TMI Blog2008 (8) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... to be adopted in the arbitral proceedings, the sittings of the arbitral proceedings and to also settle his fees in respect thereof. - ARBITRATION P. 16 OF 2006 - - - Dated:- 25-8-2008 - ALTAMAS KABIR, J. ORDER 1. By a Memorandum of Understanding, hereinafter referred to as the Memorandum , entered into between the appellant and the respondent on 11th June, 2002, the parties agreed to collaborate on an exclusive basis for jointly preparing and submitting their tender for work associated with the designing, manufacturing, supply, installation, test and commissioning contract for the Indian Railways Crashworthiness Project. Pursuant thereto the parties jointly prepared and submitted a tender signed by both the parties on 30.9.2002 in response to a bid invitation by RITES Limited, a Public Sector Undertaking of the Ministry of Railways, on 30.9.2002. 2. After submission of such bid the parties were invited to call upon the respondent on 29.10.2002 for contract negotiation in India, but without any valid or justifiable reason the respondent terminated the Memorandum on 12.11.2002 and on 15.11.2002 unilaterally withdrew the joint bid submitted to RITES without any refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4. On behalf of the appellant company, Mr. S.C. Gupta, learned advocate, submitted that although in the Memorandum the law which was to apply to the construction and performance of the agreement had been mentioned, the venue for such adjudication or arbitration had not been stipulated in the agreement since the choice of venue has obviously been left to the parties. It was submitted that primarily two questions were required to be answered in this matter, namely,: (i) Whether clauses 13.2 and 13.3 of the Memorandum of Understanding can be construed to be an arbitration agreement; and (ii) Whether having regard to clause 13.1 of the Memorandum of Understanding indicating that the construction, validity and performance of the agreement would be governed by and constructed in accordance with laws of England and Wales, this Court would have jurisdiction to appoint an Arbitrator under Section 11 of the Arbitration Act, 1996. 5. It was submitted that whenever the jurisdiction of the domestic courts is invoked, the courts have to look to their own laws to see whether they have jurisdiction to take up such matter. It was contended that since in the instant case an application h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be situated within the jurisdiction of the Courts of England and Wales. Mr. Gupta urged that an almost identical situation had arisen in the case of Bhatia International (supra), where an application made by the respondent therein to the Third Additional District Judge, Indore, M.P., was under Section 9 of the Arbitration and Conciliation Act, 1996, for grant of certain interim reliefs to restrain the parties from alienating, transferring and creating third party rights, disposing of, dealing with and/or selling their business assets and properties till the matter was decided by the Court. Bhatia International raised a plea as to the maintainability of the said application which was dismissed by the learned Additional District Judge upon holding that the Court at Indore had jurisdiction to entertain the application filed by Bulk Trading S.A. under Section 9 of the above Act and that the same was maintainable. 9. The order of the learned Third Additional District Judge was challenged before the M.P. High Court, Indore Bench, by Bhatia International by way of a writ petition, which was also dismissed by the High Court. The Judgment and Orders, both of the learned Additional Distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw of contract and it could, therefore, be contended that the proper law of the arbitration agreement is also the law of England and Wales. He, however, urged that there was nothing in the agreement to indicate that the parties had agreed as to the venue of arbitration. He submitted that the law which was to govern the conduct of arbitration or the curial law, not having been indicated by the parties, the same could be determined only by the Arbitrator. He submitted that when the Arbitrator to be appointed in the instant case, chooses the seat of arbitration, the law relating thereto will govern the law of the conduct of the arbitration proceedings. Mr. Gupta urged that the above proposition finds full support in the decision of this Court in National Thermal Power Corporation vs. Singer Company amp; Anr. [1992 (3) SCC 551] where in paragraph 28, it has been observed that questions relating to the jurisdiction of the Arbitrator to decide a particular issue relating to the continuance of an arbitration agreement, its validity, effect and interpretation are determined exclusively by the proper law of the arbitration agreement. The procedural power and duties of the Arbitrator are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Courts of England and Wales to deal with and decide all issues arising out of arbitration agreement, was denied by Mr. Parag Tripathi, learned Senior counsel for the respondent. It was urged that an application under Section 11 of the Arbitration and Conciliation Act, 1996, is nothing but a step in performance of the arbitration clause and since the performance of the Memorandum is to be governed by the laws of England and Wales, according to the choice of the parties, it is the procedural law of England and Wales which has to be applied to the performance of the arbitration agreement as well. Referring to the decision in the National Thermal Power Corporation case (supra), which had also been referred to by Mr. Gupta, Mr. Tripathi submitted that in the said decision the views of jurists such as Dicey, Mustill and Boyd and Russel had been reiterated in support of the contention that the overriding principle is that the courts of the country, whose substantive laws govern the arbitration agreement, are competent courts in respect of all matters arising under the arbitration agreement, and the jurisdiction exercised by the courts of the seat of arbitration is merely concurrent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made to various decisions on this count as well. Regarding use of the expression adjudication , Mr. Tripathy submitted that a final decision arrived in such adjudication proceedings would not make it a valid arbitration agreement. He urged that unless it is the clear intention of the parties that arbitration is to be the only forum for adjudication of disputes, the requirement of a valid arbitration clause is not fulfilled. 19. In support of his aforesaid submission, Mr. Tripathy referred to decisions of various High Courts and also the decision of this Court in Jagdish Chander v. Ramesh Chander, [2007 (5) SCC 719], wherein while dealing with the provisions and scope of Sections 7, 8 and 11 of the Arbitration and Conciliation Act, 1996, with reference to Section 89 of the Code of Civil Procedure, this Court held that the existence of an arbitration agreement, as defined under Section 7 of the above Act, is a condition precedent for exercise of power for appointment of the Arbitrator/Arbitral Tribunal, under Section 11 of the aforesaid Act. Mr. Tripathy pointed out that while arriving at such conclusion, this Court laid down certain tests to decide as to what would constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Courts of England and Wales. 23. It appears that after the conclusion of the hearing of this case, another decision of the House of Lords in Lesotho Highlands Development Authority vs. Inpregilo SpA, [2005 UKHL 43], came to the notice of the respondent where a reference to the juridical seat of the arbitration had been made and it was observed that the determination of the juridical seat of arbitration as England is the gateway to the powers of the Tribunal spelt out in many provisions of the English Arbitration Act, 1996. 24. Although, the matter has been argued at great length and Mr. Tripathy has tried to establish that the decision of this Court in Bhatia International's case (supra) is not relevant for a decision in this case, I am unable to accept such contention in the facts and circumstances of the present case. It is no doubt true that it is fairly well-settled that when an arbitration agreement is silent as to the law and procedure to be followed in implementing the arbitration agreement, the law governing the said agreement would ordinarily be the same as the law governing the contract itself. The decisions cited by Mr. Tripathy and the views of the jurists re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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