TMI Blog2019 (4) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11, which states that where the arbitration is an international commercial arbitration, an application under sub-sections (4) to (6) would lie to the Hon’ble Supreme Court. It would be necessary to consider the definition of international commercial arbitration and in particular sub-clause (i). From a plain reading of the definition it is clear that an arbitration will be an international commercial arbitration where at least one of the parties to it is an individual who is a national of, or habitually resident in, any country other than India.It is clear from the definition that the legislature has used two distinct expressions viz. “national” and “habitual resident”. These two expressions are separated by the expression “or”, which means they have been used disjunctively. Therefore, if even one of the parties to the arbitration satisfies the requirement of being a national of, or habitual resident in, any country other than India, it would be an international commercial arbitration. The Applicant cannot read one stray sentence out of context to support its contention that if parties are nationals of India then even if they are habitually resident outside India, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 11 of the Arbitration and Conciliation Act, 1996 ( the Act ) raise a common question of law as regards the meaning and interpretation of Section 2(1)(f)(i) of the Act that defines an international commercial arbitration and more particularly the meaning of or habitually resident in, any country other than India; . 2. Arbitration Applications 49, 50 and 51 of 2017 are all connected applications. The Applicant and Respondent No. 1 in all those applications are the same but there are additional Respondents in Application Nos. 50 and 51. The arbitration agreements under which the Applicant has invoked arbitration are part of a Service Agreement dated 18th October 2011 (in Arbitration Application dated 49 of 2017) and a Shareholding Agreement dated 25th July 2011 (in Arbitration Application Nos. 50 and 51 of 2017). The facts in brief giving rise to the filing of these applications are set out below : 3. In Arbitration Application No. 49 of 2017 the Applicant has stated : (i) that he is a Non-Resident Indian residing and working in Dubai, UAE; the Respondent is a company incorporated in Mumbai and governed by the provisions of the Companies Act, 2013; the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 2011 with the Respondent No. 1, Respondent No. 2 and Mr. Robert Wayne Pantermuehl and Mr. Sunil B. Shitole. (iii) that despite the express stipulation in the Shareholding Agreement dated 25th July 2011, he did not receive the duly stamped, signed share certificates evidencing the allotment in his favour. (iv) that he was, therefore, constrained to instruct his Advocate who addressed a letter dated 23rd January 2017 to the Respondent No. 1 calling upon the Respondent No. 1 to comply with its obligations under the Shareholding Agreement; by this letter, he through his Advocate also invoked the arbitration clause contained in the said Shareholding Agreement. (v) that the Respondent No. 1 failed to appoint an arbitrator and neither of the Respondents in fact responded to his Advocate s letter dated 23rd January 2017. In this background, he filed the present Application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to adjudicate the disputes that have arisen between the Applicant and the Respondents. 5. In Arbitration Application No. 51 of 2017, the Applicant is the same as in the above application and is again desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound, he filed the present Application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to adjudicate the disputes that have arisen between the Applicant and the Respondents. 6. The principal legal submission or defense raised by the Respondent is that the Applicant is ex facie a person habitually resident in a country other than India and therefore the present arbitration is an international commercial arbitration, and in view of Section 11(12)(a) of the Act, an application under Section 11 of the Act would only lie to the Hon ble Supreme Court to the Hon ble Chief Justice of India or a designate of the Hon ble Chief Justice of India, and not before this Court. 7. Therefore, the main issue that arises for consideration in all the above Applications is: whether the arbitration is an international commercial arbitration by reason of one of the parties, viz. the Applicant, being an individual who is a habitual resident in any country other than India? If the arbitrations in this case are international commercial arbitrations then under Section 11(12) of the Act, these Applications under Section 11 of the Act will have to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitration is a national of or a habitual resident of any country other than India, the arbitration would be an international commercial arbitration. If any of the conditions of nationality or habitually resident outside India is satisfied in respect of one of the parties, the arbitration would be an international commercial arbitration. Even if parties are Indian nationals but one or both of them are habitually resident in a country other than India, the arbitration would be an international commercial arbitration. 12. The learned Advocate for the Respondents then placed reliance on various judgments and authorities in support of the meaning that has been given by different courts to the expression habitually resident and other allied expressions like ordinary resident . 13. The learned Advocate for the Respondents then distinguished the judgment in TDM Infrastructure Development Pvt. Ltd.,supra, on the basis that it dealt with the definition of international commercial arbitrations where the party was a corporation and the issue in that case was in respect of the nationality of corporations. He submitted that the Applicant is completely misreading the judgment to suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) applies and- (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court. (6) Where, under an appointment procedure agreed upon by the parties,- (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, if even one of the parties to the arbitration satisfies the requirement of being a national of, or habitual resident in, any country other than India, it would be an international commercial arbitration. It is not necessary that party must be both a national of and a habitual resident in any country other than India. Such an interpretation would be contrary to the plain language and meaning of the words used in the definition. Further, it would be clear from the section that even if one of the parties is habitually resident in a country other than India but a national of India, this provision would still be applicable, and it would be an international commercial arbitration. 19. In the case of TDM Infrastructure Development Pvt. Ltd., (supra), the Hon ble Supreme Court was dealing with a situation where the parties were companies registered and incorporated under the Companies Act, 1956, but the Directors and shareholders of the petitioner company were said to be resident of Malaysia and the Board of that company also sits in Malaysia. Hence, it is clear that the Hon ble Supreme Court was dealing with a case involving companies that is separately provided for in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uage of Section 2(1)(f)(ii) and (iii) was different. A company was covered in sub-clause (iii) of the unamended provision, which is set out in the judgment. In fact, after the judgment, the legislature amended the language of sub-clause (iii) by deleting the reference to a company from it. Thus, making it clear now that a company being a body corporate would be governed by sub-clause (ii). This has been mentioned also in the Written Submissions of the Respondents. There has been no change to the language of sub-clause (i) of the definition of Section 2(1)(f) of the Act. 21. The Applicant cannot read one stray sentence out of context to support its contention that if parties are nationals of India then even if they are habitually resident outside India, the provision would not apply. It is very clear that the last sentence of paragraph 19 also deals with a situation where the parties are companies and the judgment was not dealing with a situation of individuals. 22. As regards the submission of the Respondents that the said judgment being under Section 11 of the Act has no precedential value and not binding on this Court, in view of my findings as stated above it is not necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that habitual must indicate the quality of residence rather than a period of residence. He argues that as no period of residence is specified in the 1971 Act, this of itself points to the importance of the quality of residence in order to make it habitual. This submission derives support from the fact that in s 5(2) of the Domicile and Matrimonial Proceedings Act 1973, the same phrase habitually resident appears, but for the purposes of that subsection is required to be one years duration. Counsel draws a comparison with the wording used in the well-known case of Indyka v. Indyka {([1967) 2 All ER 689 : 1969 1 AC 33}, the effect of which is, of course, superseded by the 1971 Act, and draws a distinction between the wording of the Act and the principles set forth in, for example, Traverse v. Holley {[1953]2 ALL ER 794 : [1953] P 246}. He says further that one may point to characteristics of residence which will not make it habitual but other than habitual. For example the residence must not be temporary or of a secondary nature. He urges that the phrase in the decree of the American court that the residence was actual and bona fide really defines what is meant by habitual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Although that decision was made in the different context of section 5 of the Domicile and Matrimonial Proceedings Act 1973, I follow the judgment of Bush J. in Kapur v. Kapur [1984] F.L.R 920 in holding that there is no real distinction between ordinary residence and habitual residence. The governing principle for ascertaining the elements of habitual residence is contained in the speech of Lord Scarman in R. v. Barnet London Borough Council ex parte Shah [1983] 2 A.C 309, where he says, at page 314: and there must be a degree of settled purpose. The purpose may be one or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. That is not to say that the propositus intends to stay where he is indefinitely. Indeed his purpose while settled may be for a limited period. Education, business or profession, employment, health, family or merely love of the place spring to mind as common reasons for a choice of regular abode, and there may well be many others. All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled. When the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of article 3. (Emphasis Supplied) 26. The Respondent has then relied upon an article published in the Oklahoma Law Review titled The Meaning of Habitual Residence Under the Hague Convention on the Civil Aspects of International Child Abduction and the Hague Convention on the Protection of Children: Author: Jeff Atkinson: 2011 Oklahoma Law Review Volume 63 Number 4 at Pages 649,650, 654 and 655. The relevant extracts are as set out below: The Hague Abduction Convention does not define habitual residence. The term is commonly used in international conventions covering a variety of subjects, and the drafters of the conventions deliberately avoided seeking to impose a precise, fixed definition. A 1989 Hague Convention case from the United Kingdom, In Re Bates, frequently cited in the United States, stated: It is greatly to be hoped that the courts will resist the temptation to develop detailed and restrictive rules as to habitual residence, which might make it as technical a term of art as common law domicile. The facts and circumstances of each case should continue to be assessed without resort to presumptions or presuppositions. Courts in the United Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not determinative, and courts often need to weigh conflicting factors. This section will list the factors that have been considered by courts and provide brief commentary about each. A. Factors Related to Parental Intent * Parental employment - The employment of one or both parents in a country to which the parents recently moved can be evidence of establishing a new habitual residence. Conversely, leaving one s employment in a country can be evidence of leaving a prior state of habitual residence. * Purchase of home - Purchase of a home also is evidence of establishing habitual residence. Purchase of a home is more likely to be a basis for such a finding than short-term stays with relatives or in a rental apartment. * Moving of belongings - The movement of family belonging can establish intent to establish a new habitual residence. However, shipping some belongings while keeping other belongings in the state from which one moved can be evidence of not intending to change habitual residence. * Location of bank accounts - A parent s decision to maintain bank accounts in a country where the parent had lived, despite spending time in a new country, is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court was dealing with a case under Section 488 CrPC and the question of jurisdiction of the court to entertain a petition for maintenance. The Court noticed a near unanimity of opinion as to what is meant by the use of the word resides appearing in the provision and held that resides implied something more than a flying visit to, or casual stay at a particular place. The legal position was summed up in the following words: (AIR p. 1524, para 8) 8. Having regard to the object sought to be achieved, the meaning implicit in the words used, and the construction placed by decided cases thereon, we would define the word resides thus: a person resides in a place if he through choice makes it his abode permanently or even temporarily; whether a person has chosen to make a particular place his abode depends upon the facts of each case. 30. In Kuldip Nayar v. Union of India [(2006) 7 SCC 1] the expression ordinary residence as used in the Representation of the People Act, 1950 fell for interpretation. This Court observed: (SCC p. 96, paras 243-46) 243. Lexicon refers to Cicutti v. Suffolk County Council [(1981) 1 WLR 558 : (1980) 3 All ER 689 (DC)] to denote that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India to see where the party resides and carries on business to confer jurisdiction upon that Court. This is more pronounced in cases relating to wives in matrimonial matters for which statutory provisions have been made. 30. From a reading of all of the above judgments and authorities it is clear that the question of whether a person habitually resides in a country or place may depend on various facts and circumstances. The term habitually resides or similar terms such as ordinarily resides have not been defined and do not have a technical meaning. However, from the above observations there are some factors or tests which are applicable to decide whether a person habitually resides in a particular place or location. Some of the important tests and factors, are as under: (i) The quality of the residence and not only the duration of the residence. (ii) The residence must be actual and bona fide and there must be a regular physical presence that must endure for some time. However, the duration of time must be considered in the facts of each case and given the purpose of the residence in a particular place. (iii) The purpose may be one or there may be several. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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