TMI Blog2005 (8) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... -2002 and 12-11-2002 in England. The appellant thereafter, filed applications under Section 34 of the Indian Act for setting aside the two awards dated 10-11-2002 and 12-11-2002 in the Court of learned District Judge, Bilaspur which were numbered as MJC Nos. 92 of 2003 and 14 of 2003, respectively. By order dated 20-7-2004, the learned District Judge, Bilaspur held that the applications filed by the appellant under Section 34 of the Indian Act for setting aside the two foreign awards are not tenable and accordingly dismissed the same. Aggrieved, the appellant has filed these appeals. 3. Mr. Vivek Tankha and Mr. S. N. Mukherjee, learned Counsel appearing for the appellant in the two appeals submitted that in the impugned order dated 20-7-2004, the learned District Judge has held that the application filed by the appellant under Section 34 of the Indian Act was not maintainable, but the learned District Judge has not recorded any reason whatsoever for coming to the aforesaid conclusion. They argued that the learned District Judge should have decided the issues of fact and law raised by the parties in their respective pleadings, but no such exercise has been undertaken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 34 of the Indian Act. He submitted that in the case of Bhatia International v. Bulk Trading S.A., [2002]2SCR411 (Supra) the Supreme Court has laid down the test that if a Court has jurisdiction to entertain an application under Section 9 of the Indian Act it would also have jurisdiction to entertain an application under Section 34 of the Indian Act to set aside an award made by the arbitrator. He argued that in the present case since the cause of action in connection with the subject matter of the jurisdiction arose within the jurisdiction of the District Judge at Bilaspur, the District Judge at Bilaspur had the jurisdiction to entertain the application under Section 9 of the Indian Act and accordingly also under Section 34 of the Indian Act to set aside the award. Mr. Mukherjee submitted that Part-II of the Indian Act provides for enforcement of certain foreign awards and Section 48 therein stipulates the conditions for enforcement of the foreign awards. He submitted that it will be clear from Section 48(1)(e) of the Indian Act that a foreign award can be set aside or suspended by a competent authority of the country in which, or under the law of which, that award w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by arbitration pursuant to the English Arbitration Law and subsequent amendments thereto. He pointed out that Article 17.2 of the agreement between the parties further provided that the arbitration proceedings shall be carried by two arbitrators; one appointed by the appellant and the other appointed by the respondent chosen freely and without any bias and the Court of arbitration shall be held wholly in London, England. He submitted that Article 22 of the agreement between the parties not only provided that the agreement will be governed by the prevailing law of India but also that in case of Arbitration the English Law shall apply . He argued that a reading of the aforesaid clauses of the agreement between the parties would show that the English Arbitration Act, 1996 (hereinafter referred to as the English Act ) was to apply to the conduct of arbitration and the award was to be made under the English Act. He further submitted that the aforesaid clauses in the agreement also made it clear that the arbitration was to be held in England. He also submitted that a reading of different paragraphs of the awards would show that as a matter of fact the arbitration was conducted in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be clear from Section 44 in Chapter-I of Part-II of the Indian Act. He further submitted that Chapter-II of Part-II of the Indian Act relates to Geneva Convention Awards and applies to arbitral awards on differences in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies. He argued that to arbitral awards referred to in Sections 44 and 53 of the Indian Act the provisions of Part-I including Section 34 of the Indian Act has no application. 9. Mr. Agrawal further submitted that enforcement of the foreign award may be refused only one of the conditions mentioned in Section 48 in Part-II of the Indian Act. He submitted that Section 48(1)(c) provides that a foreign award may be refused to be enforced at the request of the party against whom it is invoked if that party furnishes to the Court proof that the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. In the instant case, the award has been made in England and also under the law of arbitration in England and could be set aside or suspended b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Act. Mr. Agrawal further submitted that the decisions of the Gujarat High Court in the case of Nirma Ltd. v. Lurgi Energie Und Entsorgung GMBH, Germany AIR2003Guj145 (supra), the Calcutta High Court in the case of White Industries Australia Limited v. Coal India Limited 2004 (2) Cal LJ 197 (supra), the Supreme Court in the case of NTPC v. Singer Company [1992]3SCR106 (supra) and the decision of the Supreme Court in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. AIR1998SC825 (supra) were decided on the facts of those cases and are not applicable to the present case. He submitted that the learned District Judge, Bilaspur has therefore rightly held in the impugned order dated 20-7-2004 that the applications filed by the appellant for setting aside the awards under Section 34 of he Indian Act were not maintainable and has rightly dismissed the same and this Court should not interfere with the impugned order in the present appeals. 11. On a reading of the said impugned order dated 20-7-2004 we find that the learned District Judge has recorded the contentions of the learned Counsel for the parties and has also quoted the decisions cited by the learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the High Court and directed the High Court to hear and dispose of the appeal in accordance with law. The relevant portion of the judgment of the Supreme Court in State of Punjab v. Bhag Singh 2004 AIR SCW 102 (supra) is quoted hereinbelow (Para 5) : The trial Court was required to carefully appraise the entire evidence and then come to a conclusion. If the trial Court was at lapse in this regard the High Court was obliged to undertake such an exercise by entertaining the appeal. The trial Court on the facts of this case did not perform its duties, as was enjoined on it by law. The High Court ought to have in such circumstances granted leave and thereafter as a first Court of appeal, reappreciated the entire evidence on the record independently and returned its findings objectively as regards guilt or otherwise of the accused. 14. In the present case, we find that we can decide the issue with regard to the maintainability of the applications filed by the appellant under Section 34 of the Indian Act in the Court of the learned District Judge, Bilaspur on the basis of the agreement between the parties and the awards made by the arbitrator which were part of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforcement of foreign awards are made in Part II. To the extent that Part II provides a separate definition of an arbitral award and separate provisions for enforcement of foreign awards, the provisions in Part I dealing with these aspects will not apply to such foreign awards. It must immediately be clarified that the arbitration not having taken place in India, all or some of the provisions of Part I may also get excluded by an express or implied agreement of parties. But if not so excluded the provisions of Part I will also apply to foreign awards . The opening words of Sections 45 and 54, which are in Part II, read notwithstanding anything contained in Part I . Such a non obstante clause had to be put in because the provisions of Part I apply to Part II.b2 In Paragraph 23 of the aforesaid judgment, the Supreme Court, however, held relying on the definition of domestic award in Section 2(7) of the Indian Act that foreign awards for which special provisions have been made in Part-II of the Indian Act are those awards which have been made pursuant to arbitration in a convention country, whereas the awards made outside India in an international commercial arbitratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the language used in Article 1 in the First Schedule quoted above that the convention applies to the recognition and enforcement of foreign arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought. In the present case the two awards have been made in England and the recognition and enforcement of the awards dated 10-11-2002 and 12-11-2003 are sought in India. Hence two awards dated 10-11-2002 and 12-11-2003 are foreign awards within the meaning of Chapter-I of Part-II of the Indian Act. Sections 48 and 49 in Chapter-I of Part-II of the Indian Act which relate to enforcement of the foreign awards and which apply to the foreign awards dated 10-11-2002 and 12-11-2003 are quoted hereinbelow : 48. Conditions for enforcement of foreign awards.-- (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the Court proof that-- (a) the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 48(1)(e) of the Indian Act that enforcement of a foreign award may be refused at the request of the party against whom it is invoked, if that party furnishes to the Court proof that the award has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. To the extent Section 48(e) makes provision regarding the competent authority which can set aside a foreign award, the provision in Section 34 of Part-I of the Indian Act is excluded as per the decision of the Supreme Court in the case of Bhatia International v. Bulk Trading S.A. [2002]2SCR411 (supra). 17. While the case of the appellant is that the award was made under the law of India and accordingly under Section 48(1)(e) of the Indian Act the Court in India is the competent authority to set aside or suspend the awards, the case of the respondent is that the two awards have been made in England and under the law of England and accordingly under Section 48(1)(e) of the Indian Act it is only the Court in England which may set aside or suspend the award. Hence, the question to be decided is whether the award has been made under the law of India or under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this will be clear from paragraphs 32, 37, 42 and 45 of the award dated 12-11-2002 which are quoted hereinbelow : 32. Negotiations to reach a settlement of these disputes were unsuccessful. Pursuant to the provisions of Article 17 of the Modernization Agreement and Section 14 of the English Arbitration Act the Claimant submitted a written Notice and Request for Arbitration to the Respondent on November 13th, 1997. The Notice was accompanied by a letter dated November 13th 1997 from Mr. David Kjos, Vice-President of the Claimant. 37. Under Article 173 of the Modernization Agreement and Section 16(6)(b) of the English Arbitration Act, the arbitrators are required to appoint an Umpire before any substantive hearing of a dispute. 42. The parties were unable to agree on the precise role and attendance of the Umpire. In these circumstances the Tribunal ordered on May 27th, 1999 that the arbitration to proceed in accordance with Sections 21(2), (3) and (4) of the English Arbitration Act. 45. On July, 18th, 2000 Mr. Redfern acknowledged the respondent's confirmation that it wished me to act as Umpire as opposed to Chairman, Mr. Redfern observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e award was made obviously has intended two different meanings and both the expressions cannot mean one and the same thing. In the present case. Since Article 22 of the agreement provides that the agreement will be governed by the prevailing law in India, it is the law of India to which parties have subjected the agreement within the meaning of the expression used in Section 48(1)(a) of the Indian Act. But since Article 22 also provides that in the case of Arbitration, the English Law will apply, it is the English Law under which the arbitration has been conducted and the award has been made. 20. In National Thermal Power Corporation v. Singer Company [1992]3SCR106 (supra) cited by Mr. Mukherjee, agreements dated 17-8-1982 were entered into at New Delhi between the said Corporation and Singer Company, a foreign company for supply of equipment, erection and commissioning of certain works in India for the Corporation. The general terms and conditions of the contract were expressly incorporated in the said agreements and Clause 7.2 thereof provided that the laws applicable to this contract shall be the laws in force in India. The Courts of Delhi shall have exclusive jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian Act used two different expressions, the law to which the parties have subjected the agreement and the law under which the award was made and these two expressions used by the legislative have 110 be interpreted to mean two different things. The law to which the parties have subjected the agreement would mean the law governing the agreement or the proper law of contract applicable to the agreement as chosen by the parties and the law under which the award was made would mean the law according to which the arbitration was conducted and the award was made. 21. In Sumitomo Heavy Industries Ltd. v. ONGC Ltd. AIR1998SC825 (supra) cited by Mr. Mukherjee, Sumitomo Heavy Industries Ltd. and the ONGC Ltd. entered into a contract on 7-9-1983 whereunder Sumitomo Heavy Industries Ltd. agreed to commission on turnkey basis an oil platform at Bombay High, about 100 miles north west of Bombay. Clause 17.0 of the said contract provided for Laws/Arbitration and Clause 17.1 of the said contract reads as follows (Para 2 of AIR): 17.1 Applicable Laws. All questions, disputes or differences arising under, out of or in connection with this contract shall be subject to the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties and the arbitration sittings were held in London and the award was made and published in France at Paris. Coal India Limited filed an application for setting aside the award under Sections 34 and 48 of the Indian Act before Calcutta High Court. A Division Bench of the Calcutta High Court held that the cause of action admittedly arose in July, 1999 and by that time the Indian Arbitration Act, 1940 was repealed by Section 85 of the Indian Act which came into force in August, 1996 and that the parties to the contract made an express choice in Indian Law both as the proper law of contract and the proper law of arbitration and India was also the country with which the contract was most closely associated and the contract was signed in India and was entirely performed in India and was to be governed by Indian Laws and hence there was no reason for the Court to hold that the expression the country under the law of which was made under Section 48(1)(e) of the Indian Act would mean anything but Indian Law. In the aforesaid case of White Industries Australia Ltd. v. Coal India Ltd. 2004 (2) Cal LJ 197 (Cal) (supra) the only provision in the agreement was that the agreement will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the laws of India and there was no separate agreement that in case of arbitration the English Law would apply and that the arbitration will be conducted in accordance with the English Act and the amendments thereto as in the present case. 24. Coming now to the view of Justice Potter in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. reported in (1994) Lloyd's Law Reports 45 cited on behalf of the appellants, Justice Potter after referring to the provisions of the agreement between the parties has held : In this case, as to (1), the parties have made an express choice of Indian Law as the proper law of the contract. As to (2), it seems to me likely (although it is not necessary finally to decide) that the proper law of the arbitration agreement is similarly Indian Law, since the arbitration agreement is part of the substance of the underlying contract and the terms of Clause 17.1 are clear in that respect. It will be clear from the aforesaid reasoning or Mr. Justice Potter that since in the case of Sumitomo Heavy Industries Ltd. v. ONGC Ltd. (supra) the parties had made an express choice of the proper law of contract as Indian law and since the arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made . In Section 48(1)(e) of the Indian Act would be the Indian Law because the arbitration agreement would follow the proper law of the main contract. But where parties to the agreement have subjected the agreement to the Indian Law and have also indicated in the agreement that in case of arbitration, the English Law will apply, as in the present case, then the said two expressions in the said Section 48(1)(a) and Section 48(1)(e) will mean two different things and the law to which parties have subjected the agreement would be the Indian Law and the country under the law of which the award is made will be England. We have, therefore, no doubt in our mind that the applications of the appellant under Section 34 of the Indian Act before the learned District Judge, Bilaspur for setting aside the two awards dated 10-11-2002 and 12-11-2003 which were made under the English Act were not maintainable and the two appeals filed by the appellant are liable to be dismissed. 26. For the aforesaid reasons, we hold that the applications filed by the appellant under Section 34 of the Indian Act are not maintainable against the two foreign awards dated 10-11-2002 and 12-11-2002 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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