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2020 (3) TMI 302

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..... ad to the conclusion that parties have chosen Hong Kong as the seat of arbitration - On a plain reading of the arbitration agreement, it is clear that the reference to Hong Kong as “place of arbitration” is not a simple reference as the “venue” for the arbitral proceedings; but a reference to Hong Kong is for final resolution by arbitration administered in Hong Kong. The agreement between the parties that the dispute “shall be referred to and finally resolved by arbitration administered in Hong Kong” clearly suggests that the parties have agreed that the arbitration be seated at Hong Kong and that laws of Hong Kong shall govern the arbitration proceedings as well as have power of judicial review over the arbitration award. The words in Clause 17.1 “without regard to its conflicts of laws provisions and courts at New Delhi shall have the jurisdiction” do not take away or dilute the intention of the parties in Clause 17.2 that the arbitration be administered in Hong Kong. The words in Clause 17.1 do not suggest that the seat of arbitration is in New Delhi. Since Part-I is not applicable to “International Commercial Arbitrations&rd .....

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..... for sales in Sri Lanka, Bangladesh and Nepal. This agreement was to continue for a period of five years from the starting date, which date was to commence from the date of delivery of the first lot of Air Quality monitors in India, i.e. 03.10.2016 or 01.11.2016, whichever was later. As per the petitioner, it has spent approximately ₹ 17,00,000/- in promoting and creating a brand value for the products in India. Further the petitioner spent ₹ 9,00,000/- towards promoting the products at over fifteen business events such as Indo-German Natural Health Fair, India International Trade Fair, etc. 3. On 14.10.2017, the petitioner received an e-mail from one Mr. Charl Cater of IQAir AG (Proposed respondent No.2) informing the petitioner that the respondent is a part of IQAir AG. Attached to the e-mail was a letter dated 13.10.2017 by the CEO of IQAir AG stating that IQAir AG has acquired all technology and the associated assets of the respondent. Further, the product of AirVisual Node has been discontinued and the IQAir AG is in the process of relaunching a new and improved version which will be rebranded as IQAir AirVisual Pro. The letter also stated that IQAir AG will not ass .....

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..... g any of its products in India. The petition filed under Section 9 of the Act by the petitioner is still pending before the High Court. 7. In response to the petitioner s notice dated 08.12.2017, invoking the arbitration clause, IQAir vide its letter dated 15.12.2017, under its asset purchase agreement with the respondent, it has not assumed any contractual and legal obligations and that the terms of the MoU were not enforceable against IQAir AG. The respondent also sent its reply dated 05.01.2018 to the notice dated 08.12.2017 stating that Clause 17 of the MoU provides for arbitration administered and seated in Hong Kong. The respondent averred that should the petitioner wish to resolve the dispute by arbitration, they should refer the dispute to an arbitration institution in Hong Kong. Further, it was stated that the respondent did not agree to ad hoc arbitration but clearly agreed to administered arbitration in Hong Kong. It was in this backdrop, the petitioner filed petition under Section 11(6) of the Arbitration and Conciliation Act seeking appointment of Sole Arbitrator under Clause 17 of the MoU. 8. According to the petitioner, the proposed arbitration between the Petitioner .....

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..... arned Senior counsel submitted that the petitioner is required to approach the Hong Kong International Arbitration Centre and the Indian Courts have no jurisdiction to entertain the petition for appointment of arbitrator. 11. On behalf of the respondent, much reliance was placed upon BGS SGS SOMA JV v. NHPC Ltd. 2019 (17) SCALE 369 to contend that the expression arbitration proceedings would make it clear that the venue is really the seat of arbitration proceedings as the aforesaid expression does not include just one or more single or part hearing but the arbitration proceedings as a whole including making of the award at that place. It was submitted that in the present case, the word administered used in Clause 17.2 of the MoU between the parties clearly shows that the parties have agreed that the arbitration between the parties would be seated in Hong Kong. 12. In BGS Soma, the expression used was ….arbitration proceedings shall be held at New Delhi/Faridabad . In BGS Soma, the three-Judges Bench of the Supreme Court held that in all the three appeals by the parties, proceedings were held at New Delhi and the awards were also signed at New Delhi and not in Faridabad. The .....

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..... s is national or habitual resident in any country other than India. In the present case, since the respondent is a company incorporated under the laws of Hong Kong, we are concerned with International Commercial Arbitration . 16. As per Section 2(2), Part-I shall apply where the place of arbitration is in India. If the International Commercial Arbitration is seated in India, then Part-I of the Act shall apply. The interpretation of Section 2(2) of the Act was considered by the Constitution Bench in BALCO, wherein it was held that Part-I of the Act would have no application to International Commercial Arbitrations held outside India. In para (194) of the judgment, it was held as under:- 194. …..Section 2(2) makes a declaration that Part I of the Arbitration Act, 1996 shall apply to all arbitrations which take place within India. We are of the considered opinion that Part I of the Arbitration Act, 1996 would have no application to international commercial arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of .....

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..... e hearings will be held. But it is all about which court would have the supervisory power over the arbitration proceedings. In Enercon (India) Limited and others v. Enercon GMBH and another (2014) 5 SCC 1, the Supreme Court held that the location of the Seat will determine the courts that will have exclusive jurisdiction to oversee the arbitration proceedings. It was further held that the Seat normally carries with it the choice of that country s arbitration/curial law . 20. It is well-settled that seat of arbitration and venue of arbitration cannot be used inter-changeably. It has also been established that mere expression place of arbitration cannot be the basis to determine the intention of the parties that they have intended that place as the seat of arbitration. The intention of the parties as to the seat should be determined from other clauses in the agreement and the conduct of the parties. 21. In the present case, the arbitration agreement entered into between the parties provides Hong Kong as the place of arbitration. The agreement between the parties choosing Hong Kong as the place of arbitration by itself will not lead to the conclusion that parties have chosen Hong Kong .....

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..... l law that will govern their arbitration, by providing for arbitration in a particular country. This is too elliptical and, as an English court itself held more recently in Breas of Doune Wind Farm it does not always hold true. What the parties have done is to choose a place of arbitration in a particular country. That choice brings with it submission to the laws of that country, including any mandatory provisions of its law on arbitration. To say that the parties have chosen that particular law to govern the arbitration is rather like saying that an English woman who takes her car to France has chosen French traffic law, which will oblige her to drive on the right-hand side of the road, to give priority to vehicles approaching from the right, and generally to obey traffic laws to which she may not be accustomed. But it would be an odd use of language to say this notional motorist had opted for French traffic law . What she has done is to choose to go to France. The applicability of French law then follows automatically. It is not a matter of choice. Parties may well choose a particular place of arbitration precisely because its lex arbitri is one which they find attractive. Nevert .....

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..... s Court held that …..on a logical and schematic construction of Arbitration Act, 1996, the Indian Courts do not have the power to grant interim measures when the seat of arbitration is outside India…. . If the arbitration agreement is found to have seat of arbitration outside India, then the Indian Courts cannot exercise supervisory jurisdiction over the award or pass interim orders. It would have therefore been necessary for the parties to incorporate Clause 17.3 that parties have agreed that a party may seek interim relief for which Delhi Courts would have jurisdiction. In this regard, we may usefully refer to the insertion of proviso to Section 2(2) of the Arbitration Act, 1996 by Amendment Act, 2015. By the Amendment Act, 2015 (w.e.f. 23.10.2015), a proviso has been added to Section 2(2) of the Act as per which, certain provisions of Part-I of the Act i.e. Sections 9 - interim relief, 27 - court s assistance for evidence, 37(1)(a) - appeal against the orders and Section 37(3) have been made applicable to International Commercial Arbitrations even if the place of arbitration is outside India. Proviso to Section 2(2) of the Act reads as under:- 2. Definitions.- &hel .....

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