TMI Blog2017 (7) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... th in the said case. Once this Court has accepted the principle, the principle governs as it holds the field and it becomes a binding precedent. It will be an anathema to law to conceive a situation where this Court is obligated to accept that the decisions in BALCO and Enercon (India) Ltd. [[ 2014 (2) TMI 1170 - SUPREME COURT] ] which approve Shashoua principle are binding precedents, yet with some innate sense of creativity will dwell upon and pronounce, as canvassed by the learned senior Counsel for the Respondent, that inter-party dispute arose in the context of an anti-suit injunction and, therefore, the same having not attained finality, would not bind the parties. This will give rise to a total incompatible situation and certainly lead to violation of judicial discipline - such submission is rejected. There cannot be any trace of doubt that any filing of an application by the Appellant in the courts in India can clothe such courts with jurisdiction unless the law vests the same in them. The agreement in question having been interpreted in a particular manner by the English courts and the said interpretation having gained acceptation by this Court, the inescapable co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TE India Pvt. Limited approached this Court by filing Special Leave Petition (Civil) Nos. 22318-22321 of 2010. On 15.09.2015, the Court passed the following order: In course of hearing, we have been apprised that on behalf of ITE India Private Limited, an application Under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') is pending before the learned Single Judge of the High Court of Delhi. At this juncture, learned Counsel for Respondent No. 2 submitted that he had filed an application Under Section 34 of the Act before the learned District Judge, Gautam Budh Nagar, U.P. who had rejected the application to be filed before the proper court. Against the order passed by the District Judge, an FAO, i.e. FAFO (D) No. 1304/2011 was filed before the High Court of Allahabad, Bench at Allahabad and same has been dismissed on the ground of maintainability. Be it stated, thereafter the 2nd Respondent has challenged the order passed by the District Judge, Gautam Budh Nagar, UP in Writ Petition (C) No. 20945 of 2014 titled as International Trade Expo Centre Ltd. v. Mukesh Sharma and Ors. In our considered opinion, the writ petition and the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the arbitration Clause and what has been postulated therein and come to hold that the Courts in India have jurisdiction. It is also canvassed by him that in the decision delivered between the parties, the commercial court in London, interpreting the clauses in the agreement, has determined that the courts in London have jurisdiction and the principle laid therein (Shashoua v. Sharma 2009 EWHC 957 (Comm)) has been accepted in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 (BALCO) and further in Enercon (India) Ltd. v. Enercon GmbH (2014) 5 SCC 1 and, therefore, the inescapable conclusion has to be that the Courts in India do not have jurisdiction and consequently Part I of the Act would not be applicable. Be it noted, the second proposition, as is seen from the impugned order, was not advanced before the High Court. Be that as it may, as it involves a pure question of law, we shall advert to the same. 7. Mr. Chidambaram, learned senior Counsel for the Respondent, in his turn, would submit that the arbitration Clause specifically provides that London will be the venue for arbitration and venue can never be the seat of arbitration that vests ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or Rules chosen by the parties would prevail. Any provision, in Part I, which is contrary to or excluded by that law or Rules will not apply. 9. After recording the conclusion, the three-Judge Bench noted the stand of the learned Counsel appearing for the Appellant therein which finds place in paragraph 33 of the judgment. It is extracted hereunder: 33. Faced with this situation Mr. Sen submits that, in this case the parties had agreed that the arbitration be as per the Rules of ICC. He submits that thus by necessary implication Section 9 would not apply. In our view, in such cases the question would be whether Section 9 gets excluded by the ICC Rules of Arbitration. Article 23 of the ICC Rules reads as follows: Conservatory and interim measures 1. Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the Arbitral Tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. The Arbitral Tribunal may make the granting of any such measure subject to appropriate security being furnished by the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of properties situate in India and where an award would be invalid if opposed to the public policy of India, merely because the judgment-debtor resides abroad, the award can be enforced against properties in India through personal compliance with the judgment-debtor and by holding out the threat of contempt as is being sought to be done in the present case. In such an event, the judgment-debtor cannot be deprived of his right Under Section 34 to invoke the public policy of India, to set aside the award. As observed earlier, the public policy of India includes -- (a) the fundamental policy of India; or (b) the interests of India; or (c) justice or morality; or (d) in addition, if it is patently illegal. This extended definition of public policy can be bypassed by taking the award to a foreign country for enforcement. 12. In the said case, the Court scanned the shareholders agreement and came to hold that Part I of the Act was applicable and hence, though the award was a foreign award, its legal propriety could be called in question in India. The said authority, as is reflectible, lays down that it would be open to the parties to exclude the application of the provision of Part I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be entitled to invoke the provisions of Part I of the Act and consequently the application made Under Section 11 thereof would be maintainable. 15. In the course of hearing we have also been commended to the authority in Citation Infowares Limited v. Equinox Corporation (2009) 7 SCC 220 wherein the Designated Judge opined that unless there is express or implied exclusion of the provisions of Part I of the Act, the entire Part I including Section 11 would be applicable even where the international commercial agreements are governed by the laws of another country. 16. As we find the principle stated in Bhatia International (supra) was followed in many an authority till it was prospectively overruled in BALCO. The Constitution Bench in BALCO recorded its conclusion in this manner: 195. With utmost respect, we are unable to agree with the conclusions recorded in the judgments of this Court in Bhatia International (supra) and Venture Global Engg. (supra). In our opinion, the provision contained in Section 2(2) of the Arbitration Act, 1996 is not in conflict with any of the provisions either in Part I or in Part II of the Arbitration Act, 1996. In a foreign-seated internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter of the contracts were performed within India; and that the contract stipulated that they will be governed and interpreted in accordance with the laws of India. Various other clauses were pressed into service to stress upon the availability of jurisdiction in courts of India. The Court analyzing the postulates in the contract in entirety came to hold: 23. Upon consideration of the entire matter, the High Court has held that undoubtedly the governing law of the contract i.e. proper law of the contract is the law of India. Therefore, the parties never intended to altogether exclude the laws of India, so far as contractual rights are concerned. The laws of England are limited in their applicability in relation to arbitration agreement contained in Article 33. This would mean that the English law would be applicable only with regard to the curial law matters i.e. conduct of the arbitral proceedings. For all other matters, proper law of the contract would be applicable. Relying on Article 15(1), it has been held that the fiscal laws of India cannot be derogated from. Therefore, the exclusion of Indian public policy was not envisaged by the parties at the time when they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision and agreement of the parties. Applying the ratio of law as laid down in Bhatia International it would lead to the conclusion that the Delhi High Court had no jurisdiction to entertain the petition Under Section 34 of the Arbitration Act, 1996. 21. Be it noted, the Court opined that it was unacceptable that seat of arbitration is not analogous to an exclusive jurisdiction clause. It observed that once the parties had consciously agreed that juridical seat of the arbitration would be London and that the agreement would be governed by the laws of England, it is no longer open to propound that provisions of Part I of the Act would also be applicable to the arbitration agreement. It referred to the authority in Videocon Industries Limited v. Union of India and Anr. (2011) 6 SCC 161 and held thus: 47. ...The first issue raised in Videocon Industries Ltd. was as to whether the seat of arbitration was London or Kuala Lumpur. The second issue was with regard to the courts that would have supervisory jurisdiction over the arbitration proceedings. Firstly, the plea of Videocon Industries Ltd. was that the seat could not have been changed from Kuala Lumpur to London only on ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration for the purposes of arbitration initiated under the claimants' notice of arbitration dated 16-12-2010 shall be London, England. Furthermore, the judgment in Videocon Industries is subsequent to Venture Global. We are, therefore, bound by the ratio laid down in Videocon Industries Ltd. 23. Explicating the concept of seat of arbitration, the Court observed: 51. ...123. ....an agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any claim for a remedy ... as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of arbitration'. 24. The Court, in the course of discussion, dealt with the principles set out in Dozco India Private Limited v. Doosan Infracore Co. Limited (2011) 6 SCC 179, Sumitomo Heavy Industries Ltd. v. ONGC Ltd. (1998) 1 SCC 305, Yograj Infrastructure Limited v. Ssang Yong Engineering and Construction Co. Limited (2011) 9 SCC 735 and Enercon (India) Ltd. (supra) and thereafter opined thus: 57. In our opinion, these observations in Sulamerica Cia Nacional de Seguros SA v. Enesa Engelharia SA (2013) 1 WLR 102 : 2012 EWCA C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to be undertaken by the court is to discern from the agreement and surrounding circumstances the intention of the parties as to whether a particular place mentioned refers to the venue or seat of the arbitration. After dealing with the principles stated therein, it took note of the fact that the ratio laid down in Alfred McAlpine (supra) has been followed in Shashoua. After stating the facts, it observed that the construction of the SHA between the parties had fallen for consideration in the said case. Be it noted, the larger Bench has reproduced few passages from Shashoua case. The analysis made by the Court in BALCO is as follows: 110. Examining the fact situation in the case, the Court observed as follows (Shashoua case): The basis for the court's grant of an anti-suit injunction of the kind sought depended upon the seat of the arbitration. An agreement as to the seat of an arbitration brought in the law of that country as the curial law and was analogous to an exclusive jurisdiction clause. Not only was there agreement to the curial law of the seat, but also to the Courts of the seat having supervisory jurisdiction over the arbitration, so that, by agreeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atur of an award where arbitrators have manifestly disregarded the law. It was in consequence of such intimation that the claimant sought and obtained an interim anti-suit injunction. The learned Judge rejected the arguments to the effect that the choice of the law of New York as the proper law of the contract amounted to an agreement that the law of England should not apply to proceedings post award. He also rejected a further argument that the separate agreement to arbitrate contained in Condition V(o) of the policy was itself governed by New York Law so that proceedings could be instituted in New York. The learned Judge granted the claimant a final injunction. The Court of Appeal noted the submissions on behalf of the Defendants and we think it appropriate to reproduce the same as they have been extracted in BALCO: 112. ...14. The main submission of Mr. Hirst for the Defendant insurer was that the Judge had been wrong to hold that the arbitration agreement itself was governed by English law merely because the seat of the arbitration was London. He argued that the arbitration agreement itself was silent as to its proper law but that its proper law should follow the proper law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplain in one jurisdiction and the satisfied party be entitled to ask the other jurisdiction to declare its satisfaction with the award. There would be a serious risk of parties rushing to get the first judgment or of conflicting decisions which the parties cannot have contemplated. 17. It follows from this that a choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award. 30. Be it noted, on the facts of the case, the Court of Appeal held that the seat of the arbitration was in England and, accordingly, entertained the challenge to the award. 31. In Enercon (India) Ltd. (supra), a two-Judge Bench has observed thus: 143. Having said so, the High Court examines the question whether the English courts can exercise jurisdictions in support of arbitration between the parties, in view of London being the venue for the arbitration meetings. In answering the aforesaid question, the High Court proceeds on the basis that there is no agreement between the parties as regards the seat of the arbitration, having concluded in the earlier part of the judgment that the parties have intended the seat to be in India. This conclusion of the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue of the arbitration shall be London, United Kingdom does amount to the designation of a juridical seat. The parties have not simply provided for the location of hearings to be in London for the sake of convenience and there is indeed no suggestion that London would be convenient in itself, in the light of the governing law of the Shareholders Agreement, the nature and terms of that agreement and the nature of the disputes which were likely to arise and which did in fact arise (although the first claimant is resident in the UK). 34. The learned Judge further observed: 33. Whilst there is no material before me which would fully support an argument on estoppel, it is interesting to note that at an earlier stage of the history of this matter, the Defendant had no difficulty in putting forward London as the seat of the arbitration. On 14th February 2006 the Defendant's lawyers, when writing to the arbitral tribunal stated the seat of the arbitration is London and the first Respondent submits that the curial law of the arbitration is English law. That means the arbitration is governed by the Arbitration Act 1996 . Further, when challenging the appointment of Mr. Salve as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n refuse to recognise or enforce the award once made. xxxxx 39. In my judgment therefore there is nothing in the European Court decision in the Front Comor which impacts upon the law as developed in this country in relation to anti suit injunctions which prevent parties from pursuing proceedings in the courts of a country which is not a Member State of the European Community, whether on the basis of an exclusive jurisdiction clause, or an agreement to arbitrate (in accordance with the decision in the Angelic Grace [1995] 1 LLR 87) or the agreement of the parties to the supervisory powers of this Court by agreeing London as the seat of the arbitration (in accordance with the decision in C v. D). 35. Coming back to Enercon (India) Ltd. (supra), the Court referred to the facts and quoted two passages and then adverted to the observations made by Cooke, J. and ruled: 128. In Shashoua case (supra), Cooke, J. concluded that London is the seat, since the phrase venue of arbitration shall be London, U.K. was accompanied by the provision in the arbitration Clause for arbitration to be conducted in accordance with the Rules of ICC in Paris (a supranational body of rules). It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Bafna (supra), the Court referred to the Constitution Bench decision in Union of India v. Raghubir Singh (1989) 2 SCC 754 and Chandra Prakash v. State of U.P. (2002) 4 SCC 234 and thereafter expressed its view thus: 19. It cannot be overemphasized that the discipline demanded by a precedent or the disqualification or diminution of a decision on the application of the per incuriam Rule is of great importance, since without it, certainty of law, consistency of rulings and comity of Courts would become a costly casualty. A decision or judgment can be per incuriam any provision in a statute, Rule or Regulation, which was not brought to the notice of the Court. A decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a Co-equal or Larger Bench; or if the decision of a High Court is not in consonance with the views of this Court. It must immediately be clarified that the per incuriam Rule is strictly and correctly applicable to the ratio decidendi and not to obiter dicta. It is often encountered in High Courts that two or more mutually irreconcilable decisions of the Supreme Court are cited at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made in the context of the said case. As far as the present controversy is concerned, we shall proceed to deal with the aspect whether principle stated in Shashoua which was based on the principle laid down in C v. D (supra) has really been accepted by this Court. If we arrive at an affirmative conclusion, the question of per incuriam would not arise. We may hasten to add that after such a deliberation, we shall also deal with the clauses in the agreement and scrutinize them whether the Courts in India will have jurisdiction or not and also address to the other contentions raised by the parties. 42. As stated earlier, in Shashoua Cooke, J., in the course of analysis, held that London arbitration is a well known phenomenon which is often chosen by foreign nationals with a different law, such as the law of New York, governing the substantive rights of the parties and it is because of the legislative framework and supervisory powers of the courts here which many parties are keen to adopt. The learned Judge has further held that when there is an express designation of the arbitration venue as London and no designation of any alternative place as the seat, combined with a suprana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration and which are not inconsistent with the mandatory provisions of the English Procedural Law/Curial Law. This necessarily follows from the fact that Part I applies only to arbitrations having their seat/place in India. 45. In Enercon (India) Ltd. (supra), the Court addressed to the issue of seat/place of arbitration and venue of arbitration for the purpose of conferment of exclusive jurisdiction on the Court. The Court appreciated the point posing the question whether the use of the phrase venue shall be in London actually refers to designation of the seat of arbitration in London. The Court did not treat London as seat/place of arbitration. The Court referred to Naviera Amazonica (supra), Alfred McAlpine (supra) and C v. D (supra) and then opined: 123. The cases relied upon by Dr. Singhvi relate to the phrase arbitration in London or expressions similar thereto. The same cannot be equated with the term venue of arbitration proceedings shall be in London. Arbitration in London can be understood to include venue as well as seat; but it would be rather stretching the imagination if venue of arbitration shall be in London could be understood as seat of arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accept the view of the High Court by holding thus: 141. This conclusion is reiterated in para 46 in the following words: (Enercon GmbH case, Bom LR p. 3472) 46. The proposition that when a choice of a particular law is made, the said choice cannot be restricted to only a part of the Act or the substantive provision of that Act only. The choice is in respect of all the substantive and curial law provisions of the Act. The said proposition has been settled by judicial pronouncements in the recent past. 142. Having said so, the learned Judge further observes as follows: (Enercon GmbH case, p. 3474, para 49) 49. Though in terms of interpretation of Clause 18.3, this Court has reached a conclusion that the lex arbitri would be the Indian Arbitration Act. The question would be, whether the Indian courts would have exclusive jurisdiction. The nexus between the 'seat' or the 'place' of arbitration vis- -vis the procedural law i.e. the lex arbitri is well settled by the judicial pronouncements which have been referred to in the earlier part of this judgment. A useful reference could also be made to the learned authors Redfern and Hunter who have stated thus: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch ruled: 7. ... It is the Rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar. One additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts. 52. In Director of Settlements, A.P. and Ors. v. M.R. Apparao and Anr. (2002) 4 SCC 638, another three-Judge Bench, dealing with the concept whether a decision is declared law , observed: 7. ...But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence. To determine whether a decision has declared law it cannot be said to be a law when a point is disposed of on concession and what is binding is the principle underlying a decision. A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered.... 53. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) are squarely in the context of applicability of Part I or Part II of the Act. It will not be erroneous to say that the Constitution Bench has built the propositional pyramid on the basis or foundation of certain judgments and Shashoua and C v. D (supra) are two of them. It will be inappropriate to say that in Enercon (India) Ltd. (supra) the Court has cryptically observed that observations made in Shashoua have been approvingly quoted by the Court in BALCO in para 110. We are inclined to think, as we are obliged to, that Shashoua principle has been accepted in BALCO as well as Enercon (India) Ltd. (supra) on proper ratiocination and, therefore, the submission advanced on this score by Mr. Chidambaram, learned senior Counsel for the Respondent, is repelled. 57. It is submitted by the learned senior Counsel for the Respondent that even if the Shashoua principle is applicable, it arises from interim orders and Cooke, J. has himself observed that a mini trial would be necessary, therefore, the view expressed in an interim order and reasons assigned therefor are only tentative and cannot be treated as the ratio decidendi. For sustaining the said proposition, inspiration has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istics. The Commercial Court in London, interpreting the same agreement adverted to earlier judgments (may be in anti-suit injunction) and held that in such a situation the Courts in London will have jurisdiction. The analysis made therein, as has been stated earlier, has been appreciated in BALCO and Enercon (India) Ltd. (supra) and this Court has approved the principle set forth in the said case. Once this Court has accepted the principle, the principle governs as it holds the field and it becomes a binding precedent. To explicate, what has been stated in Shashoua as regards the determination of seat/place on one hand and venue on the other having been accepted by this Court, the conclusion in Shashoua cannot be avoided by the parties. It will be an anathema to law to conceive a situation where this Court is obligated to accept that the decisions in BALCO and Enercon (India) Ltd. (supra) which approve Shashoua principle are binding precedents, yet with some innate sense of creativity will dwell upon and pronounce, as canvassed by the learned senior Counsel for the Respondent, that inter-party dispute arose in the context of an anti-suit injunction and, therefore, the same having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st jurisdiction in a court to try the dispute which the court does not possess. 64. In view of the aforesaid, there cannot be any trace of doubt that any filing of an application by the Appellant in the courts in India can clothe such courts with jurisdiction unless the law vests the same in them. 65. Though we have opined that Shashoua principle has been accepted in BALCO and Enercon (India) Ltd. (supra), yet we think it apt to refer to the clauses in the agreement and scrutinize whether there is any scope to hold that the courts in India could have entertained the petition. Clause 14 of the shareholders agreement (SHA) refers to arbitration. The said Clause reads thus: 14. ARBITRATION 14.1 ...Each party shall nominate one arbitrator and in the event of any difference between the two arbitrators, a third arbitrator/umpire shall be appointed. The arbitration proceedings shall be in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce Paris. 14.2 Proceedings in such arbitrations shall be conducted in the English language. 14.3 The arbitration award shall be substantiated in writing and shall be final and binding on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eat. As in the instant case, the agreement in question has been interpreted and it has been held that London is not mentioned as the mere location but the courts in London will have the jurisdiction, another interpretative perception as projected by the learned senior Counsel is unacceptable. 69. Another aspect that was highlighted before us and with immense force and enthusiasm requires to be adverted to. It has been submitted that the arbitration agreement has the closest and most real connection with India and hence, the Courts in India would have the jurisdiction as per the principle laid down in Singer Co. (supra). In the said case, it has been expressed thus: 16. Where the parties have not expressly or impliedly selected the proper law, the courts impute an intention by applying the objective test to determine what the parties would have as just and reasonable persons intended as regards the applicable law had they applied their minds to the question. The Judge has to determine the proper law for the parties in such circumstances by putting himself in the place of a reasonable man . He has to determine the intention of the parties by asking himself how a just and reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use in Singer Co. (supra) and referred to the analysis made in the judgment and noted that notwithstanding the award, it was a foreign award, since the substantive law of the contract was Indian law and the arbitration law was part of the contract, the arbitration Clause would be governed by Indian law and not by the Rules of International Chambers of Commerce. On that basis the Court held in Singer Co. (supra) that the mere fact that the venue chosen by the ICC Court or conduct of the arbitration proceeding was London, does not exclude the operation of the Act which dealt with the domestic awards under the 1940 Act. The two-Judge Bench in Reliance Industries Limited. quoted para 53 of Singer Co. (supra) and thereafter opined: 13. It can be seen that this Court in Singer case did not give effect to the difference between the substantive law of the contract and the law that governed the arbitration. Therefore, since a construction of Section 9(b) of the Foreign Awards Act led to the aforesaid situation and led to the doctrine of concurrent jurisdiction, the 1996 Act, while enacting Section 9(a) of the repealed Foreign Awards Act, 1961, in Section 51 thereof, was careful enough to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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