2011 (9) TMI 854 - SC - Companies Law

Supreme Court upholds SIAC Rules in arbitration dispute, ousting Indian Courts' jurisdiction. No costs awarded.

YOGRAJ INFRASTRUCTURE LTD. Versus SSANG YONG ENGINEERING & CONSTRUCTION CO. LTD.

YOGRAJ INFRASTRUCTURE LTD. Versus SSANG YONG ENGINEERING & CONSTRUCTION CO. LTD. - 2011 AIR 3517, 2011 (14) SCR 301, 2011 (9) SCC 735 Issues Involved:1. Jurisdiction of Indian Courts under Section 37 of the Arbitration and Conciliation Act, 1996.2. Applicability of the International Arbitration Act, 2002, of Singapore.3. Determination of 'Curial law' and 'Proper law' governing the arbitration proceedings.Detailed Analysis:1. Jurisdiction of Indian Courts under Section 37 of the Arbitration and Conciliation Act, 1996:The Appellant argued that the arbitration agreement, governed by Indian law, should allow appeals under Section 37 of the Arbitration and Conciliation Act, 1996. The argument was based on Clause 28 of the agreement, which stated that the agreement would be subject to Indian laws. The Appellant contended that the right to appeal under Section 37(2)(b) is a substantive right under the 1996 Act and should not be governed by SIAC Rules.The Respondent countered that the seat of arbitration being in Singapore, the arbitration proceedings should be governed by the laws of Singapore, as per Clause 27.1 of the agreement. The District Court and the High Court dismissed the appeal on the grounds that the arbitration proceedings were governed by the laws of Singapore, thus ousting the jurisdiction of Indian Courts.The Supreme Court upheld the lower courts' decisions, stating that once the arbitration proceedings commenced under the SIAC Rules, the applicability of Section 42 and Part I of the 1996 Act, including the right of appeal under Section 37, was shut out.2. Applicability of the International Arbitration Act, 2002, of Singapore:The Appellant argued that the Arbitration and Conciliation Act, 1996, should apply to the arbitration proceedings, as the agreement was subject to Indian laws. However, the Respondent emphasized that the parties had expressly agreed that the arbitration would be conducted under the SIAC Rules, which included Rule 32, stipulating that the law of arbitration would be the International Arbitration Act, 2002, of Singapore.The Supreme Court found that the parties had specifically agreed to be governed by the SIAC Rules, which included Rule 32. Therefore, the International Arbitration Act, 2002, of Singapore was applicable, and the decision in Bhatia International and subsequent cases did not apply.3. Determination of 'Curial law' and 'Proper law' governing the arbitration proceedings:The Appellant contended that the proper law of the arbitration agreement should be the Arbitration and Conciliation Act, 1996, as per Clause 28 of the agreement. The Appellant distinguished between the 'proper law' of the contract and the 'Curial law' governing the procedure of arbitration, arguing that while the proper law was Indian law, the procedural law (Curial law) was the SIAC Rules.The Respondent maintained that the parties had agreed that the seat of arbitration would be Singapore, and the arbitration proceedings would be governed by the SIAC Rules, making the Curial law the laws of Singapore.The Supreme Court clarified that while Clause 28 indicated the governing law of the agreement was Indian law, Clause 27.1 made it clear that the procedural law for the arbitration proceedings was the SIAC Rules. The Court concluded that the SIAC Rules, including Rule 32, governed the arbitration proceedings, and the International Arbitration Act, 2002, of Singapore was applicable.Conclusion:The Supreme Court dismissed the appeal, holding that the arbitration proceedings were governed by the SIAC Rules and the International Arbitration Act, 2002, of Singapore. Consequently, the jurisdiction of Indian Courts under Section 37 of the Arbitration and Conciliation Act, 1996, was ousted once the arbitration commenced under the SIAC Rules. The Court vacated all interim orders and did not award costs.