2017 (7) TMI 1093 - SC - Indian Laws

Indian Supreme Court Upholds Arbitration Seat Jurisdiction Ruling

Roger Shashoua and Others Versus Mukesh Sharma and Others

The Supreme Court allowed the appeals, setting aside the judgment of the Delhi High Court. It held that Indian courts lacked jurisdiction over the dispute ... Territorial Jurisdiction - seat of arbitration and venue of arbitration - Held that: - 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 - It is worthy to note that the arbitration agreement is not silent as to what law and procedure is to be followed - 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. 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situation and led to the doctrine of concurrent jurisdiction, the 1996 Act, while enacting Section 9(a) of the repealed Foreign Awards Act, 1961, in Section 51 thereof, was careful enough to omit Section 9(b) of the 1961 Act which, as stated hereinabove, excluded the Foreign Awards Act from applying to any award made on arbitration agreements governed by the law of India. The courts in India have jurisdiction, and has also determined that Gautam Budh Nagar has no jurisdiction and the petition Under Section 34 has to be filed before the Delhi High Court. Once the courts in India have no jurisdiction, the aforesaid conclusions are to be nullified and we so do. Appeal allowed - decided in favor of appellant. Issues Involved:1. Applicability of Part I or Part II of the Arbitration and Conciliation Act, 1996.2. Territorial jurisdiction of Indian courts.3. Interpretation of arbitration clause regarding the seat and venue of arbitration.4. Waiver of jurisdictional objections by the conduct of the parties.Detailed Analysis:1. Applicability of Part I or Part II of the Arbitration and Conciliation Act, 1996The core issue was whether Part I or Part II of the Arbitration and Conciliation Act, 1996 applied to the dispute. The Court noted that if Part I was applicable, the territorial jurisdiction of Delhi or Gautam Budh Nagar would need to be addressed. The Court referred to the principles laid down in Bhatia International v. Bulk Trading S.A. and Anr. (2002) 4 SCC 105, which held that Part I applies to international commercial arbitrations held outside India unless expressly or impliedly excluded by the parties. The Court also noted the subsequent overruling of Bhatia International by the Constitution Bench in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 (BALCO), which applied prospectively.2. Territorial Jurisdiction of Indian CourtsThe Court examined whether the Delhi High Court or the District Judge at Gautam Budh Nagar had jurisdiction. The High Court of Delhi had held that it had territorial jurisdiction and that the application under Section 34 of the Act was maintainable. The Supreme Court, however, concluded that the courts in India did not have jurisdiction, given the designation of London as the seat of arbitration.3. Interpretation of Arbitration Clause Regarding the Seat and Venue of ArbitrationThe arbitration clause specified that the venue of arbitration would be London, United Kingdom, and that the proceedings would be conducted according to the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC), Paris. The Court referred to the Shashoua principle, which differentiates between the 'seat' and 'venue' of arbitration. The Court held that the designation of London as the venue, combined with the ICC Rules, implied that London was the juridical seat of arbitration, thereby conferring exclusive jurisdiction on the courts in London.4. Waiver of Jurisdictional Objections by the Conduct of the PartiesThe Court addressed the argument that the appellants had waived their right to contest jurisdiction by approaching Indian courts. It was held that mere filing of an application under Section 34 of the Act does not confer jurisdiction on a court that inherently lacks it. The Court reiterated that jurisdiction cannot be conferred by consent or conduct of the parties.Conclusion:The Supreme Court allowed the appeals, setting aside the judgment of the Delhi High Court. It was held that the courts in India did not have jurisdiction over the dispute, as the seat of arbitration was London. Consequently, the petition under Section 34 of the Act could not be entertained by Indian courts. The Court emphasized that the interpretation of the arbitration agreement by the English courts, which had been accepted by the Supreme Court, was binding.