2014 (12) TMI 1071 - SC - Companies Law

Court upholds SIAC arbitrator appointment in Singapore-seated arbitration with Indian law. Challenge dismissed, no interference allowed.

Pricol Limited Versus Johnson Controls Enterprise Ltd. &Others

The court upheld the appointment of the arbitrator by the SIAC, confirming Singapore as the seat of arbitration while maintaining Indian law as the ... Appointment of Arbitrator u/s 11(6) of the Arbitration and Conciliation Act, 1996 – Dispute related to the respective rights and liabilities of the parties under the JVA – Held that:- Clause 30.2 of JVA, on a reasonable and meaningful construction thereof, would mean that in case the parties are not able to name a sole Arbitrator by mutual agreement, the Arbitrator is to be appointed by the SIAC inasmuch as the entity contemplated in clause 30.2 i.e. “Singapore Chamber of Commerce” is admittedly not an Arbitration Institution' having its own Rules for appointment of Arbitrators - the most reasonable construction of the clause would be to understand the reference to “Singapore Chamber of Commerce” as to the “SIAC” - the respondents at one time had suggested the name of a retired judge of the Supreme Court of India as the sole Arbitrator, which was not agreed to by the petitioner, who in turn, was inclined to nominate another learned judge. Be that as it may, in such a situation, the respondents by invoking Arbitration clause 30.2 had approached SIAC for appointment of an Arbitrator - This was on 5th September, 2014 i.e. before the present proceeding was instituted by the petitioner. Though the notice of the request was served on the petitioner on 11th September, 2014, no steps were taken by the petitioner to pre-empt the appointment of a sole Arbitrator by SIAC. Mr. Steven Y.H. Lim came to be appointed as the sole Arbitrator by the SIAC on 29th September, 2014 - The petitioner has submitted to the jurisdiction of Mr. Steven Y.H. Lim - Even if it is held that such participation, being under protest, would not operate as an estoppel, what must be acknowledged is that the appointment of the sole Arbitrator made by SIAC and the partial award on the issue of jurisdiction cannot be questioned and examined in a proceeding u/s 11(6) of the Act which empowers the Chief Justice or his nominee only to appoint an Arbitrator in case the parties fail to do so in accordance with the terms agreed upon by them - To exercise the said power, in the facts and events that has taken place, would really amount to sitting in appeal over the decision of SIAC in appointing Mr. Lim as well as the partial award dated 27th November, 2014 passed by him acting as the sole Arbitrator - Such an exercise would be wholly inappropriate in the context of the jurisdiction under Section 11(6) of the Act, as the same has already been decided in Antrix Corp. Ltd. vs. Devas Multimedia P. Ltd. [2013 (5) TMI 402 - SUPREME COURT] – thus, the application u/s 11(6) of the Act failed – Decided against petitioner. Issues:- Appointment of an Arbitrator under the Joint Venture Agreement- Interpretation of the arbitration clause in the JVA- Jurisdiction of the Arbitrator appointed by the SIAC- Seat of Arbitration and governing law- Application of Section 11(6) of the Arbitration and Conciliation Act, 1996Appointment of an Arbitrator under the Joint Venture Agreement:The application sought the appointment of an Arbitrator under the Joint Venture Agreement (JVA) dated December 26, 2011, due to disputes between the parties regarding their respective rights and liabilities under the JVA. The arbitration clause in the JVA stipulated that in case of a dispute, the parties would attempt amicable settlement, and if failed, the dispute would be referred to a sole arbitrator, to be mutually agreed upon by the parties or appointed according to the rules of the Singapore Chamber of Commerce.Interpretation of the arbitration clause in the JVA:The petitioner argued that the arbitration proceedings being held in Singapore did not change the seat of arbitration, which they contended remained in India as per the governing law clause. They claimed that Indian law should govern the arbitration agreement, and the appointment of the sole arbitrator by the SIAC was without jurisdiction. The respondents, however, maintained that the seat of arbitration was agreed to be in Singapore, and the appointment by the SIAC was valid under the terms of the JVA.Jurisdiction of the Arbitrator appointed by the SIAC:The petitioner challenged the jurisdiction of the sole arbitrator appointed by the SIAC, claiming that the appointment was without jurisdiction as the seat of arbitration was in India. They argued that the curial law of Singapore would only apply after the arbitrator's appointment. The respondents contended that the appointment by the SIAC was valid and that the petitioner had submitted to the arbitrator's jurisdiction.Seat of Arbitration and governing law:The court interpreted the arbitration clause to understand the reference to the 'Singapore Chamber of Commerce' as the 'SIAC' since the former was not an arbitration institution with its own rules for appointing arbitrators. It was clarified that the seat of arbitration being in Singapore did not change the governing law of the JVA, which remained Indian law.Application of Section 11(6) of the Arbitration and Conciliation Act, 1996:The court dismissed the application under Section 11(6) of the Act, stating that questioning the appointment of the arbitrator made by the SIAC and the partial award would amount to sitting in appeal over the SIAC's decision. The court held that such an exercise would be inappropriate under the Act and cited precedents to support its decision, leaving the petitioner to pursue other available legal remedies.