2005 (8) TMI 731 - HC - Indian Laws

Indian High Court dismisses Section 34 applications challenging English law foreign awards, underscores importance of arbitration agreement terms.

Bharat Aluminium Co. Ltd. Versus Kaiser Aluminium Technical Services, Inc.

The High Court held that applications under Section 34 of the Indian Act were not maintainable for setting aside foreign awards made under English law. ... - Issues Involved:1. Maintainability of applications under Section 34 of the Arbitration and Conciliation Act, 1996 (Indian Act) for setting aside foreign awards.2. Applicability of Indian law versus English law in arbitration agreements.3. Jurisdiction of Indian courts to set aside foreign awards.Detailed Analysis:1. Maintainability of Applications under Section 34 of the Indian Act for Setting Aside Foreign Awards:The appeals were filed under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996, challenging the District Judge's decision that applications under Section 34 to set aside foreign awards were not maintainable. The High Court noted that the District Judge dismissed the applications without providing reasons. The appellants argued that the District Judge should have addressed the issues of fact and law raised by the parties. They contended that, according to the Supreme Court's decision in Bhatia International v. Bulk Trading S.A., the Indian Act applies to international commercial arbitrations held outside India unless expressly excluded by the parties. The High Court agreed that the District Judge failed to give reasons and thus undertook to consider the maintainability of the applications itself.2. Applicability of Indian Law Versus English Law in Arbitration Agreements:The agreement between the parties stated that disputes would be settled by arbitration under English Arbitration Law, and the arbitration would be held in London. The appellants argued that since the substantive rights under the agreement were governed by Indian law, the awards could be challenged in India. They cited the Supreme Court's decision in Bhatia International, which held that Indian law applies to international commercial arbitrations unless excluded. The respondents countered that the arbitration was conducted under English law, as specified in the agreement, and thus could only be set aside by a competent authority in England. The High Court found that the arbitration was indeed conducted under English law, as evidenced by various procedural aspects of the arbitration and the award itself.3. Jurisdiction of Indian Courts to Set Aside Foreign Awards:The High Court examined Section 48(1)(e) of the Indian Act, which allows refusal of enforcement of a foreign award if it has been set aside by a competent authority of the country in which, or under the law of which, the award was made. The High Court concluded that the awards were made under English law, and thus only a competent authority in England could set them aside. The Court distinguished this case from others cited by the appellants, where the agreements did not specify that English law would apply to the arbitration.Conclusion:The High Court held that the applications under Section 34 of the Indian Act were not maintainable for setting aside the foreign awards made under English law. The appeals were dismissed, and each party was ordered to bear its own costs. The judgment emphasized the importance of the specific arbitration agreement terms, which in this case, clearly indicated that English law governed the arbitration process.