TaxTMI 
TaxTMI 
2021 (4) TMI 1056
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....nvention"] applies, can be said to be a "foreign award" under Part II of the Arbitration and Conciliation Act, 1996 ["Arbitration Act"] and be enforceable as such. Factual Background 3.1. The appellant is a company incorporated under the Companies Act, 1956 with its registered office at Ahmedabad, Gujarat. The respondent is a company incorporated under the Companies Act, 1956 with its registered office at Chennai, Tamil Nadu, and is a 99% subsidiary of General Electric Conversion International SAS, France, which in turn is a subsidiary of the General Electric Company, United States. 3.2. In 2010, the appellant issued three purchase orders to the respondent for supply of certain converters. Pursuant to these purchase orders, the respondent supplied six converters to the appellant. Disputes arose between the parties in relation to the expiry of the warranty of the said converters. In order to resolve these disputes, the parties entered into a settlement agreement dated 23.12.2014. Under clauses 5.1 and 5.2 of the settlement agreement, the respondent agreed to provide certain delta modules along with warranties on these modules for the working of the converter panel. Clause 6 of th....
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....the Supreme Court of India's decision in Reliance Industries Ltd v. Union of India (2014) 7 SCC 603 (Exhibit CLM-3) is a leading authority. This has been confirmed by the Supreme Court of India in Sasan Power Limited v. North American Coal Corporation India Private Limited (2016) 10 SCC 813 (RL-6), which at an earlier instance before the High Court of Madhya Pradesh 2016 (2) ARBLR 179 (MP), rendered on 11.09.2015, held that two Indian companies can arbitrate outside of India. Furthermore, the earlier case of Atlas Export Industries v. Kotak & Company (1999) 7 SCC 61, which was applied in Sasan, found that a contract which is unlawful under section 23 of the Indian Contract Act 1872, because it breaches Indian public policy, would be void but that "merely because the arbitrators are situated in a foreign country cannot by itself be enough to nullify the arbitration agreement when the parties have with their eyes open willingly entered into the agreement" (p.65, para f of judgment). Such is the case here where the parties freely agreed on Zurich as the seat of the arbitration. This position has been followed in a recent decision of the Delhi High Court in GMR Energy Ltd. v. Doo....
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....ds that the arbitration clause in the Settlement Agreement is valid and will proceed to apply the Swiss Act because the seat of the arbitration is Zurich, Switzerland." 3.5. This procedural order was not challenged by either of the parties. Vide the said procedural order, the seat of the arbitration was stated to be Zurich, Switzerland. The respondent suggested Mumbai, India as a convenient venue in which to hold arbitration proceedings as costs would be reduced thereby. The appellant objected to this suggestion. At the Case Management Conference dated 28.06.2018, the learned arbitrator decided that though the seat is in Zurich, all hearings will be held in Mumbai, acceding to the application made by the respondent. Since the mountain did not come to Muhammad, Muhammad, in the form of the learned arbitrator, went to the mountain and held all sittings at the convenient venue in Mumbai. 3.6 A final award dated 18.04.2019 was passed by the learned arbitrator in which the appellant's claim was rejected. The learned arbitrator held: "Operative Part 227. Based on the foregoing, the Arbitral Tribunal hereby finds, holds and orders: Preliminary Issues A. The seat of the arbitrati....
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....uld be contrary to the public policy of India. 4.2. He then argued that foreign awards contemplated under Part II of the Arbitration Act arise only from international commercial arbitrations. "International commercial arbitration", as has been defined in section 2(1)(f) of the Arbitration Act, would make it clear that there has to be a foreign element when parties arbitrate outside India, the foreign element being that at least one of the parties is, inter alia, a national of a country other than India, or habitually resident in a country other than India, or a body corporate incorporated outside India. For this reason, the award passed in the present case cannot be designated as a foreign award under Part II of the Arbitration Act. To buttress this submission, he relied heavily upon the judgment of a learned Single Judge of this Court in TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd., (2008) 14 SCC 271 ["TDM"] and two judgments of the Bombay High Court. 4.3. He then sought to distinguish this Court's judgment in Atlas Export Industries v. Kotak & Co., (1999) 7 SCC 61 ["Atlas Export"], arguing that the specific argument made under section 23 of the Contract Act was ....
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....orcement either under Part I or Part II of the Arbitration Act. 4.7. Mr. Himani then relied heavily upon section 10 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 ["Commercial Courts Act"] which also recognises only two categories of arbitrations - international commercial arbitration and other than international commercial arbitration. He argued that there is a head-on conflict between section 10(3) of the Commercial Courts Act and section 47 of the Arbitration Act, as a result of which the former must prevail. For this purpose, he relied upon the non-obstante clause in section 21 of the Commercial Courts Act. This being the case, in any case, the impugned judgment made by the Gujarat High Court has to be set aside as it was made without jurisdiction because even as per the impugned judgment, the present is not a case of an international commercial arbitration but instead falls under the second category of "other than international commercial arbitration", as a result of which only the district court would have jurisdiction. 4.8. He finally argued that going by the closest connection test, the seat of arbitration can only....
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....ntenanced by this Court. 5.3. He further argued that unlike the definition of "international commercial arbitration" contained in section 2(1)(f) in Part I, nationality, domicile or residence of parties is irrelevant for the purpose of applicability of section 44 of the Arbitration Act. As a matter of fact, according to the learned Senior Advocate, this is no longer res integra as it has been expressly decided under the pari materia provisions of the Foreign Awards (Recognition and Enforcement) Act, 1961 ["Foreign Awards Act"] in Atlas (supra) that two Indian parties can enter into an arbitration agreement with a seat outside India, which would result in an award that would then have to be enforced as a foreign award. 5.4. He also relied upon the judgment of the Madhya Pradesh High Court in Sasan I (supra) and argued that, in appeal, the Supreme Court did not dislodge any of the findings of the High Court but instead proceeded on the basis that the arbitration was not between only two Indian companies. He then argued, relying upon a commentary on International Commercial Arbitration, authored by Prof. Eric E. Bergsten and published by the United Nations Conference on Trade and De....
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..... He then proceeded to distinguish the three judgments relied upon by Mr. Himani to demonstrate that two Indian parties can choose a foreign seat. He then went on to argue that both in the proviso to section 2(2) and section 10 of the Commercial Courts Act, the phrase "international commercial arbitration" is not governed by the definition contained in section 2(1)(f) but would only refer to arbitrations in which the seat is outside India. The Arbitration and Conciliation Act, 1996 6. Having heard learned counsel for both parties, it is first necessary to set out the relevant provisions of Part I and Part II of the Arbitration Act. "2. Definitions.-(1) In this Part, unless the context otherwise requires,- * * * (e) "Court" means- (i) in the case of an arbitration other than international commercial arbitration, the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal ....
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....of time, shall be deemed to have waived his right to so object." The rules applicable to the substance of dispute are set out in section 28 as follows: "28. Rules applicable to substance of dispute.-(1) Where the place of arbitration is situated in India,- (a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; (b) in international commercial arbitration,- (i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute; (ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii) failing any designation of the law under subclause (ii) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute. (2) The arbitral tribunal shall decide ex aequo et bono....
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....the enforcement of a foreign award shall, at the time of the application, produce before the Court- (a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; (b) the original agreement for arbitration or a duly certified copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award. (2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Explanation.-In this section and in the sections following in this Chapter, "Court" means the High Court having original jurisdiction to decide the questions forming the subject matter of the arbitral award if the same had been the subject matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Cour....
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....ill of course be dealt with in the Award on costs, depending on the outcome. The Tribunal is of the view that it is cost efficient to hold the hearing in India where the parties are based, the Respondent's five witnesses are based, where Respondent's legal team are based and Claimant's co-counsel is based. This means that the Claimant's lead counsel, the Claimant's sole witness and the sole arbitrator must travel to India. ..." This arrangement has been accepted by both parties. Even in the final award dated 18.04.2019, the learned arbitrator held: "82. For the reasons set out above, the Tribunal therefore has held in Procedural Order No.3 and hereby finds that the arbitration clause in the Settlement Agreement is valid and proceeds to apply the Swiss Act because the seat of the Arbitration is Zurich, Switzerland." 9. The closest connection test strongly relied upon by Mr. Himani would only apply if it is unclear that a seat has been designated either by the parties or by the tribunal. In this case, the seat has clearly been designated both by the parties and by the tribunal, and has been accepted by both the parties. The judgment in Enercon (supra), relied upon by Mr. Himani, ....
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....ection 6 of the Foreign Awards Act, where the court is satisfied that the foreign award is enforceable, the court shall order the award to be filed and shall proceed to pronounce judgment according to the award. This provision has since been done away with by the Arbitration Act, 1996 as section 49 of the Arbitration Act expressly provides that the award shall be deemed to be a decree of the court. Thereafter, section 7 of the Foreign Awards Act enumerates grounds on which such foreign award may be refused to be enforced. Obviously, under the earlier regime, there was no overlap between the Arbitration Act, 1940, which dealt only with domestic awards, and the Foreign Awards Act. This situation continues in the current Arbitration Act, Part I and Part II of which have been held to be mutually exclusive. Thus, in BALCO (supra), this Court held: "37. In 1953 the International Chamber of Commerce promoted a new treaty to govern international commercial arbitration. The proposals of ICC were taken up by the United Nations Economic and Social Council. This in turn led to the adoption of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards at New York in 1958 (po....
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.... arbitrations" which take place in India as well as "domestic arbitrations" which would normally take place in India. This is clear from a number of provisions contained in the Arbitration Act, 1996 viz. the Preamble of the said Act, proviso and the explanation to Section 1(2), Sections 2(1)(f), 11(9), 11(12), 28(1)(a) and 28(1)(b). All the aforesaid provisions, which incorporate the term "international", deal with pre-award situation. The term "international award" does not occur in Part I at all. Therefore, it would appear that the term "domestic award" means an award made in India whether in a purely domestic context i.e. domestically rendered award in a domestic arbitration or in the international context i.e. domestically rendered award in an international arbitration. Both the types of awards are liable to be challenged under Section 34 and are enforceable under Section 36 of the Arbitration Act, 1996. Therefore, it seems clear that the object of Section 2(7) is to distinguish the domestic award covered under Part I of the Arbitration Act, 1996 from the "foreign award" covered under Part II of the aforesaid Act; and not to distinguish the "domestic award" from an "internati....
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.... Part I and Part II of the Arbitration Act, 1996. Part I of the Arbitration Act, 1996 regulates arbitrations at all the four stages. Part II, however, regulates arbitration only in respect of commencement and recognition or enforcement of the award." * * * "124. Having accepted the principle of territoriality, it is evident that the intention of Parliament was to segregate Part I and Part II. Therefore, any of the provisions contained in Part I cannot be made applicable to foreign awards, as defined under Sections 44 and 53 i.e. the New York Convention and the Geneva awards. This would be a distortion of the scheme of the Act. It is, therefore, not possible to accept the submission of Mr Subramanium that provisions contained in Part II are supplementary to the provision contained in Part I. Parliament has clearly segregated the two parts." 13. This being the case, it is a little difficult to accede to any argument that would breach the wall between Parts I and II. Mr. Himani's argument that the proviso to section 2(2) of the Arbitration Act is a bridge which connects the two parts must, thus, be rejected. As a matter of fact, section 2(2) specifically states that Part I applie....
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....de India, it is place-centric as is provided by section 44 of the Arbitration Act. This expression, therefore, only means that it is an arbitration which takes place between two parties in a territory outside India, the New York Convention applying to such territory, thus making it an "international" commercial arbitration. Ingredients of a Foreign Award sought to be enforced under Part II 15. Section 44 of the Arbitration Act is modelled on Articles I and II of the New York Convention. The relevant provisions of the New York Convention read as under: "Article I 1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought." * * * "Article II 1. Each Contracting State shall recognise an agreement inwriting under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise....
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....made in the territory of another Contracting State.' It follows from this provision that any person receiving an arbitral award in a Contracting State may request recognition and enforcement, and this right is not limited to the nationals of a Contracting State. The Chinese Government considers this provision as too liberal, and is of the opinion that, on the basis of the principle of international reciprocity, such a right should be restricted in accordance with the spirit of article I of the 1927 Convention on the Execution of Foreign Arbitral Awards, which provides: 'An arbitral award ... shall be recognised as binding and shall be enforced ... provided that the said award has been made in a territory of one of the High Contracting Parties to which the present Convention applies, and between persons who are subject to the jurisdiction of one of the High Contracting Parties.'" Likewise, Mexico also objected, stating: "The Mexican Government further considers that it would be advisable to include in the draft Convention the stipulation contained in the Geneva Convention that the arbitral award must have been made in a dispute between persons who are subject to the jurisdiction....
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....s in their opinion the Convention constitutes an important step forward compared with the Geneva Convention. Before briefly commenting upon the separate articles of the Convention, I may try to give a broad outline of the most important differences between the Geneva Convention 1927 and the New York Convention 1958." * * * "4. Article 1 has been the result of lengthy discussions in a special working group as well as in the plenary sessions of the New York arbitration conference. The first paragraph is the result of a compromise reached within the working group. The first sentence of this paragraph is based upon a territorial criterion: The Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a state other than the state where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. The second sentence introduces the national principle: It shall also apply to arbitral awards not considered as domestic awards in the state where their recognition and enforcement is sought. Let me illustrate this by an example. Germany regards an arbitral award rende....
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....hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration." It is in pursuance of Article I of the New York Convention that section 44 of the Arbitration Act has been enacted. 21. Under section 44 of the Arbitration Act, a foreign award is defined as meaning an arbitral award on differences between persons arising out of legal relationships considered as commercial under the law in force in India, in pursuance of an agreement in writing for arbitration to which the New York Convention applies, and in one of such territories as the Central Government, by notification, declares to be territories to which the said Convention applies. Thus, what is necessary for an award to be designated as a foreign award under section 44 are four ingredients: (i) the dispute must be considered to be a commercial dispute under the law ....
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....tion, in its comment on Article I(1) of the New York Convention, and particularly, the expression "awards made in the territory of a State other than the State where the recognition and enforcement ... are sought", states as follows: "III.1.1. ... Any award made in a State other than the State of the recognition or enforcement court falls within the scope of the Convention, i.e., is a foreign award. Hence, the nationality, domicile or residence of the parties is without relevance to determine whether an award is foreign. ... Where is an award made? The Convention does not answer this question. The vast majority of Contracting States considers that an award is made at the seat of the arbitration. The seat of the arbitration is chosen by the parties or alternatively, by the arbitral institution or the arbitral tribunal. It is a legal, not a physical, geographical concept. Hearings, deliberations and signature of the award and other parts of the arbitral process may take place elsewhere." 24. However, Mr. Himani strongly relied upon the following judgments to buttress his submission that the expression "unless the context otherwise requires" used in section 44 would necessarily i....
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....mstances. Therefore, though ordinarily the word "insurer" as used in the Act would mean a person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning." (at pages 863-864) (ii) Bennett Coleman & Co. (P) Ltd. v. Punya Priya Das Gupta, (1969) 2 SCC 1 "6. ... But assuming that there is such a conflict as contended, we do not have to resolve that conflict for the purposes of the problem before us. The definition of Section 2 of the present Act commences with the words "In this Act unless the context otherwise requires" and provides that the definitions of the various expressions will be those that are given there. Similar qualifying expressions are also to be found in the Industrial Disputes Act, 1947, the Minimum Wages Act, 1948, the C.P. and Berar Industrial Disputes Settlement Act, 1947 and certain other statutes dealing with industrial questions. It is, therefore, clear that the definitions of 'a newspaper employee' and 'a working journalist' have to be construed in the light of and subject to the context requiring otherwise. Section 5 of the Act, which confers the right to gratuity i....
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.... the rule of reasonable construction must be applied while construing a statute. Literal construction should be avoided if it defeats the manifest object and purpose of the Act. 13. Therefore, in the well-known words of Judge Learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R.B. Jodha Mal Kuthiala v. CIT [(1971) 3 SCC 369 : (1971) 82 ITR 570] , this Court said that one should apply the rule of reasonable interpretation. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole." 25. We have already seen that the context of section 44 is party-neutral, having reference to the place at which the award is made. For this reason, it is not possible to accede to the argument that the ....
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....ment that the expression "unless the context otherwise requires" can be held to undo the very basis of section 44 by converting it from a seat-oriented provision in countries that are signatories to the New York Convention to a personoriented provision in which one of the parties to the arbitration agreement has to be a foreign national or habitually resident outside India. In any case, the context of section 44 is very far removed from the context of an international commercial arbitration in Part I which is defined for the purposes of section 11, section 28, section 29A(1), section 34(2A), and section 43I, all of which occur in Part I and deal with arbitrations which take place in India. Also, the argument of Mr. Himani would involve bodily importing the expression "international commercial arbitration" into section 44, which cannot be done because of the opening words of section 44, "In this Chapter" which is Chapter I of Part II, and then applying the definition contained in section 2(1)(f) of the Arbitration Act which, being restricted to Part I, must now be applied to Part II. No canon of interpretation would permit acceptance of such an argument. 27. At this point, it is im....
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.... High Court. A Letters Patent Appeal preferred by Atlas Exports Pvt. Ltd. was dismissed. A specific contention was raised that since both Atlas Exports Pvt. Ltd. and Kotak & Co. were Indian parties, the award could not be enforced, being contrary to sections 23 and 28 of the Contract Act. This was repelled by this Court as follows: "10. It was however contended by the learned counsel for the appellant that the award should have been held to be unenforceable inasmuch as the very contract between the parties relating to arbitration was opposed to public policy under Section 23 read with Section 28 of the Contract Act. It was submitted that Atlas and Kotak, the parties between whom the dispute arose, are both Indian parties and the contract which had the effect of compelling them to resort to arbitration by foreign arbitrators and thereby impliedly excluding the remedy available to them under the ordinary law of India should be held to be opposed to public policy. Under Section 23 of the Indian Contract Act the consideration or object of an agreement is unlawful if it is opposed to public policy. Section 28 and Exception 1 to it, (which only is relevant for the purpose of this case)....
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...., there is, in my opinion, no justification for regarding as obiter dictum a reason given by a Judge for his decision, because he has given another reason also. If it were a proper test to ask whether the decision would have been the same apart from the proposition alleged to be obiter, then a case which ex facie decided two things would decide nothing. A good illustration will be found in London Jewellers Ltd. v. Attenborough, (1934) 2 KB 206 (CA). In that case the determination of one of the issues depended on how far the Court of Appeal was bound by its previous decision in Folkes v. R., (1923) 1 KB 282 (CA), [in which] the court had given two grounds for its decision, the second of which [as stated by Greer, L.J., in Attenborough case, (1934) 2 KB 206] was that: (KB p. 222): '... where a man obtains possession with authority to sell, or to become the owner himself, and then sells, he cannot be treated as having obtained the goods by larceny by a trick.'" In Attenborough case, (1934) 2 KB 206 it was contended that, since there was another reason given for the decision in Folkes case, (1923) 1 KB 282, the second reason was obiter, but Greer, L.J., said in reference to the argu....
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....ake place abroad, or has some reasonable connection with one or more foreign states. Thus, section 202 of the Federal Arbitration Act [Title 9, U.S. Code] states as follows: "Section 202. Agreement or award falling under the Convention-An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states. For the purpose of this section a corporation is a citizen of the United States if it is incorporated or has its principal place of business in the United States." 32. It is important to note that no such caveat is entered when India acceded to the New York Convention and enacted the Foreign Awards Act and the Arbitration Act, 1996. On the contrary, we have seen as....
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....o cooperate in good faith with each other and the arbitral tribunal and to use their respective best efforts to respond promptly to any reasonable discovery demand made by such party and the arbitral tribunal.' Sub-clause (d) of this Article deals with payments to be made by the parties for the purpose of Arbitration. '(d) Each party shall bear its own arbitration expenses, and Reliance on the one hand, and NAC, on the other hand, shall pay one-half of the ICC's and the chairperson's fees and expenses, unless the arbitrators determine that it would be equitable if all or a portion of the prevailing party's expenses should be borne by the other party. Unless the Award provides for non-monetary remedies, any such Award shall be made and shall be promptly payable in (i) US Dollars if payable to NAC or (ii) Rupees if paid to Reliance net of any tax or other deduction. The Award shall include interest from the date of any breach or other violation of this Agreement and the rate of interest shall be specified by the arbitral tribunal and shall be calculated from the date of any such breach or other violation to the date when the Award is paid in full.'" The Court then r....
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....n Act, 1996.' (emphasis in original) 47. Hon'ble Supreme Court holds that section 28 makes a clear distinction between purely domestic arbitration and international arbitration with a seat in India, and it is indicated that section 28(1)(a) makes it clear that in an arbitration under Part I to which section 2(1)(f) does not apply, there is no choice but for the Tribunal to decide the dispute by applying the Indian substantive law applicable to the Contract. It is this part of the judgment which was heavily relied upon by Shri. V.K. Tankha, learned Senior Advocate further refers to the next sentence which says that two or more Indian parties cannot circumvent the substantive Indian Law by resorting to arbitration. By placing much emphasis on this part, learned Senior Advocate tried to indicate that the order of the learned District Judge is unsustainable. 48. However, if we further read the findings recorded by the Supreme Court in the same paragraph 118, as reproduced hereinabove, it is held by the Supreme Court that when the seat is outside India, the conflict of law rule of the country in which the arbitration takes place would have to be applied, and thereafter it is held t....
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....upon by Shri. V.K. Tankha and thereafter in paragraph 36, a caution is indicated with regard to applicability of this judgment. Whereas in the case of Atlas Exports (supra), we find that in Atlas Exports, in paragraphs 10 and 11, the following principles have been laid down:- '10. It was however contended by the learned counsel for the appellant that the award should have been held to be unenforceable in as much as the very contract between the parties relating to arbitration was opposed to public policy under Section 23 read with Section 28 of the Contract Act. It was submitted that Atlas and Kotak, the parties between whom the dispute arose, are both Indian parties and the contract which had the effect of compelling them to resort to arbitration by foreign arbitrators and thereby impliedly excluding the remedy available to them under the ordinary law of India should be held to be opposed to public policy. Under section 23 of the Indian Contract Act the consideration or object or an agreement is unlawful if it is opposed to public policy. Section 28 and Exception 1 to it, (which only is relevant for the purpose of this case) are extracted and reproduced hereunder: '28. Every a....
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....ered into an agreement. If this observation made by the Supreme Court is taken note of, we find that merely because two Indian companies have entered into an arbitration agreement to be held in a foreign country by agreed arbitrators, that by itself is not enough to nullify the arbitration agreement. 53. Shri. V.K. Tankha, learned Senior Advocate, tried to indicate that Atlas Exports (supra) case was rendered in a proceeding held under the Arbitration Act, 1940 which is entirely different from the Act of 1996 and, therefore, the said judgment will not apply in the present case. Instead, the judgment in the case of TDM Infrastructure (supra) would be applicable. 54. We cannot accept the aforesaid proposition. Shri Anirudh Krishnan, learned counsel, had taken us through the provisions of both the Act of 1940 and the Act of 1996, and thereafter he had referred to the judgment of the Supreme Court in the case of Fuerst Day Lawson Limited (supra), where after a detailed comparison of various sections of both the Acts, from paragraphs 65 onwards, Hon'ble Supreme Court discussed the provisions of both Acts, and finally has observed that there is not much of a difference between th....
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....s clear that based on the seat of arbitration, the question of permitting two Indian companies/parties to arbitrate out of India is permissible. In the case of Atlas Exports (supra) itself, the principle has been settled that two Indians can agree to have a seat of arbitration outside India. Now, if two Indian Companies agree to have their seat of arbitration in a foreign country, the question would be as to whether the provisions of Part I or Part II would apply. Section 44, of the Act of 1996, contemplates a foreign award to be one pertaining to difference between persons arising out of legal relationship, whether contractual or not, which is in pursuance to an agreement in writing for arbitration, to which the convention set forth in the first schedule applies. 58. In the First Schedule to the Act of 1996, convention on the recognition and enforcement of foreign award popularly known as New York Convention has been laid down and admittedly in this case the parties have agreed to have an arbitration with its seat outside India i.e.. London. If that be the position then the provisions of section 45 would be attracted until and unless it is established that the agreement is null ....
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....Exports Ltd., (2011) 8 SCC 333 ["Fuerst Day Lawson"], referred to the provisions of the Foreign Awards Act, 1961 and Part II of the Arbitration Act of 1996 and not the Arbitration Act, 1940, as has been incorrectly held in paragraphs 53 and 54 of the aforesaid judgment. In addition, it may only be mentioned that the judgment of this Court by a learned Single Judge, under section 11 of the Arbitration Act, in TDM (supra) cannot, in any case, be regarded as a binding precedent, having been delivered by a Single Judge appointing an arbitrator under section 11 - see State of West Bengal v. Associated Contractors, (2015) 1 SCC 32 (at paragraph 17). 34. The Bombay High Court has referred to and relied upon TDM (supra) to arrive at the opposite conclusion of Sasan I (supra). Thus, in Seven Islands Shipping Ltd. v. Sah Petroleums Ltd., (2012) 5 Mah LJ 822, one of us (Gavai, J.) sitting as Single Judge of the Bombay High Court, after placing reliance on TDM (supra), held: "13. Mandate of section 45 to refer a dispute to the Arbitrator is also on a condition that the said agreement has to be a legal agreement. When the Apex Court, in unequivocal terms has held that when both the Companies....
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....pra) - see paragraphs 29, 30 and 31. It distinguished the judgment in TDM (supra) correctly, as follows: "33. However, in para-36 of TDM Infrastructure (supra) Supreme Court clarified that any findings/observations made hereinabove were only for the purpose of determining the jurisdiction of the Court as envisaged under Section 11 of the 1996 Act and not for any other purpose and is also evident from the conclusions noted in para 20 and 22 of the report. Thus GMR Energy cannot rely upon the decision in TDM Infrastructure (supra) to contend that in the present case Part-I of the Arbitration Act would apply and not Part-II." The learned Single Judge of the Delhi High Court then relied upon this Court's judgment in Atlas (supra) in paragraph 41. In paragraph 43, the learned Single Judge then referred to the table that is set out in Fuerst Day Lawson (supra) as follows: "43. Contention of learned counsel for GMR Energy that the judgment in Atlas (supra) was given prior to Arbitration and Conciliation Act, 1996, and therefore not applicable to the present case, also deserves to be rejected in view of the decision of the Supreme Court reported as (2011) 8 SCC 333 Fuerst Day Lawson ....
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....gainst any other party to the agreement or any person claiming through or under him in respect of any matter agreed to be referred to arbitration in such agreement, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other step in the proceedings, apply to the court to stay the proceedings and the court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not, in fact, any dispute between the parties 45. Power of judicial authority to refer parties to arbitration. - Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. with regard to the matter agreed to be referred, shall make an order staying the proceedings. 4. Effect of foreign awards. -(1)....
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....s from such order. 7. Conditions for enforcement of foreign awards.-(1) A foreign award may not be enforced under this Act- if the party against whom it is sought to enforce the award proves to the court dealing with the case that- the parties to the agreement were under the law applicable to (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. 48. Conditions for enforcement of foreign awards.-(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that- the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it, or failing any indication thereon, under the law of the country where the award was made; or the party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or (iii) the award deals with questions ....
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....under the law of India; or (b) the enforcement of the (2) If the court before which a foreign award is sought to be relied upon is satisfied that an application for the setting aside or suspension of the award has been made to a competent authority referred to in sub-clause (v) of clause (a) of subsection (1), the court may, if it deems proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to furnish suitable security. award would be contrary to the public policy of India. Explanation.-Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the court may, if it considers it proper, adjourn the decision on the enforcement of the award 8. Evidence.-(1) The party applying for the enforcement of a foreign award shall,....
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.... to any award made on an arbitration agreement governed by the law of India. rights which any person would have had of enforcing in India of any award or of availing himself in India of any award if this Chapter had not been enacted. 10. Repeal.-The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), shall cease to have effect in relation to foreign awards to which this Act applies. 11. Rule-making power ofthe High Court.-The High Court may make rules consistent with this Act as to- the filing of foreign awards and all proceedings consequent thereon or incidental thereto; the evidence which must be furnished by a party seeking to enforce a foreign award under this Act; and (c) generally, all proceedings in court under this Act. 52. Chapter II not to apply.- Chapter II of this Part shall not apply in relation to foreign awards to which this Chapter applies. 65. A comparison of the two sets of provisions would showthat Section 44, the definition clause in the 1996 Act is a verbatim reproduction of Section 2 of the previous Act (but for the words "chapter" in place of "Act", "First Schedule" in place of "Schedule" and the addition of the word "arbitral" before the wor....
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....ench of the Hon'ble Supreme Court in (2017) 2 SCC 228 Centrotrade Minerals and Metal Inc. v. Hindustan Copper Ltd. emphasized the principle of party autonomy in arbitration and held that the same is virtually the backbone which permit parties to adopt the foreign law as the proper law of arbitration. In (2005) 5 SCC 465 Technip SA v. SMS Holding Pvt. Limited, a three Judge Bench of the Hon'ble Supreme Court dealing with the conflicts of law held that disregard of applicability of foreign law must relate to basic principles of morality and justice and only when the foreign law amounts to a flagrant or gross breach of such principle that power should be exercised to hold inapplicability of foreign law that too, exceptionally and with great circumspection. It was held that in a sense all statutes enacted by Parliament or the States can be said to be part of Indian public policy, but to discard a foreign law only because it is contrary to an Indian statute would defeat the basis of private international law to which India undisputedly subscribes. * * * 47. Therefore, an arbitration agreement between the parties being an agreement independent of the substantive contract and the ....
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....tion shall be recoverable in respect of the dispute so referred." * * * 39. The elusive expression "public policy" appearing in section 23 of the Contract Act is a relative concept capable of modification in tune with the strides made by mankind in science and law. An important early judgment of the Court of Appeal, namely, Maxim Nordenfelt Guns and Ammunition Company v. Nordenfelt, [1893] 1 Ch. 630 ["Nordenfelt"], puts it thus: "Rules which rest upon the foundation of public policy, not being rules which belong to the fixed or customary law, are capable, on proper occasion, of expansion or modification. Circumstances may change and make a commercial practice expedient which formerly was mischievous to commerce. But it is one thing to say that an occasion has arisen upon which to adhere to the letter of the rule would be to neglect its spirit, and another to deny that the rule still exists. The dicta which Lord Justice Fry cites from Hitchcock v. Coker [142. 6 A. & E. 348], from Tallis v. Tallis [1 E. & B. 391], and from Mallan v. May [11 M. & W. 653], are all dicta in cases of partial restraint, where the reasonableness of the particular contract necessarily came under consid....
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....n with the political views, of different judges, that it forms a treacherous and unstable ground for legal decision. ... These questions have agitated the Courts in the past, but the present state of the law would appear to be reasonably clear. Two observations may be made with some degree of assurance. First, although the rules already established by precedent must be moulded to fit the new conditions of a changing world, it is no longer legitimate for the Courts to invent a new head of public policy. A judge is not free to speculate upon what, in his opinion, is for the good of the community. He must be content to apply, either directly or by way of analogy, the principles laid down in previous decisions. He must expound, not expand, this particular branch of the law. Secondly, even though the contract is one which prima facie falls under one of the recognized heads of public policy, it will not be held illegal unless its harmful qualities are indisputable. The doctrine, as Lord ATKIN remarked in a leading case, "should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few ....
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....ant of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days." (at pages 439-440) 41. This judgment has been referred to with approval in several subsequent decisions. Thus, in Murlidhar Aggarwal v. State of U.P., (1974) 2 SCC 472, this Court held: "30. "Public Policy" has been defined by Winfield as "a principle of judicial legislation or interpretation founded on the current needs of the community" [Percy H. Winfiel....
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....treacherous horse even if they must. This doctrine, as pointed out by this Court in Gherulal Parakh case [AIR 1959 SC 781 : 1959 Supp 2 SCR 406] (ibid.), can be applied only in a case where clear and undeniable harm to the public is made out. To quote the words of Subba Rao, J. (as he then was): Though theoretically it may be permissible to evolve a new head (of public policy) under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days. There are no circumstances, whatever, which would show that the withdrawal of the resignation by the appellant would cause harm to the public or even to an individual. The contention, therefore, is repelled." 43. This Court's judgment in Central Inland Water Transport Corpn. v. Brojo Nath Ganguly, (1986) 3 SCC 156, after referring to the case law on the subject, then held: "92. The Indian Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition.....
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.... the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them." It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution." 44. Likewise, in Rattan Chand Hira Chand v. Askar Nawaz Jung, (1991) 3 SCC 67, this Court took the view that: "17. I am....
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....w view when it said: "... though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is admissible in the interest of stability of society not to make any attempt to discover new heads in these days" (p. 440) 49. In later decisions this Court has, however, leaned towards the broad view. [See : Murlidhar Agarwal v. State of U.P. [(1974) 2 SCC 472, 482 : (1975) 1 SCR 575, 584]; Central Inland Water Transport Corpn. v. Brojo Nath Ganguly [(1986) 3 SCC 156, 217]; Rattan Chand Hira Chand v. Askar Nawaz Jung [(1991) 3 SCC 67, 76-77].]" 46. In Zoroastrian Coop. Housing Society Ltd. v. District Registrar, Coop. Societies (Urban), (2005) 5 SCC 632, this Court held: "38. It is true that our Constitution has set goals for ourselves and one such goal is the doing away with discrimination based on religion or sex. But that goal has to be achieved by legislative intervention and not by the court coining a theory that whatever is not consistent with the scheme or a provision of the Constitution, be it under Part III or Part IV thereof, could be declared to be opposed to public policy by the cou....
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....ween two persons without reference to the nationality of persons who may resort to arbitration. It is for this reason that this Court in Atlas (supra) referred to the said exception to section 28 and found that there is nothing in either section 23 or section 28 which interdicts two Indian parties from getting their disputes arbitrated at a neutral forum outside India. 51. However, it was argued by Shri Himani, with specific reference to section 28(1)(a) and section 34(2A) of the Arbitration Act, that since two Indian parties cannot opt out of the substantive law of India and therefore, ought to be confined to arbitrations in India, Indian public policy, as reflected in these two sections, ought to prevail. We are unable to agree with this argument. It will be seen that section 28(1)(a) of the Arbitration Act, when read with section 2(2), section 2(6) and section 4, only makes it clear that where the place of arbitration is situated in India, in an arbitration other than an international commercial arbitration (i.e. an arbitration where none of the parties, inter alia, happens to be a national of a foreign country or habitually resident in a foreign country), the arbitral tribunal....
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.... elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not be prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement." * * * "The principle in Ralli Bros.: It has already been seen that at common law there was thought to be a principle that a contract (whether lawful by its governing law or not) was, in general, invlaid in so far as the performance of it was unlawful by the law of the country where the contract was to be performed (lex loci solutionis). This principle as formulated in the second edition of this work, was adopted by the Court of Appeal in the Ralli Bros case. There remains a question, however, whether it is a rule of the conflict of laws (as its formulation would suggest) or is, on the contrary, a principle of the domestic law of contract relating to supervening illegality. The answer affects the question whether the principle has any application since the incorporation of the Rome Convention and the enactment of the Rome I Regulation. It is clear that if an English contract was to be perf....
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....or the lex loci solutionis. Up to this point the question of the consequences of illegality according to the lex loci solutionis is covered by authority. It was, however, doubtful and highly controversial whether, according to the English rules of the conflict of laws, illegality according to the lex loci solutionis as such had any effect on the validity or operation of a contract governed by foreign law and to be performed in a third country, i.e. in a foreign country other than that of the governing law. Would an English court enforce a French contract for the payment in Spain of chartered freight beyond the maximum permitted by Spanish law? Would it hold that the consequences of such illegality were governed by Spanish law, the lex loci solutionis, or would it leave it to French law, the governing law of the contract, to determine whether illegality according to the lex loci solutionis had any, and if so what, effect upon the validity and operation of the contract? The prevailing academic view was that supervening illegality according to the law of the place of performance did not as such prevent an English court from enforcing the contract, unless it were governed by English ....
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....lish law, an English court will not enforce a contract, or award damages for its breach, if its performance will involve the doing of an act in a foreign and friendly State which violates the law of that State. For this they cite the authority of the well-known case of Foster v. Driscoll, [1929] 1 K.B. 470 and much of the debate in this House has been whether that case was rightly decided, and if so, whether it is distinguishable from the present case. The appellant contends that it was not rightly decided, and further invokes a familiar principle which he states in these wide but questionable terms, "An English court will not have regard to a foreign law of a penal, revenue, or political character," and claims that the Indian law here in question is of such a character." (at pages 317-318) * * * "Here, my Lords, was a formidable line of authority when in 1920 Ralli Brothers v. Compañia Naviera Sota y Aznar, [1920] 2 K.B. 287 came before the Court of Appeal. In that case the contract in suit was governed by English law but it required the performance in Spain of an act illegal by Spanish law, and it was held that for that reason it could not be enforced. I will cite on....
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....ffering from Lawrence and Sankey L.JJ., held that it was not invalid. The principle of the decision in Ralli Brothers, [1920] 2 K.B. 287 was emphatically reasserted and the apparent innocence of the documents was disregarded, the guilty intention being proved ab extra. So, here, it has been conclusively found that the common intention of the parties was to violate the law of India, and it is of no consequence that the documents did not disclose their intention. I ought not to part from the case without noting that Sankey L.J. observed that the cases relating to the breach of a revenue law were not germane to the issue. Nor are they germane to this appeal. Whether they are still to be regarded as a binding authority is a question that must await determination." (at pages 321-323) Lord Reid, concurring, held: "The only recent authority which is directly in point is Foster v. Driscoll, [1929] 1 K.B. 470. There Scrutton L.J. dissented because he took a different view of the facts: if he had held that performance of the contract necessarily involved a breach of American law, I think that he would have agreed with the majority. He said, [1929] 1 K.B. 470, 496: "I have no doubt that i....
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....aid and abet some other person to commit it." These passages cover the present case, and I agree with them. Finally, it was argued that, even if there be a general rule that our courts will take notice of foreign laws so that agreements to break them are unenforceable, that rule must be subject to exceptions and this Indian law is one of which we ought not to take notice. It may be that there are exceptions. I can imagine a foreign law involving persecution of such a character that we would regard an agreement to break it as meritorious. But this Indian law is very far removed from anything of that kind. It was argued that this prohibition of exports to South Africa was a hostile act against a Commonwealth country with which we have close relations, that such a prohibition is contrary to inter national usage, and that we cannot recognize it without taking sides in the dispute between India and South Africa. My Lords, it is quite impossible for a court in this country to set itself up as a judge of the rights and wrongs of a controversy between two friendly countries, we cannot judge the motives or the justifications of governments of other countries in these matters and, if we ....
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.... a court or tribunal in a country outside India for setting aside the arbitral award passed in that country on grounds available in that country (which may be wider than the grounds available under section 34 of the Arbitration Act), and then resisting enforcement under the grounds mentioned in section 48 of the Arbitration Act. The balancing act between freedom of contract and clear and undeniable harm to the public must be resolved in favour of freedom of contract as there is no clear and undeniable harm caused to the public in permitting two Indian nationals to avail of a challenge procedure of a foreign county when, after a foreign award passes muster under that procedure, its enforcement can be resisted in India on the grounds contained in section 48 of the Arbitration Act, which includes the foreign award being contrary to the public policy of India. Party Autonomy 60. The decks have now been cleared to give effect to party autonomy in arbitration. Party autonomy has been held to be the brooding and guiding spirit of arbitration. Thus, in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2016) 4 SCC 126, this Court held: "5. Party autonomy being the brood....
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....tical meaning of the expressions and the use of the expressions at the proper places in the agreement." 61. Likewise, in Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., (2017) 2 SCC 228, this Court held that a two-tier arbitration, namely, an arbitration at an original forum followed by an appeal at an appellate forum, would not be interdicted by the Arbitration Act, given the free party autonomy for parties to enter into an agreement as to choice of fora and procedure at such fora. Thereafter, this Court, under the head "party autonomy", put it thus: "Party autonomy 38. Party autonomy is virtually the backbone of arbitrations. This Court has expressed this view in quite a few decisions. In two significant passages in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. [Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2016) 4 SCC 126 : (2016) 2 SCC (Civ) 580, Hon'ble Judges/Coram: Anil R. Dave, Kurian Joseph and Amitava Roy, JJ.] this Court dealt with party autonomy from the point of view of the contracting parties and its importance in commercial contracts. In para 5 of the Report, it was observed: (SCC p. 130) "5. Party autono....
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.... the agreement, is one of the indicators to decipher the intention, apart from the plain or grammatical meaning of the expressions and the use of the expressions at the proper places in the agreement." (emphasis in original) 39. In Union of India v. U.P. State Bridge Corpn. Ltd. [Union of India v. U.P. State Bridge Corpn. Ltd., (2015) 2 SCC 52 : (2015) 1 SCC (Civ) 732] this Court accepted the view [ O.P. Malhotra on the Law and Practice of Arbitration and Conciliation (3rd Edn. revised by Ms Indu Malhotra, Senior Advocate)] that the A&C Act has four foundational pillars and then observed in para 16 of the Report that: (SCC p. 64) "16. First and paramount principle of the first pillar is 'fair, speedy and inexpensive trial by an Arbitral Tribunal'. Unnecessary delay or expense would frustrate the very purpose of arbitration. Interestingly, the second principle which is recognised in the Act is the party autonomy in the choice of procedure. This means that if a particular procedure is prescribed in the arbitration agreement which the parties have agreed to, that has to be generally resorted to." (emphasis in original) 40. This is also the view taken in Law and Practice of I....
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....is the interplay between public policy and party autonomy and therefore whether embracing the two-tier arbitration system is contrary to public policy. 44. Years ago, it was said per Burroughs, J. in Amicable Society v. Bolland [Amicable Society v. Bolland, (1830) 4 Bligh (NS) 194 : 5 ER 70 : 2 Dow & Cl 1 : 6 ER 630. [Ed.: See also per Burroughs, J. in Richardson v. Mellish, 1824 Bing 229 at 252 : 130 ER 293 at 303, wherein also he observed: "Public Policy - it is a very unruly horse, and when once you get astride it you never know where it will carry you."]] (Fauntleroy case): "Public policy is a restive horse and when you get astride of it, there is no knowing where it will carry you." Perhaps to assist in getting over this uncertainty, Mustill and Boyd [The Law and Practice of Commercial Arbitration in England, London, Butterworths 1982 pp. 245-246] identify four classes of provision regarded by the courts as contrary to public policy. They are: (i) Terms which affect the substantive content of the award; (ii) Terms which purport to exclude or restrict the supervisory jurisdiction of the Court; (iii) Terms which require the arbitrator to conduct the reference in a....
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....ade without jurisdiction. In order to appreciate this submission, sections 10 and 21 of the Commercial Courts Act are set out hereinbelow: "10. Jurisdiction in respect of arbitration matters.-Where the subject-matter of an arbitration is a commercial dispute of a specified value and- (1) If such arbitration is an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that have been filed in a High Court, shall be heard and disposed of by the Commercial Division where such Commercial Division has been constituted in such High Court. (2) If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that have been filed on the original side of the High Court, shall be heard and disposed of by the Commercial Division where such Commercial Division has been constituted in such High Court. (3) If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of....
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....the definition contained in section 2(1)(f) but would have reference to arbitrations which take place outside India, awards made in such arbitrations being enforceable under Part II of the Arbitration Act. It will be noted that section 10(1) applies to international commercial arbitrations, and applications or appeals arising therefrom, under both Parts I and II of the Arbitration Act. When applications or appeals arise out of such arbitrations under Part I, where the place of arbitration is in India, undoubtedly, the definition of "international commercial arbitration" in section 2(1)(f) will govern. However, when applied to Part II, "international commercial arbitration" has reference to a place of arbitration which is international in the sense of the arbitration taking place outside India. Thus construed, there is no clash at all between section 10 of the Commercial Courts Act and the explanation to section 47 of the Arbitration Act, as an arbitration resulting in a foreign award, as defined under section 44 of the Arbitration Act, will be enforceable only in a High Court under section 10(1) of the Commercial Courts Act, and not in a district court under section 10(2) or sectio....
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....ign awards, we would be turning the Arbitration Act and the Commercial Courts Act on their heads. Admittedly, if the amount contained in a foreign award to be enforced in India were less than Rs. 1 crore, and a Single Judge of a High Court were to enforce such award, no appeal would lie, in keeping with the object of speedy enforcement of foreign awards. However, if, in the same fact circumstance, a foreign award were to be for Rs. 1 crore or more, if the appellants are correct, enforcement of such award would be further delayed by providing an appeal under Section 13(1) of the Commercial Courts Act. Any such interpretation would lead to absurdity, and would be directly contrary to the object sought to be achieved by the Commercial Courts Act viz. speedy resolution of disputes of a commercial nature involving a sum of Rs. 1 crore and over. For this reason also, we feel that Section 13(1) of the Commercial Courts Act must be construed in accordance with the object sought to be achieved by the Act. Any construction of Section 13 of the Commercial Courts Act, which would lead to further delay, instead of an expeditious enforcement of a foreign award must, therefore, be eschewed. Even ....