TaxTMI 
TaxTMI 
2013 (6) TMI 935
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....are as under : On 28 September 2000, Imax Ltd and E­city signed in Mumbai, a letter of intent dated 28 September 2000 (The agreement) leasing of 6 IMAX systems to be installed in India. On 22 November 2000, they executed a contract under which Imax agreed to sell to E[1]city an IMAX 37 GT Projection system. On 21 December 2000, Imax entered into an agreement with Electronic Media Ltd (EML) and agreed to sell a single Imax cinema system. As alleged, EML failed to fulfill its obligations therefore, the ICC arbitration. (EML arbitration). 3 There arose disputes between the parties. Imax requested for Arbitration against EML and E­city separately. The petitioner filed its answer to the Request for Arbitration under Article 5(1) of the ICC Rules. The Arbitral Tribunal constituted and proceeded accordingly. 4 The Respondent filed a Statement of Claim. The Petitioner filed its Statement of defence. The Arbitral Tribunal conducted an evidential hearing on the question of E­city's liability to pay damages to Imax Ltd. On 9 February 2006 the Arbitral Tribunal rendered a "Partial Award" ordering, amongst other things, an assessment of damages payable by E­ci....
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....e efforts to explore potential opportunities for E­city to participate in the operation and development of existing IMAX theatres in India/those under negotiation. 14 General : Time is of the essence and no extension of time shall constitute a waive of any provision. The parties shall be entitled to their remedies at law for any breach of this Agreement, provided, however, in no event shall Imax be liable to the other for special, consequential or punitive damages, E­city shall pay any Indian taxes, duty, customs and similar charges levied on a respecting the System and the Classes, the license to use the Trademarks or payments to be made hereunder. The Initial rent, additional rent and any other amounts required to be paid by E­city hereunder shall be paid without any deduction, abatement or set off except for the appropriate withholding taxes (to a maximum of 10% ) required by law to be deducted at source. All amounts referred to herein are in US currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Imax and E­city acknowledge that the structure of this transaction is contingent upon the approval ....
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....rms of the agreement must be Indian, though the agreed was Singapore law; there is conflict of laws, hence Part­I of Arbitration Act cannot be excluded and, therefore, the Petition under Section 34 is maintainable in India. There was no agreed clause for Part­I, exclusion. Admittedly, the Awards have been made in London at the judicial seat of the arbitration. For the purpose of deciding the issue of jurisdiction, the decisions so given by the Tribunal with regard to the jurisdiction of the Tribunal to decide the dispute; and the procedural, as well as, the substantive laws applied to resolve the disputes are relevant. 11 The challenge to all these awards is maintainable in India is the issue which has to be considered on the basis of the law laid down by the Supreme Court of India in Bhatia International vs. Bulk Trading SA [2002 (4) SCC 105] and Venture Global vs. Satyam Computers [2008 (4) SCC 190] . These Courts decisions are always the source to resolve the conflict of laws. The relevant paragraphs from Venture Global are as under : "28 Mr. Nariman, after taking us through the relevant provisions of Chapter I, Part II submitted that Section 48(1)(e) read wi....
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....utside India in terms of Sections 9/34 of the Act. Inasmuch as the three[1]Judge Bench decision is an answer to the main issue raised, we are unable to accept the contra view taken in various decisions relied on by Mr. Nariman. Though in Bhatia International the issue relates to filing a petition under Section 9 of the Act for interim orders the ultimate conclusion that Part I would apply even for foreign awards is an answer to the main issue raised in this case" Proper Law:­ 12 The extract from The Law and Practice of Commercial Arbitration in England, Second Edition (Sir Michael J. Mustill and Stewart C. Boyd), is reproduced:­ "2 The proper law of the arbitration agreement:­ The proper law of the arbitration agreement is determined in accordance with the same principles as apply for the determination of the proper law of any ordinary contract. 1. The first step is to inquire whether the parties have expressly chosen the law which is to apply to the agreement. If so, this choice of law will prevail, even if the chosen law differs from : (a) the proper law of the underlying contract or (b) the curial law. When the court is faced....
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.... 15 The specific exclusion is not there in the present matter. The expressed clause/agreement in the present matter itself has created conflicts in every aspect. Therefore, in view of this conflict of laws and as the Foreign element is also involved, I am inclined to consider the present matter based upon the principles of conflict of laws and Indian judicial decisions. [Conflict of Laws (Second Edition), Atul M. Setalvad]. 16 The Supreme Court in National Thermal Power Corporation vs. Singer Company and ors., [(1992) 3 SCC 551/AIR 1993 SC 998.] has observed that; "(a) a proper law governing the arbitration is distinct and different from the law procedural law governing the conduct of the arbitration; (b) the proper law of arbitration is the same as the proper law of the underlying contract if such a law has agreed to by the parties; (c) if no procedural law of arbitration is agreed to by the parties, then the law of the place or seat of arbitration would determine the procedural law of arbitration; (d) the issue as regards validity of the arbitration agreement, jurisdiction of the arbitrator etc are issues which are to be governed by the p....
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....itral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place. (5) ........................ (6) ........................ (7) ........................" 18 Art. 21 of the ICC Rules provides similar clauses like Section 28 for applying the Rules of law. The question of procedural law in the present case is also debated. The Awards were not challenged in English Court and not even in Singapore Court. The Respondents have not even taken steps to enforce the said Award in India or in any other country. The important aspects for deciding such jurisdictional issues are the law applicable to "the substance". Indian proper law/governing law:­ 19 The different terms "proper law", "the substantive law", "the governing law" have similar and same purpose and understanding in the National and/or International arbitration. The interpretation and/or meaning of the terms and/or its challenge and/or breaches of the contract and/or the flowing rights and obligations apart from related facts and circumstances are always the basic elements of any reasoned arbi....
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....time to time. The Tribunal further proceeded that Singapore Law is the applicable law of the contract in view of paragraph 14 of the Master Agreement. The Singapore law, therefore, was treated as the foundation for construction and the interpretation of the agreement between the parties. The clause itself provides that Court at Singapore shall have jurisdiction. The Tribunal, therefore, by holding that there is a binding contract and by applying the principles of Singaporean law, passed the Award in favour of the claimant (Respondent) on the issue of liability and by the final Award declared that the Petitioner (original Respondent) is in breach of Master Agreement and that it has not taken delivery of systems and made only an initial payment in respect of the second system and no payments in respect of four remaining systems and, therefore, awarded the damages. 23 As noted, the Petitioner's application under Article 6.2 of the ICC Rules with regard to the question of jurisdiction and the final Award is a nullity was also rejected again by relying on Singapore Laws. The Respondent's case was that the governing law is the English law. The contract, as referred above, show....
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....edure and/or laws of Singapore and/or even the English laws. 27 I have already in Lu. Qin (Hong Kong) Copmpany Ltd. vs. Conros Steels Pvt.Ltd. [ Chamber Summons No.12/2013 in Execution Application No..492/2012 in Award dated 30/08/2012 along with Chamber Summons (L) No.1588/2012 in Execution Application No.492/2012 in Award dated 30/08/2012­Conros Steels Pvt.ltd. vs. Lu. Qin (Hong Kong) Company Ltd.], on 9/10 May 2013, observed as under : "33 In the present case, as noted above, there is no specific exclusive and/or agreement between the parties except the procedural rule as noted above, agreed to decide their disputes. The parties are always free to decide the rules to be followed and/or procedure to be adopted to adjudicate their disputes before the nominated Arbitral Tribunal. Both parties are bound by the same, so also the Arbitral Tribunal. The adoption of China Commission/ procedure/rules itself cannot be read and/or means that the parties have agreed to exclude the provisions of Part "I" of Arbitration Act as arbitration held outside India. Therefore, in view of specific agreement between the parties, I am inclined to observe that there is no such agreement e....
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....efore, required to consider the "Doctrine of Close nexus". Merely because the parties have vaguely agreed that Singapore will be the governing law and/or the Court of Singapore will be the Court, but considering the contents of the agreement itself and in the present facts and circumstances, I am inclined to hold that the present agreement/contract need to be construed and/or governed by the Indian laws for the purposes of considering the breaches of its terms and conditions and consequential damages and/or compensation, if any. 29 Part I of Indian Arbitration Act will also apply to foreign awards and international arbitration as recorded in Venture and Bhatia (Supra), as seat was in London. The Tribunal has also proceeded to pass Award by overlooking the Indian laws and the contents of the agreement referring to the Indian law obligations and the fact that the contract was to be performed in India. Admittedly, Singapore law is a foreign law which needs to be pleaded and proved. [ Hari Shanker Jain v. Sonia Gandhi (2001) 8 SCC 233. ], read with Section 57 of Indian Evidence Act. There is nothing on record to show that there is any inconsistency in Singapore law so as to oust Par....
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....Subject matter and cause of action in India:­ 32 The subject matter of the arbitration is in India and specifically within the jurisdiction of Courts of Mumbai. The supervision of the English court pending the arbitration cannot be compared with the Indian Court's jurisdiction and its enforcement after the final award in India. The agreed venue in no way takes away the right of the aggrieved parties to challenge the final award in the available forum out of two or more. The law which governs the respective statutory obligations, as in the present case is Indian law, should prevail over the procedural law of ICC Rules. The Singapore law, in no way, can control or be applicable and/or extendable to the contract clauses and the subject matters. Such governing law should prevail over the procedural law. The Court need to consider the clear clauses and in case of conflicts of clauses and the vagueness. There is nothing to prevent the Court from construing the agreement in such situation. In the present matter, therefore, I am inclined to observe/hold that the challenge to such international award in India is maintainable. There is no total bar. The Arbitral Tribunal's pow....
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....bitration proceedings­ Functus Officio:­ 34 Section 32 contemplates the "termination of arbitration proceedings" under the Arbitration Act. The arbitration proceedings terminates when the final award is passed. The "final arbitration award" [ 31 (1 & 7), 34 (4) and 36 ] is the award which is enforceable/executable, in accordance with the Arbitration Act. Once the Arbitrator makes the award, he is "functus officio". The Arbitrator, who is functus officio further cannot rewrite the award. He becomes functus officio for the purposes of deciding the dispute. There are other stages also contemplate to terminate the arbitration proceedings. Therefore, the concept of supervision of Court of place of Seat of arbitration even after termination of arbitration proceedings, in my view, looses its importance. The ICC Rules nowhere provides that the award is subject to challenge only in the Court of Seat of arbitration. All the Arbitration Acts are also silent about the same. Section 34 Petition maintainable in India:­ 35 There is no specific bar created by any specific provision of Arbitration Act. Therefore, by such self­imposed bar the aggrieved party's rights to ....
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....n Acts need to be made and implemented at the earliest. It is also for the reason that the provisions of Indian and/or national law always prevail over all the foreign laws and/or Treaty and/or Conventions. The agreed clause of arbitration agreements, even if are in conflicts and/or inconsistent and/or contrary to the respective clauses or the terms and the national law, such agreed clauses itself are the matter of discussion and debate in such arbitration proceedings as it impede the Arbitral Tribunal power to pass the enforceable award. The inclusion of Sections 34 to 37 in Part­I of the Arbitration Act.:­ 38 The inclusion of Sections 34 to 37 in Part­I of the Arbitration Act throughout, need re­consideration, at national and international level by all concerned. The confirmation of the award by the Court and Appeal thereon readwith its enforcement just cannot be stated to be governed by only the procedural law. The enforceability of Foreign Award:­ 39 The Arbitral Tribunal is under obligation to pass the enforceable award. The Court is under obligation to adjudicate and resolve the conflicts and so also the Arbitral Tribunal, in accordance with th....