Application of Part I of the Arbitration Act, 1996 is excluded where seat of Arbitration is outside India #indianlaws

Where the parties choose a juridical seat of Arbitration outside India and provide that the law which governs Arbitration will be a law other than Indian law, part I of the Act would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India. A Court in India could not have jurisdiction to entertain such objections under Section 34 in such a case.

Supreme Court in the instant matter had a question to decide as to whether Part I of the Arbitration Act is excluded from its operation in case of a Foreign Award where the Arbitration is not held in India and is governed by foreign law?

It was observed that the contract expressly stated English law shall apply to arbitration proceedings. Even the seat of arbitration was chosen to be at London. While the award was being passed by Arbitrator at London, there were proceedings also filed by one of the parties concerned before the Courts at Gujarat and Mumbai.

The award was challenged on the ground of want of jurisdiction of proceedings under English law.

The court specifically mentioned that the parties had chosen London as the seat of Arbitration and proceedings were also to be governed by English Law. As was observed, the losing side relentlessly resorted to apparent remedies for stalling the execution of the Award and in fact even attempted to prevent Arbitration, whereby making the present case as typical of such cases where even the fruits of Arbitration are interminably delayed.

It was held (as also the settled legal position now) that Part I is excluded where parties choose that the seat of Arbitration is outside India and the Arbitration should be governed by the law of a foreign country. Where the parties choose a juridical seat of Arbitration outside India and provide that the law which governs Arbitration will be a law other than Indian law, part I of the Act would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India. A Court in India could not have jurisdiction to entertain such objections under Section 34 in such a case. As a matter of fact the mere choosing of the juridical seat of Arbitration attracts the law applicable to such location. In other words it would not be necessary to specify which law would apply to the Arbitration proceedings, since the law of the particular country would apply ipso jure.

Eitzen Bulk A/S vs. Ashapura Minechem Ltd. & Anr.

SC, 13.05.2016

Civil Appeal Nos. 5131-5133 of 2016