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306 paragraphs · 6,275 wordsR. Banumathi, J.—Challenge in these appeals is the order of single Judge dismissing the applications [O.A. Nos. 155 to 157 of 2011 and A.
No. 1002 of 2011] filed u/s 9 of Arbitration and Conciliation Act, 1996 holding that the substantive as well as the procedural law is outside the
country [Singapore] and that the parties have impliedly excluded the jurisdiction of Part I of Arbitration and Conciliation Act, 1996. Though the
appeals are of the year 2011, with the consent of both the counsel, main appeals itself were taken up for final disposal.
Factual background:-Appellant-Financial Software & Systems Private Limited was a distributor of ACI''s Software products such as
BASE24"" and ""PRM"" in India under an International Distribution Agreement [IDA] entered into on 29.04.1998 between the Appellant and the
2nd Respondent-ACI Worldwide (Asia) Private Limited. Subsequently during 2005, certain disputes and differences arose between the Appellant
and the 2nd Respondent-ACI and Appellant filed suit in C.S. No. 628 of 2008 to settle the disputes and differences. Several rounds of
discussions and consultations took place between the Appellant and ACI which entering into a Settlement and Release Agreement [SRA] dated
17.02.2010. SRA provides amongst other things and set out in detail the full and final settlement and resolve, between the Appellant and ACI for
valuable consideration in terms of any and all disputes and differences and further provided for the effective release and discharge of either Party
from any and all claims and all obligations past, present or future under IOI, IDA and all other agreements signed between the parties. The disputes
resolutions clause in Clause 14.6 of SRA stipulates that ""agreement shall be construed and enforced in accordance with and governed by laws of
Singapore"". Parties have also agreed that the disputes will be settled exclusively by compulsory arbitration in accordance with Arbitration Rules of
Singapore International Arbitration Centre (SIAC).
Appellant was/is always ready and willing to perform its duties and obligations under SRA. Inspite of Appellant''s persevering, diligent and
earnest attempts to resolve all open items in the SRA, the Respondents are not ready and willing to perform their reciprocal promises as
contemplated under the SRA. Stating that Appellant had continued to perform its obligations as agreed to in the Software agreements [customer
contracts] and that ACI is not performing its obligations under the SRA and that the Respondents have deeply impacted the Appellant''s financials,
causing loss of revenue and loss of goodwill and reputation to the Appellant, Appellant has filed applications u/s 9 of Arbitration and Conciliation
Act restraining the Respondents, their men and agents from providing any support to other System Integrators/Service Providers/Partners of the
Respondents in violation of Clause 6 of the SRA.
Respondents resisted the application denying all the allegations and interalia raising preliminary objection of maintainability. Respondents averred
that application u/s 9 of the Act is not maintainable. It was further averred that jurisdiction of Indian Courts are barred under Clause 14.6 of SRA,
since Clause states that agreement shall be construed and enforced in accordance with the laws of Singapore. Enforcement of terms of SRA or for
any other remedy arising out of the SRA is to be settled only in accordance with the compulsory arbitration under Singapore International
Arbitration Centre (SIAC). Rule 18 of SIAC Rules specifies that the parties may agree on the ""Seat of Arbitration"" and failing such agreement
Seat of Arbitration"" shall be Singapore, unless the Arbitral Tribunal decides otherwise. Since substantive law is laws of Singapore and procedural
law applicable is also SIAC Rules, Section 9 application is not maintainable.
Upon consideration of rival contentions and referring to Clause 14.6 of SRA and also Clause 18 of SIAC Rules, the learned Judge held that
substantive law applicable to the agreement is the laws of Singapore and the procedure for holding arbitration proceedings is also as per the
arbitration Rules of SIAC and the Seat of Arbitration is also at Singapore and on correct interpretation, Seat of Arbitration is to be Singapore and
therefore Madras High Court will have no jurisdiction to entertain and try the application u/s 9 of Arbitration and Conciliation Act, 1996.
Mr. P.S. Raman, learned Senior Counsel for Appellant has contended that the learned Judge erred in holding that Madras High Court does not
have jurisdiction to decide Section 9 application and the said finding of the learned Judge is contrary to the law laid down by the Supreme Court. It
was contended that Appellant and the 3rd Respondent are Indian entities and the 1st Respondent is the entity incorporated in the United States of
America and the parties could not have therefore impliedly excluded application of the Act. Learned Senior Counsel would further contend that
when there was no agreement relating to ""Seat of Arbitration"" in the agreement, the learned Judge erred in holding that ""Seat of Arbitration"" was
Singapore. Placing reliance upon Bhatia International Vs. Bulk Trading S.A. and Another, and Venture Global Engineering Vs. Satyam Computer
Services Ltd. and Another, , learned Senior Counsel argued that learned Judge has misinterpreted the law laid down by three Judges of Supreme
Court in Bhatia International which was subsequently followed by Venture Global Engineering case. Learned Senior Counsel would further submit
that the facts referred to in Dozco India P. Ltd. Vs. Doosan Infracore Co. Ltd., and 2009 93) ARBLR 162 (Delhi) Max India Limited v. General
Binding Corporation were completely different to the facts of the instant case.
Countering the arguments of learned Senior Counsel for Appellant, Mr. AL. Somayaji, learned Senior Counsel for Respondents contended that
as per Clause 14.6 of SRA, Singapore laws govern the contract and procedure for holding arbitration proceedings is also as per the Arbitration
Rules of SIAC and parties have expressly excluded application of Part I of the Act. Learned Senior Counsel would further contend that there is
nothing in the agreement for applicability of Indian laws and when there is specific exclusion of Indian laws, application u/s 9 of Arbitration Act is
not maintainable.
The question falling for our consideration is whether this Court would have jurisdiction to entertain Section 9 application.
Before we advert to various decisions relied on by the learned Senior Counsel for both sides, we may usefully refer to the relevant Clauses.
Clause 18 of SIAC Rules deals with ""Seat of Arbitration"" which reads as under:
Seat of Arbitration
18.1 The parties may agree on the seat of arbitration. Failing such an agreement, the seat of arbitration shall be Singapore, unless the Tribunal
determines, having regard to all the circumstances of the case, that another seat is more appropriate.
Disputes resolution clause as contained in Clause 14.6 of SRA stipulates as under:-
14.6 Enforcement of Agreement. This Agreement shall be construed and enforced in accordance with and governed by the laws of Singapore. The
Parties hereby agree that any act to enforce the terms of this Agreement, or for any other remedy arising out of said Agreement, will be settled
exclusively by compulsory arbitration in accordance with Arbitration Rules of the Singapore International Arbitration Centre (SIAC); except that
either Party may pursue legal/equitable remedies in any Court of competent jurisdiction.
Clause 14.6 states that for enforcement of terms of SRA or for any other remedy arising out of the SRA is to be settled only in accordance with
compulsory arbitration under SIAC Rules. Rule 18 of SIAC Rules, 2010 specifies that ""Seat of Arbitration"" to be governed by SIAC Rules shall
be Singapore, unless the Arbitral Tribunal decides otherwise.
Interpreting Clause 14.6 of SRA, learned Senior Counsel for Appellant and Respondents referred to various decisions. Before we refer to
those decisions, we propose to refer the decisions which elaborate upon the various laws potentially applicable to various aspects of arbitral
relationship.
The problems arising out of arbitration, call for the application of any one or more of laws viz., (i) The proper law of the contract; (ii) The
proper law of the arbitration agreement; (iii) The curial law i.e. Procedural law for conduct of arbitration. Referring to Law and Practice of
Commercial Arbitration in England by Mustill and Boyd, in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. and Others, , the Supreme Court
held as under:-
10.... It may therefore be seen that problems arising out of an arbitration may, at least in theory, call for the application of any one or more of the
following laws-
The proper law of the contract, i.e., the law governing the contract which creates the substantive rights of the parties, in respect of which the
dispute has arisen.
The proper law of the arbitration agreement, i.e., the law governing the obligation of the parties to submit the disputes to arbitration, and to
honor an award.
The curial law, i.e., the law governing the conduct of the individual reference.
(underlining added)
* * *
The proper law of the arbitration agreement governs the validity of the arbitration agreement, the question whether a dispute lies within the scope
of the arbitration agreement; the validity of the notice of arbitration; the constitution of the tribunal; the question whether an award lies within the
jurisdiction of the arbitrator; the formal validity of the award; the question whether the parties have been discharged from any obligation to arbitrate
future disputes.
The curial law governs the manner in which the reference is to be conducted; the procedural powers and duties of the arbitrator; questions of
evidence; the determination of the proper law of the contract.
The proper law of the reference governs the question whether the parties have been discharged from their obligation to continue with the
reference of the individual dispute.
* * *
In the absence of express agreement, there is a strong prima facie presumption that the parties intend the curial law to be the law of the ""seat"" of
the arbitration, i.e., the place at which the arbitration is to be conducted, on the ground that that is the country most closely connected with the
proceedings. So in order to determine the curial law in the absence of an express choice by the parties it is first necessary to determine the seat of
the arbitration, by construing the agreement to arbitrate.
[underlining added]
The conclusion that we reach is that the curial law operates during the continuance of the proceedings before the arbitrator to govern the
procedure and conduct thereof. The courts administering the curial law have the authority to entertain applications by parties to arbitrations being
conducted within their jurisdiction for the purpose of ensuring that the procedure that is adopted in the proceedings before the arbitrator conforms
to the requirements of the curial law and for reliefs incidental thereto. Such authority of the courts administering the curial law ceases when the
proceedings before the arbitrator are concluded.
Mr. P.S. Raman, learned Senior Counsel for Appellant has contended that as per the ratio of Bhatia International Vs. Bulk Trading S.A. and
Another, , Part I of the Act is applicable to the International Commercial Arbitration whether the ""Seat of Arbitration"" is in India or not. Learned
Senior Counsel would further contend that there is nothing in the SRA to warrant a conclusion that the ""Seat of Arbitration"" is to be outside India
or that the parties had mutually excluded application of any of the provisions of Part I of the aforesaid Act to the agreement. It was also submitted
that by virtue of SRA, the parties had not ousted the jurisdiction of this Court nor had any express intention to that effect been included. It was
further argued that Clause 14.6 of SRA does not even refer to the place of arbitration and neither the governing law of contract nor by the
procedural law can exclude the application of Part I of Arbitration Act. Taking us through various provisions of Arbitration and Conciliation Act,
learned Senior Counsel for Appellant would further contend that ""Seat of Arbitration"" does not find place in the Indian Arbitration Act; but finds a
place only in Section 3 of English Arbitration Act and while so, the Court cannot infer exclusion of Part I of the Act to the SRA on the assumption
that ""Seat of Arbitration"" is Singapore.
The decision in BHATIA INTERNATIONAL lays down the propositions regarding applicability of Part I of arbitrations conducted outside
India. BHATIA INTERNATIONAL case was primarily dealing with the issue whether all Indian Court could provide ""interim relief"" u/s 9 with
regard to the arbitration held outside India. In BHATIA INTERNATIONAL case, application was made by the Respondent thereon to the III
Additional District Judge, Indore, Madhya Pradesh u/s 9 of the Arbitration and Conciliation Act, 1996 for grant of certain interim reliefs to restrain
the parties from alienating, transferring and creating third-party rights wherein Bhatia International raised a plea as to the maintainability of Section 9
application which was dismissed by the learned III Additional District Judge holding that the Court at Indore had jurisdiction to entertain the
application u/s 9 of the Act and that the same was maintainable. Order of III Additional District Judge, Indore was challenged before the Madhya
Pradesh High Court, Indore Bench by Bhatia International by way of a Writ Petition which was also dismissed by the High Court, Indore Bench
and the same was challenged before the Supreme Court contending that Part I of Arbitration and Conciliation Act applies only to the arbitrations
where the place of arbitration is in India as has been indicated in sub-section (2) of Section 2 of the Act. In BHATIA INTERNATIONAL case, in
Paragraph (32), the Supreme Court held as under:
To conclude, we hold that the provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. Where such arbitration
is held in India the provisions of Part I would compulsorily apply and parties are free to deviate only to the extent permitted by the derogable
provisions of Part I. In cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by
agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any
provision, in Part I, which am contrary to or excluded by that law or rules will not apply.
To sum up, the conclusions from BHATIA INTERNATIONAL case is:-
(i) Part I mandatorily applies when arbitration is held in India;
(ii) Part I applies to arbitrations conducted outside India, unless applicability of Part I is impliedly or expressly excluded; and
(iii) There is no express or implied exclusion of Part I, when the Seat of Arbitration was Paris and the proper law of the contract and proper law of
arbitration agreement are not specified.
Expanding the BHATIA INTERNATIONAL case, the Supreme Court in Venture Global Engineering Vs. Satyam Computer Services Ltd.
and Another, has held that ""Section 34 of Part I to be applicable to an arbitration conducted by the London Court of International Arbitration
where the applicable law to the contract was the law of the State of Michigan, United States. In VENTURE GLOBAL ENGINEERING case, the
Supreme Court held as under:
On close scrutiny of the materials and the dictum laid down in the three-Judge Bench decision in Bhatia International Vs. Bulk Trading S.A.
and Another, we agree with the contention of Mr. K.K. Venugopal and hold that paras 32 and 35 of Bhatia International make it clear that the
provisions of Part I of the Act would apply to all arbitrations including international commercial arbitrations and to all proceedings relating thereto.
We further hold that where such arbitration is held in India, the provisions of Part I would compulsorily apply and parties are free to deviate to the
extent permitted by the provisions of Part I. It is also clear that even in the case of international commercial arbitrations held out of India provisions
of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. We are also of the view that such an
interpretation does not lead to any conflict between any of the provisions of the Act and there is no lacuna as such. The matter, therefore, is
concluded by the three-Judge Bench decision in Bhatia International
...
The very fact that the judgment holds that it would be open to the parties to exclude the application of the provisions of Part I by express or
implied agreement, would mean that otherwise the whole of Part I would apply. In any event, to apply Section 34 to foreign international awards
would not be inconsistent with Section 48 of the Act, or any other provision of Part II as a situation may arise, where, even in respect of properties
situate in India and where an award would be invalid if opposed to the public policy of India, merely because the judgment-debtor resides abroad,
the award can be enforced against properties in India through personal compliance of the judgment-debtor and beholding out the threat of
contempt as is being sought to be done in the present case. In such an event, the judgment-debtor cannot be deprived of his right u/s 34 to invoke
the public policy of India, to set aside the award. As observed earlier, the public policy of India includes - (a) the fundamental policy of India; or
(b) the interests of India; or (c) justice or morality; or (d) in addition, if it is patently illegal. This extended definition of public policy can be
bypassed by taking the award to a foreign country for enforcement.
(underlining added)
In VENTURE GLOBAL ENGINEERING case, the agreement contained provision which stated as ""notwithstanding anything to the contrary
in this agreement, the Shareholders shall at all times act in accordance with the Companies Act and other applicable Acts/Rules being in force, in
India at any time"". In the said decision since the shareholders agreed to act in accordance with the Companies Act, the Supreme Court held that
implied exclusion condition was not specified on the basis of the clause and other surrounding circumstances viz., (i) the company was situated in
India; (ii) the transfer of the ""ownership interests"" shall be made in India under the laws of India as set out; and (iii) all the steps necessary have to
be taken in India before the ownership interests stood transferred.
In INDTEL Technical Services Pvt. Ltd. Vs. W.S. Atkins PLC., , the laws governing the contract were laws of England and Wales. Law of
the arbitration agreement and the procedural law applicable were silent. While deciding the question of applicability of Section 11 of Arbitration
and Conciliation Act and interpreting the ratio of BHATIA INTERNATIONAL case to the wordings of Clauses 13.2 and 13.3, the Hon''ble
Supreme Court held as under:-
36..... It is no doubt true that it is fairly well settled that when an arbitration agreement is silent as to the law and procedure to be followed in
implementing the arbitration agreement, the law governing the said agreement would ordinarily be the same as the law governing the contract itself.
The decisions cited by Mr. Tripathi and the views of the jurists referred to in National Thermal Power Corporation Vs. The Singer Company and
others, support such a proposition. What, however, distinguishes the various decisions and views of the authorities in this case is the fact that in
Bhatia International Vs. Bulk Trading S.A. and Another, this Court laid down the proposition that notwithstanding the provisions of Section 2(2) of
the Arbitration and Conciliation Act, 1996, indicating that Part I of the said Act would apply where the place of arbitration is in India, even in
respect of international commercial agreements, which are to be governed by the laws of another country, the parties would be entitled to invoke
the provisions of Part I of the aforesaid Act and consequently the application made u/s 11 thereof would be maintainable.
The decision in Bhatia International case has been rendered by a Bench of three Judges and governs the scope of the application under
consideration, as it clearly lays down that the provisions of Part I of the Arbitration and Conciliation Act, 1996 would be equally applicable to
international commercial arbitrations held outside India, unless any of the said provisions are excluded by agreement between the parties expressly
or by implication, which is not so in the instant case.
The decision in INDTEL case has been followed in Citation Infowares Limited Vs. Equinox Corporation, which involved identical facts. The
governing law was the law of California and the matters of dispute shall be referred to arbitration to a mutually agreed Arbitrator. The ""Seat of
Arbitration"" was silent. In the said decision, the Court held that the principles laid in National Thermal Power Corporation Vs. The Singer
Company and others, must be read in the light of BHATIA INTERNATIONAL case. Interpreting NTPC case, in CITATION INFOWARES
LIMITED, the Supreme Court held as follows:-
25... the proper law of arbitration is normally the same as the proper law of contract and it is only in exceptional cases that it is not so, even where
the proper law of contract is expressly chosen by the parties. The Court further expressed about the presumption arising that the law of the country
where arbitration is agreed to be held is the proper law of arbitration....
In my opinion the scope of the expressions in para 23 of National Thermal Power Corporation Vs. The Singer Company and others, must be
held to be limited. There may be presumption where the parties have agreed to hold arbitration in a particular country. In that circumstance, the
presumption would arise that the law of the country where the arbitration is agreed to be held would apply as a law of contract. Where there has
been no specific expression about the law of contract, the situation is otherwise....
27... There is, in the absence of any contrary intention, a presumption that the parties have intended that the proper law of contract as well as the
law governing arbitration agreement are the same as the law of the country in which the arbitration is agreed to be held. Here again the stress is on
the agreement about the country where the arbitration is agreed to be held and precisely this situation is absent in the present case. Here the
substantive law of contract governing the contract is specifically agreed upon. However, the place where arbitration would be held is not to be
found....
Following the ratio in INDTEL case, in CITATION INFOWARES case, it was held that where the proper law of the contract alone was
specified to be a foreign law, an implied exclusion of Part I of the Act could not be presumed. In CITATION INFOWARES case, the law
governing the contract was California law and the ""Seat of Arbitration"" was not specified and in such factual scenario, the Supreme Court held that
.... it is not possible to read an implied exclusion"". In the case on hand, parties have specifically agreed that enforcement of the terms of SRA shall
be in accordance with compulsory arbitration under SIAC Rules. Rule 18 of SIAC Rules, 2010 specifies that ""Seat of Arbitration"" to be governed
by SIAC Rules shall be Singapore, unless the Arbitral Tribunal decides otherwise.
The facts in Dozco India P. Ltd. Vs. Doosan Infracore Co. Ltd., is almost identical to the present case. In DOZCO case, as per arbitration
clause of the agreement (i) the substantive law was Korean law; (ii) the curial law was ICC Rules and the agreement was silent on the law
governing arbitration agreement. In Paragraphs (12) and (13), the Supreme Court held that ""there was an express exclusion of Part I of the Act as
the parties had chosen Korea to be the governing law and the ""Seat of Arbitration"" would in Seoul, Korea. In the said decision [DOZCO], the
Supreme Court held as follows:-
On the backdrop of these conflicting claims, the question boils down to as to what is the true interpretation of Article 23. This Article 23 will
have to be read in the backdrop of Article 22 and more particularly, Article 22.1. It is clear from the language of Article 22.1 that the whole
Agreement would be governed by and construed in accordance with the laws of The Republic of Korea. It is for this reason that the respondent
heavily relied on the law laid down in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and others. This judgment is a complete authority on the
proposition that the arbitrability of the dispute is to be determined in terms of the law governing arbitration agreement and the arbitration
proceedings has to be conducted in accordance with the curial law..... The language is clearly indicative of the express exclusion of Part I of the
Act. If there is such exclusion, then the law laid down in Bhatia International Vs. Bulk Trading S.A. and Another, must apply....
13... In that view, my inferences are that:
1.a clear language of Articles 22 and 23 of the Distributorship Agreement between the parties in this case spell out a clear agreement between the
parties excluding Part I of the Act.
the law laid down in Bhatia International Vs. Bulk Trading S.A. and Another, and INDTEL Technical Services Pvt. Ltd. Vs. W.S. Atkins
PLC., , as also in Citation Infowares Limited Vs. Equinox Corporation, is not applicable to the present case.
Since the interpretation of Article 23.1 suggests that the law governing the arbitration will be Korean law and the seat of arbitration will be Seoul
in Korea, there will be no question of applicability of Section 11(6) of the Act and the appointment of Arbitrator in terms of that provision.
(underlining added)
In Videocon Industries Limited Vs. Union of India (UOI) and Another, , as per the arbitration clause of the agreement (i) the substantive law
was Indian law; (ii) the law governing arbitration agreement was law of England and (iii) the venue of arbitration at Kuala Lumpur (Malaysia) and
curial law was not specified. In the said case, there was no agreement between the parties to contract to shift juridical Seat of Arbitration to
London. Due to outbreak of epidemic, Arbitral Tribunal shifted the venue of its sittings to Amsterdam and thereafter to London. The respondent
thereon requested the Tribunal to conduct the remaining arbitral proceedings at Kuala Lumpur (Malaysia), but the Tribunal rejected the same. The
Respondent then filed Petition u/s 9 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court seeking declaration that Kuala
Lumpur (Malaysia) was the contractual and juridical Seat of Arbitration and a direction to the Arbitral Tribunal to continue the hearing at Kuala
Lumpur (Malaysia). Objecting the maintainability of the Petition, the Appellant thereon contended that Indian Courts did not have jurisdiction to
entertain the same. Overruling that objection, the Delhi High Court held that it did have the jurisdiction to entertain the Petition u/s 9 of the Act.
Observing that parties had chosen that the arbitration agreement would be governed by English law and the Seat of Arbitration was not in India
and holding that applicability of Part I of the Act was excluded, in Paragraphs (31) to (33), the Supreme Court held as follows:
The learned Single Judge of the Gujarat High Court in Hardy case [(2006) 1 Guj LR 658] referred to para 32 of the judgment in Bhatia
International Vs. Bulk Trading S.A. and Another, and observed that once the parties had agreed to be governed by any law other than Indian law
in cases of international commercial arbitration, then that law would prevail and the provisions of the Act cannot be invoked questioning the
arbitration proceedings or the award.....
In our opinion, the learned Single Judge of the Gujarat High Court had rightly followed the conclusion recorded by the three Judge Bench in
Bhatia International Vs. Bulk Trading S.A. and Another, and held that the District Court, Vadodara did not have the jurisdiction to entertain the
petition filed u/s 9 of the Act because the parties had agreed that the law governing the arbitration will be English law.
In the present case also, the parties had agreed that notwithstanding Article 33.1, the arbitration agreement contained in Article 34 shall be
governed by laws of England. This necessarily implies that the parties had agreed to exclude the provisions of Part I of the Act. As a corollary to
the above conclusion, we hold that the Delhi High Court did not have the jurisdiction to entertain the petition filed by the respondents u/s 9 of the
Act and the mere fact that the appellant had earlier filed similar petitions was not sufficient to clothe that High Court with the jurisdiction to entertain
the petition filed by the respondents.
In Yograj Infrastructure Ltd. Vs. Ssang Yong Engineering and Construction Co. Ltd., , as per the arbitration clause of the agreement (i) the
substantive law was Indian law; (ii) curial law was SIAC Rules. Agreement was silent on the law governing arbitration agreement. Holding that
once the parties choose to be governed by SIAC Rules and the Seat of Arbitration was also in Singapore, the provisions of Part I of the Act are
no longer applicable, in Paragraphs (35) to (38), the Supreme Court held as follows:
35... The learned counsel for the parties has quite correctly spelt out the distinction between the ""proper law"" of the contract and the ""curial law"" to
determine the law which is to govern the arbitration itself. While the proper law is the law which governs the agreement itself, in the absence of any
other stipulation in the arbitration clause as to which law would apply in respect of the arbitral proceedings, it is now well-settled that it is the law
governing the contract which would also be the law applicable to the Arbitral Tribunal itself....
In Bhatia International Vs. Bulk Trading S.A. and Another, , wherein while considering the applicability of Part I of the 1996 Act to arbitral
proceedings where the seat of arbitration was in India, this Court was of the view that Part I of the Act did not automatically exclude all foreign
arbitral proceedings or awards, unless the parties specifically agreed to exclude the same.
As has been pointed by the learned Single Judge in the order impugned, the decision in the aforesaid case would not have any application to
the facts of this case, inasmuch as, the parties have categorically agreed that the arbitration proceedings, if any, would be governed by the SIAC
Rules as the Curial law, which included Rule 32, which categorically provides as follows:
Where the seat of arbitration is Singapore, the law of the arbitration under these Rules shall be the International Arbitration Act (Cap. 143A, 2002
Ed, Statutes of the Republic of Singapore) or its modification or re-enactment thereof.
Having agreed to the above, it was no longer available to the appellant to contend that the ""proper law"" of the agreement would apply to the
arbitration proceedings. The decision in Bhatia International Vs. Bulk Trading S.A. and Another, , which was applied subsequently in the case of
Venture Global Engineering Vs. Satyam Computer Services Ltd. and Another, and Citation Infowares Limited Vs. Equinox Corporation, , would
have no application once the parties agreed by virtue of Clause 27.1 of the Agreement that the arbitration proceedings would be conducted in
Singapore, i.e., the seat of arbitration would be in Singapore, in accordance with the Singapore International Arbitration Centre Rules as in force at
the time of signing of the Agreement. As noticed hereinabove, Rule 32 of the SIAC Rules provides that the law of arbitration would be the
International Arbitration Act, 2002, where the seat of arbitration is in Singapore. Although, it was pointed out on behalf of the appellant that in Rule
1.1 it had been stated that if any of the SIAC Rules was in conflict with the mandatory provision of the applicable law of the arbitration, from which
the parties could not derogate, the said mandatory provision would prevail, such is not the case as far as the present proceedings are concerned. In
the instant case, Section 2(2) of the 1996 Act, in fact, indicates that Part I would apply only in cases where the seat of arbitration is in India. This
Court in Bhatia International Vs. Bulk Trading S.A. and Another, , while considering the said provision, held that in certain situations the provision
of Part I of the aforesaid Act would apply even when the seat of arbitration was not in India. In the instant case, once the parties had specifically
agreed that the arbitration proceedings would be conducted in accordance with the SIAC Rules, which includes Rule 32, the decision in Bhatia
International and the subsequent decisions on the same lines, would no longer apply in the instant case where the parties had willingly agreed to be
governed by the SIAC Rules.
(underlining added)
In the light of the principles laid down in DOZCO, VIDEOCON and YOGRAJ INFRASTRUCTURE cases, Clause 14.6 of SRA has to be
examined. Clause 14.6 of SRA stipulates that parties are agreed to the substantive law governing the contract to be Singapore law and the curial
law governing the conduct of arbitration proceedings to be SIAC Rules. Clause is silent on the law governing arbitration agreement. Though the
Clause is silent, as per the ratio of the above decisions, it is clear that in the absence of any express stipulation of the law governing arbitration
agreement, the law governing arbitration agreement shall be the same as the substantive law governing the main contract i.e. Singapore law.
(underlining added)
As per SIAC Rules, 2010 where parties have agreed to refer their disputes to the SIAC for arbitration, the parties shall be deemed to have
agreed that the arbitration shall be conducted and administered in accordance with SIAC Rules. As per Rule 18, parties may agree on the ""Seat of
Arbitration"". Failing such an agreement, the ""Seat of Arbitration"" shall be Singapore, unless the Tribunal determines, having regard to all the
circumstances of the case, that another seat is more appropriate. It is not the case of Appellant that parties have agreed for another ""Seat of
Arbitration"" other than Singapore. In the absence of any agreement between the parties, as per Rule 18 of SIAC Rules, Singapore shall be the
Seat of Arbitration"", unless the Tribunal otherwise determines. (underlining added)
It is pertinent to note that parties have invoked arbitration before Singapore International Arbitration Centre under Singapore International
Arbitration Act. Rule 26 of SIAC Rules provides for ""interim and emergency relief"". Admittedly, Appellant has already approached the Arbitral
Tribunal in Singapore invoking Rule 26 of SIAC Rules seeking interim relief in which orders are said to have been reserved by the Singapore
Arbitral Tribunal. So far, Tribunal had not been called upon to determine any other place as the ""Seat of Arbitration"". Hence, it is clear that
implication of Part I of the Indian Arbitration and Conciliation Act is excluded by the parties.
Learned Senior Counsel for Appellant has contended that Appellant company is incorporated in Chennai and parties have entered into an
agreement in Chennai and the area of operation and the services are provided to various banks in India and SRA was entered into between the
parties in C.S. No. 638 of 2010. Learned Senior Counsel for Appellant would therefore submit that Madras High Court has certainly jurisdiction
to entertain Petition u/s 9 of Arbitration and Conciliation Act. Laying emphasis upon the express used in Clause 14.6 -""...... except that either party
may pursue legal/equitable remedies in any Court of competent jurisdiction"", the learned Senior Counsel for Appellant has submitted that by the
language of Clause 14.6, there is no implied exclusion of Part I of the Act and the learned single Judge has not properly interpreted the last limb of
Clause 14.6.
The above contention cannot be countenanced. Clause 14.6 has three limbs:-(i) the law governing the contract is the laws of Singapore; (ii) the
curial law i.e. law governing the conduct of arbitration is the Arbitration Rules of SIAC and (iii) either party may pursue legal/equitable remedies in
any Court of competent jurisdiction. Clause is silent on the law governing the arbitration agreement. As per the decisions of the Supreme Court, in
the absence of express agreement there is a strong prima facie presumption that the parties intend the curial law to be the law of ""Seat of
Arbitration"". This is also evident from Clause 18 of SIAC Rules. Insofar as the substantive law governs the contract and curial law governing the
procedure for conduct of arbitration, the parties intentionally chose Singapore law. Therefore, the law governing arbitration is the Singapore law.
The language is clear indication of exclusion of Part I of the Act. If there is any such exclusion, the ratio in BHATIA INTERNATIONAL case
would squarely apply. Applying the ratio of BHATIA INTERNATIONAL, DOZCO, VIDEOCON and YOGRAJ INFRASTRUCTURE cases,
we are of the view that Madras High Court had no jurisdiction to entertain Petition u/s 9 of Arbitration and Conciliation Act. We do not find any
reason warranting interference with the order of the learned Judge.
In the result, all the appeals are dismissed. Consequently, connected M. Ps. is closed. No costs.