Supreme Court

Imax Corporation v. M/s E-City Entertai (I) Pvt. Ltd.

MANU/SC/0263/2017

10.03.2017

Arbitration

Place of arbitration determines law applicable to arbitration and related matters

Appellant-Imax Corporation has challenged interim order passed by High Court of Judicature at Bombay, by which High Court held that, petition under Section 34 of Arbitration and Conciliation Act, 1996 filed by Respondent against two partial final awards and third final award was maintainable. Appellant had objected to maintainability of petition under Section 34 of Arbitration Act on ground that, arbitration clause excluded applicability of Part-I which contains the said section. On 28.09.2000, Appellant entered into an agreement with the respondent for a supply of large format projection systems for cinema theatres to be installed in theatres all across India. On 16.06.2004, Appellant filed a request for arbitration with the ICC, and claimed damages. On 08.10.2004, ICC i.e. the chosen arbitral forum fixed London as the place of arbitration i.e. the juridical seat of arbitration, after consulting parties. Question that arises for consideration is whether challenge to award made by Respondent under Section 34 of Arbitration Act is maintainable before a court in India.

Clause 14 of Arbitration clause provides that any dispute arising out of this agreement or concerning the rights, duties or liabilities of parties shall be settled by arbitration. Arbitration shall be pursuant to ICC Rules of Arbitration. Parties shall invoke ICC Rules of Arbitration in case a dispute arises between them concerning their rights, duties or liabilities. Intention is to have dispute settled by and in accordance with ICC Rules of Arbitration. International Court of Arbitration decided inter alia that London, United Kingdom will be juridical seat of the arbitration in view of Article 14(1) of the ICC Rules and, therefore, proceeded on the basis of the Part-I of English Arbitration Act, 1996.

In present case, seat of arbitration has not been specified at all in the arbitration clause. There is however an agreement to have the arbitration conducted according to the ICC rules and thus, a willingness that the seat of arbitration may be outside India. In any case, the parties having agreed to have the seat decided by the ICC and the ICC having chosen London after consulting the parties and the parties having abided by the decision, it must be held that upon the decision of the ICC to hold the arbitration in London, the parties agreed that the seat shall be in London for all practical purposes. Therefore, there is an agreement that the arbitration shall be held in London and thus Part-I of the Act should be excluded.

The construction that the parties agreed to exclude the applicability of Part-I of the Act and generally to have the entire agreement governed not according to Indian law is also apparent from the express provision that, “this agreement shall be governed by and construed according to laws of Singapore and parties attorn to jurisdiction of the Courts of Singapore”.

Place of arbitration determines the law that will apply to the arbitration and related matters like challenges to the award etc, see Eitzen Bulk A/S. Significant determinant in each case is agreement of parties as to the place of arbitration and where in fact arbitration took place. If in pursuance of arbitration agreement, arbitration took place outside India, there is a clear exclusion of Part-I of Arbitration Act. In present case, parties expressly agreed that, arbitration will be conducted according to ICC Rules of Arbitration and left place of arbitration to be chosen by the ICC. ICC in fact, chose London as the seat of arbitration after consulting the parties. Arbitration was held in London without demur from any of parties. All awards i.e. the two partial final awards, and the third final award, were made in London and communicated to the parties.

Therefore, there is no doubt that, Part-I has no application because parties chose and agreed to arbitration being conducted outside India and the arbitration was in fact held outside India. High Court committed an error in observing that, seat of arbitration itself is not a decisive factor to exclude Part-I of Arbitration Act. Judgment of High Court set aside and petition filed by Respondent under Section 34 of the Arbitration Act before the Bombay High Court dismissed and present appeal allowed.

Tags : Award Jurisdiction Maintainability

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