Citation : 2005 Lcoal Law (CG) 43
The Chhattisgarh High Court has dismissed two appeals challenging an order that refused to entertain objections against foreign arbitral awards issued in London. Chief Justice A.K. Patnaik delivered the judgment, holding that the awards in question were governed by English arbitration law, which meant they could not be set aside by an Indian court under Section 34 of the Arbitration and Conciliation Act, 1996.
The dispute came from a 1993 agreement for supply and installation of equipment at the appellant’s Korba facility. The contract stated that the agreement itself would be governed by Indian law, but any arbitration would follow English arbitration law. When disagreements arose, the matter went to arbitration in London, resulting in two awards in 2002.
The appellant approached the District Judge in Bilaspur seeking to set aside the awards under Section 34 of the Indian Act. The District Judge dismissed the petitions, holding that the awards were foreign awards and not open to challenge under Section 34. However, the judge did not record reasons for the decision, prompting the appellant to move the High Court.
Senior counsel for the appellant argued that because the contract was governed by Indian law, the awards should be open to challenge in India. They relied on earlier rulings where Indian courts entertained challenges to foreign awards when the proper law of contract was Indian law.
The respondent countered that the parties had expressly chosen English arbitration law, the proceedings were held in London, and the arbitral tribunal functioned entirely under the English Arbitration Act. They also pointed to several portions of the arbitral award demonstrating that the tribunal relied on English procedural provisions throughout the case.
The High Court agreed with the respondent. It noted that Section 48(1)(e) of the Indian Act allows refusal of enforcement only if the award has been set aside by a competent authority of the country where it was made or under whose law it was made. In this case, both the place of arbitration and the governing arbitration law were English. That meant only English courts had the power to set aside the award.
The Court observed that although the contract itself was governed by Indian law, the arbitration clause clearly separated the law governing the contract from the law governing arbitration. Because the parties had explicitly chosen English arbitration law, the law “under which the award was made” was English law, not Indian law.
After reviewing the arbitration agreement, the conduct of the proceedings, and the provisions of the English Arbitration Act applied by the tribunal, the Court held that the awards were foreign awards under Section 44 of the Indian Act. As a result, the District Judge had no jurisdiction under Section 34.
The High Court dismissed both appeals and confirmed that any challenge to the awards would have to be brought before the competent authority in England. It clarified that while Part I of the Indian Act can apply in some international arbitrations, it does not apply where Part II provides a complete code for foreign awards.
Case Details : Misc. A. Nos. 889 and 890 of 2004, Bharat Aluminium Co. Ltd. vs. Kaiser Aluminium Technical Services, Inc. (10.08.2005)
Hon’ble Judges/Coram:
A.K. Patnaik, C.J. and V.K. Shrivastava, J.
Counsels:
For Appellant/Petitioner/Plaintiff: S.N. Mukherjee, Sr. Counsel, Vivek Tankha and Abhishek Sinha, Advs. For Respondents/Defendant: Ravish Agrawal, Sr. Counsel and Sanjay S. Agrawal, Adv.
Acts/Rules/Orders:
Arbitration And Conciliation Act, 1996 – Section 10, Arbitration And Conciliation Act, 1996 – Section 2, Arbitration And Conciliation Act, 1996 – Section 2(7), Arbitration And Conciliation Act, 1996 – Section 34, Arbitration And Conciliation Act, 1996 – Section 37(1)(b), Arbitration And Conciliation Act, 1996 – Section 44, Arbitration And Conciliation Act, 1996 – Section 45, Arbitration And Conciliation Act, 1996 – Section 48, Arbitration And Conciliation Act, 1996 – Section 48(1)(a), Arbitration And Conciliation Act, 1996 – Section 48(1)(c), Arbitration And Conciliation Act, 1996 – Section 48(1)(e), Arbitration And Conciliation Act, 1996 – Section 48(e), Arbitration And Conciliation Act, 1996 – Section 49, Arbitration And Conciliation Act, 1996 – Section 53, Arbitration And Conciliation Act, 1996 – Section 54, Arbitration And Conciliation Act, 1996 – Section 58, Arbitration And Conciliation Act, 1996 – Section 85, Arbitration And Conciliation Act, 1996 – Section 9
Cases Referred:
Smt. Swaran Lata Ghosh v. Harendra Kumar Banerjee, AIR 1969 SC 1167; State of Punjab v. Bhag Singh, 2004 AIR SCW 102 : 2004 Cri LJ 916; Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105 : AIR 2002 SC 1432; Nirma Ltd. v. Lurgi Energie Und Entsorgung GMBH, Germany, AIR 2003 Gujarat 145; White Industries Australia Limited v. Coal India Limited, 2004 (2) Cal LJ (Cal) 197; NTPC v. Singer Company, (1992) 3 SCC 551 : AIR 1993 SC 998; Sumitomo Heavy Industries Ltd. v. ONGC Ltd., (1998) 1 SCC 305 : AIR 1998 SC 825, (1994) Lloyd’s Law Reports 45; Transocean Shipping Agency (P) Ltd. v. Black Sea Shipping, (1998) 2 SCC 281 : AIR 1998 SC 707; Force Shipping Limited v. Ashapura Minechem Limited, MANU/MH/0260/2003; Jindal Drugs Limited v. Noy Vallesina Engineering SpA, 2002 (2) Arbi LR 323 (Bombay)
Supreme Court Status:
Judgment challenged vide [ 2012 ] 12 SCR 327 dated: 06.09.2012 and [ 2016 ] 1 SCR 364 dated: 28.01.2016
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इस मामले में सवाल यह था कि क्या लंदन में दिए गए विदेशी मध्यस्थता पुरस्कार (foreign award) को भारत में धारा 34 के तहत चुनौती दी जा सकती है या नहीं। पक्षकारों के बीच हुए समझौते में यह साफ लिखा था कि पूरा अनुबंध भारतीय कानून से संचालित होगा, लेकिन अगर मध्यस्थता की जरूरत पड़ेगी तो वह अंग्रेज़ी कानून के अनुसार होगी। बाद में विवाद बढ़ा और मध्यस्थता की कार्यवाही लंदन में हुई। ट्राइब्यूनल ने दोनों पुरस्कार अंग्रेज़ी कानून के तहत दिए।
अपीलकर्ताओं ने इन विदेशी पुरस्कारों को रद्द कराने के लिए जिला न्यायाधीश, बिलासपुर के सामने धारा 34 के तहत आवेदन दिया। जिला न्यायाधीश ने कहा कि विदेशी पुरस्कार को धारा 34 के तहत नहीं चुनौती दी जा सकती, इसलिए आवेदन अस्वीकार कर दिया। इसी आदेश के खिलाफ यह अपील दायर हुई।
हाई कोर्ट ने माना कि जब अनुबंध स्वयं बताता है कि मध्यस्थता अंग्रेज़ी कानून के मुताबिक होगी, तो पुरस्कार भी उसी कानून के तहत “बनाया गया” माना जाएगा। इसलिए धारा 48(1)(a) में प्रयुक्त वाक्यांश “law to which the parties have subjected the agreement” (यानी अनुबंध को संचालित करने वाला कानून) भारतीय कानून होगा, जबकि धारा 48(1)(e) का वाक्यांश “law under which the award was made” अंग्रेज़ी कानून होगा।
इसका मतलब यह है कि पुरस्कार को रद्द करने का अधिकार केवल उसी देश की अदालत को है जहाँ या जिस कानून के तहत पुरस्कार बना है, यानी इस मामले में इंग्लैंड। भारत की अदालतें ऐसे विदेशी पुरस्कार को धारा 34 के तहत रद्द नहीं कर सकतीं।
अदालत ने साफ कहा कि ऐपellant द्वारा दायर धारा 34 की याचिकाएँ बिल्कुल भी maintainable नहीं थीं। इसी आधार पर अपील भी खारिज कर दी गई।
