seat and venue

7/29/2019 Seat and Venue

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Videocon Industries Ltd. vs Union Of India & Anr. on 11 May, 2011Bench: R.V. Raveendran, G.S. Singhvi

Contentions:

1. Para 10. Shri Gopal Subramaniam, learned Solicitor General submitted that as per thearbitration agreement which is binding on all the parties to the contract, a conscious

decision was taken by them that Kuala Lumpur will be the seat of any intended

arbitration, Indian law as the law of contract and English law as the law of arbitration

and the mere fact that the arbitration was held outside Kuala Lumpur due to the

outbreak of epidemic SARS, the venue of arbitration cannot be said to have been

changed from Kuala Lumpur to London. Learned Solicitor General emphasised thatonce Kuala Lumpur was decided as the venue of arbitration by written agreement, the

same could not have been changed except by amending the written agreement as

provided in clause 35.2 of the PSC. He then argued that the arbitral tribunal was not

entitled to determine the seat of arbitration and the record of proceedings held on

15.11.2003 at London cannot be construed as an agreement between the parties for

change in the juridical seat of arbitration. He further argued that the PSC was between

the Government of India and ONGC Ltd., Videocon Petroleum Ltd., Command

Petroleum (India) Pvt. Ltd. and Ravva Oil (Singapore) Pvt. Ltd. and, therefore, thevenue of arbitration cannot be treated to have been changed merely on the basis of the

so called agreement between the appellant and the respondents. Learned Solicitor

General submitted that any change in the PSC requires the concurrence by all the

parties to the contract and the consent, if any, given by two of the parties cannot have

the effect of changing the same. He then argued that every written agreement on

behalf of respondent No.1 is required to be expressed in the name of the President and

in the absence of any written agreement having been reached between the parties to

the PSC to amend the same, the consent given for shifting the physical seat ofarbitration to London did not result in change of juridical seat of the arbitration which

continues to be Kuala Lumpur. In support of this argument, the learned Solicitor

General relied upon the judgments of this Court inMulamchand v. State of Madhya

Pradesh(1968) 3 SCR 214 andState of Haryana v. Lal Chand(1984) 3 SCR 715. In

the end, he argued that the provisions of the English Arbitration Act, 1996 would have

applied only if the seat of arbitration was in England and Wales. He submitted that

London cannot be treated as juridical seat of arbitration merely because the parties

had decided that the arbitration agreement contained in Article 34 will be governed by

the laws of England.
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Holding:

2. Para 13. A reading of the above reproduced provision shows that under the Englishlaw the seat of arbitration means juridical seat of arbitration, which can be designated

by the parties to the arbitration agreement or by any arbitral or other institution or

person empowered by the parties to do so or by the arbitral tribunal, if so authorised

by the parties. In contrast, there is no provision in the Act under which the arbitral

tribunal could change the juridical seat of arbitration which, as per the agreement of

the parties, was Kuala Lumpur. Therefore, mere change in the physical venue of the

hearing from Kuala Lumpur to Amsterdam and London did not amount to change in

the juridical seat of arbitration. This is expressly indicated in Section 53 of the

English Arbitration Act, 1996, which reads as under: "53. Place where award

treated as made.

3. The place of arbitration shall be London and the language of arbitration shall beEnglish. The law governing arbitration will be the English law.

National Thermal Power ... vs Singer Company And Ors on 7 May, 1992, 1993AIR 998, 1992 SCR (3) 106, Bench: Thommen, T.K.

Contentions:

1. Mere selection of a particular place for submission to the jurisdiction of the courts orfor the conduct of arbitration will not, in the absence of any other relevant connection

factor with that place, be sufficient to draw an inference as to the intention of the

parties to be governed by the system of law prevalent in that place. This is specially

so in the case of arbitration. This is particularly true when the place of arbitration is

not chosen by the parties themselves, but by the arbitrators or by an outside body, and

that too for reasons unconnected with the contract. Choice of place for submission to

jurisdiction of courts or for arbitration may thus prove to have little relevance for

drawing an inference as to the governing law of the contract, unless supported in that

respect by the rest of the contract and the surrounding circumstances. Any such clause

must necessarily give way to stronger indications in regard to the intention of the

parties.


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2. Proper law is thus the law which the parties have expressly or impliedly chosen, orwhich is imputed to them by reason of its closest and most intimate connection with

the contract. It must, however, be clarified that the expression 'proper law' refers to

the substantive principles of the domestic law of the chosen system and not to its

conflict of laws rules. The law of contract is not affected by the doctrine of renvoi.See Dicey, Vol. II, p.1164. In a case such as the present, there is no need to draw any

inference about the intention of the parties or to impute any intention to them, for they

have clearly and categorically stipulated that their contract, made in India and the

courts in Delhi are to 'have exclusive jurisdiction in all matters arising under this

contract' (cl. 7) The cardinal test suggested by Dicey in rule 180 is thus fully satisfied.

3. The proper law of the contract in the present case being expressly stipulated to be thelaws in force in India and the exclusive jurisdiction of the courts in Delhi in all

matters arising under the contract having been specifically accepted, and the parties

not having chosen expressly or by implication a law different from the Indian law in

regard to the agreement contained in the arbitration clause, the proper law governing

the arbitration agreement is indeed the law in force in India, and the competent courts

of this country must necessarily have jurisdiction over all matters concerning

arbitration. Neither the rules of procedure for the conduct of arbitration contractulally

chosen by the parties (the ICC Rules) nor the mandatory requirements of the

procedure followed in the courts of the country in which the arbitration is held can in

any manner supersede the overriding jurisdiction and control of the Indian law and the

Indian courts.

4. The parties had never expressed their intention to choose London as the arbitralforum, but, in the absence of any agreement on the question, London was chosen by

the ICC Court as the place of arbitration. London has no significant connection with

the contract or the parties except that it is a neutral place and the Chairman of the

Arbitral Tribunal is a resident there, the other two members being nationals of the

United State and India respectively.

5. The decisions relied on by counsel for the Singer do not support his contention thatthe mere fact of London being the place of arbitration excluded the operation of the

Arbitration Act, 1940 and the jurisdiction of the courts in India. In James Miller &

Partners Ltd. v. Whitworth Street Estates (Manchester) Ltd. (1970) AC 583, the


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parties had not expressly stated which law was to govern their contract. On an

analysis of the various factors, the House of Lords held that in the absence of any

choice of the law governing arbitration proceedings, those proceedings were to be

considered to be governed by the law of the place in which the arbitration was held,

namely, Scotland because it was that system of law which was most closely connected

with the proceedings. Various links with Scotland, which was the place of

performance of the contract, unmistakably showed that the arbitral proceedings were

to be governed by the law of Scotland, although the majority of the learned Law

Lords (Lords Reid Wilberforce dissenting on the point) held that, taking into account

certain other factors, the contract was governed by English law. That case is no

authority for the proposition that, even where the proper law of the contract is

expressly stated by the parties, and in the absence of any contrary indication, a

different law governed arbitration. The observations contained in that judgment do not

support the contention urged on behalf of the Singer that merely because London was

designated to be the place of arbitration, the law which governed arbitration was

different from the law expressly chosen by the parties as the proper law of the

contract.

Holding:

1.

In sum, it may be stated that the law expressly chosen by the parties in respect of allmatters arising under their contract, which must necessarily include the agreement

contained in the arbitration clause, being Indian law and the exclusive jurisdiction of

the courts in Delhi having been expressly recognised by the parties to the contract in

all matters arising under it, and the contract being most intimately associated with

India, the proper law of arbitration and the competent courts are both exclusively

Indian, while matters of procedure connected with the conduct of arbitration are left to

be regulated by the contractually chosen rules of the ICC to the extent that such rules

are not in conflict with the public policy and the mandatory requirements of the

proper law and of the law of the place of arbitration

2. The Delhi High Court was wrong in treating the award in question as a foreign award.The Foreign Awards Act, has no application to the award by reason of the specific

exclusion contained in Section 9 of that Act. The award is governed by the laws in

force in India, including the Arbitration Act, 1940. Accordingly, we set aside the

impugned judgment of the Delhi High Court and direct that Court to consider the

appellant's application on the merits in regard to which we express no views


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whatsoever. The appeal is allowed in the above terms. We do not, however, make any

order as to costs.

M/S Dozco India P.Ltd. vs M/S Doosan Infracore Co.Ltd. on 8 October, 2010Bench: V.S. Sirpurkar

Contentions:

1. As per the Agreement between the parties, it is clear that the parties have chosen theproper law of contract as also the arbitration agreement to be Korean law with a seat

of arbitration in Seoul, South Korea and the arbitration law being conducted in

accordance with exhaustive Rules of the International Chamber of Commerce.2. 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." (Emphasis supplied) The following paragraph from Mustill and Boyd

is extremely important for the decision of this case:- "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 expresschoice by the parties it is first necessary to determine the seat of the arbitration, by

construing the agreement to arbitrate.

Holding:

1. Even in Indtel Technical Services Private Ltd. v. W.S. Atkins Rail Ltd. (cited supra),the parties had not chosen the law governing the arbitration procedure including the

seat/venue of arbitration and it was, therefore, that the Court went on to exercise the

jurisdiction under Section 11(6) of the Act. It was specifically found therein that there

was no exclusion of the provisions of the Act by the parties either expressly or

impliedly, which is clear from the observations made in the paragraph 37 of that

judgment.

2. The preceding discussion has been on the basis that there is only one"place" of arbitration. This will be the place chosen by or on behalf of the

parties; and it will be designated in the arbitration agreement or the terms of reference

or the minutes of proceedings or in some other way as the place or "seat"

of the arbitration. This does not mean, however, that the arbitral tribunal must hold all

its meetings or hearings at the place of arbitration. International commercial


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arbitration often involves people of many different nationalities, from many different

countries. In these circumstances, it is by no means unusual for an arbitral tribunal to

hold meetings - or even hearings - in a place other than the designated place of

arbitration, either for its own convenience or for the convenience of the parties or

their witnesses.......... It may be more convenient for an arbitral tribunal sitting in one

country to conduct a hearing in another country - for instance, for the purpose of

taking evidence..... In such circumstances, each move of the arbitral tribunal does not

of itself mean that the seat of the arbitration changes. The seat of the arbitration

remains the place initially agreed by or on behalf of the parties

3. These aspects need to be borne in mind when one comes to the Judge's construction ofthis policy." It would be clear from this that the bracketed portion in the Article

was not for deciding upon the seat of the arbitration, but for the convenience of the

parties in case they find to hold the arbitration proceedings somewhere else than

Seoul, Korea. The part which has been quoted above from the decision in Naviera

Amozonica Peruana S.A. v. Compania


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Internationacional De Seguros Del Peru (cited supra) supports this inference. 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.

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.

Hardly Oil And Gas Limited vs Hindustran Oil Exploration ... on 20 July, 2005Equivalent citations: (2006) 1 GLR 658

Contentions:

1. It is contended by learned advocates for the respondents that here is a situation whereparties have explicitly agreed that the place of arbitration shall be London and that

law governing arbitration will be the English law. Under these circumstances,

application under Section 9 of the Arbitration Act and appeal arising therefrom could

not have been preferred before Courts in India and would be governed by the English

law and English Courts. In support of his contentions, reliance is placed on following

decisions :

(i)National Thermal Power Corporation v. Singer Company & Ors.,.

(ii) Shreejee Traco (I) Pvt. Ltd. v. Paperline International Inc., .

2. Learned Senior Advocate Mr. Thakore appearing for the appellant submitted that thecorrect interpretation of Para.9.5 of the agreement would be that the agreement in

main shall be governed by and construed in accordance with the substantive laws of

India. He submitted that Para.9.5.4 has to be read to mean that English law would

govern dispute in respect of arbitration agreement itself and, therefore, although the

seat of arbitration is agreed to be London and language of arbitration is agreed to be

English, the proceedings would be governed by Indian laws.

3. Clause 9.5.4 provides that the place of arbitration shall be London and the language ofarbitration shall be English. It specifically provides that the law governing arbitrationwill be the English law. Thus, the intention of the parties is made very clear from a
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plain reading of Clause 9.5.1 and 9.5.4 that the agreement in main would be governed

by substantive laws of India but, when there is dispute between the parties and an

arbitration is agreed upon, the arbitration will be governed by the English law. In

order to understand the intention of the parties still better, clause 9.5.2 can be

profitably referred to, where it is agreed that the dispute shall be resolved by anarbitrator under the Rules of London Court of International Arbitration (LCIA). A

reliance was placed on Article 25.3 of LCIA Rules.

Holding:

1. As discussed above, it is clear from Clauses 9.5.1 and 9.5.4 of the agreement that theparties had agreed that the law governing arbitration will be the English law. Thus,

there is a explicit exclusion of applicability of Indian law to the arbitration under theagreement. Under the circumstances, it has to be held that in the present case,

arbitration would be governed by the English law. It is not open to parties to resort to

the provisions of the Act in respect of Arbitration.

2. 11.8 It is equally important to note that parties would not be rendered remedyless bythis decision for the reason that there are similar provisions in English law governing

arbitration.

3. 11.9 Inexcusability of any order that may be passed under that Law cannot be factorto entertain this appeal at this stage when parties have, in explicit terms agreed to thegovernance of arbitration by English law.

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