Case Note & Summary
The dispute arose from two Production Sharing Contracts (PSCs) between Reliance Industries Limited and the Union of India concerning the exploration and production of petroleum. The appellant sought arbitration for claims related to royalties, cess, service tax, and CAG audit, which the Union of India contested as non-arbitrable. The arbitral tribunal concluded that these claims were arbitrable, leading the Union to challenge the award in the Delhi High Court under Section 34 of the Arbitration and Conciliation Act, 1996. The High Court ruled that the proper law of the contract was Indian law, thus maintaining jurisdiction over the arbitration despite the seat being in London. The Supreme Court upheld the High Court's decision, affirming that the parties did not intend to exclude Indian laws, particularly concerning public policy. The court emphasized that the arbitration agreement's procedural aspects could be governed by English law, but substantive rights remained under Indian law. The final decision reinforced the jurisdiction of Indian courts in matters involving public policy and natural resources, rejecting the Union's objections regarding the arbitrability of the claims.
Headnote
A) Arbitration Law - Applicability of Indian Arbitration Act - Jurisdiction of Indian Courts - Arbitration and Conciliation Act, 1996, Section 34 - The High Court held that the governing law of the contract is Indian law, and thus, the applicability of Part I of the Arbitration Act, 1996 is not excluded. The court emphasized that the parties intended to remain subject to Indian laws, particularly regarding public policy, despite the arbitration being seated in London. Held that the objection regarding jurisdiction was rejected (Paras 25-27).
Issue of Consideration
Whether the applicability of Part I of the Arbitration and Conciliation Act, 1996 was excluded by the parties' agreement to arbitrate under English law.
Final Decision
The Supreme Court upheld the High Court's ruling, affirming that the applicability of Part I of the Arbitration and Conciliation Act, 1996 was not excluded and that Indian courts retained jurisdiction over the arbitration dispute.
Law Points
- Arbitration
- Jurisdiction
- Public Policy
- Proper Law of Contract
- Indian Contract Act
- 1872
- Arbitration and Conciliation Act
- 1996
