Case Note & Summary
The dispute arose from agreements between the National Thermal Power Corporation (NTPC) and the Singer Company for equipment supply and commissioning works in India, executed on 17.8.1982 in New Delhi. The agreements stipulated that Indian law would govern the contract and that disputes would be settled through arbitration, with the International Chamber of Commerce (ICC) rules applying. A dispute led to an interim award made in London, prompting NTPC to seek to set aside the award under the Arbitration Act, 1940. The Delhi High Court ruled that the award was a foreign award under the Foreign Awards Act, 1961, and thus outside its jurisdiction. NTPC appealed, arguing that Indian law governed the arbitration agreement, and therefore Indian courts had jurisdiction. The Supreme Court held that the High Court erred in its interpretation, asserting that the award was governed by Indian law, including the Arbitration Act, 1940. The court emphasized that the proper law of the contract was Indian law, and the arbitration agreement was not a separate contract but part of the main contract, thus retaining Indian jurisdiction over arbitration matters. The court concluded that the procedural aspects of arbitration could involve English law only to the extent that they did not conflict with Indian law. The appeal was allowed, affirming the jurisdiction of Indian courts over the arbitration agreement and the award (Paras 123-132).
Headnote
A) Arbitration Law - Jurisdiction of Courts - Award Governed by Indian Law - Arbitration Act, 1940, Section 1(2) - The High Court wrongly treated the award as a foreign award; it is governed by Indian law as per the arbitration agreement. The court held that the award is not subject to the Foreign Awards Act due to the specific exclusion in Section 9, thus affirming the jurisdiction of Indian courts over the matter (Paras 132-C).
Issue of Consideration
Whether the award made in London under the arbitration agreement is governed by the Arbitration Act, 1940 or the Foreign Awards Act, 1961.
Final Decision
The Supreme Court allowed the appeal, ruling that the award was governed by Indian law, including the Arbitration Act, 1940, and that Indian courts had jurisdiction over arbitration matters arising from the contract.
Law Points
- Arbitration Act
- 1940
- Foreign Awards (Recognition and Enforcement) Act
- 1961
- proper law of contract
- jurisdiction of Indian courts
- international commercial arbitration
