Case Note & Summary
The petitioner, Eitzen Bulk A/S, filed a petition under section 48 of the Arbitration and Conciliation Act, 1996, before the Bombay High Court seeking enforcement of a foreign arbitration award dated 26th May 2009. The respondent, Ashapura Minechem Limited, raised a preliminary objection challenging the jurisdiction of the Bombay High Court on the ground that the respondent had earlier filed Civil Miscellaneous Application No. 101 of 2009 before the District Court of Jam Khambaliya, Gujarat, under section 34 of the Act to set aside the same award. Relying on section 42 of the Act, the respondent contended that since an application under Part I had already been made in the District Court, that court alone had jurisdiction over all subsequent applications arising out of the arbitration agreement. The court examined the arbitration clause (Clause 28) of the contract of affreightment dated 18th January 2008, which provided for arbitration in London and that English law would apply. The court held that by choosing a foreign seat of arbitration and foreign law, the parties had impliedly excluded Part I of the Act, which includes section 42. Therefore, section 42 did not apply, and the prior filing of a section 34 application in Gujarat did not oust the jurisdiction of the Bombay High Court. The court dismissed the Notice of Motion and directed that the petition be heard on merits.
Headnote
A) Arbitration Law - Jurisdiction - Section 42 of the Arbitration and Conciliation Act, 1996 - Implied Exclusion of Part I - Where parties have agreed to arbitration in London with English law to apply, Part I of the Act, including section 42, is impliedly excluded. Consequently, a prior application under section 34 before a District Court in Gujarat does not confer exclusive jurisdiction on that court, and the Bombay High Court retains jurisdiction to entertain a petition under section 48 for enforcement of the foreign award. (Paras 1-5)
Issue of Consideration
Whether the Bombay High Court has jurisdiction to entertain a petition for enforcement of a foreign award under section 48 of the Arbitration and Conciliation Act, 1996, when a prior application under section 34 had been filed before the District Court of Jam Khambaliya, Gujarat, in view of section 42 of the Act.
Final Decision
The Notice of Motion was dismissed. The court held that section 42 of the Arbitration and Conciliation Act, 1996, did not apply as the parties had impliedly excluded Part I of the Act by choosing London as the seat of arbitration and English law. Consequently, the Bombay High Court had jurisdiction to entertain the petition under section 48 for enforcement of the foreign award. The petition was ordered to be heard on merits.
Law Points
- Section 42 of the Arbitration and Conciliation Act
- 1996
- does not apply where parties have impliedly excluded Part I of the Act
- including section 42
- by choosing a foreign seat of arbitration and foreign law.
Case Details
2011 LawText (BOM) (10) 69
Notice of Motion No. 3975 of 2009 in Arbitration Petition No. 561 of 2009
Mr. Prashant Pratap i/b Harsh Pratap for the Petitioners; Mr. Nitin Thakkar, senior counsel with Mr. Sharan Jagtiani, Prakash Shinde and Mr. Avinash Gautam Singh i/b MDP & Partners for the Respondents
Ashapura Minechem Limited
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Nature of Litigation
Preliminary objection as to jurisdiction in a petition for enforcement of a foreign arbitration award.
Remedy Sought
The respondent sought dismissal of the enforcement petition on the ground of lack of jurisdiction.
Filing Reason
The respondent argued that a prior application under section 34 of the Act filed before the District Court of Jam Khambaliya, Gujarat, ousted the jurisdiction of the Bombay High Court under section 42 of the Act.
Issues
Whether section 42 of the Arbitration and Conciliation Act, 1996, applies when parties have impliedly excluded Part I of the Act by choosing a foreign seat of arbitration and foreign law.
Whether the Bombay High Court has jurisdiction to entertain a petition under section 48 for enforcement of a foreign award despite a prior section 34 application before a District Court in Gujarat.
Submissions/Arguments
The respondent submitted that since it had filed Civil Miscellaneous Application No. 101 of 2009 under section 34 before the District Court of Jam Khambaliya, Gujarat, prior to the filing of the enforcement petition, section 42 of the Act mandated that all subsequent applications be made only in that court.
The petitioner contended that the parties had impliedly excluded Part I of the Act, including section 42, by agreeing to arbitration in London and that English law would apply, and therefore the Bombay High Court had jurisdiction.
Ratio Decidendi
Where parties to an arbitration agreement choose a foreign seat of arbitration and expressly agree that foreign law shall apply, they impliedly exclude Part I of the Arbitration and Conciliation Act, 1996, including section 42. Therefore, a prior application under section 34 of the Act before a court in India does not confer exclusive jurisdiction on that court under section 42, and another court in India may entertain a subsequent application for enforcement of the foreign award under section 48.
Judgment Excerpts
I have held that an application under section 34 of the Act to set aside an award falls within the ambit of the phrase 'with respect to an arbitration agreement'.
I have however come to the conclusion that in this case section 42 does not apply as the parties had impliedly if not expressly agreed to the exclusion of Part I of the Act which includes section 42.
Procedural History
The petitioner filed Arbitration Petition No. 561 of 2009 under section 48 of the Arbitration and Conciliation Act, 1996, before the Bombay High Court for enforcement of a foreign award. The respondent filed Notice of Motion No. 3975 of 2009 raising a preliminary objection as to jurisdiction, contending that a prior application under section 34 had been filed before the District Court of Jam Khambaliya, Gujarat. The court heard the Notice of Motion and dismissed it, ordering the petition to be heard on merits.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34, Section 42, Section 48
