Case Note & Summary
The petitioner, Konkola Copper Mines (PLC), a company registered in Zambia, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, before the Bombay High Court seeking security for an arbitral award dated 9 January 2013 in its favor against the respondent, Stewarts and Lloyds of India Limited, a company based in Kolkata. The award was for US$ 3,356,203. The respondent raised a preliminary objection regarding the territorial jurisdiction of the Bombay High Court, arguing that no part of the cause of action arose within its jurisdiction. The contracts dated 10 August 2006 and 18 August 2006, which were the subject matter of arbitration, were received and executed by the respondent at Kolkata. The respondent carried on business at Kolkata, and the petitioner had its registered office in Zambia. The arbitration was conducted under the ICC Rules with the venue subsequently changed to Mumbai, but the governing law was Zambian law. The respondent contended that the Bombay High Court did not fall within the definition of 'Court' under Section 2(1)(e) of the Act. The respondent also relied on the Supreme Court's decision in Bharat Aluminium Co. v. Kaiser Aluminium (2012) 9 SCC 552, which held that Part I of the Act would not apply to international commercial arbitrations held outside India, but clarified that the law would apply prospectively to arbitration agreements executed after the date of that judgment. Since the arbitration agreement in this case was executed in 2006, prior to the Bharat Aluminium decision, the respondent argued that the law as laid down in Bhatia International v. Bulk Trading (2002) 4 SCC 105 would apply, which allowed Part I to apply unless excluded. The respondent submitted that the parties had impliedly excluded Part I by agreeing to ICC arbitration and Zambian law. The court, after hearing arguments, upheld the preliminary objection and dismissed the petition, holding that no part of the cause of action arose within the territorial jurisdiction of the Bombay High Court. The court also noted that the parties had impliedly excluded Part I of the Act, and therefore, the petition under Section 9 was not maintainable.
Headnote
A) Arbitration - Territorial Jurisdiction - Section 2(1)(e) read with Section 9 of the Arbitration and Conciliation Act, 1996 - Court held that no part of cause of action arose within its jurisdiction as contracts were executed at Kolkata, respondent carried on business at Kolkata, and petitioner had registered office in Zambia - Petition dismissed for lack of territorial jurisdiction (Paras 1-6). B) Arbitration - Exclusion of Part I - International Commercial Arbitration - Parties agreed to ICC arbitration and Zambian law - Court held that parties impliedly excluded Part I of the Arbitration and Conciliation Act, 1996, following the law prior to Bharat Aluminium Co. v. Kaiser Aluminium - Petition under Section 9 not maintainable (Paras 5-6).
Issue of Consideration
Whether the Bombay High Court has territorial jurisdiction to entertain a petition under Section 9 of the Arbitration and Conciliation Act, 1996, where the arbitration agreement was executed before the decision in Bharat Aluminium Co. v. Kaiser Aluminium and the parties had agreed to foreign law and ICC arbitration.
Final Decision
The preliminary objection regarding territorial jurisdiction is upheld. The Arbitration Petition No. 160 of 2013 is dismissed. No order as to costs.
Law Points
- Territorial jurisdiction under Section 2(1)(e) of the Arbitration and Conciliation Act
- 1996
- Cause of action in arbitration
- Exclusion of Part I by agreement
- Prospective application of Bharat Aluminium Co. v. Kaiser Aluminium
