Case Note & Summary
The appeal arose from a judgment of a Learned Single Judge of the Bombay High Court dated 15 November 2011, which held that the Court had no jurisdiction to entertain a challenge to an arbitral award made by the Refined Sugar Association, London. The appellant, Sakuma Exports Limited, an Indian company, entered into an agreement on 12 January 2010 with the respondent, Louis Dreyfus Commodities and Uisse S.A., a Swiss company, for the purchase of 2700 metric tons of Brazilian white sugar. The agreement contained an arbitration clause providing for arbitration in London under the Rules of the Refined Sugar Association, with English law as the governing law. Disputes arose, and an arbitral tribunal in London passed an award against the appellant. The appellant challenged the award before the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996. The Single Judge held that the Court lacked jurisdiction because the parties had impliedly excluded Part-I of the Act by choosing English law and London as the seat of arbitration. The appellant appealed. The Division Bench considered the legal regime applicable before the Supreme Court's judgment in BALCO, which prospectively overruled Bhatia International. Under Bhatia International, Part-I of the Act applies to international commercial arbitrations held outside India unless the parties expressly or impliedly exclude it. The Court analyzed the arbitration clause and found no express exclusion of Part-I. The Court further held that the mere choice of English law and London as the seat did not amount to implied exclusion, as the parties did not specifically exclude the application of Part-I. The Court distinguished cases where implied exclusion was found, noting that in those cases, the arbitration agreement or the curial law specifically excluded the application of Part-I. The Court allowed the appeal, set aside the Single Judge's order, and restored the arbitration petition to the file of the Single Judge for hearing on merits. The Court clarified that it had not expressed any opinion on the merits of the challenge to the award.
Headnote
A) Arbitration Law - International Commercial Arbitration - Applicability of Part-I of Arbitration and Conciliation Act, 1996 - Implied Exclusion - The issue was whether parties, by choosing English law as governing law and London as seat of arbitration, impliedly excluded Part-I of the Act. The Court held that under the Bhatia International regime, Part-I applies unless excluded. The choice of foreign law and seat abroad, without more, does not amount to implied exclusion of Part-I. The Single Judge's finding of implied exclusion was reversed. (Paras 2-23) B) Arbitration Law - International Commercial Arbitration - Jurisdiction of Indian Courts - Challenge to Foreign Award - The Court held that since the arbitration agreement was entered into before the BALCO judgment, the Bhatia International regime applies. Under that regime, Part-I applies to international commercial arbitrations held outside India unless excluded. The Court found no express or implied exclusion in the present case, and thus Indian courts have jurisdiction to entertain a challenge to the award under Section 34 of the Act. (Paras 2-23)
Issue of Consideration
Whether parties to an international commercial arbitration agreement, by choosing a foreign law and a seat of arbitration outside India, have impliedly excluded the provisions of Part-I of the Arbitration and Conciliation Act, 1996.
Final Decision
Appeal allowed. The judgment of the Learned Single Judge dated 15 November 2011 is set aside. Arbitration Petition No.636 of 2011 is restored to the file of the Learned Single Judge for hearing and disposal on merits. No order as to costs.
Law Points
- Part-I of Arbitration and Conciliation Act
- 1996 applies to international commercial arbitration held outside India unless expressly or impliedly excluded by parties
- Bhatia International regime
- prospective overruling of BALCO
- implied exclusion of Part-I by choosing foreign law and seat abroad
