Case Note & Summary
The dispute arose from a voyage charter party dated 13 September 2008 between Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft & Company KG (a German company) and D.B. Shipping LLC (a UAE company). POL India Projects Limited, an Indian company, executed a guarantee on 19 September 2008, guaranteeing D.B. Shipping's performance. The charter party contained an arbitration clause providing for London arbitration under English law, which was incorporated into the guarantee. Disputes emerged when D.B. Shipping allegedly defaulted, leading Aurelia to commence two arbitration proceedings: one against D.B. Shipping and another against POL India as guarantor. In the arbitration against D.B. Shipping, a declaratory award was made on 13 October 2009 confirming the charter party and arbitration agreement, followed by a final ex parte award on 26 May 2011 holding D.B. Shipping liable for USD 870,059.24. In the arbitration against POL India, a declaratory award dated 3 March 2010 held that the guarantee was valid, that it incorporated the arbitration clause, and that the tribunal had jurisdiction. On 15 September 2011, a final award was passed against POL India for the same sum with interest. POL India did not challenge the declaratory award but filed Arbitration Petition No. 76 of 2012 under section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the final award and a declaration of no valid arbitration agreement. Aurelia filed Arbitration Petition No. 12 of 2012 under sections 44 to 48 for enforcement of the foreign award. Previously, in a section 9 petition (No. 524 of 2011) filed by Aurelia, the Bombay High Court by order dated 8 November 2011 held that Part I of the Act was excluded because the parties had chosen English law as substantive and curial law, relying on Videocon Industries Ltd. v. Union of India. Thus, the section 9 petition was not maintainable. In the present petitions, Aurelia raised a preliminary objection to the maintainability of the section 34 petition on similar grounds. The court heard arguments and reserved judgment on this preliminary issue, along with the enforcement petition. The court also noted that POL India had not challenged the declaratory award and participated in the arbitration proceedings. The judgment, as provided, ends mid-argument, without disclosing the final outcome. Therefore, the maintainability issue remained to be decided.
Headnote
A) Arbitration - Maintainability of Section 34 Petition Against Foreign Award - Part I vs Part II of Arbitration and Conciliation Act, 1996 - Arbitration and Conciliation Act, 1996, Sections 34, 44-48 - The petitioners filed a petition under section 34 challenging the final arbitral award dated 15 September 2011 claiming no valid arbitration agreement existed. The respondents raised a preliminary objection on maintainability, contending that the award was a foreign award governed by Part II of the Act, and that by choosing English law as the substantive and curial law, the parties had excluded Part I, including section 34, relying on Videocon Industries Ltd. v. Union of India. The court noted that in an earlier section 9 petition, it had held that Part I was excluded. The maintainability issue was kept open for final hearing by an order dated 26 March 2012. The present judgment was to determine this question. (Paras 1-3, 12-14) [Note: The provided judgment text does not contain the final decision on maintainability.]
Issue of Consideration
Whether a petition under section 34 of the Arbitration and Conciliation Act, 1996 is maintainable to challenge a foreign award rendered in London under English law where the arbitration agreement is contained in a voyage charter party and guarantee; Whether there was a valid arbitration agreement between the parties.
Final Decision
Not mentioned in the provided text
Law Points
- Arbitration under Part I of the Arbitration and Conciliation Act
- 1996 not maintainable against foreign award if substantive and curial law is English law
- enforceability of foreign award under sections 44-48
- incorporation of arbitration clause from charter party into guarantee
Case Details
2015 LawText (BOM) (04) 44
Arbitration Petition No. 76 of 2012 alongwith Arbitration Petition No. 12 of 2012
U.J. Makhija, Vishal Talsania, D.N. Motiwalla, Sacha Pandey, Vidhya Baskar, Motiwala & Co. for POL India; Zal Andhyarujina, Shivkumar Iyer, Aditya Krishnamurthy, Arjun Mittal, Shruti Sardesai, Bose & Mitra for Aurelia
POL India Projects Limited (in Arbitration Petition No. 76 of 2012); Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft & Company KG (in Arbitration Petition No. 12 of 2012)
Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft & Company KG and D. B. Shipping LLC (in Arbitration Petition No. 76 of 2012); POL India Projects Limited (in Arbitration Petition No. 12 of 2012)
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Nature of Litigation
Challenge to foreign arbitral award under section 34 of the Arbitration and Conciliation Act, 1996, and simultaneous enforcement petition under sections 44-48.
Remedy Sought
In Arbitration Petition No. 76 of 2012, POL India sought setting aside of the final award dated 15 September 2011 and a declaration of no valid arbitration agreement. In Arbitration Petition No. 12 of 2012, Aurelia sought enforcement of the same award as a decree and an injunction against POL India's assets.
Filing Reason
POL India alleged that there was no valid arbitration agreement, while Aurelia sought to enforce the award after POL India did not pay.
Previous Decisions
Declaratory awards were passed in both arbitrations; in the section 9 petition (Arbitration Petition No. 524 of 2011), the Bombay High Court held that Part I was excluded, and the petition was not maintainable.
Issues
Whether the petition under section 34 of the Arbitration and Conciliation Act, 1996 is maintainable against a foreign award rendered in London under English law.
Whether there was a valid arbitration agreement between the parties.
Whether the foreign award dated 15 September 2011 is enforceable under sections 44 to 48 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Respondents (Aurelia) raised a preliminary objection on maintainability of the section 34 petition, arguing that by choosing English law as substantive and curial law, Part I of the Act was excluded, relying on Videocon Industries Ltd. v. Union of India.
Petitioners (POL India) argued that they were only brokers, not a party to the charter party, and that there was no valid arbitration agreement; they also pointed to correspondences to dispute the existence of an agreement.
Ratio Decidendi
Not mentioned in the provided text
Judgment Excerpts
The petitioners in the said arbitration petition were the original respondents in the arbitral proceedings whereas the respondents i.e. POL India Projects Limited were the original claimants.
Clause 19(a) of the said voyage charter party which recorded an arbitration agreement is extracted as under :- (a) This Charter Party shall be governed by and constituted in accordance with English law and any dispute arising out of the Charter Party shall be referred to arbitration in London...
By an order dated 8th November, 2011 this court held that Arbitration Petition No.524 of 2011 was not maintainable as the parties by choosing English law as substantive law and curial law of the contract of guarantee had excluded Part I of the Arbitration and Conciliation Act, 1996 in view of the judgment of Supreme Court in case of Videocon Industries Ltd. vs. Union of India and another.
On 26th March, 2012 this court while admitting the Arbitration Petition No.76 of 2012 and enforcement proceedings i.e. Arbitration Petition No.12 of 2012 has kept the maintainability and/or challenge under section 34 to the foreign award in India open for final hearing.
Procedural History
Aurelia entered into a voyage charter party with D.B. Shipping on 13 September 2008. POL India executed a guarantee on 19 September 2008. Disputes arose; Aurelia commenced arbitration against D.B. Shipping and POL India separately in London. Declaratory awards were passed in both arbitrations. On 13 October 2009, declaratory award against D.B. Shipping; on 3 March 2010, declaratory award against POL India. Final awards: against D.B. Shipping on 26 May 2011, against POL India on 15 September 2011. Aurelia filed Arbitration Petition No. 524 of 2011 under section 9 before Bombay High Court; by order dated 8 November 2011, petition held not maintainable. POL India filed Arbitration Petition No. 76 of 2012 under section 34 challenging final award; Aurelia filed Arbitration Petition No. 12 of 2012 under sections 44-48 for enforcement. On 26 March 2012, court admitted both petitions and kept maintainability issue open. The petitions were heard together and reserved for judgment on 10 February 2015.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 34, 44-48, 9
- Companies Act, 1956:
