Case Note & Summary
The appeal arose from a Commercial Appeal under Section 37 of the Arbitration and Conciliation Act, 1996, filed by Katra Holdings Ltd., a Mauritius company, challenging the order of a Single Judge of the Bombay High Court dated 15 September 2017. The Single Judge had dismissed an Arbitration Petition under Section 34 of the Act filed by the appellant to set aside a foreign arbitral award dated 11 September 2015. The underlying dispute concerned an Escrow and Transaction Settlement Agreement dated 12 May 2007 among the appellant, Corsair Investments Ltd., and Standard Chartered Bank (Mauritius) Ltd. for placing equity shares of Tamilnad Mercantile Bank Ltd. The appellant alleged that the respondents committed fraud and violated various Indian statutes. The Arbitral Tribunal dismissed the appellant's claim. In the Section 34 petition, the appellant argued that the award violated the fundamental policy of Indian law. The respondents raised a preliminary objection that the court lacked jurisdiction because the juridical seat of arbitration was New York, and the law governing the arbitration agreement was foreign, thereby excluding Part-I of the Act. The Single Judge upheld the objection and dismissed the petition with costs. In appeal, the appellant contended that Clauses 15 and 16 of the Escrow Agreement showed that Indian law governed not only the substantive contract but also the arbitration agreement, as Clause 16 excluded only six specific clauses from Indian law, and Clause 15 was not among them. The appellant relied on Supreme Court decisions in Sumitomo Heavy Industries and Bhatia International to argue that a Section 34 petition was maintainable. The Division Bench heard arguments and reserved judgment. The extracted text does not include the final decision of the Division Bench.
Headnote
A) Arbitration - International Commercial Arbitration - Jurisdiction under Section 34 - Arbitration and Conciliation Act, 1996, Sections 34, 37, 2(1)(f) - The appellant, a Mauritius company, entered into an Escrow Agreement with respondents for placement of shares, which contained an arbitration clause (Clause 15) and a governing law clause (Clause 16) providing that the agreement shall be governed by Indian law except six specific clauses; after an arbitral award was passed in New York dismissing the appellant's claims, the appellant filed a Section 34 petition in Bombay High Court alleging violation of Indian public policy; the Single Judge dismissed the petition on the preliminary objection that the juridical seat was foreign and the law governing the arbitration agreement was foreign, thereby excluding Part-I; in appeal, the court examined whether Clause 16 extended Indian law to the arbitration agreement, making the Section 34 petition maintainable - Held - Not mentioned (Paras 1-11)
Issue of Consideration
Whether the award passed by the Arbitral Tribunal could be challenged in the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996, given that the juridical seat of arbitration was outside India and the law governing the arbitration agreement was foreign law.
Law Points
- Applicability of Part-I of Arbitration and Conciliation Act
- 1996 to foreign awards
- determination of juridical seat versus venue
- law governing arbitration agreement
- implied exclusion of Part-I
- jurisdiction under Section 34 for international commercial arbitration
