1. Mitshubhishi Motors Corp.
v Soler Chrysler Plymouth
Facts - Soler Chrysler-Plymouth, Inc. (Soler) (defendant) entered an agreement to sell cars in
the San Juan area with Chrysler International, S.A. (CISA), a joint venture involving Chrysler
and Mitsubishi Motors Corporation (Mitsubishi) (plaintiff). The agreement contained an
arbitration clause to resolve disputes in Japan. Soler canceled orders for approximately 1,000
vehicles because of a downturn in sales. Mitsubishi sued in district court to compel
arbitration under the Federal Arbitration Act. Soler counterclaimed with claims under various
antitrust statutes as the antitrust claims are not arbitrable, including the Sherman Act. The
district court ordered all claims to be arbitrated. The court of appeals reversed the district
court’s order to the extent it required the antitrust claims to be arbitrated.
Issue - The question presented to the Supreme Court was whether claims arising out of the
Sherman Antitrust Act were arbitrable pursuant to the Federal Arbitration Act (“FAA) or the
NYC.
Held- The Supreme Court found that they were. In doing so, the Court reasoned that
“concerns for international comity, respect for the capacities of foreign and transnational
tribunals, and sensitivity to the need of the international commercial system for predictability
in the resolution of disputes” required that the Court compel arbitration. The Court further
based its decision on the fact that the Arbitral Tribunal was competent to hear, and had
agreed to consider, the antitrust claims. Finally, the Court held that national courts of the
United States would have the opportunity at the enforcement stage, pursuant to Article V(2)
(b) NYC, to ensure that the legitimate interest in the antitrust issues had been addressed.
2. TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd
- Dispute b/w 1 Indian Company and another registered in India but mainly from Malaysia
(operation and management).
- The main issue herein was that one company who’s central administration lay abroad
contended that the agreement was a valid ICA agreement whereas the Company in India
contended that both Companies being registered in India does not constitute it a valid ICA
agreement.
- SC upholding the “Nationality” approach towards jurisdiction pertaining to ICA, S.28
was further discussed. [states that it is the Indian Law that prevails and is to be followed
in the absence of any other law]
- Therefore, it was held that both the companies were Indian in nature and the ICA would
not apply. Unenforceable.
3. ADDHAR MERCANTILE V. SHREE JAGDAMBA AGRI EXPORTS
PVT. LTD. (2015)
B.F –
Arbitration Application 1. (2014) was filed u/s. 11(6) of the A&C Act, 1996 praying for
an appointment of an Arbitrator by invoking Clause 23 of the agreement between the
parties.
Section 11 of A&C Act, 1996 – Appointment of arbitrators.
(6) Where, under an appointment procedure agreed upon by the parties,—
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them
under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it
under that procedure,
a party may request [the Supreme Court or, as the case may be, the High Court or any
person or institution designated by such Court] to take the necessary measure, unless the
agreement on the appointment procedure provides other means for securing the appointment.
Clause 23 of Agreement –
Arbitration in India or Singapore and English Law to apply.
- Petitioners herein contend that since both the parties are of Indian origin
(incorporation), and in consonance with Clause 23 which provides for seat of
Arbitration to be either in India or Singapore, the Arbitration be conducted in
India as opposed by the Respondents who contend for it to be held at Singapore.
No dispute in regards to application of law – English Law.
HELD – The SC held that seat of Arbitration be India and that Clause 23 is workable.
Reliance was placed on TDM Infra case wherein the Court held that the intention of the
legislature would be clear that Indian Nationals should not be permitted to derogate
from Indian Law.
4. SASAN POWER LTD. V. NORTH AMERICAN COAL CORPORATION INDIA
PVT. LTD. (2016)
B.F. –
Two main Contracts were entered into in this scenario:
a. Between the Petitioner and the Respondent according to which there would be
Arbitration at London along with ICC Rules.
b. Between Respondent and their Subsidiary (NACC India) [to sublet their rights]
Dispute arose b/w Petitioner and NACC India wherein NACC India contended Arbitration @
London w/ ICC Rules whereas Petitioners contended that the contract was an Indian Contract
governed by the Indian Contract Act and would therefore be adjudged upon by Indian Courts.
SC -
i. Whether 2 Indian entities could enter into an agreement seeking application of
Foreign Law over their Arbitration proceedings?
ii. Can 2 Indian Companies (regd.) enter into an ICA @ London with English law as
the one that prevails? #Issue
iii. Indian Contract Act provisions’ discussion – Novation #Issue
HELD –
i. SC recognised the first agreement to be a Bi-Party Agreement and refused to
comment much over the first issue and preferred to leave the same open – ended.
ii. SC recognised the second agreement as a Tri-Party Agreement between the
Petitioner, the Respondent and its Subsidiary (NACC India) and also noted that
the Respondent was very much still a party in the essence of contract. Therefore
there was no Novation of Contract that was observed.
iii. Therefore, it was held to be a valid International Commercial Arbitration u/s. 45
of A&C Act [45. Power of judicial authority to refer parties to arbitration.—Notwithstanding
anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial
authority, when seized of an action in a matter in respect of which the parties have made an
agreement referred to in section 44, shall, at the request of one of the parties or any person
1
claiming through or under him, refer the parties to arbitration, [unless it prima facie finds] that
the said agreement is null and void, inoperative or incapable of being performed.]
Note – u/s. 45 of A&C Act, in order for the Court to grant Relief, there needs to be an
agreement b/w the parties in consonance with the provisions of Section 44 of the A&C
Act, i.e., must not be void, null, inappropriate or incapable of being performed.
Therefore, SC held that Arbitration is enforceable as accorded via the agreement entered
into by the Parties.
5. GMR ENERGY V. DOSAN POWER SYSTEM (2017)
B.F. -
A. Petitioners herein submit that the three agreements entered into by the above parties
prescribe; 1. The law governing the Contract shall be Indian Law. 2. The Arbitration
shall be conducted in Singapore and 3. That the Arbitration shall be as per the
Singapore Laws. Relying on TDM infra, they have contended that since the
relationship between the parties is only domestic in nature, all parties being Indian
Parties, Part – I of A&C Act will apply in the view of the amendment followed by
the TDM Case. Since the Arbitration is between two Indians, it cannot be termed as
ICA and the Indian Substantive law cannot be derogated for and b/w two Indian
Parties.
B. Respondents herein submitted that since parties agreed to Arbitration under Singapore
Law with the Seat of Arbitration being at Singapore, Part – II of the A&C would
apply.
HELD – Indian Law is the Law that prevails. Two Indian Parties can well enter into
agreements outside India and the Award passed therein will be enforceable.
6. BHATIA INTERNATIONAL V. BULK TRADING (2002)
A. Can Part – I of the A&C Act apply in cases where, in an ICA Agreement, the Seat of
Arbitration is outside India?
- Unless Parties to an Arbitration have expressly or impliedly excluded the
application of Part – I of the A&C Act, the Act WILL APPLY.
7. BHARAT ALUMINIUM AND CO. V. KAISER ALUMINIUM AND CO. (2012)
- “Seat – Centric” rule was applied pertaining to jurisdiction to adjudge over an
Arbitration proceeding b/w two parties.
- According to which, if the Seat of Arbitration (as a part of the agreement) is not in
India, the Supreme Court [or any other Indian tribunal] will not have jurisdiction to
adjudge over the matter.
8. VIDEOCON INDUSTRIES V. UOI (2011)
- Main question herein was whether the Delhi HC could entertain the petition filed by
the Respondents u/s. 9 of the A&C Act for grant of declaration that Kuala Lampur
(Malaysia) is the contractual and juridical seat of Arbitration and for issuance of a
direction to the Arbitral Tribunal to continue the hearing at Kuala Lampur in terms of
Clause 34 of the Contract entered into by the Parties (not so relevant).
[34.3 Unresolved disputes.—Subject to the provisions of this contract, the parties agree that any
matter, unresolved dispute, difference or claim which cannot be agreed or settled amicably
within twenty-one (21) days may be submitted to a sole expert (where Article 34.2 applies) or
otherwise to an Arbitral Tribunal for final decision as hereinafter provided.
34.12 Venue and law of arbitration agreement.—The venue of sole expert, conciliation or
arbitration proceedings pursuant to this article, unless the parties otherwise agree, shall be
Kuala Lumpur, Malaysia, and shall be conducted in the English language. Insofar as
practicable, the parties shall continue to implement the terms of this contract notwithstanding the
initiation of arbitral proceedings and any pending claim or dispute. Notwithstanding
the provisions of Article 33.1, the arbitration agreement contained in this Article 34 shall be
governed by the laws of England.]
- It was therefore held that the Arbitration agreement contained in Article 34 shall be
governed by laws of England. This necessarily implies that the parties had agreed to
exclude the provisions of Part – I of the A&C Act. It was also held that the Delhi
HC did not have the jurisdiction to entertain the petition filed by the Respondents u/s.
9 of the A&C Act and the mere fact that the appellant had earlier filed similar
petitions was not sufficient to clothe that HC with the jurisdiction to entertain the
Petition filed by the Respondent.
- Reliance was placed on Bhatia International b. Bulk Trading S.A.
9. YOGRAJ INFRASTRUCTURE LTD. V. SSANG YONG ENGINEERING AND
CONTRUCTION CO. LTD. (2011)
B.F. –
- National Highways Authority of India (NHAI) awarded a contract to the Respondent
(Korean regd. Company) herein for construction of highways in M.P. The respondents
further contracted with the Appellant (Indian regd. Company) herein for carrying out the
work.
- Clause 27 and 28 of the contract entered into by the parties dictate that arbitration and
the governing law agreed to was the A&C Act, 1996.
- Respondent Company issued a notice of termination of the agreement on the ground of
delay in performing the work under the agreement; on account of which the Appellant
filed an application before District and Sessions Judge, M.P. u/s. 9 of the A&C Act
praying for interim reliefs.
- Respondent Company instituted arbitral proceedings against Appellant Company @
Singapore wherein award was granted against the Applicant Company. Applicant
Company aggrieved by the same, filed an application against the same in H.C., which was
duly dismissed after which has come to the SC in appeal.
SC –
- In the instant case, once the parties had specifically agreed that the arbitration
proceedings would be conducted in accordance with the SIAC Rules, which includes
Rule 32, the decision in Bhatia International and the subsequent decisions on the
same lines, would no longer apply in the instant case where the parties had willingly
agreed to be governed by the SIAC Rules.
- With regard to the effect of Section 42 of the Arbitration and Conciliation Act,
1996, the same, in our view was applicable at the pre-arbitral stage, when the
arbitrator had not also been appointed. Once the arbitrator was appointed and the
arbitral proceedings were commenced, the SIAC Rules became applicable shutting
out the applicability of Section 42 and for that matter Part I of the 1996 Act,
including the right of appeal under Section 37 thereof.
- With regard to the effect of Section 42 of the Arbitration and Conciliation Act,
1996, the same, in our view was applicable at the pre-arbitral stage, when the
arbitrator had not also been appointed. Once the arbitrator was appointed and the
arbitral proceedings were commenced, the SIAC Rules became applicable shutting
out the applicability of Section 42 and for that matter Part I of the 1996 Act,
including the right of appeal under Section 37 thereof.
[Rule 32 of Singapore Law - 32. Where the seat of arbitration is Singapore, the law of the
arbitration under these Rules shall be the International Arbitration Act (Cap. 143-A, 2002
Edn., Statutes of the Republic of Singapore) or its modification or re-enactment thereof.]
10. ECO SWISS CHINA TIME LTD. V. BENETTON INT N.V.
- A national court to which application is made for annulment of an arbitration award
must grant that application if it considers that the award in question is in fact contrary
to Article 85 of the EC Treaty (now Article 81 EC), where its domestic rules of
procedure require it to grant an application for annulment founded on failure to
observe national rules of public policy.
11. SWISS TIMING LTD. V. COMMONWEALTH GAMES 2010 ORGANISING
COMMITTEE (2014)
B.F. –
- Petitioner Company and Respondents entered into a contract. Respondent failed to
perform their end of the bargain. Petitioner Company decided to invoke Clause 38 of
the agreement which provided for the invoking of Arbitration in case of dispute.
- [38.1 If a dispute arises between the parties out of or relating to this Agreement (a
“Dispute”), any party seeking to resolve the Dispute must do so strictly in
accordance with the provisions of this clause. Compliance with the provisions of this
clause is a condition precedent to seeking a resolution of the Dispute at the arbitral
tribunal constituted in accordance with this clause 38.]
- [38.6 The Dispute shall be referred to a tribunal consisting of three Arbitrators, one
to be nominated by each party, with the presiding Arbitrator to be nominated by the
two arbitrators nominated by the parties. The Arbitrators shall be retired judges of
the Supreme Court or High Courts of India. However, the Presiding Arbitrator shall
be a retired Supreme Court Judge.]
[38.7 The place of arbitration shall be New Delhi. All arbitration proceedings shall
be conducted in English in accordance with the provisions of the Arbitration and
Conciliation Act, 1996 as amended from time to time.]
- The present petition was filed u/s. 11(4) read with Section 11(6) of the A&C Act.
- [11. Appointment of arbitrators –
- 4) If the appointment procedure in sub-section (3) applies and—
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a
request to do so from the other party; or (b) the two appointed arbitrators fail to
agree on the third arbitrator within thirty days from the date of their appointment,
the appointment shall be made, upon request of a party, by 1[the Supreme Court or,
as the case may be, the High Court or any person or institution designated by such
Court];
- (6) Where, under an appointment procedure agreed upon by the parties,— (a) a
party fails to act as required under that procedure; or (b) the parties, or the two
appointed arbitrators, fail to reach an agreement expected of them under that
procedure; or (c) a person, including an institution, fails to perform any function
entrusted to him or it under that procedure, a party may request 1[the Supreme
Court or, as the case may be, the High Court or any person or institution designated
by such Court] to take the necessary measure, unless the agreement on the
appointment procedure provides other means for securing the appointment.
- 2[(6A) The Supreme Court or, as the case may be, the High Court, while considering
any application under sub-section (4) or sub-section (5) or sub-section (6), shall,
notwithstanding any judgment, decree or order of any Court, confine to the
examination of the existence of an arbitration agreement.
- (6B) The designation of any person or institution by the Supreme Court or, as the
case may be, the High Court, for the purposes of this section shall not be regarded as
a delegation of judicial power by the Supreme Court or the High Court.]
SC –
- The SC decided to invoke the Arbitration Clause regardless of the Respondent’s
contention of the Contract being void.
- The second preliminary objection raised by the respondent is on the ground that the
contract stands vitiated and is void-ab-initio in view of Clauses 29, 30 and 34 of the
agreement
- [Under Clause 29, both sides have given a warranty not to indulge in corrupt
practices to induce execution of the Agreement. Clause 34 empowers the Organising
Committee to terminate the contract after deciding that the contract was executed in
breach of the undertaking given in Clause 29 of the Contract.]
- As a pure question of law, I am unable to accept the very broad proposition that
whenever a contract is said to be void-ab-initio, the Courts exercising jurisdiction
under Section 8 and Section 11 of the Arbitration Act, 1996 are rendered powerless
to refer the disputes to arbitration.
- Despite the aforesaid rule of law, the SC held that since there was already an ongoing
criminal case pending upon the Respondents herein based on the alleged illegality of
the terms of the agreement, it would cause no harm to refer the matter to Arbitration.
12. R.M. Investments & Trading Co. Pvt. Ltd. v. Boeing Co
Held- ‘Commercial’ should be construed broadly having regard to the manifold activities
which are an integral part of international trade today.
Section 2(1)(f) of the Act defines an ICA as a legal relationship which must be considered
commercial, where either of the parties is a foreign national or resident, or is a foreign body
corporate or is a company, association or body of individuals whose central management or
control is in foreign hands. Thus, under Indian law, an arbitration with a seat in India, but
involving a foreign party will also be regarded as an ICA, and will be subject to Part I of the
Act. However, where an ICA is held outside India, Part I of the Act would have no
applicability on the parties but the parties would be subject to Part II of the Act.
