Justice R S BACHAWAT’S LAw OF ARBITRATION & CONCILIATION (Including International Commercial Arbitration & ADR) SixTH EDITION VoLume 2 (Sections 35 To END AND AprENpices 1 To 146) Chief Editors Anirudh Wadhwa BA LLB (Hons) ‘National Law School of India University, Bangalore BCL, Oxford Univecsity Advocite, Delhi High Court and Anirudh Krishnan BA LLB (Hons) NALSAR University of Law, Hyderabad BCL, Oxford Univessity Advocate, Madras High Court, (Author of Laie of Reservation end Anti-Dicrimination (2008)) Editor Arun Karthik Mohan BA LLB (Hons) National Law School of India University, Bangalore ‘Advocate, Madras High Court @ LexisNexis:2684 Part I-#2—Principles of Private International Law ... Proposition Extract from Supreme Court Judgment competent English couris, will have jurisdiction in respect of procedural matters conceming the conduct of arbitration. But the overriding princi- ple is that the courts of the country whose substantive laws govern the arbitration agreement are the compe tent courts in respect of all matters arising under the arbitration agree- ment, and the jurisdiction exercised by the courts of the seat of arbitration is merely concurrent and not exclu- sive and strictly limited to matters of procedure.” (para 25) “Neither the rules of procedure for the conduct of arbitration contrac- tually chosen by the parties (the ICC Rules) nor the mandatory require- ments of the procedure followed in the courts of the country in which the arbitration is held can in any manner supersede the overriding jurisdiction and control of the Indian law and the Indian courts.” (para 26) Applicability of Singer in the Bhatia regime. While most propositions elucidated above seem to still hold good, two presump- tions in NTPC v. Singer'+ seem to have no application in the light of later Supreme Court case law. These presumptions are: (1) in most cases the proper law of arbitration agreement shall be the same as the proper law of contract (“Presumption A”). The Supreme Court, in Citation Infowares Limited v. Equinox Corporation’, recognized Presumption A and did not dispute it when it held: “The Court undoubtedly further goes on to say (in Singer) that where the proper law of contract is expressly chosen by the parties such 2 law must, in the absence of unmistakable intention to the contrary, govem the arbi- tration agreement which, though collateral or ancillary to the contract, is nevertheless 2 part of the contract.” 14, National Thermal Paver Corporation ». Singer Comparny, (1992) 2 Arb LR 154: AIR 1993 SC ‘998 : (1992) 3 SCC 551. 15. Citation Infowares Limited ». Equinox Corporation, (2009) 5 UJ 2066 : (2009) 7 SCC 220 : (2009) 9 JT 316.Part -#2-Principles of Private International Law .... 2685 16. 17. 18, 19. 20. 21. 22, 23, 24, 25. 26. 27. 28. However, in Indtel Technical Services Pot. Ltd. v. WS. Atkins Rail Ltd it was pointed out by the Supreme Court that Presumption A may not be applicable in certain cases falling within the ambit of Bhatia International’, when the seat of arbitration was India even though foreign law governed the arbitration agreement. In such a scenario, following the ratio of Bhatia International'®, irrespective of the law governing the contract, where the seat of the arbitration was in India, Part I of the 1996 Act would automatically apply. This ratio of Bhatia International’ can be interpreted in two ways: (a) that Presumption A is no longer applicable only in cases where the seat of arbitration is in India (b) that the very basis of Presumption A does not hold good and Pre- sumption A does not operate under any circumstances. ‘The Delhi High Court in Sara International Ltd. v. Arab Shipping Co. (P) Ltd.®, expressly recognized the former approach and held: “the 1996 Act and the declaration of law in Bhatia International as applied in subsequent decisions, has altered that understanding; it is no longer possible for Courts to, in such cases”!, infer that the proper law of the arbitration agreement is also the proper law of the contract.” (emphasis added) However, it seems that the Supreme Court has impliedly adopted the latter approach in Indte/?? and Citation”, If Presumption A remained operative post- Bhatia, the single judge benches of Supreme Court in Indte! and Ci tation?’ would have been bound by Presumption A which was part of the ratio of a Division Bench of the Supreme Court in NTPC v. Singer®. In IndteP” and Citation, where the law governing the contract was foreign Indtel Technical Services Put. Lid. ». W.S. Atkins Rail Ltd., 2008) 3 Arb LR 301 : AIR 2000 ‘SC 1132 : (2008) 4 RAJ 204 : (2008) 10 SCC 308. Bhatia International v. Bulk Trading S.A., (2002) 1 Arb LR 675 : AIR 2002 SC 1432 : (2002) RAJ 469 : (2002) 4 SCC 105. Bhatia International v. Bulk Trading S.A, (2002) 1 Arb LR 675 : ATR 2002 SC 1432 : (2002) 1 RAJ 469 : (2002) 4 SCC 105. Bhatia International v. Bulk Trading S.A, (2002) 1 Arb LR 675 : ATR 2002 SC 1432 : (2002) 1 RAJ 469 : (2002) 4 SCC 105. Sara International Ltd. v. Arab Shipping Ca, (P) Ltd., 2009 (3) Arb LR 81 (Del). “such cases”, in this context referred to cases where the arbitration was held in India. Indtel Technical Services Pit, Ltd. v. W.S. Atkins Rail Ltd., (2008) 3 Arb LR 391 : ATR 2009 ‘SC 1132 : (2008) 4 RAJ 204 : (2008) 10 SCC 308, Citation Infowares Limited v. Equinox Corporation, (2009) 1 UJ 2066 (SC) : (2009) 7 SCC-220 : (2009) 8 JT 316. Indtel Technical Services Pot. Lid. 0. W.S. Atkins Rail Ltd., (2008) 3 Arb LR 391: ATR 2009 ‘SC 1132 : (2008) 4 RAJ 204 : (20080 10 SCC 308. Bhatia International v. Bulk Trading S.A., 2009 (5) UJ 2066 (SC) : (2009) 7 SCC 220 : (2009) 8 JT 316. ‘National Thermal Power Corporation ». Singer Company, (1992) 2 Arb LR 154 : AIR 1993 SC 998 : (1992) 3 SCC 551. Indtel Technical Services Pxt, Ltd. 2. W.S. Atkins Rail Ltd., (2008) 3 Arb LR 391 : AIR 2009 SC 1132 : (2008) 4 RAJ 204 : (2008) 10 SCC 308, Citation Infowares Limited » Equinox Corporation, (2009) 5 UJ 2066 : (2009) 7 SCC 290 (2009) 8JT 316.29. 31. 32. 33. Part Il-#2-Principles of Private International Law ... and the seat of arbitration was not specified, an application of Presumption ‘A would have implied that foreign law would have governed the arbitra- tion agreement and not the Indian Act2%. However, Part I of the 1996 Act was held to be applicable in these cases, This implies that the Supreme Court treated Presumption A to be not binding on it thereby suggesting that the ruling in Bhatia International has rendered Presumption A large- ly academic and effectively redundant.3! (2 the proper law of the contract and the proper law of arbitration shall be presumed to be that of the law of the seat of arbitration, if the parties have merely chosen a seat of arbitration and failed to designate the proper law of contract and proper law of the arbitration agreement (“Presumption B”, which along with Presumption A are referred to as the “Singer presump- tions”). Presumption B, was recognized by the decisions of the Supreme Court in Indte®? and Citation®, where it was observed that this presumption operat- ed only when the parties have designated a seat of arbitration abroad and not chosen the proper law of contract. The reasoning behind Presumption B appears to be that if a party merely chooses a seat of arbitration and does no more, it is a reasonable inference that he intends the contract to be governed by the laws of that country, On the other hand, if he chooses the seat of arbitration and designates another country’s law as the proper law of contract, the basis for the inference disappears. The following observations were made in Citation**: “The Court further expressed about the presumption arising that the law of the country where arbitration is agreed to be held is the proper law of arbitration, This presumption was heavily relied on by Shri KK. Venu- gopal. In my opinion the scope of the expressions in paragraph 23 must be held to be limited. There may be presumption where the parties have agreed to hold arbitration in a particular country. In that circumstance, the presumption would arise that the law of the couniry where the arbitra- tion is agreed to be held would apply as a law of contract. Where there hhas been no specific expression about the law of contract, the situation is otherwise. In this way the law of contract is agreed upon 2s the Californi- an law... Here the substantive law of contract governing the contract is specifically agreed upon. However, the place where arbitration would be held is not to be found in the language of Clause 10.1. Therefore, the sit- ‘This is based on the presumption that by default, the substantive law governing the arbitra- tion can be that of only one country. Bhatia International v. Bulk Trading S.A., (2002) 1 Arb LR 675 : AIR 2002 SC 1432: (2002) 1 RAJ 469 : (2002) 4 SCC 105. ‘This Presumption was held to be applicable in DGS Realtors Put. Ltd. x Realogy Corporation, OMP No. 508/2009, decided on 03 September 2009, High Court of Delhi. However, this ob- servation seems to be merely by way of obiter dida. Indtel Technical Services Pot. Lid. v. W.S. Atkins Rail Ltd., 2008) 3 Arb LR 391 : AIR 2009 ‘SC 1132 : (2008) 4 RAJ 204 : (20080 10 SCC 308. Citation Infowares Limited v. Equinox Corporation, (2009) 1 UJ 2066 (SC) : (2009) 7 SCC 220 : (2009) 8JT 316. Citation Infouwares Limited v, Equinox Corporation, (2009) 1 UJ 2066 (SC) : (2009) 7 SCC 220 : (2009) 8JT 316.