| The Appellant entered into a contract
with the 1st Respondent which contained a clause providing
for arbitration as per rules of the International Chambers
of Commerce (for short, ICC). The 1st Respondent filed a request
with ICC for arbitration. ICC appointed a Sole Arbitrator.
The arbitration was to be held in Paris, France.
The 1st Respondent filed an application under Section 9 of
the Act of 1996 before the III Additional District Judge,
Indore, Madhya Pradesh against the Appellant and the 2nd Respondent.
One of the interim reliefs sought was an order of injunction
restraining these parties from alienating, transferring, selling
their business assets and properties. The Appellant contended
that the application was not maintainable since Part I of
the Act of 1996 applied to arbitrations where the place of
arbitration is not in India. The III Additional District Judge
at Indore held that the court at Indore had jurisdiction and
the application was maintainable. The Appellant filed a writ
petition before the High Court of Madhya Pradesh which was
dismissed.
The Supreme Court observed in this case, inter alia, as follows:
Section 2(1) (f) of the Act of 1996 defines an international
commercial arbitration. The definition makes no distinction
between international commercial arbitration held in India
or outside. An international commercial arbitration may be
held in a country which is a signatory to either the New York
Convention or the Geneva Convention (hereinafter called “the
convention country”). An international commercial arbitration
may also be held in a non-convention country. The Act of 1996
nowhere provides that its provisions are not to apply to international
commercial arbitrations which take place in a non-convention
country. Part II of the Act of 1996 applies to an international
commercial arbitration which takes place in a convention country.
However, it is not possible to accept the submission that
the Act of 1996 makes no provision for international commercial
arbitrations which take place in a non-convention country.
The words “this Act” used in Section 1 of the
Act of 1996 mean the entire Act. This shows that the entire
Act, including Part I, applies to the whole of India. The
fact that all Parts apply to the whole of India is clear from
the proviso which provides that Parts I, III and IV will apply
to the State of Jammu and Kashmir only so far as international
commercial arbitrations/conciliations are concerned. Significantly,
the proviso does not state that Part I would apply to Jammu
and Kashmir only if the place of international arbitration
is in Jammu and Kashmir. Thus if the argument of the appellant
was to be accepted there would be a conflict between Section
1 and Section 2(2) of the Act of 1996. There would also be
an anomaly inasmuch as even if an international commercial
arbitration takes place outside India, Part I would continue
to apply in Jammu and Kashmir, but it would not apply to the
rest of India.
Section 2(1)(e) gives the definition of a court and it nowhere
provides that courts in India will not have jurisdiction if
an international commercial arbitration takes place outside
India. Courts in India would have jurisdiction even in respect
of an international commercial arbitration. An answer of jurisdiction
cannot be implied but has to be expressly stated. An ouster
of jurisdiction has to be express.
Sub-section (2) of Section 2 provides that Part I would apply
where the place of arbitration is in India. To be immediately
noted, that it is not providing that Part I shall not apply
where the place of arbitration is not in India. It is also
not providing that Part I will “only” apply where
the place of arbitration is in India(emphasis supplied). Thus
the legislature has not provided that Part I is not to apply
to arbitrations which take place outside India. By not specifically
providing that provisions of Part I apply to international
commercial arbitrations out of India, the intention of the
legislature appears to be to allow parties to provide that
Part I or any provision therein will not apply. Thus in respect
of arbitrations which take place outside India even the non-derogable
provisions of Part I can be excluded. Such an agreement may
be express or implied. If read in this manner there would
be no conflict between Section 1 and Section 2(2).
If Part I was to only apply to arbitrations which take place
in India, the term “court” would have been used
Sections 5 and 8 of the Act of 1996. The legislature was aware
that, in international commercial arbitrations, a matter may
be taken before a judicial authority outside India. As Part
I was to apply to international commercial arbitrations held
outside India the term “judicial authority” has
been used in Sections 5 and 8.
If Part I was not to apply for an arbitration which takes
place outside India there would no necessity to specify in
Section 28 that the rules are to apply “where the place
of arbitration is situated in India”. It has been held
in the case of National Thermal Power Corpn. v. Singer Co.
that in international commercial arbitrations parties are
at liberty to chose expressly or by necessary implication,
the law and procedure to be made applicable. The procedure
or the rules governing such arbitration may be of the country
where the arbitration is being held or the body under whose
aegis the arbitration is being held. Thus Section 28 does
not provide for rules where the place of arbitration is out
of India.
Section 9 provides that a party could apply to the court
(a) before, (b) during arbitral proceedings, or (c) after
the making of the arbitral award but before it is enforced
in accordance with Section 36. It is clear that the words
“in accordance with Section 36” can have no reference
to an application made “before” or “during
the arbitral proceedings”. Thus it is clear that an
application for interim measure can be made to the courts
in India, whether or not the arbitration takes place in India,
before or during arbitral proceedings. Once an award is passed,
then the award itself can be executed. Sections 49 and 58
provide that awards covered by Part II are deemed to be a
decree of a court. Thus “foreign awards” which
are enforceable in India are deemed to be decrees. A domestic
award has to be enforced under the provisions of the Civil
Procedure Code.
The Supreme Court dismissed the appeal and concluded by stating
that the provisions of Part I would apply to all arbitrations
and to all proceedings relating thereto.
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