Case: M/s Dozco India P. Ltd Vs. M/s Doosan Infracore Co. Ltd

the arbitration procedure including the seat/venue of arbitration and it was, therefore, that the Court went on to exercise the jurisdiction under Section 11(6) of the Act. It was specifically found therein that there was no exclusion of the provisions of the Act by the parties either expressly or impliedly, which is clear from the observations made in the paragraph 37 of that judgment. 13. Ms. Mohana, learned Counsel appearing on behalf of the petitioner, however, very heavily relied on the decision in Citation Infowares Ltd. v. Equinox Corporation (cited supra). There also, the parties had agreed to be governed by the laws of California, USA.The learned Counsel invited our attention to the Clause 10.1 of the agreement therein, which runs as under:- "10.1Governing law:This agreement shall be governed by and interpreted in accordance with the laws of California, USA and matters of dispute, if any, relating to this agreement or its subject matter shall be referred for arbitration to a mutually agreed arbitrator." Ms. Mohana further submitted that the language of this Clause is quite comparable to Article 23.1 of the Distributorship Agreement between the parties in this case, whereas, Shri Gurukrishna Kumar, learned Counsel for the respondent contended that there is essential difference in the language of both the Clauses. He pointed out that the language of Article 23.1, in contradistinction with the Clause 10.1 in the case of Citation Infowares Ltd. v. Equinox Corporation (cited supra), clearly spells out that the seat of the arbitration was agreed to be in Seoul, Korea and thereby, there would be express exclusion of Part I of the Act. In my opinion, there is essential difference between the clauses referred to in the case of Citation Infowares Ltd. v. Equinox Corporation (cited supra) as also in Indtel Technical Services Private Ltd. v. W.S. Atkins Rail Ltd. (cited supra) on one hand and Article 23.1 in the present case, on the other. Shri Gurukrishna Kumar rightly pointed out that the advantage of bracketed portion cannot be taken, particularly, in view of the decision in Naviera Amozonica Peruana S.A. v. Compania Internationacional De Seguros Del Peru (cited supra), wherein it was held:- "All contracts which provide for arbitration and contain a foreign element may involve three potentially relevant systems of law: (a) the law governing the substantive contract; (2) the law governing the agreement to arbitrate and the performance of that agreement; (3) the law governing the conduct of the arbitration. In the majority of the cases all three will be the same, but (1) will often be different from (2) and (3) and occasionally, but rarely, (2) may also differ from (3)". That is exactly the case here. The language of Article 23.1 clearly suggests that all the three laws are the laws of The Republic of Korea with the seat of the arbitration in Seoul, Korea and the arbitration to be conducted in accordance with the rules of International Chamber of Commerce. In respect of the bracketed portion, however, it is to be seen that it was observed in that case:- ".... It seems clear that the submissions advanced below confused the legal "seat" etc. of an arbitration with the geographically convenient place or places for holding hearings. This distinction is nowadays a common feature of international arbitrations and is helpfully explained in Redfern and Hunter in the following passage under the heading "The Place of Arbitration": The preceding discussion has been on the basis that there is only one "place" of arbitration. This will be the place chosen by or on behalf of the parties; and it will be designated in the arbitration agreement or the terms of reference or the minutes of proceedings or in some other way as the place or "seat" of the arbitration. This does not mean, however, that the arbitral tribunal must hold all its meetings or hearings at the place of arbitration. International commercial arbitration often involves people of many different nationalities, from many different countries. In these circumstances, it is by no means unusual for an arbitral tribunal to hold meetings - or even hearings - in a place other than the designated place of arbitration, either for its own convenience or for the convenience of the parties or their witnesses.......... It may be more convenient for an arbitral tribunal sitting in one country to conduct a hearing in another country - for instance, for the purpose of taking evidence..... In such circumstances, each move of the arbitral tribunal does not of itself mean that the seat of the arbitration changes. The seat of the arbitration remains the place initially agreed by or on behalf of the parties. These aspects need to be borne in mind when one comes to the Judges construction of this policy." It would be clear from this that the bracketed portion in the Article was not for deciding upon the seat of the arbitration, but for the convenience of the parties in case they find to hold the arbitration proceedings somewhere else than Seoul, Korea. The part which has been quoted above from the decision in Naviera Amozonica Peruana S.A. v. Compania Internationacional De Seguros Del Peru (cited supra) supports this inference. In that view, my inferences are that:- 1. a clear language of Articles 22 and 23 of the Distributorship Agreement between the parties in this case spell out a clear agreement between the parties excluding Part I of the Act.2. the law laid down in Bhatia International v. Bulk Trading S.A. & Anr. (cited supra) and Indtel Technical Services Private Ltd. v. W.S. Atkins Rail Ltd. (cited supra), as also in Citation Infowares Ltd. v. Equinox Corporation (cited supra) is not applicable to the present case.3. Since the interpretation of Article 23.1 suggests that the law governing the arbitration will be Korean law and the seat of arbitration will be Seoul in Korea, there will be no question of applicability of Section 11(6) of the Act and the appointment of Arbitrator in terms of that provision.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]This Article 23 will have to be read in the backdrop of Article 22 and more particularly, Article 22.1. It is clear from the language of Article 22.1 that the whole Agreement would be governed by and construed in accordance with the laws of The Republic of Korea. It is for this reason that the respondent heavily relied on the law laid down in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. & Ors. (cited supra). This judgment is a complete authority on the proposition that the arbitrability of the dispute is to be determined in terms of the law governing arbitration agreement and the arbitration proceedings has to be conducted in accordance with the curial law. This Court, in that judgment, relying on Mustill and Boyd (the Law and Practice of Commercial Arbitration in England, 2nd Edition), observed in paragraph 15 that where the law governing the conduct of the reference is different from the law governing the underlying arbitration agreement, the Court looks to the arbitration agreement to see if the dispute is arbitrable, then to the curial law to see how the reference should be conducted and then returns to the first law in order to give effect to the resulting award. In paragraph 16, this Court, in no uncertain terms, declared that the law which would apply to the filing of the award, to its enforcement and to its setting aside would be the law governing the agreement to arbitrate and the performance of thatfollowing paragraph from Mustill and Boyd is extremely important for the decision of thisthe absence of express agreement, there is a strong prima facie presumption that the parties intend the curial law to be the law of the seat of the arbitration, i.e. the place at which the arbitration is to be conducted, on the ground that that is the country most closely connected with the proceedings. So in order to determine the curial law in the absence of an express choice by the parties it is first necessary to determine the seat of the arbitration, by construing the agreement toparagraphs 15 and 16, this Court has heavily relied on the observations quoted above. If we see the language of Article 23.1 in the light of the Article 22.1, it is clear that the parties had agreed that the disputes arising out of the Agreement between them would be finally settled by the arbitration in Seoul, Korea.Not only that, but the rules of arbitration to be made applicable were the Rules of International Chamber of Commerce. This gives the prima facie impression that the seat of arbitration was only in Seoul, South Korea. However, Ms. Mohana, learned Counsel appearing on behalf of the petitioner drew our attention to the bracketed portion and contended that because of the bracketed portion which is to the effect "or such other place as the parties may agree in writing", the seat could be elsewhere also. It is based on this that Ms. Mohana contended that, therefore, there is no express exclusion of Part I of the Act. It is not possible to accept this contention for the simple reason that a bracket could not be allowed to control the main clause. Bracketed portion is only for the purposes of further explanation. In my opinion, Shri Gurukrishna Kumar, learned Counsel appearing on behalf of the respondent, is right in contending that the bracketed portion is meant only for the convenience of the arbitral Tribunal and/or the parties for conducting the proceedings of the arbitration, but the bracketed portion does not, in any manner, change the seat of arbitration, which is only Seoul, Korea. The language is clearly indicative of the express exclusion of Part I of thewould be clear from this that the bracketed portion in the Article was not for deciding upon the seat of the arbitration, but for the convenience of the parties in case they find to hold the arbitration proceedings somewhere else than Seoul, Korea. The part which has been quoted above from the decision in Naviera Amozonica Peruana S.A. v. Compania Internationacional De Seguros Del Peru (cited supra) supports this inference. In that view, my inferences area clear language of Articles 22 and 23 of the Distributorship Agreement between the parties in this case spell out a clear agreement between the parties excluding Part I of the Act.2. the law laid down in Bhatia International v. Bulk Trading S.A. & Anr. (cited supra) and Indtel Technical Services Private Ltd. v. W.S. Atkins Rail Ltd. (cited supra), as also in Citation Infowares Ltd. v. Equinox Corporation (cited supra) is not applicable to the present case.3. Since the interpretation of Article 23.1 suggests that the law governing the arbitration will be Korean law and the seat of arbitration will be Seoul in Korea, there will be no question of applicability of Section 11(6) of the Act and the appointment of Arbitrator in terms of that provision.