Case: Imax Corporation Vs. M/S E-City Entertainment (I) P.Ltd

commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any provision, in Part I, which is contrary to or excluded by that law or rules will not apply."This view has been followed in several cases, See Venture Global Engg. v. Satyam Computer Services Ltd., (2008) 4 SCC 190 , Videocon Industries Limited v. Union of India, (2011) 6 SCC 161 , Dozco India (P) Ltd. v. Doosan Infracore Co. Ltd., (2011) 6 SCC 179 , Cauvery Coffee Traders v. Horner Resources (International) Co. Ltd., (2011) 10 SCC 420 , Reliance Industries Ltd. (supra) and Sakuma Exports Ltd. (supra), Union of India v. Reliance Industries Ltd., (2015) 10 SCC 213 , Harmony Innovation Shipping Ltd. (supra) and Eitzen Bulk A/S v. Ashapura Minechem Ltd., (2016) 11 SCC 508. The relevant clause in these cases was undoubtedly different in that, the seat of arbitration outside India was specified in the clause itself. However, we have found that the clause in this case had the effect of an agreement to have the seat of arbitration outside India, as chosen by the ICC, and as agreed to by the parties.28. On a true construction of Clause 14 in this case, there is no doubt the parties have agreed to exclude Part-I by agreeing that the arbitration would be conducted in accordance with the ICC Rules. The parties were undoubtedly conscious that the ICC could choose a venue for arbitration outside India. That in our view is sufficient to infer that the parties agreed to exclude Part-I. The ICC could well have chosen a venue in India. The possibility that ICC could have chosen India is not a counter indication of this inference. It could also be said that the decision to exclude the applicability of Part-I was taken when the ICC chose London after consulting the parties. Either way Part-I was excluded.29. The view that it is the law of the country where arbitration is held that will govern the arbitration and matters related thereto such as a challenge to the award is well entrenched. In Dozco India (P) Ltd. (supra), this Court observed:-"In the 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 to arbitrate."30. The relationship between the seat of arbitration and the law governing arbitration is an integral one. The seat of arbitration is defined as the juridical seat of arbitration designated by the parties, or by the arbitral institution or by the arbitrators themselves as the case may be. It is pertinent to refer to the following passage from Redfern and Hunter (supra):-"This intrnded to be its centre of gravity."Further, in the same work on International Arbitration by Redfern and Hunter (supra), the following passage emphasizes the connection between the lex arbitri and lex fori:-"Parties may well choose a particular place of arbitration precisely because its lex arbitri is one which they find attractive. Nevertheless, once a place of arbitration has been chosen, it brings with it its own law. If that law contains provisions that are mandatory so far as arbitration are concerned, those provisions must be obeyed. It is not a matter of choice any more than the notional motorist is free to choose which local traffic laws to obey and which to disregard."Thus, it is clear that the place of arbitration determines the law that will apply to the arbitration and related matters like challenges to the award etc, see Eitzen Bulk A/S (supra).31. The significant determinant in each case is the agreement of the parties as to the place of arbitration and where in fact the arbitration took place.If in pursuance of the arbitration agreement, the arbitration took place outside India, there is a clear exclusion of Part-I of the Arbitration Act. In the present case, the parties expressly agreed that the arbitration will be conducted according to the ICC Rules of Arbitration and left the place of arbitration to be chosen by the ICC. The ICC in fact, chose London as the seat of arbitration after consulting the parties. The arbitration was held in London without demur from any of the parties. All the awards i.e. the two partial final awards, and the third final award, were made in London and communicated to the parties. We find that this is a clear case of the exclusion of Part-I vide Eitzen Bulk A/S (supra), and the decisions referred to and followed therein.32. The respondent contends before us that Part-I of the award was applicable, however they themselves stated the place of arbitration to be London.It is pertinent to reproduce the relevant portion in the respondents application before the ICC while objecting to the authority of the law firms representing the appellant. It stated:-"The seat of this arbitration is London."Therefore, the two reasons for Part-I not being applicable are as follows:-(i) Parties agreed that the seat maybe outside India as may be fixed by the ICC; and(ii) It was admitted that the seat of arbitration was London and the award was made there.Therefore, there is no doubt that Part-I has no application because the parties chose and agreed to the arbitration being conducted outside India and the arbitration was in fact held outside India.33. In view of the foregoing observations, we find that the High Court committed an error in observing that the seat of arbitration itself is not a decisive factor to exclude Part-I of the Arbitration Act.

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

Explanation:
0[ds]15. The only question that arises for consideration before us is whether the challenge to the award made by the respondent under Section 34 of the Arbitration Act is maintainable before a court in India. Clearly, if the answer is in the negative it is not necessary to decide the question of delay. Thus, we make it clear that we are not deciding where else in the world a challenge to the award would benoted the above submissions and statements made by the parties, we propose to decide the question on the construction of Clause 14 and the law governing such challenges.In this case, there is an express choice of the law governing the contract as a whole i.e. Singaporean Law.There is an express agreement that any arbitration would be governed by the ICC Rules of Arbitration. The general principle is that, in the absence of any contradictory indication, it shall be presumed that the parties have intended that the proper law of contract as well as the law governing the arbitration agreement is the same as the law of the country in which the arbitration is agreed to be held.Here, an express choice has been made by the parties regarding the conduct of arbitration, i.e., that a dispute shall be finally settled by arbitration according to the ICC Rules of Arbitration. The parties have not chosen the place of arbitration. They have simply chosen the rules that will govern the arbitration, presumably aware of the provision in the rules that the place of arbitration will be decided by the ICC vide Article 14(1) of the ICC Rules. The ICC having chosen London, leaves no doubt that the place of arbitration will attract the law of UK in all matters concerning arbitration.arbitration.24. Dr. Singhvi rightly submitted that the decisions of the court in Sakuma Exports Ltd. v. Louis Dreyfus Commodities Suisse Sa, (2015) 5 SCC 656  , Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd., (2015) 9 SCC 172  , and Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603     do not help the appellant in view of the main difference between the abovementioned cases and the present one i.e. in all these cases, the parties had specifically agreed that the seat of arbitration will be London. The arbitration clause in these cases itself specified the seat to be at London. In Reliance Industries Ltd. (supra), the agreement that the seat of arbitration would be London was incorporated in the final partial award.However, as we shall see the agreement to have the arbitration conducted by the ICC and the choice of London as the seat of arbitration has made no material difference for the purpose of exclusion of Part-I.The relevant clause in these cases was undoubtedly different in that the seat of arbitration outside India was specified in the clause itself. However, we have found that the relevant clause in the present case had the effect of an agreement to have the seat of the arbitration outside India, as chosen by the ICC and agreed to by the parties.25. We find that in the present case, the seat of arbitration has not been specified at all in the arbitration clause. There is however an agreement to have the arbitration conducted according to the ICC rules and thus a willingness that the seat of arbitration may be outside India. In any case, the parties having agreed to have the seat decided by the ICC and the ICC having chosen London after consulting the parties and the parties having abided by the decision, it must be held that upon the decision of the ICC to hold the arbitration in London, the parties agreed that the seat shall be in London for all practical purposes. Therefore, there is an agreement that the arbitration shall be held in London and thus Part-I of the Act should be excluded.On a true construction of Clause 14 in this case, there is no doubt the parties have agreed to exclude Part-I by agreeing that the arbitration would be conducted in accordance with the ICC Rules. The parties were undoubtedly conscious that the ICC could choose a venue for arbitration outside India. That in our view is sufficient to infer that the parties agreed to exclude Part-I. The ICC could well have chosen a venue in India. The possibility that ICC could have chosen India is not a counter indication of this inference. It could also be said that the decision to exclude the applicability of Part-I was taken when the ICC chose London after consulting the parties. Either way Part-I was excluded.The significant determinant in each case is the agreement of the parties as to the place of arbitration and where in fact the arbitration took place.If in pursuance of the arbitration agreement, the arbitration took place outside India, there is a clear exclusion of Part-I of the Arbitration Act. In the present case, the parties expressly agreed that the arbitration will be conducted according to the ICC Rules of Arbitration and left the place of arbitration to be chosen by the ICC. The ICC in fact, chose London as the seat of arbitration after consulting the parties. The arbitration was held in London without demur from any of the parties. All the awards i.e. the two partial final awards, and the third final award, were made in London and communicated to the parties. We find that this is a clear case of the exclusion of Part-I vide Eitzen Bulk A/S (supra), and the decisions referred to and followed therein.In view of the foregoing observations, we find that the High Court committed an error in observing that the seat of arbitration itself is not a decisive factor to exclude Part-I of the Arbitration Act.