Case: Roger Shashoua  Vs. Mukesh Sharma

location of hearings to be in London. To elaborate, the distinction between the venue and the seat remains. But when a Court finds there is prescription for venue and something else, it has to be adjudged on the facts of each case to determine the juridical seat. As in the instant case, the agreement in question has been interpreted and it has been held that London is not mentioned as the mere location but the courts in London will have the jurisdiction, another interpretative perception as projected by the learned senior Counsel is unacceptable. 69. Another aspect that was highlighted before us and with immense force and enthusiasm requires to be adverted to. It has been submitted that the arbitration agreement has the closest and most real connection with India and hence, the Courts in India would have the jurisdiction as per the principle laid down in Singer Co. (supra). In the said case, it has been expressed thus:16. Where the parties have not expressly or impliedly selected the proper law, the courts impute an intention by applying the objective test to determine what the parties would have as just and reasonable persons intended as regards the applicable law had they applied their minds to the question. The Judge has to determine the proper law for the parties in such circumstances by putting himself in the place of a "reasonable man". He has to determine the intention of the parties by asking himself how a just and reasonable person would have regarded the problem", The Assunzione; Mount Albert Borough Council v. Australasian Temperance and General Mutual Life Assurance Society Ltd. 17. For this purpose the place where the contract was made, the form and object of the contract, the place of performance, the place of residence or business of the parties, reference to the courts having jurisdiction and such other links are examined by the courts to determine the system of law with which the transaction has its closest and most real connection.And again:44. It is important to recall that in the instant case the parties have expressly stated that the laws applicable to the contract would be the laws in force in India and that the courts of Delhi would have exclusive jurisdiction "in all matters arising under this contract". They have further stated that the "contract shall in all respects be construed and governed according to Indian laws". These words are wide enough to engulf every question arising under the contract including the disputes between the parties and the mode of settlement. It was in Delhi that the agreement was executed. The form of the agreement is closely related to the system of law in India. Various Indian enactments are specifically mentioned in the agreement as applicable to it in many respects. The contract is to be performed in India with the aid of Indian workmen whose conditions of service are regulated by Indian laws. One of the parties to the contract is a public sector undertaking. The contract has in every respect the closest and most real connection with the Indian system of law and it is by that law that the parties have expressly evinced their intention to be bound in all respects. The arbitration agreement is contained in one of the clauses of the contract, and not in a separate agreement. In the absence of any indication to the contrary, the governing law of the contract (i.e., in the words of Dicey, the proper law of the contract) being Indian law, it is that system of law which must necessarily govern matters concerning arbitration, although in certain respects the law of the place of arbitration may have its relevance in regard to procedural matters.70. It is apposite to note that the said decision has been discussed at length in Union of India v. Reliance Industries Limited. The Court, in fact, reproduced the arbitration Clause in Singer Co. (supra) and referred to the analysis made in the judgment and noted that notwithstanding the award, it was a foreign award, since the substantive law of the contract was Indian law and the arbitration law was part of the contract, the arbitration Clause would be governed by Indian law and not by the Rules of International Chambers of Commerce. On that basis the Court held in Singer Co. (supra) that the mere fact that the venue chosen by the ICC Court or conduct of the arbitration proceeding was London, does not exclude the operation of the Act which dealt with the domestic awards under the 1940 Act. The two-Judge Bench in Reliance Industries Limited. quoted para 53 of Singer Co. (supra) and thereafter opined:13. It can be seen that this Court in Singer case did not give effect to the difference between the substantive law of the contract and the law that governed the arbitration. Therefore, since a construction of Section 9(b) of the Foreign Awards Act led to the aforesaid situation and led to the doctrine of concurrent jurisdiction, the 1996 Act, while enacting Section 9(a) of the repealed Foreign Awards Act, 1961, in Section 51 thereof, was careful enough to omit Section 9(b) of the 1961 Act which, as stated hereinabove, excluded the Foreign Awards Act from applying to any award made on arbitration agreements governed by the law of India. 14. This being the case, the theory of concurrent jurisdiction was expressly given a go-by with the dropping of Section 9(b) of the Foreign Awards Act, while enacting Part II of the Arbitration Act, 1996, which repealed all the three earlier laws and put the law of arbitration into one statute, albeit in four different parts.71. We respectfully concur with the said view, for there is no reason to differ. Apart from that, we have already held that the agreement in question having been interpreted in a particular manner by the English courts and the said interpretation having gained acceptation by this Court, the inescapable conclusion is that the courts in India have no jurisdiction.

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

Explanation:
1[ds]25. It is patent from the law enunciated in the aforesaid decision is that stipulations in the agreement are required to be studiedly analysed and appropriately appreciated for the purpose of arriving at whether there is express or implied exclusion and further meaning of the term "seat of arbitration". The Court has also ruled that it is necessary to avoid inconsistency between the provisions in the agreement and Part I of the Act.At this juncture, we may state that there are other subsequent authorities that have dealt with express or implied exclusion. There are also authorities which have declined to accept the stance of implied exclusion. We shall refer to the same at the subsequent stage when we shall refer to the Share Holders Agreement (SHA) and appreciate what interpretation needs to be placed on the Clause relating to arbitration. Prior to that we are disposed to think to address the issue as regards the approval of Shashoua principle in BALCO and the legal acceptability of the observations made by theBench in Enercon (India) Ltd. (supra) or it is per incuriam as is proponed bythe learned senior50. We had earlier extracted extensively from the said judgment, as we find, the Court after adverting to various aspects, has categorically held that the High Court had not followed Shashoua principle. The various decisions referred to in Enercon (India) Ltd. (supra), the analysis made and the propositions deduced leads to an indubitable conclusion that Shashoua principle has been accepted by Enercon (India) Ltd. (supra). It is also to be noted that in BALCO, the Constitution Bench has not merely reproduced few paragraphs from Shashoua but has also referred to other decisions on which Shashoua has placed reliance upon. As we notice, there is analysis of earlier judgments, though it does not specifically state that "propositions laid down in Shashoua are accepted". On a clear reading, the ratio of the decision in BALCO, in the ultimate eventuate, reflects that the Shashoua principle has been accepted and theBench in Enercon (India) Ltd. (supra), after succinctly analyzing it, has stated that the said principles have been accepted by the Constitution Bench. Therefore, we are unable to accept the submission of Mr. Chidambaram that the finding recorded in Enercon (India) Ltd. (supra) that Shashoua principle has been accepted in BALCO should be declared as per incuriam.At this juncture, we think it necessary to dwell upon the issue whetherShashoua principle is the ratio decidendi of BALCO and Enercon (India) Ltd. (supra)and we intend to do so for the sake of completeness. It is well settled in law that the ratio decidendi of each case has to be correctly understood.From the aforesaid authorities, it is quite vivid that a ratio of a judgment has the precedential value and it is obligatory on the part of the Court to cogitate on the judgment regard being had to the facts exposited therein and the context in which the questions had arisen and the law has been declared. It is also necessary to read the judgment in entirety and if any principle has been laid down, it has to be considered keeping in view the questions that arose for consideration in the case. One is not expected to pick up a word or a sentence from a judgment de hors from the context and understand the ratio decidendi which has the precedential value. That apart, the Court before whom an authority is cited is required to consider what has been decided therein but not what can be deduced by following a syllogistic process.Tested on the aforesaid principle, we find that question that arose in BALCO and the discussion that has been made by the larger Bench relating to Shashoua and C v. D (supra) are squarely in the context of applicability of Part I or Part II of the Act. It will not be erroneous to say that the Constitution Bench has built the propositional pyramid on the basis or foundation of certain judgments and Shashoua and C v. D (supra) are two of them. It will be inappropriate to say that in Enercon (India) Ltd. (supra) the Court has cryptically observed that observations made in Shashoua have been approvingly quoted by the Court in BALCO in para 110. We are inclined to think, as we are obliged to, that Shashoua principle has been accepted in BALCO as well as Enercon (India) Ltd. (supra) on proper ratiocination and, therefore, the submission advanced on this score byMr. Chidambaram, learned seniornt, is repelled.59. Thus, the analysis made in the said case, theBench has opined that a precedent is a judicial decision containing a principle which forms an authoritative element termed as ratio decidendi and any reasons assigned in support of such interim order containing prima facie findings are only tentative. There cannot be any quarrel over the aforesaid proposition of law. However, the controversy involved in this case has its distinctive characteristics. The Commercial Court in London, interpreting the same agreement adverted to earlier judgments (may be ininjunction) and held that in such a situation the Courts in London will have jurisdiction. The analysis made therein, as has been stated earlier, has been appreciated in BALCO and Enercon (India) Ltd. (supra) and this Court has approved the principle set forth in the said case. Once this Court has accepted the principle, the principle governs as it holds the field and it becomes a binding precedent. To explicate, what has been stated in Shashoua as regards the determination of seat/place on one hand and venue on the other having been accepted by this Court, the conclusion in Shashoua cannot be avoided by the parties. It will be an anathema to law to conceive a situation where this Court is obligated to accept that the decisions in BALCO and Enercon (India) Ltd. (supra) which approve Shashoua principle are binding precedents, yet with some innate sense of creativity will dwell upon and pronounce, as canvassed bythe learned seniornt, thatdispute arose in the context of aninjunction and, therefore, the same having not attained finality, would not bind the parties. This will give rise to a total incompatible situation and certainly lead to violation of judicial discipline. We cannot conceive it to be permissible. Therefore, without any hesitation, we reject the said submission.In view of the aforesaid, there cannot be any trace of doubt that any filing of an application by thein the courts in India can clothe such courts with jurisdiction unless the law vests the same in them.Though we have opined that Shashoua principle has been accepted in BALCO and Enercon (India) Ltd. (supra), yet we think it apt to refer to the clauses in the agreement and scrutinize whether there is any scope to hold that the courts in India could have entertained the petition. Clause 14 of the shareholders agreement (SHA) refers towe perceive, therelating to the arbitration stipulates that the arbitral proceedings shall be in accordance with the ICC Rules. There is ain the SHA that the governing law of SHA would be laws of India. The aforesaid agreement has already been interpreted by the English Courts to mean that the parties have not simply provided for the location of hearing to be in London.It is worthy to note that the arbitration agreement is not silent as to what law and procedure is to be followed. On the contrary, Clause 14.1 lays down that the arbitration proceedings shall be in accordance with the Rules of Conciliation and Arbitration of the ICC. In Enercon (India) Ltd. (supra), theBench referring to Shashoua case accepted the view of Cooke, J. that the phrase "venue of arbitration shall be in London, UK" was accompanied by the provision in the arbitrationor arbitration to be conducted in accordance with the Rules of ICC in Paris. TheBench accepted the Rules of ICC, Paris which is supernational body of Rules as has been noted by Cooke, J. and that is how it has accepted that the parties have not simply provided for the location of hearings to be in London. To elaborate, the distinction between the venue and the seat remains. But when a Court finds there is prescription for venue and something else, it has to be adjudged on the facts of each case to determine the juridical seat. As in the instant case, the agreement in question has been interpreted and it has been held that London is not mentioned as the mere location but the courts in London will have the jurisdiction, another interpretative perception as projected bythe learned senior1. We respectfully concur with the said view, for there is no reason to differ. Apart from that, we have already held that the agreement in question having been interpreted in a particular manner by the English courts and the said interpretation having gained acceptation by this Court, the inescapable conclusion is that the courts in India have no jurisdiction.