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

While the petitioner is registered under the Companies Act, 1956, the respondent is a company incorporated in Seoul, South Korea with its principle place at Seoul. The disputes have arisen in between these two companies out of a Distributorship Agreement which was entered between the parties on 2.2.2004. By this, the petitioner was to be the exclusive distributor of the respondent in India and Bhutan for its products like Excavators, Wheel Loaders etc. Article 23 of the Distributorship Agreement provides for the resolution of disputes by arbitration. Since the disputes have arisen in between the two companies and since one of the companies is based in Seoul, South Korea, the present petition has been filed treating this to be an international arbitration. There is no dispute between the parties that this will be the international arbitration on the basis of the arbitration Clause being Article 23 of the Distributorship Agreement.2. There is also no dispute that the disputes have arisen between the parties on account of which the respondent purported to terminate the Agreement entered into between them. In pursuance of the disputes, the petitioner issued notice dated 01.09.2007 for appointment of an Arbitrator to resolve the disputes arisen between the parties. However, that not having been done, the present petition is necessitated.

Reasoning:
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.