NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY AMBIENTE S.P.A.) versus JINDAL DRUGS LIMITED & ORS.
[2020] 12 S.C.R. 1019, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Facts
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1019
NOY VALLESINA ENGINEERING SpA,
(NOW KNOWN AS NOY AMBIENTE S.P.A.)
v.
JINDAL DRUGS LIMITED & ORS.
(Civil Appeal No. 8607 of 2010)
NOVEMBER 26, 2020
[INDIRA BANERJEE AND S. RAVINDRA BHAT, JJ.]
Arbitration and Conciliation Act, 1996:
s.34 – Petition under – Challenging foreign award –
Maintainability of – Held: Seat of arbitration in the present case
was in London under the aegis of ICC – Challenge to such award
u/s. 34 is not maintainable.
s.50 – Appeal against orders passed in arbitration proceedings
– Maintainability – Held: Section 50 alone provides for an appeal
in all arbitration cases of enforcement of foreign awards – Letters
Patent Appeals against such orders is not maintainable.
Allowing the appeal, the Court
HELD: 1. Having regard to the precedential unanimity, so
to say, about the manner of applicability of *BALCO case in
respect of agreements entered into and awards rendered earlier,
with respect to the law of the seat of arbitration (or the curial law)
excluding applicability of Part I of the Arbitration and Conciliation
Act, 1996 and the unambiguous intention of the parties in the
present case (expressed in Clause 12.4.2 of the Contract) that
the seat of arbitration was London, where the ICC arbitration
proceedings were in fact held, and the awards rendered, this court
is of the opinion that the impugned judgment cannot be sustained.
[Para 23][1052-D-F]
*Bharat Aluminium Company vs Kaiser Aluminium
Technical Services Inc (2012) 9 SCC 552 :
[2012] 12
SCR 327; Venture Global Engineering v. Satyam
Computer Services Ltd. & Anr. (2008) 4 SCC 190 :
[2008] 1 SCR 501 – followed.
[2020] 12 S.C.R. 1019
1019
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Roger Shashoua v. Mukesh Sharma (2017) 14 SCC 722
: [2017] 7 SCR 442; IMAX Corporation v. E-City
Entertainment (India) (P.) Ltd. (2017) 5 SCC 331 :
[2017] 4 SCR 833; Government of India v. Vedanta Ltd
(2020) SCC Online (SC) 749; BGS SOMA JV v.
National Hydro Electric Power Corporation (2020) 4
SCC 234 – relied on.
Bhatia International v. Bulk Trading S. A. & Anr. (2002)
4 SCC 105 : [2002] 2 SCR 411; Union of India v.
Reliance Industries (2015) 10 SCC 213 : [2015] 10
SCR 85; Harmony Innovation Shipping Ltd v. Gupta
Goal India Ltd. 2015 (9) SCC 172: [2015] 2 SCR 697
– referred to.
2.1 The decision in **Fuerst Day Lawson unambiguously
ruled out the maintainability of any appeal against an order granting
enforcement of a foreign arbitration award. In the present case,
both the partial and final awards are foreign awards. Therefore,
the provisions of Sections 47/48 were correctly invoked by the
appellant for enforcement of the awards (through Application No
156/2005). The respondent objected to the enforcement
proceedings, in accordance with grounds articulated in Part II of
the Act. A single judge substantially upheld the award, and
proceeded to its enforcement, by a judgment dated 05.06.2006,
at the same time rejecting the challenge to enforcement laid out
by the respondent. Both parties appealed to the Division Bench;
the respondent on the challenge to the order rejecting its objection
to enforcement (Appeal No.
492/2006), and the appellant as to
that part of the order of the Single Judge, refusing to enforce a
part of the award (Appeal. No. 740/2006). [Para 24][1052-G; 1053-
A-B]
2.2. In all arbitration cases of enforcement of foreign awards,
it is Section 50 alone that provides an appeal. Therefore, the
respondent’s appeal to the Division Bench, (Appeal No. 492/
2006) is not maintainable. However, the appellant’s appeal
(Appeal. No. 740/2006), against the order of the Single Judge (to
the extent it refuses enforcement) is maintainable. [Para 25][1055-
F-G]
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2.3 In view of the finding that such an appeal (against an
order of enforcement) is untenable by reason of Section 50, the
merits of the respondent’s objections to the Single Judge’s order,
are open for it to be canvassed in appropriate proceedings. Such
proceedings cannot also be a resort to any remedy under the
Code of Civil Procedure. In the event the respondent chooses
to avail of such remedy, the question of limitation is left open, as
this court is conscious of the fact that Fuerst Day Lawson is a
decision rendered over 10 years ago; it settled the law decisively
and has been followed in later judgments. It cannot be said that
the respondent was ignorant of the law. [Para 26][1055-H; 1056-
A-B]
**Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2011)
8 SCC 333 : [2011] 11 SCR 1; Union of India v Simplex
Infrastructures Ltd. (2017) 14 SCC 225; Kandla Export
Corpn. v. OCI Corpn (2018) 14 SCC 715 : [2018] 1
SCR 915 – relied on.
Case Law Reference
[2015] 10 SCR 85
referred to
Para 12
[2015] 2 SCR 697
referred to
Para 12
[2002] 2 SCR 411
referred to
Para 17
[2008] 1 SCR 501
followed
Para 17
[2017] 7 SCR 442
relied on
Para 19
[2017] 4 SCR 833
relied on
Para 20
(2020) 4 SCC 234
relied on
Para 20
[2012] 12 SCR 327
followed
Para 23
[2011] 11 SCR 1
relied on
Para 25
(2017) 14 SCC 225
relied on
Para 25
[2018] 1 SCR 915
relied on
Para 25
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8607
of 2010.
From the Judgment and Order dated 28.04.2008 of the High Court
of
Bombay in Appeal No. 519 of 2002.
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED
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Jayadeep Gupta, Sr.Adv. L.K. Bhushan, Anirudh Arun kumar,
G.C.Shyam Sundar, M/S. Dua Associates, M/s D.S.K. Legal, Advs. for
the appearing parties.
The Judgment of the Court was delivered by
S. RAVINDRA BHAT, J.
1. The appellant, which was granted special leave, challenges a
judgment of the Bombay High Court1. It urges that the impugned judgment
is erroneous because it concludes that proceedings under Section 34 of
the Arbitration and Conciliation Act, 1996 (hereafter “the Act”) can be
maintained to challenge a foreign award, defined as one, under that
enactment.
The facts
2. The appellant company (hereafter “NV Engineering” or “the
appellant”) was at the relevant time, incorporated under Italian law and
involved in the setting-up and construction of plants for production of
synthetic fibers, polymers and ascorbic acid. The respondent (hereafter
“Jindal”) is a public limited company incorporated under relevant Indian
law. In 1994, Jindal negotiated with a company - Engineering Chur AG
of Sagenstrasse 97, 7001 Chur, Switzerland (hereafter,‘Enco’) and, on
30.01.1995 entered into four related agreements with Enco to set up an
ascorbic acid plant in India. These were: (i) Engineering Contract for
Ascorbic for Acid Plant (ECAAP, or “plant contract”); (ii) Supply contract
for Ascorbic Acid plant (SCAAP or “supply contract”); (iii) Service
agreement for Ascorbic Acid plant (SAAAP “service contract”); and
(iv) License
agreement for Ascorbic acid plant (LAAAP “license
contract”).
3. Under the plant contract, Enco agreed to provide Jindal with
technical information and basic engineering documentation for the
construction, commission, operation and maintenance of the Ascorbic
Acid Plant (“the plant”). In consideration of Enco’s obligations, Jindal
was to pay a total fee of Swiss Francs 86,00,000/- in the manner provided
in the Agreement. ECAAP as well as the other three agreements had
an arbitration clause. In March 1995, with the consent of the respondent,
Enco assigned ECAAP to NV Engineering. All the obligations of  Enco
towards Jindal were taken over by NV Engineering.
1 Dated 28.4.2008 in Appeal No. 519/2002
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4. Disputes arose between Jindal and NV Engineering. The latter
terminated the agreement and claimed damages. On 31.10.1996, Jindal
filed a request for arbitration under the ECAAP, i.e. the plant contract,
before the International Court of Arbitration (ICC), Paris. The appellant
filed its reply to Jindal’s claim and also made a counter claim. Jindal
appointed Mr. Desai as its nominee on the arbitral tribunal. NV
Engineering nominated Prof. ACC Alberto Santa Maria as its nominee.
The appointment of Mr. Desai and Prof. ACC Alberto Santa Maria as
Arbitrators was confirmed by the ICC. Mr. Richard Fernyhough Q.C.
was appointed as Chairman of the Arbitral Tribunal.
5. After considering the claims and counter claims, the tribunal
made a partial award on 01.02.2000; by that award, Jindal’s claims were
rejected. NV Engineering was awarded SFr.44,33,416 (Swiss Francs)
towards its counterclaims under the ECAAP. The tribunal then called
upon the parties to present written representations on interest and costs
in terms of Article 20 of the ICC Rules of Arbitration to enable it to
frame the final award.
6. On 20.2.2000 Jindal filed a petition2 before the Bombay High
Court under Section 34 of the Act challenging the partial award. The
petition was admitted for final hearing on 01.03.2000 and notice was
issued to the respondents (including the ICC and the tribunal). An interim
injunction restraining the said respondents “from receiving any further
submissions, and/or
passing any further direction and/or Ruling
and/or Award in the arbitration proceedings….” was issued. This
order was continued from time to time till the petition was decided. The
ICC tribunal in the meanwhile was of the view that the interim order
passed by the high court was not binding on it and consequently, proceeded
further. NV Engineering filed written submissions on interest and cost
on 14.03.2001. Jindal, however, notified the tribunal that it did not intend
to make any submission on the issue of interest and cost. Mr. Desai (the
respondent’s nominee) indicated that he was unable to continue on the
tribunal due to the interim order passed by the court. Resultantly the
ICC appointed Mr. Ashok Sancheti as a replacement co-arbitrator in
place of Mr. Desai, and the tribunal made its final Award on 22.10.2001.
When the final award was made, Jindal’s challenge to the partial award,
and the interim application3 were both pending in the High Court.
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
2 Arbitration petition No. 49/2000.
3 No. 98/2000, under Section 9 of the Act.
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7. The petition (under Section 34) challenging the partial award
was decided by the High Court by an order of a Single Judge dated
6.2.20024, which held that the since the partial award was a foreign
award, a challenge through a petition was not maintainable under Section
34 of the Act. Jindal preferred an appeal against that order before the
Division Bench5 (hereafter “Jindal’s challenge appeal”). During the
pendency of the appeal, NV Engineering had applied for enforcement
of the two awards, i.e. the partial and final awards, under Sections 47
and 48 of the Act, in the chapter relating to foreign awards. This petition
was allowed and Jindal’s objections against the two awards’ enforceability
were overruled. The single judge who decided the petition held, in a
judgment (hereafter referred to as “the enforcement order”)6 that the
two awards “at Exh. A & B are enforceable, save and except that
part of the award at Exh. A which directs payment of Swiss
Fr.1,453,316” by Jindal to NV Engineering. Jindal preferred an appeal
(hereafter “Jindal’s enforcement appeal”) and NV Engineering filed a
cross appeal7.
8. By the impugned judgment, even as the later two appeals, which
directly dealt with the same subject matter (enforcement of a foreign
award were pending), the Division Bench decided Jindal’s challenge
appeal preferred in 2002, and set aside the single judge’s order (which
had ruled that a petition under Section 34
was not maintainable). The
Division Bench relied on the judgments of this court, i.e. Bhatia
International v. Bulk Trading S. A. & Anr8 and Venture Global
Engineering v. Satyam Computer Services Ltd. & Anr9 to hold that
proceedings under Section 34 of the Act could be validly maintained to
challenge a foreign award.
The parties’ contentions
9. Appearing for the appellant, NV Engineering, Mr. Joydeep
Gupta, learned senior counsel, urged that the impugned judgment is
4 Dated 06.02.2002, which is now reported as Jindal Drugs Ltd v Noy Vallesina 2002
(2) Mah. LJ 820.
5 Appeal No. 519/2002.
6 Noy Vallesina v Jindal Drugs Ltd 2006 (3) Arb.LR 510 (Bom). The enforcement
proceeding, under Sections 47/48 were registered as Arb. Petition No. 156/2005. The
decision was rendered on 05.06.2006.
7 Jindal’s appeal was Appeal No. 492/2006; NV Engineering’s appeal was Appeal. No.
740/2006
8 (2002) 4 SCC 105
9 2008 (4) SCC 190
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unsupportable in law because a foreign award cannot be challenged
under Section 34 of the Act. It was urged that the three-judge decision
in Bhatia International10 and the subsequent holding in Venture Global11
were both held to be incorrect in the larger, five judges ruling in Bharat
Aluminium Company vs Kaiser Aluminium Technical Services Inc12
(“BALCO” hereafter). Learned counsel submitted that even the caveat
in BALCO that a class of foreign awards made prior to its pronouncement
cannot aid Jindal’s essential argument with respect to maintainability of
a challenge under Section 34 and that such challenge under Part I is
untenable.
10. Mr. Gupta relied on BALCO extensively in support of his
argument that the foreign awards in this case, having been rendered
outside India under the aegis of the ICC cannot be challenged merely
because a condition in the underlying contract says that the law governing
the agreement, would be Indian law. The following discussion in BALCO
was pressed into service:
“117. It would, therefore, follow that if the arbitration
agreement is found or held to provide for a seat/place of
arbitration outside India, then the provision that the
Arbitration Act, 1996 would govern the arbitration
proceedings, would not make Part I of the Arbitration Act,
1996 applicable or enable the Indian courts to exercise
supervisory jurisdiction over the arbitration or the award. It
would only mean that the parties have contractually imported
from
the Arbitration Act, 1996, those provisions which are
concerned with the internal conduct of their arbitration and
which are not inconsistent with the mandatory provisions of
the English procedural law/curial law. This necessarily follows
from the fact that Part I applies only to arbitrations having
their seat/place in India.
******
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         ********
123. Thus, it is clear that the regulation of conduct of
arbitration and challenge to an award would have to be done
by the courts of the country in which the arbitration is being
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
10 Supra n. 8
11 Supra n. 9
12 2012 (9) SCC 552
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conducted. Such a court is then the supervisory court
possessed of the power to annul the award. This is in keeping
with the scheme of the international instruments, such as the
Geneva Convention and the New York Convention as well as
the UNCITRAL Model Law. It also recognises the territorial
principle which gives effect to the sovereign right of a country
to regulate, through its national courts, an adjudicatory duty
being performed in its own country. By way of a comparative
example, we may reiterate the observations made by the Court
of Appeal, England in C v. D [2008 Bus LR 843 : 2007 EWCA
Civ 1282 (CA)] wherein it is observed that:
“It follows from this that a choice of seat for the arbitration
must be a choice of forum for remedies seeking to attack the
award.”
(emphasis supplied)
In the aforesaid case, the Court of Appeal had approved the
observations made in A v. B [(2007) 1 All ER (Comm) 591:
(2007) 1 Lloyd’s Rep 237] wherein it is observed that:
“… an agreement as to the seat of an arbitration is
analogous to an exclusive jurisdiction clause. Any claim
for a remedy … as to the validity of an existing interim or
final award is agreed to be made only in the courts of the
place designated as the seat of arbitration.”
(emphasis supplied)
*****
******
******
133. The party which seeks to resist the enforcement of the
award has to prove one or more of the grounds set out in
Sections 48(1) and (2) and/or the
Explanation of sub-section
(2). In these proceedings, we are, however, concerned only
with the interpretation of the terms “country where the award
was made” and “under the law of which the award was made”.
The provisions correspond to Article V(1)(e) of the New York
Convention, which reads as under:
“V(1) Recognition and enforcement of the award may be
refused, at the request of the party against whom it is
invoked, only if that party furnishes to the competent
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authority where the recognition and enforcement is sought,
proof that—
(a)-(d)***
(e) the award has not yet become binding on the parties,
or has been set aside or suspended by a competent
authority of the country in which, or under the law of
which, that award was made.
(2) Recognition and enforcement of an arbitral award may
also be refused if the competent authority in the country
where recognition and enforcement is sought finds that—
(a) the subject-matter of the difference is not capable of
settlement by arbitration under the law of that country; or
(b) the recognition or enforcement of the award would be
contrary to the public policy of that country.”
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135. Thus, the intention of the legislature is clear that the
court may refuse to enforce the foreign award on satisfactory
proof of any of the grounds mentioned in Section 48(1), by
the party resisting the enforcement of the award. The provision
sets out the defences open to the party to resist enforcement
of a foreign award. The words “set aside or suspended”, in
clause (e) of Section 48(1) cannot be interpreted to mean
that, by necessary implication, the foreign award sought to
be enforced in India can also be challenged on merits in Indian
courts. The provision merely recognises that courts of the two
nations which are competent to annul or suspend an award.
It does not ipso facto confer jurisdiction on such courts for
annulment of an award made outside the country. Such
jurisdiction has to be specifically provided in the relevant
national legislation of the country in which the court
concerned is located. So far as India is concerned, the
Arbitration Act, 1996 does not confer any such jurisdiction
on the Indian courts to annul an international commercial
award made outside India. Such provision exists in Section
34, which is placed in Part I. Therefore, the applicability of
that provision is limited to the awards made in India. If the
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
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arguments of the learned counsel for the appellants are
accepted, it would entail incorporating the provision contained
in Section 34 of the Arbitration Act, 1996, which is placed in
Part I of the Arbitration Act, 1996 into Part II of the said Act.
This is not permissible as the intention of Parliament was
clearly to confine the powers of the Indian courts to set aside
an award relating to international commercial arbitrations,
which take place in India.
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134. The aforesaid Article of the New York Convention has
been bodily lifted and incorporated in the Arbitration Act,
1996 as Section 48.
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151.Redfern and Hunter [ Blackaby, Partasides, Redfern and
Hunter (Eds.), Redfern and Hunter on International
Arbitration (5th Edn., Oxford University Press, Oxford/New
York 2009).] at Para 11.96 state that the court which is
competent to sustain or set aside an award is the court of the
country in “alternative one” or “alternative two”. The authors,
however, further state that “this court will almost invariably
be the national court at the seat of the arbitration”. They
point out that the prospect of an award being set aside under
the procedural law of a State other than that at the seat of
arbitration is unlikely. They point out that an ingenious (but
unsuccessful) attempt was made to persuade the US District
Court to set aside an award made in Mexico, on the basis
that the reference to the law under which that award was made
was a reference to the law governing the dispute and not to
the procedural law (para 11.96). The learned authors had
made a reference to International Standard Electric Corpn.
(US) v. Bridas Sociedad Anonima Petrolera (Argentina)
[(1992) 7 Ybk Comm Arb 639]. The Court rejected the
aforesaid argument with the following observations:
“Decisions of foreign courts under the Convention
uniformly support the view that the clause in question
means procedural and not substantive (that is, in most
cases, contract law)….
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Accordingly, we hold that the contested language in Article
V(1)(e) of the Convention … refers exclusively to
procedural and not substantive law, and more precisely to
the regimen or scheme of arbitral procedural law under
which the arbitration was conducted.”
152. The correct position under the New York Convention is
described very clearly and concisely by Gary B. Born in his
book International Commercial Arbitration (Kluwer Law
International, Vol. 1), Ch. X, p. 1260 as follows:
“This provision is vitally important for the international
arbitral process, because it significantly restricts the extent
of national court review of international arbitral awards
in annulment actions, limiting such review only to the
courts of the arbitral seat (that is, the State where the award
is made or the State whose procedural law is selected by
the parties to govern the arbitration). In so doing, the
Convention ensures that courts outside the arbitral seat
may not purport to annul an international award, thereby
materially limiting the role of such courts in supervising
or overseeing the procedures utilized in international
arbitrations.
At the same time, the New York Convention also allows the
courts of the arbitral seat wide powers with regard to the
annulment of arbitral awards made locally. The Convention
generally permits the courts of the arbitral seat to annul
an arbitral award on any grounds available under local
law, while limiting the grounds for
non-recognition of
Convention awards in courts outside the arbitral seat to
those specified in Article V of the Convention. This has the
effect of permitting the courts of the arbitral seat
substantially greater scope than courts of other States to
affect the conduct or outcome of an international
arbitration 
through 
the vehicle 
of 
annulment
actions. Together with the other provisions of Articles II
and V, this allocation of annulment authority confirms the
(continued) special importance of the arbitral seat in the
international arbitral process under the New York
Convention.”
(emphasis supplied)
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
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153. In our opinion, the aforesaid is the correct way to
interpret the expressions “country where the award was made”
and the “country under the law of which the award was made”.
We are unable to accept the submission of Mr Sundaram that
the provision confers concurrent jurisdiction in both the fora.
“Second alternative” is available only on the failure of the
“first alternative”. The expression under the law is the
reference only to the procedural law/curial law of the country
in which the award was made and under the law of which the
award was made. It has no reference to the substantive law of
the contract between the parties. In such view of the matter,
we have no hesitation in rejecting the submission of the
learned counsel for the appellants.
***
*******
******
154. At this stage, we may notice that in spite of the aforesaid
international understanding of the second limb of Article
V(1)(e), this Court has proceeded on a number of occasions
to annul an award on the basis that parties had chosen Indian
law to govern the substance of their dispute. The aforesaid
view has been expressed in Bhatia International [(2002) 4
SCC 105] and Venture Global Engg. [(2008) 4 SCC 190] In
our opinion, accepting such an interpretation would be to
ignore the spirit underlying the New York Convention which
embodies a consensus evolved to encourage consensual
resolution of complicated, intricate and in many cases very
sensitive
international commercial disputes. Therefore, the
interpretation which hinders such a process ought not to be
accepted. This also seems to be the view of the national courts
in different jurisdictions across the world. For the reasons
stated above, we are also unable to agree with the conclusions
recorded by this Court in Venture Global Engg. [(2008) 4 SCC
190] that the foreign award could be annulled on the exclusive
grounds that the Indian law governed the substance of the
dispute. Such an opinion is not borne out by the huge body
of judicial precedents in different jurisdictions of the world.”
11. It was next argued that BALCO, a five-judge decision, clearly
enunciated the principle that the seat of arbitration also indicated the
choice of the law governing the arbitration. Learned counsel relied
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on the observations of the larger bench, and its emphasis on the
“Shashoua principle”13. It was contended that according to that principle,
the designation of a “seat” of the arbitration would carry with it “something
akin to an exclusive jurisdiction clause”. Learned counsel referred to
identical conditions in each contract, in the present case, which expressly
stated that arbitration would be “under the Rules of Conciliation and
arbitration of the International Chamber of Commerce, Paris and
Arbitration proceedings shall be in the English language and shall
take place in London.” NV Engineering therefore, argued that the
intention of the parties expressed unambiguously in the contract was
that the arbitration was governed by the law of the seat, i.e. UK law.
Therefore, the findings in the impugned judgment were clearly untenable.
12. The appellants also contended that Union of India v Reliance
Industries14 Harmony Innovation Shipping Ltd v Gupta Goal India
Ltd15 and Roger Shashoua v Mukesh Sharma16 have now established
that pre-Balco awards involving agreements which stipulate that the
juridical seat is in India, and which stipulate or can be read as stipulating
that the law governing arbitration would be Indian law, would not be
ruled by BALCO. However, cases where juridical seat is not in India, or
the law governing arbitration is not Indian law, would be bound by BALCO.
Therefore, the impugned judgment, which held to the contrary, cannot
be
sustained.
13. The appellant lastly relied on Section 50 of the Act and argued
that the order holding that the petition under Section 34 was not
maintainable was not appealable. Learned counsel also relied on Fuerst
Day Lawson Ltd. v. Jindal Exports Ltd.17 in this context.
14. Mr. Jay Salva, learned senior counsel for Jindal, submitted
that the impugned judgment is unexceptionable and not liable to be
interfered with. He argued that Section 34 operates in a field different
from Section 48. The latter enables the enforcement of a foreign award,
and the court may only refuse enforcement, whereas under Section 34,
the legality of an award can be gone into and the court has the jurisdiction
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
13 The term based on the rule spelt out in Roger Shashoua v Mukesh Sharma 2009
EWHC 957 (Comm)
14 2015 (10) SCC 213
15 2015 (9) SCC 172
16 2017 (14) SCC 722
17 (2011) 8 SCC 333
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to set it aside. This crucial difference was recognized by Indian courts,
as is evident from the decisions in Bhatia International18 and Venture
Global19.
15. Learned counsel contested the appellants’ argument that the
decision in BALCO would govern the dispute in the present case. He
relied on the observations in BALCO that arbitration agreements entered
into before the decision, and disputes which arose under them, would
continue to be bound by the pre-BALCO rules. Since, in this case, the
agreements were entered into, and awards too were rendered during
the prevalence of Bhatia20 principle, the later decision in BALCO or any
subsequent judgment could not apply.
16. Learned counsel emphasized that though the ECAAP (the
plant contract) stated that the arbitration was to be in London, under the
ICC. Clause 12.4.1 clearly stated that the contract would be governed
by Indian law, which unambiguously pointed to the fact that the parties
intended that the law governing arbitration too was Indian law. Therefore,
there is no question of the applicability of the ratio in BALCO.
Analysis & Conclusions
17. The decision in Bhatia21, and later, in Venture Global22, had
ruled that resort to remedies under Part I of the Act can be made in
respect of foreign awards, despite the clear dichotomy in the enactment
between domestic awards (covered by Part I) and foreign awards
(covered by Part II). This understanding was re-visited in
BALCO where
this court held as follows:
“75. We are also unable to accept the submission of the learned
counsel for the appellants that the Arbitration Act, 1996 does
not make seat of the arbitration as the centre of gravity of
the arbitration. On the contrary, it is accepted by most of the
experts that in most of the national laws, arbitrations are
anchored to the seat/place/situs of arbitration. Redfern in Para
3.54 concludes that ‘the seat of the arbitration is thus intended
to be its centre of gravity.’ [Blackaby, Partasides, Redfern
18 Supra n. 8
19 Supra n. 9
20 Supra n. 8
21 Supra n.8
22 Supra n.9
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and Hunter (Eds.), Redfern and Hunter on International
Arbitration (5th Edn., Oxford University Press, Oxford/New
York 2009)] This, however, does not mean that all the
proceedings of the arbitration have to take place at the seat
of the arbitration. The arbitrators at times hold meetings at
more convenient locations. This is necessary as arbitrators
often come from different countries. It may, therefore, on
occasions be convenient to hold some of the meetings in a
location which may be convenient to all. Such a situation
was examined by the Court of Appeal in England in Naviera
Amazonica Peruana SA v. Compania International de Seguros
del Peru [Naviera Amazonica Peruana SA v. Compania
International de Seguros del Peru, (1988) 1 Lloyd’s Rep 116
(CA)] wherein at p. 121 it is observed as follows:
‘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 arbitration changes. The seat of arbitration
remains the place initially agreed by or on behalf of the
parties.’
76. It must be pointed out that the law of the seat or place
where the arbitration is held, is normally the law to govern
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that arbitration. The territorial link between the place of
arbitration and the law governing that arbitration is well
established in the international instruments, namely, the New
York Convention of 1958 and the UNCITRAL Model Law of 1985.
It is true that the terms “seat” and “place” are often used
interchangeably. In Redfern and Hunter on International
Arbitration [Blackaby, Partasides, Redfern and Hunter
(Eds.), Redfern and Hunter on International Arbitration (5th
Edn., Oxford University Press, Oxford/New York 2009)] (Para
3.51), the seat theory is defined thus:‘The concept that an
arbitration is governed by the law of the place in which it is
held, which is the “seat” (or “forum” or locus arbitri) of the
arbitration, is well established in both the theory and practice
of international arbitration. In fact, the Geneva Protocol,
1923 states
*****
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*****
95. The learned counsel for the appellants have submitted
that Section 2(1)(e), Section 20 and Section 28 read with
Section 45 and Section 48(1)(e) make it clear that Part I is
not limited only to arbitrations which take place in India.
These provisions indicate that the Arbitration Act, 1996
is subject-matter centric and not exclusively seat-centric.
Therefore, “seat” is not the “centre of gravity” so far as the
Arbitration Act, 1996 is concerned. We are of the considered
opinion that the aforesaid provisions have to be interpreted
by keeping the principle
of territoriality at the forefront. We
have earlier observed that Section 2(2) does not make Part I
applicable to arbitrations seated or held outside India. In
view of the expression used in Section 2(2), the
maxim expressumfacitcessaretacitum, would not permit by
interpretation to hold that Part I would also apply to
arbitrations held outside the territory of India. The expression
“this Part shall apply where the place of arbitration is in
India” necessarily excludes application of Part I to
arbitration seated or held outside India. It appears to us that
neither of the provisions relied upon by the learned counsel
for the appellants would make any section of Part I applicable
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to arbitration seated outside India. It will be apposite now to
consider each of the aforesaid provisions in turn.
96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under:
******
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   ******
We are of the opinion, the term “subject-matter of the
arbitration” cannot be confused with “subject-matter of the
suit”. The term “subject-matter” in Section 2(1)(e) is confined
to Part I. It has a reference and connection with the process
of dispute resolution. Its purpose is to identify the courts
having supervisory control over the arbitration proceedings.
Hence, it refers to a court which would essentially be a court
of the seat of the arbitration process. In our opinion, the
provision in Section 2(1)(e) has to be construed keeping in
view the provisions in Section 20 which give recognition to
party autonomy. Accepting the narrow construction as
projected by the learned counsel for the appellants would, in
fact, render Section 20 nugatory. In our view, the legislature
has intentionally given jurisdiction to two courts i.e. the court
which would have jurisdiction where the cause of action is
located and the courts where the arbitration takes place. This
was necessary as on many occasions the agreement may
provide for a seat of arbitration at a place which would be
neutral to both the parties. Therefore, the courts where the
arbitration takes place would be required to exercise
supervisory control over the arbitral process. For example, if
the
arbitration is held in Delhi, where neither of the parties
are from Delhi, (Delhi having been chosen as a neutral place
as between a party from Mumbai and the other from Kolkata)
and the tribunal sitting in Delhi passes an interim order Under
Section 17 of the Arbitration Act, 1996, the appeal against
such an interim order under Section 37 must lie to the courts
of Delhi being the courts having supervisory jurisdiction over
the arbitration proceedings and the tribunal. This would be
irrespective of the fact that the obligations to be performed
under the contract were to be performed either at Mumbai or
at Kolkata, and only arbitration is to take place in Delhi. In
such circumstances, both the courts would have jurisdiction
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i.e. the court within whose jurisdiction the subject-matter of
the suit is situated and the courts within the jurisdiction of
which the dispute resolution i.e. arbitration is located.
***
98. We now come to Section 20, which is as under:
******
   ******
         ******
A plain reading of Section 20 leaves no room for doubt
that where the place of arbitration is in India, the parties are
free to agree to any “place” or “seat” within India, be it
Delhi, Mumbai, etc. In the absence of the parties’ agreement
thereto, Section 20(2) authorises the tribunal to determine
the place/seat of such arbitration. Section 20(3) enables the
tribunal to meet at any place for conducting hearings at a
place of convenience in matters such as consultations among
its members for hearing witnesses, experts or the parties.
99. The fixation of the most convenient “venue” is taken care
of by Section 20(3). Section 20, has to be read in the context
of Section 2(2), which places a threshold limitation on the
applicability of Part I, where the place of arbitration is in
India. Therefore, Section 20 would also not support the
submission of the extra-territorial applicability of Part I, as
canvassed by the learned counsel for the appellants, so far
as purely domestic arbitration is concerned.
Only if the agreement of the parties is construed to
provide for the “seat”/”place” of arbitration being in India
— would Part I of the Arbitration Act,
1996 be applicable. If
the agreement is held to provide for a “seat”/”place” outside
India, Part I would be inapplicable to the extent inconsistent
with the arbitration law of the seat, even if the agreement
purports to provide that the Arbitration Act, 1996 shall govern
the arbitration proceedings.”
******
*******
*******
110. Examining the fact situation in the case, the Court
observed as follows: (Shashoua case [2009 EWHC 957
(Comm)])
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“The basis for the court’s grant of an anti-suit injunction
of the kind sought depended upon the seat of the
arbitration. An agreement as to the seat of an arbitration
brought in the law of that country as the curial law and
was analogous to an exclusive jurisdiction clause. Not only
was there agreement to the curial law of the seat, but also
to the courts of the seat having supervisory jurisdiction
over the arbitration, so that, by agreeing to the seat, the
parties agreed that any challenge to an interim or final
award was to be made only in the courts of the place
designated as the seat of the arbitration.
Although, ‘venue’ was not synonymous with ‘seat’, in an
arbitration clause which provided for arbitration to be
conducted in accordance with the Rules of the ICC in Paris
(a supranational body of rules), a provision that ‘the venue
of arbitration shall be London, United Kingdom’ did
amount to the designation of a juridical seat….”
In para 54, it is further observed as follows: (Shashoua
case [2009 EWHC 957 (Comm)])
“There was a little debate about the possibility of the issues
relating to the alleged submission by the claimants to the
jurisdiction of the High Court of Delhi being heard by
that Court, because it was best fitted to determine such
issues under the Indian law. Whilst I found this idea
attractive initially, we are persuaded that it would be wrong
in principle to allow this and that it would create undue
practical problems in any event. On
the basis of what I
have already decided, England is the seat of the arbitration
and since this carries with it something akin to an exclusive
jurisdiction clause, as a matter of principle the foreign
court should not decide matters which are for this Court
to decide in the context of an anti-suit injunction.”
(emphasis supplied)
In making the aforesaid observations in Shashoua
case [2009 EWHC 957 (Comm)] , the Court relied on the
judgments of the Court of Appeal in C v. D [2008 Bus LR
843 : 2007 EWCA Civ 1282 (CA)] .
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111. In C v. D [2008 Bus LR 843: 2007 EWCA Civ 1282 (CA)]
the Court of Appeal in England was examining an appeal by
the defendant insurer from the judgment of Cooke, J. granting
an anti-suit injunction preventing it from challenging an
arbitration award in the US courts. The insurance policy
provided “any dispute arising under this policy shall be finally
and fully determined in London, England under the provisions
of the English Arbitration Act, 1950 as amended”. However,
it was further provided that “this policy shall be governed by
and construed in accordance with the internal laws of the
State of New York….” (Bus LR p. 847, para 2). A partial award
was made in favour of the claimants. It was agreed that this
partial award is, in English law terms, final as to what it
decides. The defendant sought the tribunal’s withdrawal of
its findings. The defendant also intimated its intention to apply
to a Federal Court applying the US Federal Arbitration Law
governing the enforcement of arbitral award, which was said
to permit “vacatur” of an award where arbitrators have
manifestly disregarded the law. It was in consequence of such
intimation that the claimant sought and obtained an interim
anti-suit injunction. The Judge held that parties had agreed
that any proceedings seeking to attack or set aside the partial
award would only be those permitted by the English law. It
was not, therefore, permissible for the defendant to
bring any
proceedings in New York or elsewhere to attack the partial
award. The Judge rejected the arguments to the effect that
the choice of the law of New York as the proper law of the
contract amounted to an agreement that the law of England
should not apply to proceedings post award. The Judge also
rejected a further argument that the separate agreement to
arbitrate contained in Condition V(o) of the policy was itself
governed by New York Law so that proceedings could be
instituted in New York. The Judge granted the claimant a final
injunction.
******
******
******
116. The legal position that emerges from a conspectus of all
the decisions, seems to be, that the choice of another country
as the seat of arbitration inevitably imports an acceptance
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that the law of that country relating to the conduct and
supervision of arbitrations will apply to the proceedings.
117. It would, therefore, follow that if the arbitration agreement
is found or held to provide for a seat/place of arbitration
outside India, then the provision that the Arbitration Act, 1996
would govern the arbitration proceedings, would not make
Part I of the Arbitration Act, 1996 applicable or enable the
Indian courts to exercise supervisory jurisdiction over the
arbitration or the award. It would only mean that the parties
have contractually imported from the Arbitration Act, 1996,
those provisions which are concerned with the internal
conduct of their arbitration and which are not inconsistent
with the mandatory provisions of the English procedural law/
curial law. This necessarily follows from the fact that Part I
applies only to arbitrations having their seat/place in India.”
The final conclusions in BALCO were recorded as follows:
“194. In view of the above discussion, we are of the
considered opinion that the Arbitration Act, 1996 has
accepted the territoriality principle which has been
adopted in the UNCITRAL Model Law. Section 2(2) makes a
declaration that Part I of the Arbitration Act, 1996 shall
apply to all arbitrations which take place within India. We
are of the considered opinion that Part I of the Arbitration
Act, 1996 would have no application to international
commercial arbitration held outside India. Therefore, such
awards would only be subject to the jurisdiction of the
Indian courts when the same are sought to be enforced in
India in accordance with the provisions contained in Part
II of the Arbitration Act, 1996. In our opinion, the
provisions contained in the Arbitration Act, 1996 make it
crystal clear that there can be no overlapping or
intermingling of the provisions contained in Part I with
the provisions contained in Part II of the Arbitration Act,
1996.”
18. The Shashoua principle has been followed repeatedly in a
series of decisions of this court, with respect to the law governing
the seat as the law of the “seat” where the arbitration had been
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held.23 In Reliance24 this court answered the question, in the
following terms:
“18. It is important to note that in para 32 of Bhatia
International [Bhatia International v. Bulk Trading S.A.,
(2002) 4 SCC 105] itself this Court has held that Part I of
the Arbitration Act, 1996 will not apply if it has been
excluded either expressly or by necessary implication.
Several judgments of this Court have held that Part I is
excluded by necessary implication if it is found that on the
facts of a case either the juridical seat of the arbitration is
outside India or the law governing the arbitration
agreement is a law other than Indian law. This is now well
settled by a series of decisions of this Court [see Videocon
Industries Ltd. v. Union of India [(2011) 6 SCC 161 :
(2011) 3 SCC (Civ) 257] , Dozco India (P) Ltd. v. Doosan
Infracore Co. Ltd. [(2011) 6 SCC 179 : (2011) 3 SCC (Civ)
276] , Yograj Infrastructure Ltd. v. Ssang Yong Engg. and
Construction Co. Ltd. [(2011) 9 SCC 735 : (2011) 4 SCC
(Civ) 864] , the very judgment in this case reported
in Reliance Industries Ltd. v. Union of India [Reliance
Industries Ltd. v. Union of India, (2014) 7 SCC 603 :
(2014) 3 SCC (Civ) 737] and a recent judgment in Harmony
Innovation Shipping Ltd. v. Gupta Coal India Ltd. [(2015)
9 SCC 172 : (2015) 4 SCC (Civ) 341] ].
19. In fact, in Harmony case [(2015) 9 SCC 172 : (2015)
4 SCC (Civ) 341] , this Court, after setting out all the
aforesaid
judgments, set out the arbitration clause in that
case in para 36 as follows: (SCC p. 193)
“36. In view of the aforesaid propositions laid down by
this Court, we are required to scan the tenor of the
clauses in the agreement specifically, the arbitration
clause in appropriate perspective. The said clause reads
as follows:
23 This court, in the facts of this case, is of the opinion that it is inessential to explain
or notice the difference between the “venue” which is a matter of convenience, and
“seat” – an expression that has definite legal connotations in regard to intention of
parties, vis-à-vis jurisdiction of the courts.
24 Supra n. 14
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‘5. If any dispute or difference should arise under
this charter, general average/arbitration in London
to apply, one to be appointed by each of the parties
hereto, the third by the two so chosen, and their
decision or that of any two of them, shall be final
and binding, and this agreement may, for enforcing
the same, be made a rule of court. Said three parties
to be commercial men who are the members of the
London Arbitrators Association. This contract is to
be governed and construed according to English law.
For disputes where total amount claimed by either
party does not exceed US $50,000 the arbitration
should be conducted in accordance with small claims
procedure of the London Maritime Arbitration
Association.’”
It then held: (SCC pp. 198 & 200, paras 45 & 50-51)
“45. Coming to the stipulations in the present arbitration
clause, it is clear as day that if any dispute or difference
would arise under the charter, arbitration in London to
apply; that the arbitrators are to be commercial men who
are members of London Arbitration Association; the
contract is to be construed and governed by English law;
and that the arbitration should be conducted, if the claim
is for a lesser sum, in accordance with small claims
procedure of the London Maritime Arbitration Association.
There is no other provision in the agreement that any other
law would govern the arbitration clause.”
***
***
***
***
“50. Thus, interpreting the clause in question on the
bedrock of the
aforesaid principles it is vivid that the
intended effect is to have the seat of arbitration at
London. The commercial background, the context of the
contract and the circumstances of the parties and in
the background in which the contract was entered into,
irresistibly lead in that direction. We are not impressed
by the submission that by such interpretation it will put
the respondent in an advantageous position. Therefore,
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we think it would be appropriate to interpret the clause
that it is a proper clause or substantial clause and not
a curial or a procedural one by which the arbitration
proceedings are to be conducted and hence, we are
disposed to think that the seat of arbitration will be at
London.
51. Having said that the implied exclusion principle
stated in Bhatia International [Bhatia International
v. Bulk Trading S.A., (2002) 4 SCC 105] would be
applicable, regard being had to the clause in the
agreement, there is no need to dwell upon the contention
raised pertaining to the addendum, for any
interpretation placed on the said document would not
make any difference to the ultimate conclusion that we
have already arrived at.”
20. It is interesting to note that even though the law governing
the arbitration agreement was not specified, yet this Court
held, having regard to various circumstances, that the seat of
arbitration would be London and therefore, by necessary
implication, the ratio of Bhatia International [Bhatia
International v. Bulk Trading S.A., (2002) 4 SCC 105] would
not apply.
21. The last paragraph of BALCO [BALCO v. Kaiser
Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012)
4 SCC (Civ) 810] judgment has now to be read with two
caveats, both emanating from para 32 of Bhatia International
[Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105]
itself — that where the Court comes to a determination that
the juridical seat is outside India or where law other than
Indian law governs the arbitration agreement, Part I of the
Arbitration Act, 1996 would be excluded by necessary
implication. Therefore, even in the cases governed by
the Bhatia [Bhatia International v. Bulk Trading S.A., (2002)
4 SCC 105] principle, it is only those cases in which
agreements stipulate that the seat of the arbitration is in India
or on whose facts a judgment cannot be reached on the seat
of the arbitration as being outside India that would continue
to be governed by the Bhatia [Bhatia International v. Bulk
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Trading S.A., (2002) 4 SCC 105] principle. Also, it is only
those agreements which stipulate or can be read to stipulate
that the law governing the arbitration agreement is Indian
law which would continue to be governed by the
Bhatia [Bhatia International v. Bulk Trading S.A., (2002) 4
SCC 105] rule.
22. On the facts in the present case, it is clear that this Court
has already determined both that the juridical seat of the
arbitration is at London and that the arbitration agreement is
governed by English law. This being the case, it is not open
to the Union of India to argue that Part I of the Arbitration
Act, 1996 would be applicable. A Section 14 application made
under Part I would consequently not be maintainable.”
19. Again, in Roger Shashoua25 this court spelt out the principle
in the following terms:
“46. As stated earlier, in Shashoua [Roger Shashoua
v. Mukesh Sharma, 2009 EWHC 957 (Comm)] Cooke, J., in
the course of analysis, held that “London arbitration” is a
well-known phenomenon which is often chosen by foreign
nationals with a different law, such as the law of New York,
governing the substantive rights of the parties and it is
because of the legislative framework and supervisory powers
of the courts here which many parties are keen to adopt. The
learned Judge has further held that when there is an express
designation of the arbitration venue as London and no
designation of any alternative place as the seat, combined
with a supranational body
of rules governing the arbitration
and no other significant contrary indicia, the inexorable
conclusion is that London is the juridical seat and English
law the curial law.
47. In BALCO [BALCO v. Kaiser Aluminium Technical Services
Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] the
Constitution Bench referred to Shashoua [Roger Shashoua
v. Mukesh Sharma, 2009 EWHC 957 (Comm)] and reproduced
certain paragraphs from the same. To appreciate the
controversy from a proper perspective, we have already
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reproduced para 54 of the said judgment which has succinctly
stated the proposition.
50. Proceeding further the Court in Enercon (India) Ltd.
case [Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC
1 : (2014) 3 SCC (Civ) 59] approved the Shashoua [Roger
Shashoua v. Mukesh Sharma, 2009 EWHC 957 (Comm)]
principle and referred to McDonnell Douglas Corpn. [Union
of India v. McDonnell Douglas Corpn., (1993) 2 Lloyd’s Rep
48] wherein the principles stated in Naviera Amazonica
Peruana S.A. [Naviera Amazonica Peruana S.A. v. Compania
International de Seguros del Peru, (1988) 1 Lloyd’s Rep 116
(CA)] were reiterated. Construing the clauses in the agreement,
the said authority has held: (Enercon (India) case [Enercon
(India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1 : (2014) 3
SCC (Civ) 59] , SCC p. 56, para 129)
“129. … ‘On the contrary, for the reasons given, it seems
to me that by their agreement the parties have chosen
English law as the law to govern their arbitration
proceedings, while contractually importing from the Indian
Act those provisions of that Act which are concerned with
the internal conduct of their arbitration and which are not
inconsistent with the choice of English arbitral procedural
law.”
49.  In Enercon (India) Ltd. [Enercon (India) Ltd. v. Enercon
GmbH, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] , the Court
addressed to the issue of “seat/place of arbitration” and
“venue of arbitration” for the purpose of
conferment of
exclusive jurisdiction on the Court. The Court appreciated
the point posing the question whether the use of the phrase
“venue shall be in London” actually refers to designation of
the seat of arbitration in London. The Court did not treat
London as seat/place of arbitration. The Court referred
to Naviera Amazonica [Naviera Amazonica Peruana
S.A. v. Compania International de Seguros del Peru, (1988)
1 Lloyd’s Rep 116 (CA)], Alfred McAlpine [Braes of Doune
Wind Farm (Scotland) Ltd. v. Alfred McAlpine Business
Services Ltd., 2008 Bus LR D 137 (QBD) : 2008 EWHC 426
(TCC)] and C v. D [C v. D, 2008 Bus LR 843 : 2007 EWCA
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Civ 1282 (CA)] and then opined: (Enercon (India)
case [Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC
1 : (2014) 3 SCC (Civ) 59] , SCC p. 54, paras 123-124)
“123. The cases relied upon by Dr Singhvi relate to the
phrase “arbitration in London” or expressions similar
thereto. The same cannot be equated with the term
“venue of arbitration proceedings shall be in London”.
Arbitration in London can be understood to
include venue as well as seat; but it would be rather
stretching the imagination if “venue of arbitration shall
be in London” could be understood as “seat of arbitration
shall be London”, in the absence of any other factor
connecting the arbitration to London. In spite of
Dr Singhvi’s seemingly attractive submission to convince
us, we decline to entertain the notion that India would not
be the natural forum for all remedies in relation to the
disputes, having such a close and intimate connection with
India. In contrast, London is described only as a
venue which Dr Singhvi says would be the natural forum.
124. In Shashoua [Roger Shashoua v. Mukesh Sharma,
2009 EWHC 957 (Comm)], such an expression was
understood as seat instead of venue, as the parties had
agreed that the ICC Rules would apply to the arbitration
proceedings. In Shashoua [Roger Shashoua v. Mukesh
Sharma, 2009 EWHC 957 (Comm)], the ratio
in Naviera [Naviera Amazonica Peruana S.A. v. Compania
International de Seguros del Peru, (1988) 1 Lloyd’s Rep
116 (CA)] and Braes of Doune
[Braes of Doune Wind Farm
(Scotland) Ltd. v. Alfred McAlpine Business Services Ltd.,
2008 Bus LR D 137 (QBD) : 2008 EWHC 426 (TCC)] has
been followed. In that case, the Court was concerned with
the construction of the shareholders’ agreement between
the parties, which provided that “the venue of the
arbitration shall be London, United Kingdom”. It provided
that the arbitration proceedings should be conducted in
English in accordance with the ICC Rules and that the
governing law of the shareholders’ agreement itself would
be the law of India. …”
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
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20. In IMAX Corporation v. E-City Entertainment (India) (P.)
Ltd26, this rule was again followed. The award was a pre-BALCO award.
Taking into consideration the fact that the parties had expressly chosen
to resolve the dispute through the ICC, in the form of a London based
arbitration, the court stated that “ICC having chosen London, leaves
no doubt that the place of arbitration will attract the law of UK in
all matters concerning arbitration.” After holding that the parties’
choice of seat was outside India, though there was no express term, and
that the ICC chose it under its rules, the court went on to hold:
“29. 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 ICC
and 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 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.”
The judgment in BGS SOMA JV v. National Hydro Electric
Power
Corporation27, re-stated these principles in the following terms:
“38. A reading of paras 75, 76, 96, 110, 116, 123 and 194
of BALCO [BALCO v. Kaiser Aluminium Technical Services Inc.,
(2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] would show
that where parties have selected the seat of arbitration in
their agreement, such selection would then amount to an
exclusive jurisdiction clause, as the parties have now
indicated that the courts at the “seat” would alone have
jurisdiction to entertain challenges against the arbitral award
which have been made at the seat. The example given in para
96 buttresses this proposition, and is supported by the previous
and subsequent paragraphs pointed out hereinabove.
26 2017 (5) SCC 331
27 2020 (4) SCC 234
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The BALCO [BALCO v. Kaiser Aluminium Technical Services Inc.,
(2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] judgment, when
read as a whole, applies the concept of “seat” as laid down
by the English judgments (and which is in Section 20 of the
Arbitration Act, 1996), by harmoniously construing Section
20 with Section 2(1)(e), so as to broaden the definition of
“court”, and bring within its ken courts of the “seat” of the
arbitration….
******
******
******
40. Para 96 of BALCO case [BALCO v. Kaiser Aluminium
Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC
(Civ) 810] is in several parts. First and foremost, Section
2(1)(e), which is the definition of “court” under the Arbitration
Act, 1996 was referred to, and was construed keeping in view
the provisions in Section 20 of the Arbitration Act, 1996, which
give recognition to party autonomy in choosing the seat of
the arbitration proceedings. Secondly, the Court went on to
state in two places in the said paragraph that jurisdiction is
given to two sets of courts, namely, those courts which would
have jurisdiction where the cause of action is located; and
those courts where the arbitration takes place. However, when
it came to providing a neutral place as the “seat” of
arbitration proceedings, the example given by the five-Judge
Bench made it clear that appeals under Section 37 of the
Arbitration Act, 1996 against interim orders passed under
Section 17 of the Arbitration Act, 1996 would lie only to the
courts of the seat — which is Delhi in that example — which
are the courts having supervisory control, or jurisdiction, over
the arbitration proceedings. The example then goes on to state
that this would be irrespective of the fact that the obligations
to be performed under the contract, that is the cause of action,
may arise in part either at Mumbai or Kolkata. The fact that
the arbitration is to take place in Delhi is of importance.
However, the next sentence in the said paragraph reiterates
the concurrent jurisdiction of both courts.
****
****
****
44. If paras 75, 76, 96, 110, 116, 123 and 194 of
BALCO [BALCO v. Kaiser Aluminium Technical Services Inc.,
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
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(2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] are to be read
together, what becomes clear is that Section 2(1)(e) has to be
construed keeping in view Section 20 of the Arbitration Act,
1996, which gives recognition to party autonomy — the
Arbitration Act, 1996 having accepted the territoriality
principle in Section 2(2), following the UNCITRAL Model Law.
The narrow construction of Section 2(1)(e) was expressly
rejected by the five-Judge Bench in BALCO [BALCO v. Kaiser
Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012)
4 SCC (Civ) 810] . This being so, what has then to be seen is
what is the effect Section 20 would have on Section 2(1)(e)
of the Arbitration Act, 1996.
********
********
********
50. In fact, subsequent Division Benches of this Court have
understood the law to be that once the seat of arbitration is
chosen, it amounts to an exclusive jurisdiction clause, insofar
as the courts at that seat are concerned…. In Enercon (India)
Ltd. v. Enercon GmbH [Enercon (India) Ltd. v. Enercon
GmbH, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59], this Court
approved the dictum in Shashoua [Shashoua v. Sharma, 2009
EWHC 957 (Comm) : (2009) 2 Lloyd’s Law Rep 376]…
*******
********
********
51. The Court in Enercon [Enercon (India) Ltd. v. Enercon
GmbH, (2014) 5 SCC 1:(2014) 3 SCC (Civ) 59] then concluded
: (SCC p. 60, para 138)
“138. Once the seat of arbitration has been fixed in India,
it would be in the nature of
exclusive jurisdiction to exercise
the supervisory powers over the arbitration.”
(emphasis)”
21. The latest decision on this issue is Government of India v
Vedanta Ltd28. The dispute arose out of a pre-BALCO contract; the
award was rendered on 18.01.2011 (prior to the BALCO decision). The
seat of arbitration was Kuala Lumpur; however, the governing law of
the agreement or contract, was English law. This court, in its three-
28 2020 SCC Online (SC) 749
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judge decision, held that the curial law, i.e. the law governing the
challenge to the award, was Malaysian law, in the following words:29
“(i) In the present case, the law governing the agreement to
arbitrate was the English law as per Article 34.12 of the PSC,
which provides that the arbitration agreement shall be
governed by the laws of England. Even though there seems
to have been some confusion in the application of the law
governing the agreement to arbitrate by the seat courts, as
pointed out by the learned Amicus, we will not dwell on this
issue, since the enforcement court does not sit in appeal over
the findings of the seat court. Furthermore, in view of the
principles of comity of nations, this Court would not comment
on the judgments passed by Courts in other jurisdictions.
The enforcement of the award is a subsequent and distinct
proceeding from the setting aside proceedings at the seat.
The enforcement court would independently determine the
issue of recognition and enforceability of the foreign award
in India, in accordance with the provisions of Chapter 1 Part
II of the Indian Arbitration Act, 1996.
(ii) The courts having jurisdiction to annul or suspend a New
York Convention award are the courts of the State where the
award was made, or is determined to have been made i.e. at
the seat of arbitration. The seat of the arbitration is a legal
concept i.e. the juridical home of the arbitration. The legal
“seat” must not be confused with a
geographically convenient
venue chosen to conduct some of the hearings in the
arbitration. The courts at the seat of arbitration are referred
to as the courts which exercise “supervisory” or “primary”
jurisdiction over the award. The “laws under which the award
was made” used in Article V (1)(e) of the New York
Convention, is mirrored in Section 48(1)(e) of the Indian
Arbitration Act, which refers to the country of the seat of the
arbitration, and not the State whose laws govern the
substantive contract.”
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
29 In fact, even the Government of India understood that to be the correct position, and
had challenged the award, on a substantive basis, in Kuala Lumpur.
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The court then proceeded to rely on BALCO especially Paras 76
and 123, and thereafter stated as follows:
“(iii) The courts before which the foreign award is brought
for recognition and enforcement would exercise “secondary”
or “enforcement” jurisdiction over the award, to determine
the recognition and enforceability of the award in that
jurisdiction.
(iv) We will now briefly touch upon the four types of laws
which are applicable in an international commercial
arbitration, and court proceedings arising therefrom. These
are:
a) The governing law determines the substantive rights and
obligations of the parties in the underlying commercial
contract. The parties normally make a choice of the governing
law of the substantive contract; in the absence of a choice of
the governing law, it would be determined by the tribunal in
accordance with the conflict of law rules, which are considered
to be applicable.
b) The law governing the arbitration agreement must be
determined separately from the law applicable to the
substantive contract.44 The arbitration agreement constitutes
a separate and autonomous agreement, which would
determine the validity and extent of the arbitration agreement;
limits of party autonomy, the jurisdiction of the tribunal, etc.
c) The curial law of the arbitration is determined by the seat
of arbitration. In an international commercial arbitration, it
is necessary that the conduct of the arbitral
proceedings are
connected with the law of the seat of arbitration, which would
regulate the various aspects of the arbitral proceedings. The
parties have the autonomy to determine the choice of law,
which would govern the arbitral procedure, which is referred
to as the lex arbitri, and is expressed in the choice of the seat
of arbitration.45
The curial law governs the procedure of the arbitration, the
commencement of the arbitration, appointment of arbitrator/
s in exercise of the default power by the court, grant of
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provisional measures, collection of evidence, hearings, and
challenge to the award.
The courts at the seat of arbitration exercise supervisory or
“primary” jurisdiction over the arbitral proceedings, except
if the parties have made an express and effective choice of a
different lex arbitri, in which event, the role of the courts at
the seat will be limited to those matters which are specified to
be internationally mandatory and of a nonderogable nature.46
d) The lex fori governs the proceedings for recognition and
enforcement of the award in other jurisdictions. Article III of
the New York Convention provides that the national courts
apply their respective lex fori regarding limitation periods
applicable for recognition and enforcement proceedings; the
date from which the limitation period would commence,
whether there is power to extend the period of limitation.
The lex fori determines the court which is competent and has
the jurisdiction to decide the issue of recognition and
enforcement of the foreign award, and the legal remedies
available to the parties for enforcement of the foreign award.
(v) In view of the above-mentioned position, the Malaysian
Courts being the seat courts were justified in applying the
Malaysian Act to the public policy challenge raised by the
Government of India.
The enforcement court would, however, examine the challenge
to the award in accordance with the grounds available under
Section 48 of the Act, without being
constrained by the
findings of the Malaysian Courts. Merely because the
Malaysian Courts have upheld the award, it would not be an
impediment for the Indian courts to examine whether the award
was opposed to the public policy of India under Section 48
of the Indian Arbitration Act, 1996. If the award is found to
be violative of the public policy of India, it would not be
enforced by the Indian courts. The enforcement court would
however not second-guess or review the correctness of the
judgment of the Seat Courts, while deciding the challenge to
the award.”
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
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This court, therefore, categorically ruled that a substantive
challenge to the award, correctly was adjudicated by the Malaysian court,
because the seat of arbitration was Kuala Lumpur.
22. Article 12 of the contract30 in this case deals with miscellaneous
matters. Clause 12.4 reads as follows:
“12.4.1 This Engineering Contract shall be governed by the
laws of India.
12.4.2 In case of disputes or disagreement between the parties
as any matter arising out of or relating to this engineering
That Contract and provided no understanding between the
parties can be reached for the settlement of the difference,
the matter shall be finally settled by arbitration. That under
the rules of conciliation That and Arbitration That of the
International That Chamber of commerce Paris, and
Arbitration proceedings shall be in English language and shall
take place in London. The decisions of such arbitration shall
be final and binding on the parties.”
23. Having regard to the precedential unanimity, so to say, about
the manner of applicability of BALCO in respect of agreements entered
into and awards rendered earlier, with respect to the law of the seat of
arbitration (or the curial law) excluding applicability of Part I of the Act,
and the unambiguous intention of the parties in the present case
(expressed in Clause 12.4.2) that the seat of arbitration was London,
where the ICC arbitration proceedings were in fact held, and the awards
rendered, this court is of the opinion that the impugned judgment cannot
be sustained.
24. The above discussion would have been sufficient to dispose
of this appeal. However, it is noticeable that the decision in Feurest Day
Lawson31 unambiguously ruled out the maintainability of any appeal
against an order granting enforcement of a foreign arbitration award. In
the present case, both the partial and final awards are foreign awards.
Therefore, the provisions of Sections 47/48 were correctly invoked by
NV Engineering, for enforcement of the awards (through Application
No 156/2005). Jindal objected to the enforcement proceedings, in
30 ECAAP, i.e. the plant contract
31 Supra n. 17
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accordance with grounds articulated in Part II of the Act. A single judge
substantially upheld the award, and proceeded to its enforcement, by a
judgment dated 05.06.2006, at the same time rejecting the challenge to
enforcement laid out by Jindal. Both parties appealed to the Division
Bench; Jindal, on the challenge to the order rejecting its objection to
enforcement (Appeal No. 492/2006), and NV Engineering, as to that
part of the order of the single judge, refusing to enforce a part of the
award (Appeal. No. 740/2006).
25. In the decision in Fuerst Day Lawson32 this court had to
interpret Section 50 of the Act (quoted in the footnote below33), which
provides for a restrictive category of appealable subject matters, and
prohibits appeals in other matters. The court after noticing previous
judgments held as follows:
“88. Mohindra Supply Co. [Union of India v. Mohindra
Supply Co., AIR 1962 SC 256] was last referred in a
Constitution Bench decision of this Court in P.S. Sathappan
[P.S. Sathappan v. Andhra Bank Ltd., (2004) 11 SCC 672],
and the way the Constitution Bench understood and
interpreted Mohindra Supply Co. [Union of India v.
Mohindra Supply Co., AIR 1962 SC 256] would be clear from
the following para 10 of the judgment: (P.S. Sathappan
case [P.S. Sathappan v. Andhra Bank Ltd., (2004) 11 SCC
672], SCC pp. 689-90)
‘10. … The provisions in the Letters Patent providing for
appeal, insofar as they related to orders passed in
arbitration proceedings,
were held to be subject to the
provisions of Sections 39(1) and (2) of the Arbitration
Act, as the same is a self-contained code relating to
arbitration.’
NOY VALLESINA ENGINEERING SPA, (NOW KNOWN AS NOY
AMBIENTE S.P.A.) v. JINDAL DRUGS LIMITED [S. RAVINDRA BHAT, J.]
32 Supra n. 17
33 “50.Appealable orders.—(1) An appeal shall lie from the order refusing to—
     (a) refer the parties to arbitration under Section 45;
     (b) enforce a foreign award under Section 48, to the court authorised by law to hear
appeals from such order.
     (2) No second appeal shall lie from an order passed in appeal under this section, but
nothing in this section shall affect or take away any right to appeal to the Supreme
Court.”
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89. It is, thus, to be seen that the Arbitration Act, 1940, from
its inception and right through to 2004 (in P.S. Sathappan [P.S.
Sathappan v. Andhra Bank Ltd., (2004) 11 SCC 672] ) was
held to be a self-contained code. Now, if the Arbitration Act,
1940 was held to be a self-contained code, on matters
pertaining to arbitration, the Arbitration and Conciliation Act,
1996, which consolidates, amends and designs the law
relating to arbitration to bring it, as much as possible, in
harmony with the UNCITRAL Model must be held only to be more
so. Once it is held that the Arbitration Act is a self-contained
code and exhaustive, then it must also be held, using the lucid
expression of Tulzapurkar, J., that it carries with it “a negative
import that only such acts as are mentioned in the Act are
permissible to be done and acts or things not mentioned
therein are not permissible to be done” [The reference is
to S.N. Srikantia and Co. v. Union of India, 1965 SCC OnLine
Bom 133 : AIR 1967 Bom 347 at p. 354, para 9.] . In other
words, a letters patent appeal would be excluded by the
application of one of the general principles that where the
special Act sets out a self-contained code the applicability of
the general law procedure would be impliedly excluded.”
These observations were quoted with approval in Union of India
v Simplex Infrastructures Ltd34 and the court further held:
“10. After this decision, there is no scope to
contend that the
remedy of letters patent appeal was available in relation to
the judgment of the learned Single Judge in question. This
legal position has been restated in the recent decision of this
Court (to which one of us was party, Justice Dipak Misra),
in Arun Dev Upadhyaya v. Integrated Sales Service Ltd.
[Arun Dev Upadhyaya v. Integrated Sales Service Ltd., (2016)
9 SCC 524 : (2016) 4 SCC (Civ) 564]”
This court, in Kandla Export Corpn. v. OCI Corpn35 held that a
further appeal by a party aggrieved by an order of enforcement, even
under the later enacted Commercial Courts Act, 2015 is not maintainable:
“20. Given the judgment of this Court in Fuerst Day
Lawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011)
34 2017 (14) SCC 225
35 (2018) 14 SCC 715
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8 SCC 333 : (2011) 4 SCC (Civ) 178] , which Parliament is
presumed to know when it enacted the Arbitration Amendment
Act, 2015, and given the fact that no change was made in
Section 50 of the Arbitration Act when the Commercial Courts
Act was brought into force, it is clear that Section 50 is a
provision contained in a self-contained code on matters
pertaining to arbitration, and which is exhaustive in nature.
It carries the negative import mentioned in para 89 of Fuerst
Day Lawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.,
(2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178] that appeals
which are not mentioned therein, are not permissible. This
being the case, it is clear that Section 13(1) of the Commercial
Courts Act, being a general provision vis-à-vis arbitration
relating to appeals arising out of commercial disputes, would
obviously not apply to cases covered by Section 50 of the
Arbitration Act.
*****************
************
22. This, in fact, follows from the language of Section 50 itself.
In all arbitration cases of enforcement of foreign awards, it
is Section 50 alone that provides an appeal. Having provided
for an appeal, the forum of appeal is left “to the Court
authorised by law to hear appeals from such orders”. Section
50 properly read would, therefore, mean that if an appeal
lies under the said provision, then alone would Section 13(1)
of the Commercial Courts Act be attracted as laying down the
forum which will hear and decide such an
appeal.”
In view of the categorical holdings in the judgments of this court,
Jindal’s appeal to the Division Bench, (Appeal No. 492/2006) is not
maintainable. However, in view of the above decisions, and the express
terms of Section 50, NV Engineering’s appeal (Appeal. No. 740/2006),
against the order of the single judge (to the extent it refuses enforcement)
is maintainable.
26. This court has not considered the merits of the substantive
challenge to the enforcement order, because the parties were not heard
and therefore, it would not be fair to comment on it. Further, Jindal has
proceeded on the assumption that its appeal to the Division Bench on
this aspect is pending. In view of the finding of this court that such an
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appeal (against an order of enforcement) is untenable by reason of Section
50, the merits of Jindal’s objections to the single judge’s order, are open
for it to be canvassed in appropriate proceedings. Such proceedings
cannot also be a resort to any remedy under the Code of Civil Procedure.
In the event Jindal chooses to avail of such remedy, the question of
limitation is left open, as this court is conscious of the fact that Fuerst
Day Lawson36 is a decision rendered over 10 years ago; it settled the
law decisively and has been followed in later judgments. It cannot be
said that Jindal was ignorant of the law.
27. In view of the foregoing discussion, the impugned judgment
and order is hereby set aside; the appeal is allowed in the above terms.
Costs quantified at ` 1,50,000/- shall be paid by the respondent No.1.
Kalpana K. Tripathy
Appeal allowed.
36 Supra n. 17