Case: Sumitomo Heavy Industries Ltd Vs. Ongc Ltd. &amp; Ors

The Judgment and order is reported in (1994) 1 LIoyds Law Reports 45). The arbitrators having differed, the second respondent entered upon the reference and, on 27th June, 1995, made his award. The award was served on the first respondent on 10th July,26th July, 1995, the first respondent filed in the High Court at Bombay a petition praying that the second respondent be directed, under Section 14 of the Indian Arbitration Act, 1940, to file the award in that court. The first respondent submitted that the award was invalid, unenforceable and liable to be set aside under the provisions of the said Act. The learned Judge, as aforestated, allowed the petition.

Court's reasoning:
The conclusion that we reach is that the curial law operates during the continuance of the proceeding before the arbitrator to govern procedure and conduct thereof. The courts administering the curial law have the authority to entertain applications by parties to arbitrations being conducted within their jurisdiction for the purpose of ensuring that the procedure that is adopted in the proceedings before the arbitrator conforms to the requirements of the curial law and for reliefs incidental thereto. Such authority of the courts administering the curial law ceases when the proceedings before the arbitrator are concluded.The proceedings before the arbitrator commence when he enters upon the reference and conclude with the making of the award. As the work by Mustill and Boyd aforementioned puts, it with the making of a valid award the arbitrators authority, powers and duties in the reference come to an end and he is "functus officio" (page 404). The arbitrator is not obliged by law to file his award in court but he may be asked by the party seeking to enforce the award to do so. The need to file an award in court arises only if it is required to be enforced, and the need to challenge it arises if it being enforced. The enforcement process is subsequent to and independent of the proceedings before the arbitrator. It is not governed by the curial or procedural law that governed the procedure that the arbitrator followed in the conduct of thecase was, therefore, concerned with the question of which law governed the proceedings before the arbitrator and not with the question of which law governed proceedings to set an award.We think that our conclusion that the curial law does not apply to the filing of an award in court must, accordingly, hold good. We find support for the conclusion in the extracts from Mustill and Boyd which we have quoted earlier. 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 resultinglaw 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 that agreement. Having regard to the clear terms of Clause 17 of the contract between the appellant and the first respondent, we are in no doubt that the law governing the contract and the law governing the rights and obligations of the parties arising from their agreement to arbitrate, and, in particular, their obligations to submit disputes to arbitration and to honour the award, are governed by the law of India; nor is there any dispute in thisonly other statute which is required to be considered in the context of the provisions of Section 47 of the 1940 Act isthe Foreign Awards (Recognition and Enforcement) Act, 1961. For the purposes of determining whether the provision of the 1940 Act are subject to the provisions of the 1961 Act, Section 9 is relevant. It readsng in this Actprejudice any rights which any person would have had of enforcing in India of any award or of availing himself in India of any award if this Act had not been passed, or(b) apply to any award made on an arbitration agreement governed by the law of India."reason of Section 9(b), the 1961 Act does not apply to any award made on an arbitration agreement governed by the law of India. The 1961 Act, therefore, does not apply to the arbitration agreement between the appellant and the first respondent. The 1940 Act, applies to it and, by reason of Section 14(2) thereof, the courts in India are entitled to receive the award made by the second respondent. We must add in the interests of completeness that is not the case of the appellant that the High Court at Bombay lacked the territorial jurisdiction to do so.