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Though the ‘lis’ in this article is limited but significance it carries is global. At times, in arbitration cases, the issue of jurisdiction of the court is disputed by the parties - sometimes to delay the final decision of the court during the pendency of the case or where the award of Arbitrator’s is questioned on different grounds. Section 34 of the Arbitration and Conciliation Act, 1996 (here-in-after referred to as ‘the Act’) deals with the seat of arbitration and venue thereof - of course subject to the material terms and conditions of the agreement.

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While interpreting the agreement and the relevant laws, conciliation of interpretation between the two plays an important role. The same agreement and the same laws can be interpreted by two different courts in two different ways and here is an example of the same conflict which has been very clearly discerned with by Hon’ble Mr. Justice Dipak Misra CJI in SLP (C) No. 22616-22618 of 2016 Roger Shashoua & Ors. v. Mukesh Sharma & Ors.

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Basics of the case:

In this case shareholders agreement of arbitration had provided that in case of dispute between them, the same will be decided by arbitration. For the said purpose, each party shall nominate one arbitrator and in event of any difference between the two arbitrators, a third arbitrator/umpire shall be appointed. The arbitration proceedings shall be in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce of Paris. The seat of the arbitration shall be London, United Kingdom and the agreement and the issues arising therefrom shall be governed by and construed in accordance with the laws of India.

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This case relates to territorial jurisdiction of a petition preferred u/s 34 of ‘the Act’. The main issue involved was, a pure question of law, i.e., the maintainability of the petition in the courts of India. Hon’ble Supreme Court had to dwell upon the applicability of part I or part II of the Act to the controversy in question along with adverting to “seat of arbitration and venue of arbitration”. The High Court of Justice, Queen’s Bench Division, (commercial court) London decided on 7.05.2009 that anti injunction suit was maintainable only at London. The validity of jurisdiction of Delhi High Court was also addressed before the London court of Hon’ble Mr. Justice Cooke.

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How the case moved:

The history of the case collaterally began at District Gautam Budha Nagar (UP). A petition u/s 34 of the Act was filed before the learned District Judge, G.B. Gautam Budha Nagar (UP) who had not entertained the application on the ground of lack of jurisdiction and returned it to be filed before the appropriate court by an order dated 6.07.2011. The petitioner filed an appeal, FAO (D) 1304 of 2011 before the High Court of Judicature at Allahabad, which was dismissed on the ground of maintainability. Thereafter, another writ petition No. 20945 of 2014 titled as International Trade Expo Centre Ltd. v. Mukesh Sharma and others was filed by another respondent before the Hon’ble High Court at Allahabad challenging the order dated 6.07.2011 of District Judge, G.B. Nagar.

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ITE India Pvt. Limited filed a SLP (Civil) Nos. 22318-22321 of 2010 before the Supreme Court, who vide order dated 15.09.2015 transferred the petition pending before High Court at Allahabad to Delhi High Court, where another writ petition was also pending. Delhi High Court decided both the petitions by common order and held that the application u/s 34 of the Act was maintainable and the Delhi High Court has the territorial jurisdiction to deal with the same.

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The order passed by High Court at Delhi was set aside by Supreme Court vide order dated 4.07.2017 in the above mentioned S.L.P. It was held by the Supreme Court that inescapable conclusion is that the courts in India have no jurisdiction to deal with the matter. It was a wonderful judgment by the Supreme Court of India. What a lucid interpretation of the complex question relating to the applicability of the Act was done by Hon’ble Mr. Justice Dipak Misra.

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Last prayer

The prayer of the appellants before the Supreme Court was that application u/s 34 of the Act was not maintainable since part I of the Act is not applicable according to arbitration clause in the agreement from which it was discernible that only the courts in London have jurisdiction. It was, therefore, prayed that the order passed by the High Court at Delhi should be set aside in as much as the court committed a palpable error in its appreciation of arbitration clause and what has been postulated therein.

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Final observations made by Hon’ble Mr. Justice Misra

Part I of the act clearly postulates that in case of this part being applicable, Part II will not be attracted. If Part I is applicable, there is no doubt that arbitration will be held in India. In cases of International Commercial Arbitration held out of India Provisions of the Act 1996 Part I will be applicable unless the parties excluded all or any of its provisions. In that eventuality, the laws or rules chosen by the parties would dominate the proceedings. The concept of the seat of arbitration is analogous to an exclusive jurisdiction of the courts of a particular place as very intelligently and finely distinguished by Mr. Justice Dipak Misra. The venue means the laws substantive or procedural which will be made applicable by the court of territorial jurisdiction. It has been clearly demonstrated by Hon’ble Mr. Justice Dipak Misra that the detailed examination, which is required to be undertaken by the court while dealing with the issue of jurisdiction, is to discern from the agreement and surrounding circumstances. The intentions of the parties as to whether a particular place mentioned, refers to the venue or seat of the arbitration, shall be the determining factors.

In other words when a court finds there is prescription for jurisdiction, it has to be decided on the facts of each case to decipher the judicial seat i.e. the place. At the cost of repetition, it may be mentioned that the nature of the language used in the agreement will dominate the scene.

The Supreme Court allowed the appeals and set aside the judgment of Delhi High Court that had held that courts in India have jurisdiction. Justice Dipak Misra pronounced the judgment for the court and has finally said that they have already held that the agreement in question having been interpreted in a particular manner by the English Court and the said interpretation having acquired approval of this court, the inescapable conclusion is that the courts in India have no jurisdiction. Thus, the impugned order passed by Delhi High Court was set aside.

 

 

Shareholders agreement of arbitration had provided that in case of dispute between them, the same will be decided by arbitration. For the said purpose, each party shall nominate one arbitrator and in event of any difference between the two arbitrators, a third arbitrator/umpire shall be appointed. The arbitration proceedings shall be in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce of Paris. The venue of the arbitration shall be London, United Kingdom and the agreement shall be governed by and construed in accordance with the laws of India.

 

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 acceptation by this Court, the inescapable conclusion is that the courts in India have no jurisdiction.

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