Date of Decision: 05.03.2021
Bench Strength: 3
- R. BANUMATHI
- A.S. BOPANNA
- HRISHIKESH ROY, J.
Trajectory of the decision
# Atlas Export Industries v. Kotak & Company [(1999) 7 SCC 61]
# Reliance Industries Ltd v. Union of India [(2014) 7 SCC 603] (indirectly)
# Sasan Power Limited v. North American Coal Corporation India Private Limited [(2016) 10 SCC 813]
# GMR Energy Limited v. Doosan Power Systems India [CS (COMM) 447/2017 (decided on 14.11.2017)] & # Dholi Spintex v. Louis Dreyfus [CS (COMM) 286/2020 (decided on 24.11.2020)] (Approved in PASL Wind Solutions ¶36 and ¶37)
# PASL Wind Solutions Pvt. Ltd. v GE Power Conversion India Pvt. Ltd. [2021 SCCOnline SC 331]
⇒ Primary Holding
- Autonomy of Indian parties to opt for a foreign seated arbitration upheld.
- Section 9 applications for interim measures in the above case are maintainable in line with the Proviso to Section 2(2).
📜 PDF of the Decision
- TLDR - Dispute arose between Indian and Hong Kong companies, where the arbitration agreement provides that the arbitration would be administered and seated in Hong Kong.
- Is the arbitration seated in Hong Kong and therefore, does the Court lack jurisdiction to entertain a Petition under Section 11 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act").
3.1. Test of the seat of arbitration
The 3 judge bench, in its jurisdiction under Section 11(6) held that merely because parties have chosen 'Hong Kong' as the place of arbitration, it does not result in an automatic conclusion as to the venue.
In addition to the nomination of a place of arbitration, the court relied on the definitive role of Hong Kong as the place of resolution of the dispute as the additional reason that led to the conclusion that the place of arbitration was nominated as the seat of the arbitration, thus inviting the curial law of Hong Kong aswell.
3.2. The Mere Choice of Seat ipso jure Attracts its Lex Curiae
The Court relying on # Eitzen Bulk A/S v. Ashapura Minechem Ltd. and another [(2016) 11 SCC 508] mere choosing of the juridical seat of arbitration attracts the law applicable to such location. In other words, it would not be necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure.
3.3. Determination of Juridical Seat Confers Exclusivity
Finally, the Court relying on # Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. and others (2017) 7 SCC 678, held that where the 'Seat' of arbitration is determined, it imparts jurisdiction upon the courts of the place where the arbitration is seated.
4. Jurisprudential Breakdown
While the SC in ¶21, arrived at the correct conclusion, perhaps taking an alternate route to it. It stated that the mere choice of Hong Kong as a place of arbitration will not lead to an inevitable conclusion of the seat. It drew cues from the remainder of the arbitration agreement to cement the view on the arbitral seat.
The Decision of the SC in # Mankastu Impex along with its other decisions Union of India v Hardy Exploration, BGS SGS Soma have led to conflicting precedents. The Court in Hardy Exploration had held that where the parties affirm that the arbitration would be held at a certain place, without affirming any other juridical seat or any siginificant contrary indica, such venue actually indicatest the seat of the arbitration.
Much like the one ring, overreliance on singular legal tests generally leads '' judicial , considering the multivariate and expansive nature of arbitrations. It appears that