Holding

A company incorporated in India is deemed to have Indian nationality; therefore, when both parties are Indian companies the arbitration agreement is not an international commercial arbitration agreement and the Supreme Court lacks jurisdiction to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.

Summary

The petitioners, TDM Infrastructure Pvt. Ltd., sought appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, contending that the arbitration agreement was an international commercial arbitration because the company's central management and control were exercised in Malaysia. The respondents argued that both parties were Indian companies incorporated under the Companies Act and therefore the Supreme Court lacked jurisdiction to appoint an arbitrator. The Court examined the definition of "international commercial arbitration" in Section 2(1)(f) and held that a company incorporated in India possesses Indian nationality for the purposes of the Act, irrespective of where its central management is located. Consequently, the arbitration agreement between the two Indian companies could not be classified as an international commercial arbitration, and clause (iii) of Section 2(1)(f) was inapplicable. The Court further held that jurisdiction to appoint an arbitrator under Section 11 arises only in international commercial arbitrations, which was not the case here. The application for appointment of an arbitrator was therefore dismissed with costs.

Issues considered

Whether a company incorporated in India but whose central management and control are exercised abroad can be treated as a foreign national for purposes of Section 2(1)(f)(iii) of the Arbitration and Conciliation Act, 1996.
Whether the arbitration agreement between two Indian companies qualifies as an international commercial arbitration agreement.
Whether the Supreme Court has jurisdiction to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 in the present dispute.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(5), s. 11(6), s. 11(9), s. 2(1)(f)(iii), s. 2(6), s. 28, s. 2(9)
English Arbitration Act, 1996s. 85
Income Tax Act, 1961s. 6
UNCITRAL Model Law on International Commercial Arbitration (1985)

Subjects

ArbitrationJurisdictionInternational Commercial ArbitrationArbitration and Conciliation Act 1996Section 11Section 2(1)(f)Corporate nationalityAppointment of arbitratorSupreme Court jurisdiction

Judgment

(2008] 8 S.C.R 775

TDM INFRASTRUCTURE PRIVATE LIMITED A
v.
UE DEVELOPMENT INDIA PRIVATE LIMITED
(Arbitration Application No. 2 of 2008)
MAY 14, 2008
B
[5.8. SINHA,J]
,. ARBITRATION AND CONCILIATION ACT, 1996:

ss. 2(1)(f)(iii), 11(5),(a) and 28 - International Commer-
cial Arbitration - Connotation of - Appointment of arbitrator - c
Both parties to arbitration agreement registered under Indian
Companies Act - HELD: A company incorporated in India can
only have Indian nationality for purpose of the Act- Once both
the Companies are incorporated in India and, thus, have been
7
domiciled in India, arbitration agreement entered into by and D
-1- between the parties would not be an international commercial
arbitration agreement and question of applicability of clause
(iii) of s. 2(1 )(f) would not arise - In the instant case, Supreme
Court. has no jurisdiction to appoint arbitrator - UNCITRAL
Model Law on International Commercial Arbitration (1985). E
INTERPRETATION OF STATUTES."

Determination of jurisdiction - HELD: An interpretation
should ensure certainty in determination of jurisdiction as to
"""·I which court should a disputant approach for appointment of F
an arbitrator u/s 11 of 1996 Act - In a matter involving deter-
mination of jurisdiction of a court, certainty must prevail which
cannot be determined by entering into a disputed question of
fact - Arbitration and Conciliation Act, 1996 - s. 11.
V VR.N.M. Subbayya Chettiar v. Commissioner of In- G
,.....
I come Tax, Madras 1950 SCR 961; and McLeod and Com-
pany Ltd. v. State of Orissa and Others (1984) 1 SCC 434 -
held inapplicable.

775 H
776 SUPREME COURT REPORTS [2008] 8 S.C.R.

A Subbayya Chettiar v. IT Commissioner, Madras AIR 1951 r
SC 101; and Central Bank of India Ltd. v. Ram Narain AIR
1955 SC 36...: referred to.
De Beers Consolidated Mines Limited v. Howe (Surveyor
of Taxes) (1906) AC 455; Unit Construction Co. Ltd. v. Bui-
B lock 1960 AC 35'1 - referred to.

Russell on Arbitration, 23rd edition, page 357- referred to.
~
ORl.GINAL CIVIL JURISDICTION: Arbitration Petition No.
2 of 2008 ~
c
Sumeef Kachwah, Ashok Sagar, Dharmendra, Anuradha
Sharma and Meenaks~1i Aron~ for the Appellant.
Dhyan Chinappa and Gaurav Agrawal for the Respondent.

D The following Order of the Court was delivered
\
1. The parties hereto are companies registered and in- ..,...
corporated under the Companies Act, 1956 (for short "the Act").
Directors and shareholders of the petitioner - company, how-
ever, are said to be residents of Malaysia. The Board of Direc-
E tors of the petitioner also sits at Malaysia.
2. A contract for rehabilitation and upgrading was awarded
to the respondent by the National Highway Authority of India.
Respondent subcontracted a portion thereof to the petitioner
by three letters of awards dated 12.04.2002, 24.05.2002 and ,,.._
F 29.08.2002. '
However, for the purpose of present petition, we are con-
cerned with the second and third letters of award. The parties
entered into those contracts containing an arbitration clause,
G which read as under:
"If the parties fail to settle the question, dispute or differ-
__...,
I
•
ence through negotiations, the same shall be referred to Arbi-
tration as per the provisions of the Indian Arbitration Act, 1940
and the rules made thereunder and any statutory modifications
H or re-enactment thereof that may be made from time to time
TOM INFRASTRUCTURE PVT LTD. v. UE 777
DEVELOPMENT INDIA PVT. LTD.

and actually in force at the time of reference. The cost of arbi- A
tration shall be borne by the parties in the ratio to be agreed
upon by the parties. The venue of the Arbitration shall be New
Delhi. The language to be used in the arbitration proceedings
shall be English."
3. Disputes and differences having arisen between the B
parties, the said arbitration agreement was resorted to, where-
for a notice dated 22.03.2007 was served by the petitioner
through its solicitors M/s. Shook Lin & Bok. A nominee was
proposed. In response thereto, the respondent herein through
its solicitors Mis. Shearn Delamare & Co. also proposed its C
nominee by a letter dated 18.04.2007. Respondent, however,
proposed amendments to the original dispute resolution and
arbitration clause by suggesting change of venue of the arbitra-
tion to Kuala Lumpur, Malaysia in stead and place of New Delhi
and that the disputes be arbitrated in terms of the Malaysian D
Law and the Malaysian Arbitration Act, 2005. The said pro-
posal of the respondent was rejected by the petitioner. Peti-
tioner thereafter proposed alternative nominee which was also
rejected by the respondent and in turn suggested its own nomi-
nee which was not acceptable to the petitioner. E
4. By reason of this application under Section 11 (5) and
11 (6) of the Arbitration and Conciliation Act, 1996 (for short "the
1996 Act"), a prayer has been made for appointment of a sole
--l.
I arbitrator to adjudicate upon the disputes and differences be-
tween the parties arising out of or in relation to the aforemen- F
tioned second and third letters of award.
5. One of the contentions raised by the respondent is that
the petitioner - company being registered in India, this Court
has no jurisdiction to pass an order for appointing an arbitrator. G
It was urged that the Company in law must be held to be situate
in India notwithstanding that the directors are foreign nationals
as for all intent and purport, the Company incorporated in India
would always be controlled in India.
6. Mr. Sumeet Kachwah, learned counsel appearing on H
778 SUPREME COURT REPORTS (2008] 8 S.C.R

A behalf.ofthe petitioner, would submit thafin view of the provi"
sions contained in Section 2(1 )(f) read with Section 11(6) of the
1996 Act, this Court alone has.the jurisdiction to appoint an ar-
bitrator as the central management and control of the petitioner
company is exercised in Malaysia inasmuchas the term "cen-
8 tral manag~nient" would mean that its day to day management
does not take place in India. · ·
7. Drawing our attention to the fact that the Indian Income
Tax Act, 1961 contains a similar provision, it was urged that the
testwhich should be applied in a case of this nature is the real
C business test as propounded by the House of Lords iri De Beers ·
Consolidated Mines Limited y. Howe (Surveyor of Taxes).
((1906) AC455] which has been approv1ed by this Court in
II. 11.R.NM. Subbayya Chettiar v. Commissioner of Income
Tax, Madras [1950 SCR 961] and McLeod and Company Ltd.
D v. State of Orissa and Others [(1984) 1 SCC 434]. \
+
8. The terms "nationality", "domicile" or "residents" must
be interpreted, Mr. Kachwah would submit, having regard to the
text and context in which they are used. Our attention in this
behalf has been drawn to the provisions of Section 1(4) of the
E English Arbitration Act, 1975 and Section 85 occurring in Part II
of English Arbitration Act, 1996, which, however, has not come
into force.
9. Mr. Dhyan Chinappa, learned counsel appearing on ).._

F behalf of the respondent, on the other hand, would submit that "
the interpretative tools for interpretation of the provisions of the
1996 Act and taxing statute are different.
It was urged that the jurisdiction of this court must be de-
termined having regard to the provisions contained in Sections
G 2(6), 11 (9) and 28 of the 1996 Act.
It was furthermore submitted that the English Courts, even
in respect of a taxing statute, have deviated from its earlier stand
· as would appear from a decision in Unit Construction Co. Ltd.
H v. Bullock [1960 AC 351).
780 SUPREME COURT REPORTS [2008] 8 S.C.R.

~

A (iv) the Government of a foreign country;
(6) Where this Part, except section 28, leaves the parties
free to determine a certain issue, that freedom shall include
the right of the parties to authorise any person including
an institution, to determine that issue.
B
(7) An arbitral award made under this Part shall be
considered domestic award. '
"""'
(8) Where this Part.-

c (a) refers to the fact that the partie~s have agreed or that
they may agree, or
(b) in any other way refers to an agreement of the parties,
that agreement shall include any arbitration rules
referred to in that agreement."
D
Sections 11(1), 11(5) and 11(9) read as under: "·t-
"11 - Appointment of arbitrators
(1) A person of any nationality may be an arbitrator,
unless otherwise agreed by the parties.
E
(5) Failing any agreement referred to in sub-section (2),
in an arbitration with a sole arbitrator, if the parties
fail to agree on the arbitrator within thirty days from
receipt of a request by one party from the other party )._
·,
F to so agree the appointment shall be made, upon
request of a party, by the Chie~f Justice or any person
or institution designated by him.
(9) In the case of appointment of sole or third arbitrator
in an international commercial arbitration, the Chief
G Justice of India or the person or institution designated A.
by him may appoint an arbitrator of a nationality other '
than the nationalities of the parties where the parties
belong to different nationalities."
Section 28 of the 1996 Act reads as under:
H
TOM INFRASTRUCTURE PVT LTD. v. UE 781
DEVELOPMENT INDIA PVT. LTD.
-t'
"28 - Rules applicable to substance of dispute A
(1) Where the place of arbitration is situate in India,-
(a) in an arbitration other than an international
commercial arbitration, the arbitral tribunal shall
decide the dispute submitted to arbitration in B
accordance with the substantive law for the time being
in force in India;
.,.
(b) in international commercial arbitration-
(i) the arbitral tribunal shall decided the dispute in c
accordance with the rules of law designated by
the parties as applicable to the substance of
the dispute;
(ii) any designation by the parties of the law or
l
legal system of a given country shall be D
~ construed, unless otherwise expressed, as
directly referring to the substantive law of that
country and not to its conflict of laws rules;
(iii) failing any designation of the law under clause
E
(a) by the parties, the arbitral tribunal shall apply
the rules of law it considers to be appropriate
given all the circumstances surrounding the
dispute .
. _._
( (2) The arbitral tribunal shall decide ex aequo et bona or F
as amiable compositeur only if the parties have
expressly authorised it to do so.
(3) In all cases, the arbitral tribunal shall decide in
accordance with the terms of the contract and shall
take into account the usages of the trade applicable G
,,.. to the transaction."
I

12. Whereas Part I of the 1996 Act deals with domestic
arbitration, Part II thereof deals with the Foreign Award.
The term "International Commercial Arbitration" has a defi- H
782 SUPREME COURT REPORTS [2008] 8 S.C.R.

A nite connotation. It inter alia means a body corporate which is
incorporated in any country other than India. However, accord-
ing to the petitioner, it is a company whose central manage-
ment and control is exercised in any country other than India
and, thus, despite the fact that the company is incorporated and
8 registered in India, its central management and control being
exercised in Malaysia, it will come within the purview of Clause
(iii) of Section 2(1 )(f) of the 1996 Act. •
'"'I'
13. Whenever in an interpretation clause, the word "means"
is used the same must be given a restrictive meaning.
c
"International Commercial Arbitration" and "Domestic Ar-
bitration" connote two different things. The 1996 Act excludes
domestic arbitration from the purview of International Commer-
cialArbitration. The Company which is incorporated in a coun-
try other than India is excluded from the said definition. The
D
same cannot be included again on the premise that its central
management and control is exercised in any country other than "
-t-·

India. Although clause (iii) of Section 2(1 )(f) of the 1996 Act
talks of a company which would ordinarily include a company
registered and incorporated under the Companies Act but the
E same also includes an association or a body of individuals which
•
may also be a foreign company. Sub-section (6) of Section 2
of the 1996 Act leaves the parties free to determine certain is-
sues. That freedom shall include the right of the parties to au-
thorize any person including an institution, to determine the >
)
F same. Thus, in a case of this nature, the court shall not interpret
the words in such a manner which would be opposed to the
intention of the parties.
A statute which provides for an arbitration between the
parties and a taxing statute must be interpreted differently. T~e
G
term "International Commercial Arbitration" even does not find ~
I
place in the UNCITRAL Model Law. It finds place only in the
English Arbitration Act which has also not been given effect to.
14. Part II of the 1996 Act deals with enforcement of for-
H eign awards. The 1996 Act keeping in view the scheme of the
TOM INFRASTRUCTURE PVT LTD. v. UE 783
DEVELOPMENT INDIA PVT. LTD.

statute must be read in its entirety. It takes into consideration A
various situations. Power of this Court to appoint an arbitrator
would arise in view of Sub-section (12) of Section 11 of the
1996 Act only if it is to be held that the dispute has arisen in
relation to an international commercial arbitration.
Whether, thus, an agreement falls within the purview of B
, Section 2(1)(f) of the 1996 Act is the core question. Section
~ 2(1)(f) speaks of legal relationship whether commercial or oth-
erwise under the law in force in India. The relationship has to
be between an individual who is a national of or habitually resi-
dent in any country other than India as specified in Clause (i) of c
Section 2(1 )(f). 'Nationality' or being 'habitually resident' in re-
spect of a body corporate in any country other than India should,
in my view, receive a similar construction.
15. Determination of nationality of the parties plays a cru-
D
.I- cial role in the matter of appointment of an arbitrator. A com-
pany incorporated in India can only have Indian nationality for
the purpose of the Act. It cannot be said that a company incor-
porated in India does not have an Indian nationality. Hence,
where both parties have Indian nationalities, then the arbitra-
tion between such parties cannot be said to be an international E
commercial arbitration.
16. The learned counsel contends that the word "or" being
...(
disjunctive, clause (iii) of Section 2(1 )(f) of the 1996 Act shall
apply in a case where clause (ii) shall not apply. We do not F
agree. The question of taking recourse to clause (iii) would
come into play only in a case where clause (ii) otherwise does
not apply in its entirety and not where by reason of an exclusion
clause, consideration for construing an agreement to be an in-
ternational commercial arbitration agreement goes outside the
G
>- purview of its definition. Once it is held that both the companies
i
are incorporated in India, and, thus, they have been domiciled
in India, the arbitration agreement entered irito by and between
them would not be an international commercial arbitration agree-
ment and, thus, the question of applicability of clause (iii) of
H
784 SUPREME COURT REPORTS [2008] 8 S.C.R.

r
A Section 2(1)(f) would not arise.
The Chief Justice of India or his designate, furthermore,
having regard to_Sub-section (9) of Section 11 of the 1996 Act
must bearin mind the nationality of an arbitrator. The national-
ity of the arbitrator may have to be kept in mind having regard to
B the nationality of the respective parties.
I
17. Only in a case where, however, a body corporate which ~
need not necessarily be a company registered and incorpo~
rated under the Companies Act, as for example, an associa- ',

c tion or a body of individuals, the exercise of central manage-
ment and control in any country other than India may have to be
taken into consideration.
18. Chapter VI of the 1996 Act dealing with making of an
arbitral award and termination of proceedings in this behalf plays
D an important role. In respect of 'international commercial arbi- \

tration', clause (b) of Sub-section (1) of Section 28 of the 1996
+
Act would apply, whereas in respect of any other dispute where
the place of arbitration is situated in India, clause (a) of Sub-
section (1) thereof shall apply.
E 19. When, thus, both the companies are incorporated in
India, in my opinion, ~lause (ii) of Section 2(1)(f) will apply and
not the clause (iii) thereof.
_,l_
20. _Section 28 of the 1996 Act is imperative in character
F in view of Section 2(6) thereof, which excludes the same from '
those provisions which parties derogate from (if so provided by
the Act). The intention of the legislature appears to be clear
that Indian nationals should not be permitted to derogate from
Indian law. This is part of the public policy of the country.
G 21. Russell on. Arbitration, 23rd edition, page 357, in his
commentary on English Arbitration Act, 1996, shows that al- "'"'
l

\---
though a distinction has been made between a domestic and
non-domestic arbitration but the provisions relating to domes-
tic arbitration had not been brought into force.
H
TOM INFRASTRUCTURE PVT LTD. v. UE 785
DEVELOPMENT INDIA PVT. LTD.
-~ 22. Section 85 of the English Arbitration Act, 1996 which A
provides for a modification of Part I in relation to domestic arbi-
tration agreement reads, thus:
"85. - Modification of Part I in relation to domestic
arbitration agreement.
B
(1) In the case of a domestic arbitration agreement the
;
provisions of Part I are modified in accordance with
~- the following sections.
(2) For this purpose a "domestic arbitration agreement"
means an arbitration agreement to which none of c
the parties is -
(a) an individual who is a national of, or habitually
resident in, a state other than the United
Kingdom, or
D
~ (b) a body corporate which is incorporated in, or
whose central control and management is
exercised in, a state other than the United
Kingdom, and under which the seat of the
arbitration (if the seat has been designated or E
determined) is in the United Kingdom.
(3) In subsection (2)"arbitration agreement" and
"seat of the arbitration" have the same meaning
...... as in Part I (see sections 3, 5(1) and 6)."
F
" Sub-section (4) of Section 1 of the English Arbitration Act,
1975 is also to the same effect.
23. It is of some significance to notice that whereas the
1996 Act lays emphasis on one of the parties being outside
India; the English Arbitration Act for the purpose of domestic G
arbitration agreement excludes a body corporate which is in-
1" corporated and whose central control or management is exer-
cised in a State other than United Kingdom.
24. Thus, under the English Arbitration Act, what is being
H
786 SUPREME COURT REPORTS [2008) 8 .S.C.R.

A considered is domestic arbitration agreement where a body .,,..
corporate is incorporated in a State other than United Kingdom;
whereas under the 1996 Act only a body corporate which is
only incorporated in a State outside India shall be included within
the meaning of the international commercial arbitration.
B 25. Reference to the provisions of Indian Income Tax Act,
1961, in my opinion, is not apposite. Taxing statutes are en-
acted for a different purpose. They provide for compulsory ex-
action. Section 6 of the Income Tax Act clearly states the situ a- -.,·
tion contemplated under Clause (ii) of Sub-section (3) of Sec-
c tion 6 is only for the purpose of the said Act. It speaks about
.two contingencies, viz., where the company is an Indian Com-
pany and control and management of whose affairs may be situ-
ated wholly in India. The provision of the 1996Act, therefore, in
my opinion, is not in pari materia with the provisions of the In-
D dian Income Tax Act.
\
26. Even in a case where taxing statute applies, national- T
ity or domicile of the assessee may have to be taken into con-
sideration.
27. lhe decisions which, thus, have been relied upon by
E
Mr. Kachwah are not applicable to the facts of the present case. .
28. An interpretation should ensure certainty in determi-
nation of jurisdiction as to which court should a disputant ap-
proach for appointment of an arbitrator under Section 11 of the
F Act" Else, the question is always mooted as to whether a com- ~-

pany is controlled outside India or not and accordingly would
'
have to be determined in each and every case, if an objection
is raised. The interpretation of the Act, as suggested hereinbe-
fore, would lead to determination of jurisdiction of either the High
G Court or this Court with certainty.
In Subbayya Chettiar v. IT Commissioner, Madras [AIR _...._.
,
1951 SC 101), this Court, while dealing with the issue of Hindu
Undivided Family and the residence of the family endorsed the
definition of Patanjali Sastri J. (in the same case before the
H

!
TDM INFRASTRUCTURE PVT LTD. v. UE 787
DEVELOPMENT INDIA PVT. LTD.

Madras High Court) as follows: A
'"Control and management' signifies, in the present context,
the controlling and directive power, 'the head and brain'
as it is sometimes called, and 'situated' implies the
functioning of such power at a particular place with some
degree of permanence, while 'wholly' would seem to B
recognize the possibility of the seat of such power being
~ divided between two distinct and separated places."
-..,.
In that case, this Court, while dealing with the definition
contained in Section 4 of the Income Tax Act was mainly con- c
cerned with a Hindu Undivided Family and not a Company.
Furthermore, in the findings of Patanjali Sastri, J., there is a
direct reference to "some degree of permanence".
A difficulty in having a clear definition of domicile has been
noticed by this Court (albeit in a different context) in Central D
Bank of India Ltd. v. Ram Narain [AIR 1955 SC 36] stating:
.i
"Writers on Private International Law are agreed that it is
impossible to lay down an absolute definition of "domicile".
The simplest definition of this expression has been given
by Chitty, J. in Craignish v. Craignish wherein the learned E
Judge said:
'
"That place is properly the domicile of a person in
which his habitation is fixed without any present
.A-. intention of removing therefrom." F
But even this definition is not an absolute one. The truth is
that the term "domicil" lends itself to illustrations but not to
definition. Be that as it may, two constituent elements that
are necessary by English law for the existence of domicil
are: (1) a residence of a particular kind, and (2) an intention G
of a particular kind. There must be the factum and there
{'--
must be the animus. The residence need not be continuous
but it must be indefinite, not purely fleeting. The intention
must be a present intention to reside for ever in the country
where the residence has been taken up. It is also a well H
788 SUPREME COURT REPORTS [2008] 8 S.C.R.

A established proposition that a person may have no home
but he cannot be without a domicil and the law may attribute
to him a domicil in a country where in reality he has not.
A person may be a vagrant as when he lives in a yacht or
w-;nderer from one European hotel to another, but
B nevertheless the law will arbitrarily ascribe to him a domicil
in one particular territory. In order to make the rule th.at
nobody can be without a domicil effective, the law assigns
what is called a domicil of origin to every person at his
birth. This prevails until a new domicil has been acquired,
c so that if a person leaves the country of his origin with an
undoubted intention of never returning to it again,
nevetheless his domicil of origin adheres to him until he
actually settles with the requisite intention in some other
country."
D In Unit Construction Co. Ltd. (supra) on a question as to
whether subsidiary companies of a holding company based in
South Africa would be deemed to be domiciled in England, it +'
was held:
"My Lords, I do not read the reference to the ordinary con-
E stitution of a limited liability company as evidencing an inten-
tion to make any addition to the test indicated by Lord Loreburn
in the De Beers case. I think that all Sir Raymond Evershed
was saying was that, in almost every case, the articles of asso-
ciation of a limited company vest the control of the company in
F the board of directors and that accordingly, if you found out that
the board of a company habitually met in a particular country,
you would thus settle the residence of that company. He plainly
had not in mind a case such as the present, where it would ap-
pear that the board of directors appointed under the articles
G did not meet at all during the period relevant to the assessments
now in. question, nor was he expressing any opinion as to what
the right conclusion would be, if, for instance, the control was
vested not in the board but in managing agents. It seems to me
that, in the circumstances disclosed in the Case Stated, th~
H commissioners, if the Court of Appeal were right as to the iovt(
TOM INFRASTRUCTURE PVT LTD. v. UE 789
DEVELOPMENT INDIA PVT. LTD .
._,,,
might, but for the admission made by the appellant company, A
have been compelled to find that the African subsidiaries had
no residence anywhere. Moreover, it may well be asked what
the position would have been had the business of each of the
African companies been conducted by their duly appointed
boards but, in disregard of the articles, all the board meetings B
had been held in London and all instructions had been issued
.,.
~
from London. Logically, if the Court of Appeal were right, these
meetings should be disregarded and the African subsidiaries
could not be held to be resident in England, but counsel for the
Crown shrank from carrying his argument to this logical conclu- c
sion. Counsel for the Crown suggested that, unless the appli-
cation of Lord Loreburns principle was made in accordance
with the Court of Appeals interpretation of it in the present case,
the consequences would be disastrous and companies could
vary their liability by moving control to and fro. My Lords, so
D
.I they could, even on the Court of Appeals view, if they amended
the relevant articles (not a very difficult process in the case of a
hundred per cent subsidiary). Moreover the adoption of the in-
terpretation of the law laid down by the Court of Appeal could
lead to the strange consequences which I have already indi-
cated. My Lords, I do not think that adherence to the test laid E
down by Lord Loreburn and to the application thereof which, as
I think, has hitherto been adopted namely, that the question
where the central control actually abides is a question of fact for
~
the decision of the commissioners will lead to any disastrous
consequences. The facts of the case before your Lordships F
are most unusual. It is surely exceptional for a parent company
to usurp the control; it usually operates through the boards of
the subsidiary companies, and had the commissioners found
in the present case that that was what had in substance hap-
pened, it may well be that your Lordships could not have dis- G
t turbed that finding. But they have found to the contrary, and, as
I have already said, it seems to me that there was evidence
justifying their conclusion."
The domicile of a company being an artificial person would
' H
790 SUPREME COURT REPORTS [2008] 8 S.C.R.

A depend upon the nature and purport of the statute. [See McLeod
and Company Ltd. (supra)].

In the said decision itself, however, it is noticed that the
nationality of a company is determined by the law of the country
in which it is incorporated and from which it derives its person-
s ality. However, for the purpose of taxation, test of residence
may not be registration but where the company does its real
business and where the central management and control ex-
ists. A distinction, thus, exists in law between a nationality and
the residence. Furthermore, there exists a dispute that all the
C Board meetings take place only in Malaysia. In a matter involv-
ing determination of jurisdiction of a court, certainty must pre-
vail which cannot be determined by entering into a dispute ques-
tion of fact.
29. For the reasons aforementioned, I am of the opinion
0 \
that this Court has no jurisdiction to nominate! an arbitrator. The
application is dismissed with costs. Counsel's fee assessed +·
at Rs. 50,0Q,0/-.
R.P. Application dismissed.

)·