Supreme Court of India
UNION OF INDIAversusRELIANCE INDUSTRIES LIMITED & ORS.
- Citation
- 2015 INSC 692
- Decided
- 22 September 2015
- Disposal
- Dismissed
- Bench
- A K SIKRI
Holding
Part I of the Arbitration and Conciliation Act, 1996 is excluded by necessary implication where the seat of arbitration is London and the arbitration agreement is governed by English law, rendering the Section 14 application non‑maintainable.
Summary
The Union of India and Reliance Industries Ltd. entered into Production Sharing Contracts for the Tapti and Panna Mukta fields that contained an arbitration clause stipulating that disputes be resolved under UNCITRAL rules, with the seat in London and the arbitration agreement governed by English law. A dispute arose, leading to the appointment of arbitrators and a final partial award; the Union filed a Section 34 petition in the Delhi High Court, which was held maintainable, but the Supreme Court in 2014 held that Part I of the Arbitration and Conciliation Act, 1996 was excluded by necessary implication because the seat was outside India and the governing law was foreign. The High Court later dismissed a Section 14 application on the basis of that earlier judgment, and the Union filed a Special Leave Petition challenging the dismissal. The Court reaffirmed that Part I of the 1996 Act does not apply where the seat is abroad and the arbitration agreement is governed by foreign law, and consequently the Section 14 petition is not maintainable. It also held that the doctrine of res judicata bars a fresh challenge to the same jurisdictional issue and that the petition was an abuse of process. The SLP was therefore dismissed.
Issues considered
- Whether Part I of the Arbitration and Conciliation Act, 1996 applies to an arbitration whose seat is outside India and whose agreement is governed by English law.
- Whether a Section 14 application challenging the arbitral award is maintainable after a prior Supreme Court decision excluding Part I.
- Whether the doctrine of res judicata applies to jurisdictional questions in the present context.
- Whether the partial consent award was within jurisdiction given the amendment clause of the PSC.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 14, s. 34
Subjects
ArbitrationSeat of arbitrationPart I applicabilityRes judicataSection 14Section 34Production Sharing ContractUNCITRAL RulesEnglish lawJurisdictionReview petitionCurative petition
Judgment
[2015] 10 S.C.R. 85
UNION OF INDIA A
v.
RELIANCE INDUSTRIES LIMITED & ORS.
(Special Leave Petition (Civil) No.11396 of 2015)
B
SEPTEMBER 22, 2015
[A. K. SIKRI AND R. F. NARIMAN, JJ.]
Arbitration and Conci.'.'ation Act, 1996 - Part I, s. 14 -
Seat of arbitration outside India -Applicability of Part I of the c
Act - Product Sharing Contracts(PSC) - Execution of, for
Tapta and Panna Mukta oil and gas fields between Union of
India and the companies - Dispute between the parties -
Invocation of arbitration clause and appointment of arbitrator
-Arbitration agreement between the parties that arbitration D
agreement would be governed by English law and the juridical
seat of arbitration is London - Certain disputes under PSC -
Initiation of arbitration proceedings in London by UOI- Final
partial award by arbitral tribunal - Petition filed u/s. 34 by
UOI for setting aside the arbitration award and the High Court E
held the same to be maintainable- In appeal, Supreme Court
set aside the order passed by the High Court holding that
Part I of the Act was not applicable and it was necessarily
excluded being wholly inconsistent with the arbitration
agreement - On basis thereof, High Court dismissed the F
appeal pending uls. 14 as not maintainable - Review petition
as also curative petition against the Supreme Court judgment
also dismissed - In SLP, held: Arbitration agreements being
prior to Bharat Aluminium Company's judgment, would be
governed by Bhatia International wherein it was held that Part- G
I would not apply if it is excluded by necessary implication,
the juridical seat of arbitration is outside India or the law
governing the arbitration agreement is a law other than Indian
law- In the instant case, this Court had already determined H
85
86 SUPREME COURT REPORTS [2015] 10 S.C.R.
A that the juridical seat of the arbitration is at London and the
arbitration agreement is governed by English law, thus, it was
not open to UOI to argue that Part-I would be applicable -
Valiant attempt to reopen a question settled twice by dismissal
of review petition and curative petition on the very same
B ground, to meet with the same fate -As regards the plea that
res judicata would not attach to questions relating to
jurisdiction, would not apply as the effect of clause of the PSC
raises a mixed question of fact and law and not a pure
question ofjurisdiction unrelated to facts - Thus, both on res
C judicata as w,ell as the law laid down by Supreme Court,
application uls. 14 to be dismissed - It is also an abuse of
the process of the Court as only after moving under the
UNCITRAL Arbitration Rules and getting an adverse
judgment from the Permanent Court of Arbitration the
0
application was filed u/s. 14 - Thus, the order of High Court
is upheld.
Reliance Industries Limited and another v. Union
oflndia 2014 (6) SCR 456: (2014) 7 sec 603;
E Bhatia International v. Bulk Trading S.A. & Anr.
2002 (2) SCR 411: (2002) 4 SCC 105; National
Thermal Power Corporation v. Singer Company
1992 (3) SCR 106 : (1992) 3 SCC 551; Venture
Global Engineering v. Satyam Computer Services
F
Ltd. & Anr. 2008 (1) SCR 501: (2008) 4 sec 190;
Bharat Aluminium Company Ltd. v. Kaiser
Aluminium Technical Services, Inc. (2012) 9
SCC; Videocon Industries Ltd. v. Union of India
G & Anr. 2011 (8) seR 569: (2011) 6 sec 161;
Dozco India Private Limited v. Doosan lnfracore
Company Limited 2010 (12) SeR 259: (2011) 6
sec 179; Yograj Infrastructure Limited v. Ssang
Yong Engineering and Construction Company
H Limited 2011 (14) SCR 301: (2011) 9 sec 735;
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 87
Harmony Innovation Shipping Ltd. v. Gupta Coal A
India Ltd. & Anr. 2015 SCR 697; Mathura Prasad
Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy 1970
(3) SCR 830: (1970) 1 SCC 613 - referred to.
Case Law Reference B
2014 (6) SCR 456 Referred to. Para 1
2002 (2) SCR 411 Referred to. Para 7
1992 (3) SCR 106 Referred to. Para 10 c
2008 (1) SCR 501 Referred to. Para 14
(2012) 9 sec Referred to. Para 15
2011 (8) SCR 569 Referred to. Para 17 D
2010 (12) SCR 259 Referred to. Para 17
2011 (14) SCR 301 Referred to. Para 17
2015 SCR 697 Referred to. Para 17 E
1970 (3) SCR 830 Referred to. Para 21
CIVIL APPELLATE JURISDICTION : Special Leave
Petition No. 11396 of2015. F
From the Judgment and Order dated 03.07.2014 of the
High Court of Delhi at New Delhi in O.M.P. No. 671 of 2013.
Ranjeet Kumar, SG, Tushar Mehta, ASG, Dr. Abhishek
Manu Singhvi, Shyam Divan, lndu Malhotra, Sameer Parekh, G
Sona Ii Basu Parekh, Lal it Chauhan, Amit Bhandari, Abhinay,
Abhishek Vined Deshmukh, S. Lakshmi Iyer, Udayaditya,
Parekh & Co., Abhijeet Sinha, Sangeeta Mandal, Swati Sinha,
Debesh Panda, Vijay Kumar, Shantanu Bansal, Fox Mandal H
88 SUPREME COURT REPORTS [2015) 10 S.C.R.
A & Co., Sunil K. Jain, Pawanshree Agrawal, Kaushik
Choudhury, Sunil Kumar Jain for the appearing parties.
The Judgment of the Court was delivered by
B R. F. NARIMAN, J. 1. The present case arises as a
sequel to this Court's decision delivered on 281h May, 2014 in
Reliance Industries Limited and another v. Union of India,
(2014) 7 sec 603.
2. A brief resume of the facts that led to the judgment of
C this Court on 281h May, 2014 are as follows:-·
Two Production Sharing Contracts (hereinafter referred to as
"PSC") for the Tapti and Panna Mukta Fields were executed
between Reliance Industries Limited, the Union of India, Enron
D Oil and Gas India Limited and the ONGC. The relevant clauses
of the PSCs insofar as they are applicable to the present
controversy are as follows:-
"ARTICLE 32: APPLICABLE LAW AND LANGUAGE OF
E THE CONTRACT
32. 1 Subject to the provisions of Article 33.12, this
Contract shall be governed and interpreted in
accordance with the laws of India.
32.2 Nothing in this Contract shall entitle the Government
F or the Contractor to exercise the rights, privileges and
powers conferred upon it by this Contract in a manner
which will contravene the laws of India.
ARTICLE 33: SOLE EXPERT, CONCILIATION AND
G ARBITRATION
33.9 Arbitration proceedings shall be conducted in
accordance with the arbitration rules of the United
Nations Commission on International Trade Law
(UNCITRAL) of 1985 exceptthat in the event of any conflict
H
-
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 89
[R. F. NARIMAN, J.]
between these rules and the provisions ofthisArticle 33, A
the provisions of this Article 33 shall govern.
33.12 The venue of conciliation or arbitration
proceedings pursuant to this Article, unlelt~ the Parties B
otherwise agree, shall be London, England and shall be
conducted in the English Language. The arbitration
agreement contained in this Article 33 shall be governed
by the laws of England. Insofar as practicable, the Parties
shall continue to implement the terms of this Contract c
notwithstanding the initiation of arbitral proceedings and
any pending claim or dispute.
34.2 This Contract shall not be amended, modified,
varied or supplemented in any respect except by an
instrument in writing signed by all the Parties, which shall D
state the date upon which the amendment or modification
shall become effective."
3. It needs to be mentioned that Enron Oil & Gas India
Limited was renamed BG Exploration & Produdion India E
Limited. The PSCs were amended to substitute Enron OilJ?.
Gas India Limited with BG Exploration and Production India
Limited by two amendment agreements dated 24.2.2004 and
10.1.2005. Since certain disputes and differences arose
between the Union of India, Reliance Industries Limited and F
BG Exploration and Production India Limited sometime in
2010, Reliance Industries Limited and BG Exploration and
Production India Limited invoked the arbitration clause and
appointed Mr. Peter Leaver, QC as Arbitrator. The Union of
India appointed Justice B.P. Jeevan Reddy as Arbitrator and G
Mr. Christopher Lau SC was appointed as Chairman of the
Tribunal. On 14.9.2011, the Union of India, Reliance Industries
Limited and BG Exploration and Production India Limited,
agreed to change the seat of arbitration to London, England
and a final partial consent award was made and duly signed H
90 . SUPREME COURT REPORTS [2015) 10 S.C.R.
A bythepartiestothiseffect. On 12.9.2012, theArbitralTribunal
passed a final partial award which became the subject matter
of a Section 34 petition filed in the Delhi High Court by the
Union of India, dated 13.12.2012. The Delhi High Court by a
judgment and order dated 22.3.2013 decided that the said
B petition filed under Section 34 was maintainable. This Court
in a detailed judgment dated 28.5.2014 reversed the Delhi
High Court. Since this judgment in effect determines the
controversyraised in the present SLP, it is important to set it
out in some detail. After stating the facts and the contentions
C of both parties, this Court held:
"Before we analyse the submissions made by the learned
Senior Counsel for both the parties, it would be
appropriate to notice the various factual and legal points
D on which the parties are agreed. The controversy herein
would have to be decided on the basis of the law declared
by this Court in Bhatia International [(2002) 4 SCC 1051
. The parties are agreed and it is also evident from the
final partial consent award dated 14-9-2011 that
E the juridical seat (or legal place) of arbitration for the
purposes of the arbitration initiated under the claimants'
notice of arbitration dated 16-12-2010 shall be London,
England. The parties are also agreed that hearings of
the notice of arbitration may take place at Paris, France,
F
Singapore or any other location the Tribunal considers
may be convenient. It is also agreed by the parties that
the terms and conditions of the arbitration agreement in
Article 33 of the PSCs shall remain in full force and effect
G and be applicable to the arbitration proceedings.
The essential dispute between the parties is as to whether
Part I of the Arbitration Act, 1996 would be applicable to
the arbitration agreement irrespective of the fact that
the seat of arbitration is outside India. To find a conclusive
H
answer to the issue as to whether applicability of Part I
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 91
[R. F. NARIMAN, J.]
of the Arbitration Act, 1996 has been excluded, it would A
be necessary to discover the intention of the parties.
Beyond this parties are not agreed on any issue.
We are also of the opinion that since the ratio of law laid
down in Ba/co [Ba/co v. Kaiser Aluminium Technical B
Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ)
81 O] has been made prospective in operation by the
Constitution Bench itself, we are bound by the decision
rendered in Bhatia International [(2002) 4 SCC 105].
Therefore, at the outset, it would be appropriate to C
reproduce the relevant ratio of Bhatia
International [(2002) 4 SCC 105] in para 32 which is as
under: (SCC p. 123)
"32. To conclude, we hold that the provisions of Part I D
would apply to all arbitrations and to all proceedings
rE?lating thereto. Where such arbitration is held in India
the provisions of Part I would compulsorily apply and
parties are free to deviate only to the extent permitted by
the derogable provisions of Part I. In cases of international E
commercial arbitrations held out of India provisions of
Part I would apply unless the parties by agreement,
express or implied, exclude all or any of its provisions. In
that case the laws or rules chosen by the parties would
prevail. Any provision, in Part I, which is contrary to or F
excluded by that law or rules will not apply."
In view of the aforesaid, .it would be necessary to analyse
the relevant articles of the PSC, to discover the real
intention of the parties as to whether the provisions of G
the Arbitration Act, 1996 have been excluded. It must,
immediately, be noticed thatArticles 32.1 and 32.2 deal
with applicable law and language of the contract as is
evident from the heading of the article which is
"Applicable law and language of the contract". Article 32.1 H
92 SUPREME COURT REPORTS [2015] 1OS.C.R.
A provides for the proper law of the contract i.e. laws of
India. Article 32.2 makes a declaration that none of the
provisions contained in the contract would entitle either
the Government or the contractor to exercise the rights,
privileges and powers conferred upon it by the contract
B in a manner which would contravene the laws of India.
Article 33 makes a very detailed provision with regard
to the resolution of disputes through arbitration. The two .
articles do not overlap-one (Article 32) deals with the
c proper law of the contract, the other (Article 33) deals
with ADR i.e. consultations between the parties;
conciliation; reference to a sole expert and ultimately
arbitration. Under Article 33, at first efforts should be
made by the parties 'to settle the disputes among
D themselves (Article 33.1 ). If these efforts fail, the parties
by agreement shall refer the dispute to a sole expert
(Article 33.2). The provision with regard to constitution
of the Arbitral Tribunal provides that the Arbitral Tribunal
shall consist of three arbitrators (Article 33.4). This article
E also provides that each party shall appoint one arbitrator.
The arbitrators appointed by the parties shall appoint the
third arbitrator. In case, the procedure under Article 33.4
fails, the aggrieved party can approach the Permanent
Court of Arbitration at The Hague for appointment of an
F
arbitrator (Article 33.5). Further, in case the two arbitrators
fail to make the appointment of the third arbitrator within
30 days of the appointment of the second arbitrator,
again the Secretary General of the Permanent Court of
G Arbitration at The Hague may, at the request of either
party appoint the third arbitrator. In the face of this, it is
difficult to appreciate the submission of the respondent
Union of India that the Arbitration Act, 1996 (Part I) would
be applicable to the arbitration proceedings. In the event,
H the Union of India intended to ensure that the Arbitration
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 93
[R. F. NARIMAN, J.]
Act, 1996 shall apply to the arbitration proceedings, A
Article 33.5 should have provided that in default of a party
appointing its arbitrator, such arbitrator may, at the
request of the first party be appointed by the Chief Justice
of India or any person or institution designated by him.
Thus, the Permanent Court of Arbitration at The Hague B
can be approached for the appointment of the arbitrator,
in case of default by any of the parties. This, in our
opinion, is a strong indication that applicability of the
Arbitration Act, 1996 was excluded by the parties by
consensus. Further, the arbitration proceedings are to C
be conducted in accordance with the UNCITRAL Rules,
1976 (Article 33.9). It is specifically provided that the right
to arbitrate disputes and claims under this contract shall
survive the termination of this contract (Article 33.10). ·
D
The article which provides the basis of the controversy
herein is Article 33.12 which provides that venue of the
arbitration shall be London and that the arbitration
agreement shall be governed by the laws of England. It
appears, as observed earlier, that by a final partial E
consent award, the parties have agreed that the juridical
seat (or legal place of arbitration) for the purposes of
arbitration initiated under the claimants' notice of
arbitration dated 16-12-2010 shall be London, England. F
We are of the opinion, upon a meaningful reading of the
aforesaid articles of the PSC, that the proper law of the
contract is Indian law; proper law of the arbitration
agreement is the law of England. Therefore, can it be
said as canvassed by the respondents, that applicability G
of the Arbitration Act, 1996 has not been excluded?" [at
paras 36 - 42]
4. The Court went on to state in paragraph 45 that it is
-too late in the day to contend that the seat of arbitration is not H
94 SUPREME COURT REPORTS [2015] 10 S.C.R.
A analogous to an exclusive jurisdiction clause and then went on
to hold as follows:-
"In our opinion, these observations in Sulamerica
case [(2013) 1 WLR 102 : 2012 EWCA Civ 638 : 2012
B WL 14764] are fully applicable to the facts and
circumstances of this case. The conclusion reached by
the High Court would lead to the chaotic situation where
the parties would be left rushing between India and
England for redressal of their grievances. The provisions
c of Part I .of the Arbitration Act, 1996 (Indian) are
necessarily excluded; being wholly inconsistent with the
arbitration agreement which provides "that arbitration
agreement shall be governed by English law". Thus the
remedy for the respondent to challenge any award
D rendered in the arbitration proceedings would lie under
the relevant provisions contained in the Arbitration Act,
1996 of England and Wales. Whether or not such an
application would now be entertained by the courts in
England is hot for us to examine, it would have to be
E examined by the court of competent jurisdiction in
England." [at para 57]
It ultimately concluded:
F "We are also unable to agree with the submission of Mr
Ganguli that since the issues involved herein relate to
the public policy of India, Part I of the Arbitration Act, 1996
would be· applicable. Applicability of Part I of the
Arbitration Act, 1996 is not dependent on the nature of
G challenge to the award. Whether or not the award is
challenged on the ground of public policy, it would have
to satisfy the precondition that the Arbitration Act, 1996
is applicable to the arbitration agreement. In our opinion,
the High Court has committed a jurisdictional error in
H holding that the provisions contained in Article 33.12 are
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 95 '
[R. F. NARIMAN, J.]
relevant only for the determination of the curial law A
applicable to the proceedings. We have already noticed
earlier that the parties by agreement have provided that
the juridical seat of the arbitration shall be in London.
Necessary amendment has also been made in the PSCs,
· as recorded by the final partial consent award dated 14- B
9-2011. It is noteworthy thatthe Arbitration Act, 1996 does
not define or mention juridical seat. The term "juridical
seat" on the other hand is specifically defined in Section
3 of the English Arbitration Act. Therefore, this would
clearly indicate that the parties understood that the C
arbitration law of England would be applicable to the
arbitration agreement.
In view of the aforesaid, we are unable to uphold the
conclusion arrived at by the Delhi High Court that the D
applicabilit'l' of the Arbitration Act, 1996 to the arbitration
agreement in the present case has not been excluded.
In view of the above, we hold that:
E
The petition filed by respondents under Section 34 of
the Arbitration Act, 1996 in the Delhi High Court is not
maintainable.
We further overrule and set aside the conclusion of the
F
High Court that. even though the arbitration agreement
would be governed by the laws of England and that
the juridical seat of arbitration would be in London. Part
I of the Arbitration Act would still be applicable as the
laws governing the substantive contract are Indian laws. G
In the event a final award is made against the respondent,
the enforceability of the same in India can be resisted on
the ground of public policy.
H
96 SUPREME COURT REPORTS [2015] 10S;C.R.
A The conclusion of the High Court that in the event, the
award is sought to be enforced outside India, it would
leave the Indian party remediless is without any basis as
the parties have consensually provided that the arbitration
agreement will be governed by the English law. Therefore,
B the remedy against the award will have to be sought in
· England, where the juridical seat is located. However,
we accept the submission of the appellant that since the
substantive law governing the contract is Indian law, even
the courts in England, in case the arbitrability is
c challenged, will have to decide the issue by applying
Indian law viz. the principle of public policy, etc. as it
prevails in Indian law.
In view of the above, the appeal is allowed and the
D . impugned judgment [(2013) 199 DLT 469] of the High
Court is set aside." [at paras 74 - 77]" •
5. Continuing the narration of facts, the present SLP
arises out of a judgment dated 3.7.2014 whereby the Delhi
E High Court has dismissed an application filed under Section
14 of the Arbitration and Conciliation Act, 1996, dated
12.6.2013, on the ground that this Court's judgment dated
28. 5.2014 having held that Part-I of the Arbitration Act, 1996
is not applicable, such petition filed under Section 14 would
F not be maintainable.
6. It needs further to be pointed out that a review petition
against the said judgment dated 28.5.2014 was dismissed
on 31.7.2014 and a curative petition filed thereafter was also
G dismissed.
7. Shri Ranjit Kumar, learned Solicitor General of India
argued before us that the partial consent award dated
14.9.2011 was without jurisdiction in that it was contrary to
H clause 34.2 of the PSC which stated that the PSC can only be
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 97
[R. F. NARIMAN, J.]
amended if all the parties thereto by an agreement in writing A
a
amend it. Since ONGC which was party to the PSC had not
done so, the said final partial consent award was without
jurisdiction. This being so, the seat of the arbitration cannot
be said to be London and clause 33.12 of the PSC which
made the "venue" London would continue to govern. Since B
the arbitration clause contained in the PSC is prior to
12.9.2012, the judgment in Bhatia International v. ·Bulk
Trading S.A. & Anr., (2002) 4 SCC 105 would govern and
consequently Part I of the Arbitration Act, 1996 would be
applicable. He also stated that the judgment delivered on C
28.5.2014 would not stand in his way notwithstanding that a
review petition and a curative petition had already been
dismissed. This was beca.use, according to him, the issue
raised being jurisdictional in nature, the doctrine of resjudicata D
would have no application. He went on to read various
provisions of the UK Arbitration Act, 1996 to further buttrE!ss
his submission.
8. Dr. A.M. Singhvi, learned senior counsel, on the other
hand vehemently opposed the arguments of Shri Ranjit Kumar, E
learned Solicitor General of India. According to him, the
judgment dated 28.5.2014 being final inter partes binds the
parties both by way of res judicata and as a precedent.
According to him, the judgment unequivocally holds that on F
the very facts of this case Part-I of the Arbitration Act, 1996
would have no application. He further went on to demonstrate
that the Union of India had already availed of the very remedy
sought under Section 14 and had invited a decision of the
Permanent Court of Arbitration dated 10.6.2013 by which its G
objections to the appointment of Mr. Peter Leaver as Arbitrator
were already rejected.
9. We have heard learned counsel for the parties. In order
to fully appreciate the contention raised by the learned Solicitor H
98 SUPREME COURT REPORTS [2015] 10 S.C.R.
A General of India, it is necessary to delve into the history of the
law of arbitration in India. Prior to the 1996 Act, three Acts
governed the law of Arbitration in India - the Arbitration
(Protocol and Convention) Act, 1937, which gave effect to the
Geneva Convention, the Arbitration Act, 1940, which dealt with
B domestic awards, and the Foreign Awards (Recognition And
Er'l'torcement) Act, 1961 which gave effect to the New York
Conv(!)ntion of 1958 and which dealt with challenges to awards
made which were foreign awards.
C 10. In National Thermal Power Corporation v. Singer
Company, (1992) 3 SCC 551, this Court while construing
Section 9(b) of the Foreign Awards Act held that where an
arbitration agreement was governed by the law of India, the
Arbitration Act, 1940 alone would apply and not the Foreign
D Awards Act. The arbitration clause in Singer's case read as
follows:-
"Sub-clause 6 of Clause 27 of the General Terms deals
with arbitration in relation to an Indian contractor and sub-
E clause 7 of the said clause deals with arbitration in respect __,
of a foreign contractor. The latter provision says:
"27. 7 In the event of foreign contractor, the arbitration shall
be conducted by three arbitrators, one each to be
nominated by the owner and the contractor and the third
F
to be named by the President of the International
Chamber of Commerce, Paris. Save as above all rules
of conciliation and arbitration of the International
Chamber of Commerce shall apply to such arbitrations.
The arbitration shall be conducted at such places as the
G
arbitrators may determine." ·
·In respect of an Indian contractor, sub-clause 6.2 of
Clause 27 says that the arbitration shall be conducted at
New Delhi in accordance with the provisions of the
H Arbitration Act, 1940. It reads:
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 99
[R. F. NARIMAN, J.]
"27 .6.2 The arbitration shall be conducted in accordance A
with the provisions of the Indian Arbitration Act, 1940 or
any statutory modification thereof. The venue of arbitration
shall be New Delhi, India."
The General Terms further provide: B
"[T]he contract shall in all respects be construed and
governed according to Indian laws." (32.3).
The formal agreements which the parties executed on
August 17, 1982 contain a specific provision for C
settlement of disputes. Article 4.1 provides:
"4.1. Settlement of Disputes.-lt is specifically agreed
by and between the parties that all the differences or
disputes arising out of the contract or touching the subject- D
matter of the contract, shall be decided by process of
settlement and arbitration as specified in Clauses 26.0
and 27.0 excluding 27.6.1and27.6.2., of the General
Conditions of the Contract." [at para 4]
E
11. Notwithstanding that the award in that case was a
foreign award, this Court held that since the substantive law of
the contract was Indian law and since the arbitration clause
was part of the contract, the arbitration clause would be
governed by Indian law and not by the Rules of the International F
Chamber of Commerce. This being the case, it was held that
the mere fact that the venue chosen by the ICC Court for the
conduct of tne arbitration proceeding was London does not
exclude the operation of the Act which dealt with domestic
awards i.e. the Act of 1940. In a significant sentence, the Court G
went on to hold:- •
" ... Nevertheless, the jurisdiction exercisable by the
English courts and the applicability of the laws of that
country in procedural matters must be viewed as H
100 SUPREME COURT REPORTS [2015] 10 S.C.R.
A concurrent and consistent with the jurisdiction of the
competent Indian courts and the operation of Indian laws
in all matters concerning arbitration insofar as the main
contract as well as that which is contained in the arbitration
clause are governed by the laws of India." [at para 53]
B
12. It can be seen that this Court in Singer's case did not
give effect to the difference between the substantive law of the
contract and the law that governed the arbitration. Therefore,
since a construction of Section 9(b) of the Foreign Awards Act
C led to the aforesaid situation and led to the doctrine of
concurrent jurisdiction, the 1996 Act while enacting Section
9(a) of the repealed ForeignAwardsAct, 1961, in Section 51
thereof, was careful enough to omit SPi:-~L ·, 1 J(b) of the 1961
Act which, as stated hereinabove, ex..;1uded the Foreign Awards
D Act from applying to any award made on arbitration agreements
governed by the law of India.
13. This being the case, the theory of concurrent
jurisdiction was expressly given a go-by with the dropping of
E Section 9(b) of the Foreign Awards Act, while enacting Part-II
of the Arbitration Act, 1996, which repealed all the three earlier
laws and put the law of arbitration into one statute, albeit in
four different parts.
F 14. However, this Court in Bhatia International v. Bulk
Trading S.A. & Anr., (2002) 4 sec 105, resurrected\this
doctrine of concurrent jurisdiction by holding, in paragraph 32,
that even where arbitrations are held outside India, unless the
parties agree to exclude the application of Part-I of the
G Arbitration Act, 1996, either expressly or by necessary
implication, the courts in India will exercise concurrent
jurisdiction with the court in the country in which the foreign
award was made. Bhatia International was in the context of
a Section 9 application made under Part-I of the 1996 Act by
H the respondent in that case for interim orders to safeguard the
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 101
[R. F. NARIMAN, J.]
assets of the Indian company in case a foreign award was to A
be executed in India against it. The reductio ad absurdum of
this doctrine of concurrent jurisdiction came to be felt in a most
poignant form in the judgment of Venture Global Engineering
v. Satyam Computer Services Ltd. & Anr., (2008) 4 _sec
190, by which this Court held that a foreign award would also B
be considered as a domestic award and the challenge
procedure provided in Section 34 of the Part-I of the Act of
1996 would therefore apply. This led to a situation where the
foreign award could be challenged in the country in which it is
made; it could also be challenged under Part-I of the 1996Act C
in India; and could be refused to be recognised and enforced
under Section 48 contained in Part II of the 1996 Act.
15. Given this state of the law, a 5-Judge Bench of this
Court in Bharat Aluminium Company Ltd. v. Kaiser D
Aluminium Technical Services, Inc., (2012) 9 sec,
overruled both Bhatia International and Venture Global
Engineering. But in so overruling these judgments, this Court
went on to hold:
E
"The judgment in Bhatia International [(2002) 4 Sec
105] was rendered by this Court on 13-3-2002. Since
then, the aforesaid judgment has been followed by all
the High Courts as well as by this Court on numerous
occasions. In fact, the judgment in Venture Global F
Engineering [(2008) 4 SCC 190] has been. rendered on
10-1-2008 in terms of the ratio of the decision in Bhatia
International [(2002) 4 SCC 105] . Thus, in order to do
complete justice, we hereby order, that the law now
declared by this Court shall apply prospectively, to all the G
arbitration agreements executed hereafter." [at para 197]
16. It will thus be seen that facts like the present case
attract the Bhatia International principle of concurrent
jurisdiction inasmuch as all arbitration agreements entered into H
102 SUPREME COURT REPORTS [2015] 10 S.C.R.
A before 12.9.2012, that is the date of pronouricement of Bharat
Aluminium Company's judgment, will be governed by Bhatia
International.
17. It is important to note that in paragraph 32 of Bhatia
B International itself this Court has held that Part-:1 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
C 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 & Anr., (2011) 6
SCC 161, Dozco India Private Limited v. Doosan lnfracore
D Company Limited, (2011) 6SCC179, Yograj Infrastructure
Limited v. Ssang Yong Engineering and Construction
Company Limited, (2011) 9 SCC 735), the very judgment in
this case reported in Reliance Industries Limited v. Union
of India, (2014) 7 sec 603, and a recent judgment in
E Harmony Innovation Shipping Ltd. v. Gupta Coal India
Ltd. &Anr., (decided on 101h March, 2015 in CivilAppeal No.
610 of2015)].
18. In fact, in Harmony's case, this Court, after setting
F out all the aforesaid judgments, set out the arbitration clause
in that case in paragraph 32 as follows:
"In view of the aforesaid propositions laid down by this
Court, we are required to scan the tenor of the clauses in
G the agreement specifically; the arbitration clause in
appropriate perspective. The said clause read as follows:
"5. If any dispute or difference should arise under this
charter, general average/arbitration in London to apply,
H one to be appointed by each of the parties hereto, the
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 103
[R. F. NARIMAN, J.]
third by the two so chosen, and their decision or that of A
any two of them, shall be final and binding, and this
agreement may, for enforcing the same, be inade 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 B
to Eng fish Law. For disputes where total amount claim
by either party does not exceed USO 50,000 the
arbitration should be conducted in accordance with small
claims procedure of the Page 33 33 London Maritime
Arbitration Association." [at para 32] C
It then held:
"Coming to the stipulations in the present arbitration
clause, it is clear as day that if any dispute or difference D
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 E
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."
[atpara41] F
'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 G
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, we think it would be H
104 SUPREME COURT REPORTS [2015] 10 S.C.R.
A appropriate to interpret the clause that it is a proper clause
or substantial clause and not a curial or a procedural orie
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.
B
Having said that the implied exclusion prin~iple stated
in Bhatia International (supra) would be applicable,
regard being had to the clause in the agreement, there
is no need to dwell upon the contention raised pertaining
C 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." [at
paras 46 and 47]
o 19. 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
implieation, the ratio of Bhatia lnternetional would not apply.
E
20. The last paragraph of BharatAluminium's judgment
has now to be read with two caveats, both emanating from
paragraph 32 of Bhatia International itself - that where the
Court comes to a determination that the juridical seat is outside
F 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 principle, it is only those cases
in which agreements stipulate that the seat of the arbitration is
G 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 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
H which would continue to be governed by the Bhatia rule.
UNION OF INDIA v. RELIANCE INDUSTRIES LIMITED 105
[R. F. NARIMAN, J.]
21. On the facts in the present case, it is clear that this A
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 B
under Part-I would consequently not be maintainable. It needs
to be mentioned that Shri Ranjit Kumar's valiant attempt to
reopen a question settled twice over, that is by dismissal of
both a review petition and a curative petition on the very ground
urged before us, must meet with the same fate. His argument C
citing the case of Mathura Prasad Bajoo Jaiswal v. Dossibai
N.B. Jeejeebhoy, (1970) 1SCC613, thatresjudicata would
not attach to questions relating to jurisdiction, would not apply
in the present case as the effect of clause 34.2 of the PSC
0
raises at best a mixed question of fact and law and not a pure
question of jurisdiction unrelated to facts. Therefore, both on
grounds of res judicata as well as the law laid down in the
judgment dated 28.5.2014, this application under Section 14
deserves to be dismissed. It is also an abuse of the process E
of the Court as has rightly been argued by Dr. Singhvi. It is
only after moving under the UNCITRALArbitration Rules and
getting an adverse judgment from the Permanent Court of
Arbitration dated 10.06.2013 that the present application was
filed under Section 14 of the Arbitration Act two days later i.e. F
on 12.6.2013. Viewed from any angle therefore, the Delhi High
Court judgment is correct and consequently this Special Leave
Petition iS dismissed.
Nidhi Jain SLP dismissed. G
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