3: FACTS OF THE CASEIn this case an agreement dated 22 April, 1993 was executed between BALCO (appellant) and Kaiser (respondent), under which Kaiser was to supply and install a computer based system at BALCO’s premises. As per the arbitration clause in the Agreement, any dispute under the Agreement would be settled in accordance with the English Arbitration Law and the venue of the proceedings would be London. The Agreement further stated that the governing law with respect to the Agreement
was Indian law; however, arbitration proceedings were to be governed and conducted in accordance with English Law. A dispute arose between the appellants and the respondents with respect to performance of agreement and the matter was referred to arbitration. The arbitration proceeding were held in England and two awards were passed in the proceeding. The Appellants thereafter filed application under section 34 of Arbitration Act 1996 for setting aside awards. The district court of Bilaspur and the High Court of Chhattisgarh refused the setting aside of the awards and appellants filed an appeal against the said order in the Supreme court of India.
4: ARGUMENT:The counsel of the appellants relied on previously held judgments of Bhatia International v Bulk Trading S.A & Anr. And Venture Global Engineering v Satyam Computer Services Ltd & Anr.and submitted that Part I of the Act is applicable to the arbitration proceeding that were held in London and the awards by virtue of S. 34 of part 1 could be set aside. The Supreme Court in Bhatia International v Bulk Trading S.A & Anr held that Part I of the Arbitration Act 1996 applies to foreign awards passed by international commercial arbitration proceedings that were held outside India. The Court observed that the section 2 (2) has not been expressly or impliedly excluded the application of Part I to international Commercial Arbitrations held outside India and hence Part I shall be applicable to international commercial arbitration held outside India. The Apex Court in Venture Global Engineering v Satyam Computer Services Ltd & Anr passed interim orders under Section 34 of Part I of the Act against the award passed in International Commercial Arbitration held outside India relying on Bhatia Trading judgment.
5: JUDGEMENT:-
•The Supreme Court has held that there can be no “overlapping or intermingling” of the provisions contained in Part I of the Act with the provisions contained in Part II. •Part I and Part II are applicable to different fields. Part I is applicable to all domestically rendered arbitration proceedings that include arbitration proceeding with no foreign party or arbitration proceedings with both foreign parties but held in India or international commercial arbitration proceeding that are held in India and Part II of the Act applies only to enforcement of foreign awards in India. •The territoriality principle of Model law upon which the Indian arbitration act 1996 has been enacted has been enshrined in the Indian Arbitration act. •The choice of the country as the seat of arbitration inevitably imports an acceptance that the law of that country shall be applicable to the arbitration proceedings. “Seat” of arbitration and “place” of arbitration are used interchanging but the seat shall remain the place mentioned in the arbitration agreement. Parties of different nations are involved in international commercial arbitration and hence the venue for arbitration might change but the seat shall remain the same. •Awards rendered in commercial arbitrations seated outside India will only be subject to the jurisdiction of the Indian courts when they are sought to be enforced in India in accordance with the provisions contained in Part II of the Act. •The Indian courts cannot order interim relief under Section 9 or any other provision of the Act in support of foreign seated arbitrations. Parties will therefore need to rely on the relief afforded by the courts of the jurisdiction in which the arbitration is seated. As the choice of seat can have significant implications for the way an arbitration is conducted, parties should carefully consider their choice at the drafting stage. The decision of Bharat Aluminium only applies to arbitration agreements entered into after 6 September 2012.
