Mere choosing of the juridical seat of Arbitration attracts the law applicable to such location: Supreme Court [Read Judgment]

Where the parties choose a juridical seat of Arbitration outside India and provide that  the law which governs Arbitration will be a law other than Indian law, Part I of the Act would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India, the Bench said.

The Supreme Court in EITZEN BULK A/S VS. ASHAPURA MINECHEM LTD. has reiterated that held that mere choosing of the juridical seat of Arbitration attracts the law applicable to such location and 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.

Apex Court bench comprising of Justices Fakkir Mohamed Ibrahim Kalifulla and S.A. Bobde also reiterated that where the parties choose a juridical seat of Arbitration outside India and provide that the law which governs Arbitration will be a law other than Indian law, Part I of the Arbitration and Conciliation Act, 1996 would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India.

The court disposed of appeals arising out of Gujarat and Bombay High Courts, which had taken a contradictory view on the issue whether Part I of the Arbitration Act is excluded from its operation in case of a Foreign Award where the Arbitration is not held in India and is governed by foreign law. Gujarat High Court had held that it is not excluded and the Bombay High Court had taken an opposite view.

PART 1 NOT APPLICABLE

 The Court referring to Reliance Industries Limited and another v. Union of India, observed “clause 28 in the present case must be intended to have a similar effect that is to exclude the applicability of Part I of the Indian Arbitration and Conciliation Act since the parties have chosen London as the seat of Arbitration and further provided that the Arbitration shall be governed by English Law….It is settled law for quite some time that Part I is excluded where parties choose that the seat of Arbitration is outside India and the Arbitration should be governed by the law of a foreign country.”

‘MERE CHOOSING OF THE JURIDICAL SEAT OF ARBITRATION ATTRACTS THE LAW APPLICABLE TO SUCH LOCATION’

The Court further said: “As a matter of fact the 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.”

Read the Judgment here.