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July 17, 2009
CHOOSING As In a recent case filed before the Hon’ble Delhi High Court (“Court”) being Max
India Limited v. General Binding Corporation1, the Court
has held2
that where the parties have agreed to confer jurisdiction upon another court,
the same would amount to exclusion of the jurisdiction of the Court and the
exclusion of the application of Part I of the Arbitration & Conciliation
Act, 1996 (“the Act”). FACTS Max India Limited (“MIL”)
filed an application for interim relief under Section 9 of the Act before the
Court wherein, MIL sought to restrain General Binding Corporation (“GBC”)
from implementing the terms and conditions of a contract entered into by it
directly or through its holding company. GBC filed a reply before the Court
wherein they raised an objection on the jurisdiction of the Court to
entertain and try such an application under Section 9 of the Act. Interestingly, the governing law
and dispute resolution provisions under this contract read as follows: “19.1
This Agreement shall be governed and construed in accordance with the laws of
19.2
Any dispute between the Parties arising out of or in connection with this Agreement
shall be referred to and finally resolved by arbitration under the Citing various precedents3, MIL
argued that notwithstanding the contents of clause 19 (as reproduced
hereinabove), where it was agreed between the parties that the Court of
Singapore would have jurisdiction to settle disputes in connection with the
contract, MIL had a right to invoke Section 9 of the Act and file an
application before the Court. JUDGMENT & ANALYSIS Relying upon the full bench
judgment of the Hon’ble Supreme Court of India in Bhatia
International Vs. Bulk Trading S.A. & Anr.4, the
Court observed that parties in an international commercial arbitration were
permitted to deviate from the provisions of Part I of the Act in certain
cases. The Court thereafter referred to the case of ABC Lombard Private
Limited5
where it was held that in the event that the jurisdiction
determined by the parties to a contract is also the proper jurisdiction for a
dispute arising out of the contract, no specific ouster of the jurisdiction
of courts was necessary and the same may be inferred in certain cases. In
other words, the express mention of one jurisdiction may imply the exclusion
of another. In the instant matter, it was clear
from the relevant clauses being 19.1 and 19.2 of the contract between the
parties that disputes under the contract were to be referred for arbitration
to the SIAC to be resolved under the law of Singapore and as per SIAC Rules
and jurisdiction was granted to the courts in Singapore. The Court thus held
that the contract between the parties clearly implied the exclusion of the
jurisdiction of Indian Courts and excluded the applicability of Part I of the
Act and therefore dismissed the petition as not-maintainable. This judgment serves to further the
position held in Bhatia International6. Thus, an
arbitration clause which (i) specifies a foreign
law as the governing law of the contract, (ii) specifies the jurisdiction of
a foreign court and (iii) specifies a foreign location as the place of
arbitration, will be construed by the courts as excluding the jurisdiction of
Indian Courts as well as excluding the applicability of Part I of the
Act. __________________________ 1 OMP 136/2009 2 By its order dated May 14, 2009 3 AIR 2008 SC 685 and AIR 2008 SC
1061 4 (2002) 4 SCC 105 5 (1989) 2 SCC 163 6 (2002) 4 SCC 105 |
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You may direct your queries or
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