• Scope of Section 89 CPC (Afcons

Infrastructure)
• Issue of Arbitrability (Booz Allen Triple
Test)
• Varied application of Booz Allen
Recap: Principles:
 IP Rights (IPRS v. Entertainment
Network, Eros Intl. v. Telemax)
 Fraud (Swiss Timing v. Commonwealth
games OC, Ayyasamy v. Paramasivam)
 The New York Arbitration Convention on Recognition
& Enforcement of Foreign Arbitral Awards, 1958

Most successful treaty in private international law

New York
Convention: More than 160 nations have signed up

Arbitral awards made in the territory of another

(Contracting) State can be recognized and enforced

Referal by a court to arbitration

UNCITRAL
Model Law Designed to assist States in
reforming and modernizing
on their law on arbitration

International
Commercial Reflects worldwide
concensus on key aspects of
Arbitration, International Arbitration
1985
The PURPOSE:

Aribtration
&
Conciliation
Act, 1996 An Act to consolidate and amend the law relating
to domestic arbitration, international
commercial arbitration and enforcement of
foreign arbitral awards as also to define the law relating
to conciliation and for matters connected therewith or
incidental thereto.
 The Act comprises of four parts and seven schedules –
 Part I: General Provisions on Arbitration
 Chapter 1 to 7 (taken from UNCITRAL Model Law)
• Ss. 2 to 6: Definitions, Scope, Construction of references,
mode and manner of receipt of written communications,
limits of judicial intervention and administrative
assistance
An Overview of • Ss. 7 to 9: Arbitration Agreement
• Ss. 10 to 15: Composition of Arbitral Tribunal
the 1996 Act: • Ss. 16 & 17: Jurisdiction of Arbitral Tribunals
• Ss. 18 to 27: Conduct of Arbitral Proceedings
• Ss. 28 to 33: Making of arbitral award and termination of
proceedings
• S. 34: Recourse against arbitral award
• Chapter 8 to 10
• Ss. 35 & 36: Finality and Enforcement of arbitral awards
• S. 37: Appeals
• Ss. 38 to 43: Misc.
 q Part II: Enforcement of Certain Foreign Awards
§ Chapter 1

An Overview § Ss. 44 to 52: New York Convention Awards

§ First Schedule: Convention on the recognition and
of the 1996 enforcement of foreign arbitral awards
§ Chapter II
Act: § Ss. 53 to 60: Geneva Convention Awards
§ Second Schedule: Protocol on Arbitration Clauses
§ Third Schedule: Convention on the execution of
foreign Arbitral Awards
q Part III: Conciliation
q Part IV: Supplemental Provisions
 Section 2: Definitions
• Section 2(1) (a): Arbitration: any arbitration whether or not administered by permanent arbitral
institution.
• Section 2(1) (b): Arbitration Agreement: Agreement referred to in Section 7.
• Section 2 (1) (c): Arbitral Award: includes interim award.
• Section 2 (1) (ca): Arbitral Institution: [Added by 2019 Amendment]: means an arbitral institution
designated by the Supreme Court or a High Court under this Act.
• Section 2 (1) (d): Arbitral Tribunal: a sole arbitrator or a panel of arbitrators.
• Section 2 (1) (e): Court: [Amended by 2015 Amendment Act] : means
i. In case of arbitration other than ICA-
 the principal civil court of original jurisdiction in a district, and
 includes the HC in exercise of its ordinary original civil jurisdiction [Bombay, Calcutta, Madras &
Delhi]
 that have jurisdiction to decide questions forming subject-matter of the arbitration if the same had
been the subject matter of a suit;
 Excludes any Civil Court of a grade inferior to such principal Civil Court or any Court of Small Causes.
ii. In case of International Commercial Arbitration –
• HC in exercise of its ordinary civil jurisdiction, having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same had been the subject-matter of
suit
• In other cases, HC having jurisdiction to hear appeals from decrees of courts subordinate to
that HC.
246th Law Commission Report: "This is to solve the problem of conflict of jurisdiction that
would arise in cases where interim measures are sought in India in case of arbitrations
seated outside India. This also ensures that in International Commercial Arbitrations,
jurisdiction is exercised by the High Court, even if such High Court does not exercise
ordinary original civil jurisdiction."
 Sec. 42: Jurisdiction: Notwithstanding anything contained elsewhere in this Part [Part I] or
in any other law for the time being in force, where with respect to an arbitration
agreement any application under this Part has been made in a Court, that Court alone shall
have the jurisdiction over the arbitral proceedings and all subsequent applications arising
out of that agreement and the arbitral proceedings shall be made in that Court and in no
other Court.
 Section 2(1)(f): International Commercial Arbitration
• International: “International commercial arbitration” means an arbitration relating to disputes
arising out of legal relationships, whether contractual or not, considered as commercial under
the law in force in India and where at least one of the parties is:
i. An individual who is a national of, or habitually resident in any country other than India; or
ii. A body corporate which is incorporated in any country other than India; or
iii. An association or a body of individuals whose central management and control is exercised in
any country other than India; or
iv. The government of a foreign country.
• Commercial: This term should be given wide interpretation so as to cover matters arising from
all relationships of a commercial nature, whether contractual or not. Trade and commerce do
not mean merely traffic in goods. It includes carriage of persons and goods by rail, road, air and
waterways, building contracts, banking, insurance, transactions in the stock, communication of
information,supply of energy, postal and telegraph services and many more. (Atiabari Tea Co.
Ltd.vs. State of Assam , 1961).
• Arbitration
• Part I of the Act applies to domestic arbitrations and only those ‘international
commercial arbitration’ held in India, and not to foreign- seated international
commercial arbitrations.
• International Commercial Arbitrations which take place in India will be governed by
Part I of the Act, and the award resulting from it will be a ‘domestic’ award as
defined u/ S. 2(7). Such an award will be enforceable as if it were a decree of the
Court. Likewise, the remedies of setting aside the award, or the appellate remedies
will be available to the parties.
• An international commercial arbitration if it takes place outside India, the award
would be a ‘foreign award’ as defined in Sec. 44 or Sec. 53.
• However, Ss. 9, 27, 37(1)(a) and 37(3) shall also apply to International Commercial
Arbitrations seated outside India unless there is an agreement to the contrary. And
the award for such arbitrations shall be enforceable and recognized under Part II.
[According to the 2015 amendment to Section 2(2)]
 SCOPE OF APPLICATION OF PART I
• Section 2(2): Place of Arbitration: Part I of the Act shall apply where the place arbitration is
in India. However, for those international commercial arbitrations seated outside India, Ss. 9,
27, 37(1)(a) and 37(2) shall apply UNLESS there is an agreement to contrary.
• Section 2(3): Over-riding effect of other laws: If by virtue of any law certain disputes cannot
be submitted to arbitration, Part I of the Act shall not apply there.
• Section 2(4): Statutory Arbitration: For statutory arbitrations, the statute shall be deemed to
be the arbitration agreement and all provisions of Part I of this Act shall apply to such
arbitrations EXCEPT Ss. 40(1), 41 and 43 and those which are inconsistent with the
provisions in the other enactment that provides for arbitration or any rules made
thereunder.
• Section 2(5): Application to All Arbitrations: Part I applies to all arbitrations and to all
proceedings relating thereto EXCEPT as stated in sub-section (4) or provided by any law or in
any agreement between India and any other country or countries.
 Various laws applicable to aspects of an
arbitral relationship:
• Contract (Substantive law)
 The Proper law of the underlying contract i.e. the law governing the contract which creates the substantive rights and
obligations of the parties.
 The term “applicable law” or “proper law of the contract” is the law that governs the discharge of the contract itself. The
parties are free to choose what contract law would apply to them.
• Arbitration Agreement (Governing law)
 The proper law of the arbitration agreement/ law governing the arbitration agreement i.e. the law which governs rights and
obligations of the parties arising out of their agreement to arbitrate and, in particular, their obligation to submit their disputes
for arbitration and to honor an award. This includes questions like validity of the arbitration agreement, validity of the notice
of arbitration, constitution of the tribunal, whether an award lies within the jurisdiction of the arbitrator.
• Procedural law (Law of the Seat of Arbitration)
 The curial law/ lex arbitri i.e. the law governing the arbitration proceedings themselves, the manner in which the reference is
to be conducted. It governs the procedural powers and duties of the arbitrator, questions of evidence and determination of
proper law of the contract, internal arbitration procedures like commencement of proceedings, appointment of arbitrators,
pleadings, manner of conducting evidence, etc.
 This law is almost in all cases determined by seat of arbitration.
 SECTION 2(2): PLACE OF ARBITRATION
“This Part shall apply where the place of arbitration is in India.”
• Part I would apply to all arbitrations, whether between Indian nationals or international
arbitrations, where the place/ seat is in India.
• Parties have the freedom to determine the place of arbitration and to choose the law governing
an international commercial agreement (contract and arbitration).
• The choice of seat imports legal significance since it constitutes the Juridical seat of arbitration i.e.
it imports the acceptance of the law of the country of the seat of arbitration, relating to the
conduct and supervision of the proceedings.
• Such choices (seat/ substantive law of agreement) may be exercised expressly or impliedly.
• Where there is no express choice of law governing the contract as a whole, or the arbitration
agreement in particular, there is, in absence of any contrary indication, a presumption that the
parties have intended that the proper law of the contract, as well as the arbitration agreement,
are the same as the law of the country or seat of arbitration.
 Seat v. Venue

Seat Venue

Should remain constant Flexible concept

Decides the applicable procedural law Decided as per convenience of parties,

arbitration panel.

Section 2(2)- “place" =seat Section 20 (3)- “place”= venue

Deciding factor for purposes of applicability of Does not decide any law applicable to
part I or Part II of the A&C Act, 1996 arbitration
 WHETHER S.2(2) IS APPLICABLE TO FOREIGN
SEATED ARBITRATIONS?
Relevant Statutory Provisions:
• S.2(2): Part I of the Act shall apply where the place of arbitration is in India:
Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of subsection
(1) and sub-section (3) of section 37 shall also apply to international commercial arbitration, even if the place of
arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognized
under the provisions of Part II of thisAct.
• S.2(5): Subject to S.2(4), Part I shall apply to all arbitrations and to all proceedings relating thereto; except if
otherwise provided by any agreement in force between India and any other country.
• S.2(7):An arbitral award made under Part I shall be considered as a domestic award.
• Judicial Dicta Prior to Bhatia International:
There were conflicting judgments of various High Courts: -
 Delhi HC: S.2(2) is wide enough to include arbitrations even taking place outside India.
 Calcutta, Delhi, Bombay, AP HCs: S.2(2) strictly applies to arbitrations in India.
 BHATIA INTERNATIONAL vs. BULK TRADING
S.A. (2002) 2 SCC 105

• Facts: Bhatia Int’l entered into a contract with Bulk Trading on May 9, 1997. the contract
contained an arbitration clause which provided that arbitration was to be as per the rules of
the Int’l Chamber of Commerce (ICC). On Oct 23, 1997 Bulk Trading filed a request for
arbitration with ICC. Parties agreed that the arbitration be held in Paris, France. ICC had
appointed a sole arbitrator. In the meanwhile, Bulk Trading filed an application u/S.9 of A&C
Act in District Court, Indore against Bhatia Int’l seeking injunction restraining Bhatia Int’l
from alienating, transferring and/ or selling their business assets and properties.
• Bhatia Int’l raised a plea against maintainability contending that Part I of the Act would not
apply to arbitrations where the place of arbitration is not India but the plea was dismissed.
Then it filed a writ in the HC which was again dismissed and then this appeal in the SC
which was also dismissed.
The three-judge bench held that –
 Section 2(2) does not provide that Part I shall not apply where place of arbitration is not in India. It also
does not provide that Part I will "only" apply where place of arbitration is in India. Therefore, Part I of the
Act necessarily applies to arbitrations which are held in India between Indian nationals, and to int’l
commercial arbitrations whether held in India, or out of India.
 Where such arbitration is held in India (including ICA), the provisions of Part I would compulsorily apply and
the parties cannot, by agreement, deviate from such non-derogable provision (Section 2(2)) of Part I.
 In cases of 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.
 Part II only applies to arbitrations which take place in a Convention country because it deals with
enforcement of foreign awards covered by arbitrations under the New York Convention (Chapter I) & the
Geneva Convention (Chapter II) respectively.
 S.2(2) is based on Article 1(2) of UNCITRAL Model law which clearly used the word ‘only’ in describing the
application of the provisions – “The provisions of this law apply only if the place of arbitration is in the
territory of this State.” But S.2(2) omits the use of this word and it changes the whole complexion of the
sentence.
• S. 1 says ‘Act’ applicable to whole of India. This shows that the entire Act, including Part I, applies to the
whole of India. For J&K, Part I, III and IV will apply only in case of ICA. It doesn't state that Part I will apply
to J&K only if place of ICA is in J&K.
• The words “every arbitration” in S.2(4) and the words “all arbitrations and to all proceedings relating
thereto” in S.2(5) are wide. S. 2(2) has to be read harmoniously with S.2(4) & (5) and S. 1.
• Definitions of arbitral award, ICA and Court do not provide that there is no jurisdiction if arbitration
takes place outside India. Therefore, ouster of jurisdiction cannot be implied, it should be express.
• With respect to non-convention country, the Act nowhere provides that its provisions would not apply to
such arbitrations otherwise it would leave a party remediless.
• Relying on S.2(7) and Part II, since the Act only classifies awards as ‘domestic awards’ or ‘foreign awards’
made in a Convention country, an award passed in an arbitration which takes place in a non-convention
country, even though strictly speaking would not be a domestic award, it would be covered by Part I.
• S. 28 begins with the words, “where the place of arbitration is situated in India” – if Part I was to apply to
arbitrations taking place in India only then S. 28 would not have started like this.
• S. 45 & 54 begin with the non-obstante clause “Notwithstanding anything contained in Part I” implicating
that provisions of Part I apply to Part II.
• Part I is about “General Provisions” applicable to all arbitrations and such provisions will not be repeated
in all Chapters and Parts.
Consequences of the
Bhatia Judgment

• Part I of the Act applies to all arbitrations, domestic or foreign;

• Parties in arbitration held outside India can, however, exclude the
application of Part I by express or implied consent.
• The court did not deal with what would constitute implied exclusion.

The judgement was severely criticized especially amongst the foreign

inventor community and it opened the floodgates for challenge under the
domestic law.
 Venture Global Engineering vs. Satyam Computer
Services Ltd. (2008) (4) SCC 190
• Facts: VGE (US) and SCSL (India) entered into a JV to form a company named
SVESL with equal shareholding. In the Shareholders agreement they agreed to
resolve the disputes amicably and failing such resolution, to resolve by
arbitration. Dispute arose and SCSL requested LCIA for arbitration which gave its
award directing VGE to transfer shares to SCSL. Thereafter, SCSL filed petition
(14/4/06) before US District Court of Eastern Michigan for recognition and
enforcement of the award to which VGE filed cross-petition objecting the
enforcement as it was in violation of Indian laws and regulations (FEMA). VGE
filed a petition (28/4/06) in Secunderabad seeking to set aside the award and
permanent injunction on transfer of shares under the award. Trial court rejected
the plaint of VGE, which filed an appeal in the HC. HC dismissed the appeal
holding that the award cannot be challenged even if it is against the public policy
and in contravention of statutory provisions. Now VGE has filed an SLP in the SC.
• Issue: Whether a foreign award can be challenged under S. 34 on the ground of
being against the public policy of India?
• Held:
• Applied Bhatia judgment;
• Provisions of Part I of the Act would apply to all arbitrations including international commercial
arbitrations and to all proceedings relating thereto. Where such arbitration is held in India, the
provisions of Part I would compulsorily apply and parties cannot deviate from non-derogable provisions
of Part I.
• Even in the case of international 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.
• Applying S. 34 to foreign international awards would not be inconsistent with S. 48 of the Act or any
other provision of Part II because a situation may arise, where, even in respect of properties situate in
India and where an award would be invalid if opposed to the public policy of India, merely because the
judgment-debtor resides abroad, the award can be enforced against properties in India through
personal compliance of the judgment-debtor and by holding out the threat of contempt as is being
sought to be done in the present case. In such an event, the judgment-debtor cannot be deprived of his
right u/S.34 to invoke public policy of India to set aside the award. The public policy as given in ONGC
vs. Saw Pipes case includes – the fundamental policy of India; or the interests of India; or justice or
morality; or if it is patently illegal. This extended definition of public policy can be bypassed by taking
the award to a foreign country for enforcement.
• Appeal allowed.
 BHARAT ALUMINUM COMPANY VS. KAISER ALUMINUM TECHNICAL SERVICES
INC. (BALCO) (2012)
{DECIDED BY THE CONSTITUTIONAL BENCH}

• “The use of the words ‘place’, ‘seat’, ‘situs’ and ‘venue’ in the context of arbitration
indicate the juridical or legal seat of arbitration which determines the curial law i.e. the
law that shall govern the arbitration proceedings. What this judgment holds is that if the
legal or juridical seat of arbitration is outside India, then Part I of the Act shall be
inapplicable to such arbitrations; and even in case a clause in the arbitration agreement
purports to apply Part I of the Act to an arbitration where the juridical seat of arbitration is
outside India, Part I shall be inapplicable to the extent inconsistent with the arbitration
law of the seat of arbitration. ‘Venue of arbitration’ as distinguished from the ‘place’ or
‘seat’ or ‘situs’, is the actual physical location where the arbitrator(s)/ Arbitral Tribunal (for
reasons of convenience, etc.) might actually conduct their proceedings, which may be a
location physically outside the juridical or legal seat of arbitration. Thus, wherever the
phrase ‘outside India’ is used, it means that the juridical or legal seat of arbitration is
outside India, and whenever the phrase ‘inside India’ or ‘in India’ is used, it means that
the juridical or legal seat of arbitration is India or is inside India. “ - Ed Note in the
judgment.
• Facts: An agreement dated 22-04-1993 was executed between BALCO and
Kaiser, under which Kaiser was to supply and install a computer-based system
for shelter modernization at BALCO’s Korba Shelter. The agreement contained
an arbitration clause for resolution of disputes arising out of the contract. The
clause in Article 17 and 21 was as follow:
• “17.1: Any dispute or claim arising out of or relating to this agreement shall be
in the first instance, endeavored to be settled amicably by negotiation between
the parties hereto and failing which the same will be settled by arbitration
pursuant to the English arbitration law and subsequent amendments thereto.
• 17.2: The arbitration proceedings shall be carried out by two arbitrators, one
appointed by BALCO and one by KATSI chosen freely and without any bias. The
Court of Arbitration shall be held wholly in London, England and shall use
English language in the proceeding.The findings and award of the Court of
Arbitration shall be final and binding.
• 22:The agreement will be governed by the prevailing law of India and in case of
arbitration, the English law shall apply.”
• Awards (02) were given by the arbitral tribunal by arbitration held in England.
BALCO then filed application u/S.34 of A&C Act for setting aside of the awards.
District Court dismissed the application; HC dismissed the appeal which was
challenged in the SC.
• Number of other appeals and SLPs and transferred cases were listed along
with this appeal.
 • Held:
• Constitutional bench over-ruled Bhatia International wherein it was
Question: held that the omission of the word ‘only’ from Section 2(2) indicates
the applicability of Part I of the Act not only to domestic arbitration but
Whether Part would also extent to arbitrations held outside India.

I of the Act • S.1(2) does not extend the application of Part I to ICA held outside
India. Proviso to S.1(2) was added to incorporate the provisions to the
would apply J&K Arbitration Act as far as they relate to ICA, which were absent in
the previous legislations and consequently absent in J&K’s Arbitration
to foreign Act. Section 2(2) which states the territoriality principle is not affected
by the proviso which is restricted to Section 1(2).
seated • S.2(2) makes it clear that Part I is limited in its application to
arbitrations which take place/seated in India. Legislature has done so to
international give recognition to the territorial principle.
• Article 1(2) upon which S.2(2) is based is a model and a guide to all the
commercial States, which have accepted the UNCITRAL Model Law. Model Law
used the word ‘only’ in view of exceptions referred to in that Article
arbitrations? which could have extra-territorial effect. The Indian legislature did not
include the exceptions mentioned in Article 1(2) and therefore,
inclusion of the word “only” would have been superfluous.
• There is no conflict between S.2(2) on the one hand and S.2(4) & (5) on the other.
• S.2(4) makes Part I applicable to “every arbitration under any other enactment for the time being in force”.
Hence, there must be an enactment under which arbitration takes place. Here enactment is the one made by the
Indian Parliament. It is impossible to accept that “every arbitration” would include arbitrations which take place
outside India.
• S.2(5) has to be read with S.2(2) in the background meaning Part I shall apply to all arbitrations and proceedings
relating thereto, where the seat is in India and if it is not a statutory arbitration or subject of an agreement
between India and any other country.
• S.2(7) also does not alter the proposition that Part I applies only where the “seat” or “place” of the arbitration is
in India. The provision reinforces the territorial criterion by providing that, when two foreigners arbitrate in India,
under a Foreign Arbitration Act, the provisions of Part I will apply. Indian Courts being the supervisory Courts, will
exercise control and regulate the arbitration proceedings, which will produce a "domestically rendered
international commercial award". It would be a "foreign award" for the purposes of enforcement in a country
other than India.
• Only if the agreement of the parties is construed to provide for the “seat/place” of arbitration being in India –
would Part I be applicable. If the agreement is held to provide for a “seat/place” outside India, Part I would be
inapplicable to the extent inconsistent with the arbitration law of the seat, even if the agreement purports to
provide that the A&C Act 1996 shall govern the arbitration proceedings. A choice of seat for arbitration must be a
choice of forum for remedies seeking to attack the award.
• Section 2(1)(e) and 47 (definition of court): The purpose of section 2(1)(e) “Court” is to identify courts having
supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially be a court
of the seat of the arbitration process. The Section 2(1)(e) read with Section 20 (Party Autonomy) provides that the
Legislature has given jurisdiction to the court which would have jurisdiction where the cause of action is located
and the courts where the arbitration takes place. On the other hand, under section 47 “court” means a court
having subject matter jursidiction of the award in case of enforcement of certain foreign awards. The Section 2(1)
(e) being purely jurisdictional in nature, it can have no relevance to the question whether Part I applies to
arbitrations which take place outside India. The court has to undertake a detailed examination to discern from
the agreement and the surrounding circumstances the intention of the parties as to whether a particular place
mentioned mentioned refers to the "venue" or "seat" of the arbitration. The choice of another country as the seat
of arbitration inevitably imports an acceptance that the law of that country relating to the conduct and supervision
of arbitrations will apply to the proceedings.
• S.28(1) indicates that in an arbitration in India other than ICA, there is no choice but for the Tribunal to decide “the
dispute” by applying the Indian “substantive law applicable to the contract.” So that Indian parties do not
circumvent the substantive Indian law by resorting to arbitrations. Whereas, for ICA held in India, the parties
would be free to agree to any other “substantive law” and if not so agreed, the “substantive law” applicable would
be as determined by the arbitral tribunal.
• Indian courts do not have the power to grant interim measures under Section 9 when the seat of arbitration is
outside India.
• Lacuna w.r.t. non-convention award cannot be incorporated in the Act by process of interpretation. This task is
with the Parliament, instead.
Prospective Ruling of Bhatia International by BALCO
• Ruling in BALCO would apply only to arbitration agreements entered into from the date of
the judgment, September 6, 2012.
• Bhatia International continues to hold the field and is applicable to proceedings arising out
of any arbitration agreement executed prior to September 6, 2012.
• General rule: Judgments of the courts interpreting statutory provisions of law apply
retrospectively as it is based on the principle that the courts only find the law, meaning that
they interpret and declare the law as it existed and was originally intended.
• A subsequent judgment overruling a prior view of the law has the effect of obliterating or
erasing that prior decision, with the effect that the interpretation of the law as newly
declared in the subsequent judgment is to treated as having always existed.
• Doctrine of prospective overruling allows the court to overrule an earlier judgment and yet
hold that its decision would apply only prospectively.
Bhatia International v. Bulk Trading S.A. (2002) 4 SCC 105 [3 Bharat Aluminium Company and Ors.
Judge Bench] Vs. Kaiser Aluminium Technical Service, Inc. and Ors.
(2012) (8) SCALE 333 [5 Judge Bench]

1. If seat is in India, then Part I applies. It includes 1. Part I applies to arbitrations seated in India.
both Domestic and International Commercial Arbitrations. 2. Part II applies to arbitrations seated in
Subject to agreement between the parties, the parties Convention countries. Therefore, no application of
can derogate from derogable provisions under Part I. section 9.
2. For foreign seated arbitrations:- 3. The lacuna in law for arbitration cases where the
(a) For Convention (New York or Geneva Convention) awards are passed in non convention countries - the
countries- Part II applies. For the aspects not provided in Legislature is required to step in. Part I is not applicable.
Part II, Part I applies unless impliedly or explicitly excluded. 4. Part I and Part II are mutually exclusive.
(b) For Non-Convention countries- Part I applies unless
parties by agreement (express or implied) exclude all of any
of its provisions. If excluded, the laws agreed upon by parties
would apply.
The "award" under Section 2(7) includes awards The term "award" includes the awards for
from non convention countries. arbitration seated in India and also International
Commercial Arbitration that takes place in India
Bhatia International case (2002) BALCO case (2012)

Section 9 (interim measures before or Section 9 is part of Part I of the

during the arbitral proceedings): applies to Act- therefore, only applicable to the arbitrations which
foreign seated arbitrations as well otherwise the party take place within India. It provides for pre
will be rendered with no remedy. enforcement (Section 36) interim measures therefore,
only applicable for domestic awards. The party is
not rendered without any remedy as it can approach the
court of seat for remedy.

The section 2(2) ["This Part shall apply where the place UNCITRAL Model uses the word "only" because the
of arbitration is in India"] does not include the word "only" parent provision includes certain exceptions. However,
like UNCITRAL Model. So, the Legislature did not intend for India has not enacted those exceptions, therefore the
Part I to only apply to arbitration seated in India. [Note: section 2(2) does not use the word "only".
"place" in section 2(2) read with section 20 means seat of Section 2(2): Territoriality principle
arbitration]
Bhatia International case (2002) BALCO case (2012)

Section 2(4) and (5) makes Part I applicable to The section 2(4) is limited to statutory or
all arbitrations irrespective of where it is held. compulsory arbitrations.
The section 2(4) uses the term "every Section 2(2) read with 2(4) and 2(5) provides that
arbitration". Therefore, limiting applicability "all arbitrations" mentioned in section 2(5) means that
of Part I to arbitrations that takes place in barring statutory arbitrations under section 2(4) and
India would make Section 2(2) in conflict with arbitrations pursuant to International Agreements, all
section (4) and (5). other arbitration proceedings in India shall be subject to
Part I of the Act. Therefore, there is no conflict among
section 2(2), 2(3) and 2(4) of the Act.

Retrospective Application: application from enactment Prospective Application: 06.09.2012- governed by Date
of 1996 Act to 06.09.2012 (BALCO Decision): governed by of Arbitration Agreement
Date of Arbitration Agreement
 APPLICATION: BHATIA
INTERNATIONAL vs. BULK
TRADING S.A. (2002) V. BALCO
VS. KAISER
ALUMINUM TECHNICAL SERVICE
S INC. (2012)
 Harmony Innovation Shipping Ltd.
vs. Gupta Coal India Ltd. (2015)
WHAT SHOULD APPLY? BHATIA OR BALCO? WHAT DO YOU
THINK?
• Facts: An agreement was entered into between the parties on 20-10-2010 in respect of 24 voyages of
coal shipment. Gupta Coal India undertook only 15 voyages and that resulted in disputes which
ultimately stood referred to arbitration. Clause 5 of the agreement clearly stated that arbitration will be
held in London for any dispute that may arise and the agreement is to be governed and construed
according to the English law and if claim under the dispute does not exceed US $50,000, the arbitration
should be conducted in accordance with small claims procedure of the London Maritime Arbitration
Association. After this dispute arose in respect of the main agreement, an addendum to agreement was
executed as regards the remaining voyages on 3-4-2013. Arbitration proceedings were initiated in
London and eventually an award was passed.
• After the award was passed, Harmony Innovation filed an application u/S.9 before the Distt. Court
seeking security from Gupta Coal India. Court issued an order for attachment of the cargos as an
interim measure and asked Gupta Coal India to furnish a security of Rs 6,60,00,000. Gupta Coal filed a
writ in HC seeking to set aside Distt. Court's order for want of jurisdiction. The order was set aside on
the ground that BALCO decision is declaratory in nature and thus a party is bound by the same even if
the agreement was entered into before BALCO judgment. Now Harmony Innovation has appealed in
the SC.
 Harmony Innovation Shipping Ltd.
vs. Gupta Coal India Ltd. (2015)

• Issue: Whether Bhatia or BALCO judgment will apply to the arbitration agreement between the
parties?
• Held: Here, the arbitration agreement was executed prior to 6-9-2012 and the addendum came
into existence afterwards on 3-4-2013. Therefore, there can be no scintilla of doubt that the
authority in BALCO case would not be applicable for determination of the controversy in hand.
• Pronouncement in Bhatia International would be applicable to the facts of the present case
inasmuch as there is nothing in the addendum to suggest any amendment to the arbitration
clause and therefore, it is controlled and governed by conditions postulated in the principal
contract.
• To apply the doctrine of implied exclusion as stated in Bhatia, the court has to test “presumed
intention” by adopting an objective approach as to what would have been the intention of
reasonable parties in the position of the actual parties to the contract.
 Harmony Innovation Shipping Ltd.
vs. Gupta Coal India Ltd. (2015)
• Quoting from BALCO, the court stated “an agreement as to the seat of an arbitration is analogous
to an exclusive jurisdiction clause. Any claim for a remedy as to the validity of an existing interim or
final award is agreed to be as made only in the courts of the place designated as the seat of
arbitration.”
• Since the parties intended to keep the Juridical seat as London which is evident from various
phrases in the principal contract, it is an implied exclusion of the applicability of Part I of the Act.
Therefore, petition under S. 9 for interim measures is not maintainable.
• HC had allowed the petition on the foundation that BALCO case would govern the field which was
not held to be a correct view by the SC. But even applying the principles laid down in Bhatia
International (as stated by the SC) and considering the arbitration clause, the courts in India will not
have jurisdiction as there is implied exclusion.
• SC concurred with the conclusion arrived at by the HC but for different reasons.
 UOI vs. Reliance Industries
(2015) WHAT SHOULD APPLY? BHATIA OR BALCO?
WHAT DO YOU THINK?
• Facts: Two Production Sharing Contracts (PSC) were executed between Reliance Industries (RIL), UOI,
Enron Oil and Gas India Ltd. (later BG Exploration) and the ONGC. Parties agreed u/Article 32 and 33 that
proper law of contract shall be the law of India, arbitration proceedings shall be conducted as per
arbitration rules of UNCITRAL, 1985, the arbitration agreement shall be governed by the laws of England.
Proceedings shall be conducted in English and the venue shall be London, England. However, on 14-09-
2011 UOI, Reliance and BG Exploration agreed to the seat of arbitration as London, England. Dispute
arose between RIL and UOI.
• Procedural history:
• Arbitral tribunal passed the award on 12-9-2012.
• UOI filed petition u/S. 34 in Delhi High Court whereby the Court in its judgment delivered on 22-3-
2013 decided that the petition under S.34 was maintainable.
• Supreme Court’s decision on 28-5-2014 reversed Delhi HC’s judgment applying Bhatia and finding
implied exclusion of Part I by choosing a foreign seat and foreign law governing the arbitration
agreement.
• Review petition and curative petition against the SC’s judgment have been dismissed.
• This SLP arises out of a judgment dated 3-7-2014 whereby Delhi HC dismissed an application u/S.14
on the ground that Part I of the Act is not applicable.
 UOI vs. Reliance Industries
(2015)
• Supreme Court’s decision on 28-5-2014 was based on the law declared in Bhatia
International. It stated that since in the articles of contract stated that the proper law of the
contract is Indian law; proper law of the arbitration agreement is the law of England –Part I
of the Act is not applicable to present arbitration agreement. Applicability of Part I is not
dependent on the nature of 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
Act is applicable to the arbitration agreement.
• Held:
• Prior to 1996, the three Acts which governed the Arbitration law in India were based on
the doctrine of concurrent jurisdiction. However, in 1996 Act this doctrine was done
away with. But Bhatia International resurrected this doctrine and it was supported by
judgment of Venture Global. Further, BALCO judgment overruled these judgments and
declared the law to apply prospectively.
• The juridical seat is outside India or where law other than Indian law governs the
arbitration agreement. Thus, Part I of the Arbitration Act, 1996 would be excluded by
necessary implication.
 UOI vs. Reliance Industries
(2015)
• 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 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 which would continue to be governed by the Bhatia rule.
• In this case, as already held by the SC, both the juridical seat of the arbitration is at London and
that the arbitration agreement is governed by English law. Therefore, Part I would be inapplicable.
• The application under Section 14 is dismissed both on the question of res judicata and the law laid
down in the SC decision of 28-5-2014.
 IMAX Corporation v. E-city
Entertainment (I) Pvt. Ltd. (2017)
WHAT SHOULD APPLY? BHATIA OR BALCO?
WHAT DO YOU THINK?
• The parties entered into a contract on 28/9/2000.
• Clause 14 of the agreement contained an arbitration Clause which read : This Agreement
shall be governed by and construed according to the laws of Singapore, and the parties
attorn to the jurisdiction of the courts of Singapore. Any dispute arising out of this master
agreement or concerning the rights, duties or liabilities of E-City or Imax hereunder shall
be finally settled by arbitration pursuant to the ICC Rules of Arbitration.
• The ICC Rules provide for the entire conduct of arbitration from its commencement to the
passing of an award. Rules provide that “the place of the arbitration shall be fixed by the
Court unless agreed upon by the parties.”
• When dispute arose on 16/06/2004, IMAX had proposed the venue of arbitration to be
Paris in France. The Respondent, in their answer stated that the venue suggested by the
claimant i.e. Paris in France would unnecessarily increase the cost of arbitration and
therefore suggested that Singapore would be the most appropriate and convenient venue
for the arbitration.
 IMAX Corporation v. E-city
Entertainment (I) Pvt. Ltd. (2017)
• The International Court of Arbitration decided that London, United Kingdom will be the
juridical seat of the arbitration in view of Article 14(1) of the ICC Rules and, therefore,
proceeded on the basis of the Part-I of the English Arbitration Act,1996 after consulting the
parties.
• Two partial final awards and one final award was passed on 11/02/2006, 24/08/2007 and
27/03/2008, respectively.
• On 21/07/2008, Respondent filed an application under S.34 in the Bombay HC. The Court
condoning the delay, admitted the application.
• IMAX filed an appeal against the interim order of the Bom HC challenging the applicability
of Part I to their arbitration.
• Held:
• Though the parties have not chosen the seat of arbitration but agreed to conduct the
arbitration as per rules of the ICC thereby expressing willing that the seat of arbitration can
be outside India. When ICC decided the seat to be in London, parties agreed. Therefore,
there is an agreement that arbitration shall be held in London and thus Part I should be
excluded.
2015 AMENDMENT TO SECTION 2(2)

• 2015 Amendment (dated 23.10.2015) inserted proviso to section 2(2):

"Provided that subject to an agreement to the contrary, the provisions of
sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of section
37 shall also apply to international commercial arbitration, even if the place of
arbitration is outside India, and an arbitral award made or to be made in such
place is enforceable and recognized under the provisions of Part II of this Act."
 Section 37: Appealable Orders
(1) Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from
the following orders (and from no others) to the Court authorized by law to hear appeals from original
decrees of the Court passing the order, namely:—
(a) refusing to refer the parties to arbitration under section 8;
(b) granting or refusing to grant any measure under section 9;
(c) setting aside or refusing to set aside an arbitral award under section 34.
(2) Appeal shall also lie to a court from an order of the arbitral tribunal—
(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or
(b) granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section
shall affect or takeaway any right to appeal to the Supreme Court.
 2019 AMENDMENT

• This part of the amendment has not been notified yet.

• Background: (High Level Committee to Review the mechanism of Institutional Arbitration in India)- “There is
an error in this provision since clause (a) of sub-section (1) of section 37 pertains to refusing to refer parties
to arbitration under section 8 of the ACA. It is obvious that the reference in the proviso to section 2(2) was
with respect to clause (b) of sub-section (1) of section 37 which pertains to granting or refusing to grant any
measure under section 9.”
• The amendment states to substitute Section 37(1) clause (a) with clause (b) in Section 2(2) proviso. This
means that the section Section 37 (1)(b), in place of section 37 (1)(a), would apply to international
commercial arbitration, even if the seated outside India, and an arbitral award made or to be made at such
seat is enforceable and recognised under the provisions of Part II of the Act. Section 37 (1)(b) is a non
obstante clause stating that an appeal to an order of section 9 (interim relief) under the Act.
Case/Amendment Development in law
1. If seat is in India, then Part I applies. It includes both Domestic
and International Commercial Arbitrations. The parties can
derogate from derogable provisions under Part I.
2. For foreign seated arbitrations:-
BHATIA INTERNATIONAL vs. BULK TRADING S.A. (a) For Convention (New York or Geneva Convention) countries-
(2002) 2 SCC 105 Part II applies. For the aspects not provided in Part II, Part
I applies unless impliedly or explicitly excluded.
(b) For Non-Convention countries- Part I applies unless parties by
agreement (express or implied) exclude all of any of its provisions.
If excluded, the laws agreed upon by parties would apply.

1. Applied Bhatia judgment;

2. Provisions of Part I of the Act would apply to all
arbitrations including international commercial
Venture Global Engineering vs. Satyam Computer arbitrations and to all proceedings relating thereto. Where
Services Ltd. (2008) (4) SCC 190 such arbitration is held in India, the provisions of Part I
would compulsorily apply and parties are free to deviate to
the extent permitted by the provisions of Part I.
3. Even in the case of international 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.
Case/Amendment Development in law
BALCO (2012) 1. Part I applies to arbitrations seated in India.
2. Part II applies to arbitrations seated in Convention
countries. Therefore, no application of section 9.
3. The lacuna in law for arbitration cases where the
awards are passed in non convention countries - the
Legislature is required to step in. Part I is not applicable.
4. Part I and Part II are mutually exclusive.

Harmony Innovation Shipping Ltd. vs. Gupta Coal 1. Here, the arbitration agreement was executed prior to 6-
India Ltd. (2015) 9-2012 and the addendum came into existence afterwards
[APPLICATION: Bhatia v. BALCO] on 3-4-2013. Therefore, there can be no scintilla of doubt
that the authority in BALCO case would not be applicable
for determination of the controversy in hand.
To apply the principal of implied exclusion, the court has
to test the “presumed intention” by adopting an objective
approach as to what would have been the intention of
reasonable parties in the position of the actual parties to
the contract.
Case/Amendment Development in law

1. The juridical seat is outside India or where law other

UOI vs. Reliance Industries (2015) than Indian law governs the arbitration agreement, Part
[APPLICATION: Bhatia v. BALCO] I of the Arbitration Act, 1996 would be excluded by
necessary implication.
2. 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 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 which would continue to be
governed by the Bhatia rule.

Though the parties have not chosen the seat of

IMAX Corporation v. E-city arbitration but agreed to conduct the arbitration as
Entertainment (I) Pvt. Ltd. (2017) per rules of the ICC thereby expressing willingness that
[APPLICATION: Bhatia v. BALCO] the seat of arbitration can be outside India. When ICC
decided the seat to be in London, parties agreed.
Therefore, there is an agreement that arbitration shall
be held on London and thus Part I should be excluded.
Case/Amendment Development in law

Section 2(2): "This Part shall apply where the place of arbitration is
2015 Amendment in India:
[Provided that subject to an agreement to the contrary, the
provisions of sections 9, 27 and clause (a) of sub-section (1) and
sub-section (3) of section 37 shall also apply to international
commercial arbitration, even if the place of arbitration is outside
India, and an arbitral award made or to be made in such place is
enforceable and recognized under the provisions of Part II of this
Act.]"

2019 Amendment Section 2(2): "This Part shall apply where the place of arbitration is
in India:
[Provided that subject to an agreement to the contrary,
the provisions of sections 9, 27 and clause (b) of sub-section (1)
and sub-section (3) of section 37 shall also apply to international
commercial arbitration, even if the place of arbitration is outside
India, and an arbitral award made or to be made in such place is
enforceable and recognized under the provisions of Part II of this
Act.]"
Section 2(2): Present Provision

(2) This Part shall apply where the place of arbitration is in India:
Provided that subject to an agreement to the contrary, the provisions of sections
9, 27 and clause (a) of sub-section (1) and sub-section (3) of section37 shall also
apply to international commercial arbitration, even if the place of arbitration is
outside India, and an arbitral award made or to be made in such place is
enforceable and recognized under the provisions of Part II of this Act.
SECTION 26 of THE ARBITRATION AND
CONCILIATION (AMENDMENT) ACT, 2015

"26. Nothing contained in this Act shall apply to the

arbitral proceedings commenced, in accordance with the
provisions of section 21 of the principal Act, before the
commencement of this Act unless the parties otherwise
agree but this Act shall apply in relation to arbitral
proceedings commenced on or after the date of
commencement of this Act."
“In relation to arbitral proceedings”
commenced after 23-10-2015

• Only arbitral proceeding itself or also the court matters that arise in relation to
arbitral proceedings?
• State of confusion: arbitral proceedings commence before 23-10-2015 but
court proceedings in relation to the same commence after 23-10-2015.
• Is the object of legislature to give retrospective effect to the application of
2015 Amendment Act?
Issue 2: Whether the date of arbitration
agreement is to be considered or the date of
commencement of arbitral proceedings?

• Bhatia principle: applicable from the date of 1996 Act till BALCO judgment (6-09-
2012) based on the date on arbitration agreement.
• BALCO principle: applicable from the date of judgment (6-09-2012) based on the
date on arbitration agreement.
• 2015 Amendment: applicable from the date of amendment (23-10-2015) based on
the date of commencement of arbitral proceedings?
• Confusion: Where as per date of arbitration agreement, Bhatia/BALCO principle will
apply and, as per date of commencement of arbitral proceedings proviso to S. 2(2)
introduced by 2015 amendment will apply.
 Suggested amendments by 246th Law Commission
Report not included in the 2015 Amendment Act

• Insertion of the word “only” after the words “shall apply” and insertion of the word “seat” instead of the word
“place” in sub-section (2) to mean-
“This Part shall apply only where the seat of arbitration is in India”.
• 246th Law Commission Report: “This amendment ensures that an Indian Court can only exercise jurisdiction
under Part I where the seat of the arbitration is in India. To this extent, it over-rules Bhatia principle, and re-
enforces the “seat centricity” principle of BALCO judgment”.
• In order to protect the applications which were filed on the basis of Bhatia rule and were still pending in an Indian
court that, insertion of sub-section (2A) after the S. 2(2) proviso was recommended.
“(2A) Notwithstanding any judgment/ decree to the contrary, the amendment to this sub-section (2)
shall not apply to applications which are pending before any judicial authority on the date of such
amendment, and which have arisen in relation to arbitrations where the date of the arbitration agreement
is prior to 06.09.2012.”
• 246th Law Commission Report: “The proposed amendment to S. 2 (2) does away with the prospective over-ruling
of Bhatia principle in BALCO judgment. However, applications that are already pending in an Indian court and
which have been filed on the basis of the Bhatia rule, should be protected”.
BCCI v. Kochi Cricket (2018) 6 SCC 287:
Interpretation of “in relation to arbitration
proceedings” commenced after 23-10-2015 as used
in S. 2(2) proviso

• Held:
• Section 2(2) proviso shall apply to arbitration
proceedings that have commenced as per section 21 of the
principal Act, on or after 23.10.2015 (date of 2015
amendment), unless parties otherwise agree.
• The section 2(2) proviso shall also apply to court
proceedings which have commenced on or after
23.10.2015 (date of 2015 amendment).
THE ARBITRATION AND CONCILIATION
(AMENDMENT) ACT, 2019

In 2019 amendment, the Section 87 was inserted and Section 26 of the 2015 amendment was
deleted. It clarified that the Section 2(2) proviso shall only apply to
i. arbitral proceedings which commenced on or after 23.10.2015 (date of 2015 amendment); and
ii. court proceedings arising out of or in relation to arbitral proceedings which commenced on or
after 23.10.2015 (date of 2015 amendment).
In effect, it meant that unless the parties otherwise agreed, the Section 2(2) proviso shall not apply
to
(i) arbitral proceedings commenced before 23.10.2015 (date of 2015 amendment); and
(ii) court proceedings that arise from the arbitral proceedings commenced before 23.10.2015 (date
of 2015 amendment), irrespective of whether such court proceedings are commenced prior to or
after 23.10.2015 (date of 2015 amendment).
Hindustan Construction Co. v. U.O.I (W.P. Civ
1074/2019)

• The court struck down the insertion of Section 87 of the 2019 Amendment Act
and deletion of Section 26 of the 2015 Amendment Act as unconstitutional.
• As a result, the Section 26 of the 2015 amendment which governed the
application of section 2(2) proviso is revived. That means, BCCI v. Kochi being
law of the land, the current position on applicability of 2015 amendment is
that-
Section 2(2) proviso shall apply to arbitration proceedings that
have commenced as per section 21 of the principal Act, on or after
23.10.2015 (date of 2015 amendment), unless parties otherwise agree.
The section 2(2) proviso shall also apply to court proceedings
which have commenced on or after 23.10.2015 (date of 2015
amendment).
DEFINITION OF
COURT
Section 2(1)(e)
Territorial jurisdiction v. Jurisdiction of
court at seat
 Indus Mobile Distribution Pvt. Ltd. v.
Datawind Innovations Pvt. Ltd. (2017)

• The parties entered into an agreement on 25/10/2014. The agreement had the following
dispute resolution clause:
• 18. ...such Dispute shall be finally settled by arbitration conducted under the provisions of the
Arbitration & Conciliation Act 1996 by reference to a sole Arbitrator which shall be mutually
agreed by the parties. Such arbitration shall be conducted at Mumbai, in English language...
• 19. All disputes & differences of any kind whatever arising out of or in connection with this
Agreement shall be subject to the exclusive jurisdiction of courts of Mumbai only.”
• The Appellant’s registered office is in Chennai, and as per the commercial arrangement
between the parties, goods were to be shipped from Amritsar to New Delhi.
• Dispute arose on 25/9/2015.
• Respondent filed an application under S. 9 in the Delhi HC to prevent the Appellant from
alienating or creating a charge on the property which was the subject matter of dispute.
 Indus Mobile Distribution Pvt. Ltd. v.
Datawind Innovations Pvt. Ltd. (2017)
• The Delhi HC assumed the jurisdiction stating that since no part of the subject matter
jurisdiction arose in Mumbai, the courts of Mumbai would not be able to assert jurisdiction
and decide the Section 9 petition. On facts, there were only three courts which had
jurisdiction, i.e., the relevant courts at New Delhi, Chennai and Amritsar. Since the HC at
Delhi was first approached, it would have jurisdiction and no other court, especially the
courts of Mumbai could exercise jurisdiction over the Section 9 petition. Accordingly, the HC
allowed the interim relief prayed for in the Section 9 Petition.
• Appellant approached the SC in appeal where it was held:
• Once the seat of arbitration has been fixed, courts of such seat will exercise exclusive
jurisdiction on the proceedings arising out of or in connection with the arbitration,
including proceedings initiated under Section 9 of the Act.
• The ‘seat’ may not in the classical sense (as stated in CPC Ss. 16 to 21) have jurisdiction
i.e. no cause of action may have arisen there, but, in arbitration law, the
moment ‘seat’ is determined it vests the courts in the seat with exclusive jurisdiction for
the purposes of regulating arbitral proceedings arising out of the agreement between
the parties.
Indus Mobile Distribution Pvt. Ltd. v.
Datawind Innovations Pvt. Ltd. (2017)

• Section 2(1)(e) is to be construed along with the provision of Section 20

which gives autonomy to the parties to choose place/seat of arbitration.
• Judicial intent behind the importance of seat in Arbitration: Upholding
party autonomy and to prevent forum shopping by the parties.
• Principles of the Code of Civil Procedure will not bar a seat chosen by
parties for want of nexus with cause of action because parties enjoy
autonomy under Section 20 to choose neutral third place as seat.
 • Section 2(1)(e) of 1996 Act
Evolution • 246th Law Commission Report: This is to
of solve the problem of conflict of jurisdiction
and also ensures that in International
definition Commercial Arbitrations, jurisdiction is
of "Court" exercised by the High Court, even if such
High Court does not exercise ordinary
under Part original civil jurisdiction.
I • 2015 Amendment to Section 2(1)(e) of the
Act
 Court under Section 2(1)(e)

1. Subject matter of arbitration jurisdiction: "jurisdiction to 2. Hierarchical jurisdiction

decide the questions forming the subject-matter of the
arbitration if the same had been the subject-matter of a suit"
Arbitrations seated in India other International Commercial
than International Commercial arbitrations seated in India:
If seat is mentioned in the If arbitration agreement does not arbitrations Section 2(1)(f)
arbitration agreement, then the provide for seat, then the parties
court at seat shall have exclusive must decide the seat by mutual
jurisdiction. consent. If not, then the Arbitral High Court having ordinary (a) High Court in exercise of
Indus Mobile case (2017)+ BGS Tribunal shall have to decide the original civil jurisdiction and its ordinary original civil
SGS Soma (2019) seat of arbitration. (S. 20) having subject matter of jurisdiction having subject
arbitration jurisdiction matter
of arbitration jurisdiction
If any dispute arise which is not beyond purview of the arbitration Principal Civil Court having subject
contract itself for example, challenge to the contract itself, then it
matter of arbitration jurisdiction (b) In absence of (a), High
shall be governed as per "subject matter of suit" that is, cause of
action under section 16-20 of CPC. (Concept of severability of Court having jurisdiction to
arbitration agreement; and subject matter of arbitration v. subject Excludes: any Civil Court of a grade hear appeals from decrees
inferior to such principal Civil Court, or of courts subordinate to
matter of suit) any Court of Small Causes (Section 2(1)
(c )(I) that High Court having
Now, once we have decided which state or states shall have subject matter of
jurisdiction with respect to the subject-matter of arbitration, then we arbitration jurisdiction
need to look at which court in hierarchy will have jurisdiction. For this,
we refer to '2. Hierarchical Jurisdiction
Other sections
under Part I
(Chapter I)
Chapter I: General Provisions

Section 2 Section 3 Section 4 Section 5 Section 6

Definitions Receipt of written Waiver of right to Extent of judicial Administrative assistance.
Construction of communication object intervention.
References
• SECTION 2(3): “This Part shall not affect any other law for the time being in force by
virtue of which certain disputes may not be submitted to arbitration.”
• SECTION 2(4): “This Part except sub-section (1) of section 40, sections 41 and 43 shall
apply to every arbitration under any other enactment for the time being in force, as of
the arbitration were pursuant to an arbitration agreement and as if that other
enactment were an arbitration agreement, except in so far as the provisions of this Part
inconsistent with that other enactment or with any rules made thereunder.”
Arbitrations under any other enactments are recognized as arbitrations under Part I.
Statutory arbitrations are a creation of statute.
In so far as the provisions of this Part are inconsistent with the provisions of such other
Act, or with any rules made thereunder, the provisions of the latter will prevail.
Source of such arbitrations does not emanate from an agreement between the parties
but the statutory provisions applicable to the contractual relationship between the
parties.
Following exclusionary provisions shall not apply to such statutory arbitrations: S. 40(1),
41 and 43
• SECTION 2(5): “Subject to the provisions of sub-section (4), and save in so far as is
otherwise provided by any law for the time being in force or in any agreement in force
between India and any other country or countries, this Part shall apply to all
arbitrations and to all proceedings relating thereto.”
It has to be understood in the context of the mandatory requirement of S.2(2) which
provides that Part I shall apply where the place of arbitration is in India.
‘All arbitrations’ here implies all types of arbitrations such as ad hoc, institutional,
statutory, domestic, international, where the place of arbitration is in India.
‘Any other enactment’ would in its ordinary meaning contemplate only an Act made by
the Indian Parliament.
 • Section 2(6): Construction of References: For
all derogable provisions under Part I, parties are
free to determine matters or they may delegate
this freedom to any institution. Except – Section
28.
• Section 2(7): Domestic Award: Award made
CONSTRUCTI under Part I shall be considered as Domestic
ON OF Award i.e. it is an award coming from an
arbitration seated in India between parties of
REFERENCE any nationality whatsoever (Indian or Non-
Indian).
S IN PART I • Section 2(8): Reference to Arbitration rules in
Agreement
• Section 2(9): Claims and Defences: Reference
to claim includes counter-claim and defence to
that counter-claim, except under S. 25(a) and
32(2)(a).
SECTION 2(6): “Where in this Part, except section 28, leaves the parties free to determine a
certain issue, that freedom shall include the right of the parties to authorize any person
including an institution, to determine that issue.”
• It grants autonomy to parties to determine certain issues, that would include the right of the
parties to authorize any person including an institution, to determine the same.
• E.g.: Number of arbitrators; challenge procedure; rules of procedure; place of arbitration and
language of arbitration.
• Exception: S.28 which pertains to the rules applicable to the substance of the dispute i.e.
making of an arbitral award and termination of proceedings.
• Right under S.2(6) can be delegated to a third party.
SECTION 2(7): “An arbitral award made under this Part shall be considered as domestic award.”
• Means an award resulting from an arbitration held in India as per Part I., whether in a
domestic arbitration or ICA.
SECTION 2(8): “Where this Part –
a) Refers to the fact that the parties have agreed or that they may agree, or
b) In any other way refers to an agreement of the parties,
The agreement shall include any arbitration rules referred to in that agreement.”

SECTION 2(9): “Where this Part, other than clause (a) of Section 25 or clause (a) of sub-section
(2) of section 32, refers to a claim, it shall also apply to a counter-claim, and where it refers to a
defence, it shall also apply to a defence to that counter-claim.”
• Terms ‘claim’ and ‘defence’ in Part I should be read as including counter-claims and counter
defences respectively.
 SECTION 3: RECEIPT OF WRITTEN COMMUNICATIONS
Procedural provisions that apply to all the notices that are required to be served under the Act.
• Provides:
• Unless otherwise agreed by the parties; any written communication is deemed to have been
received,
• if it is delivered to the addressee personally or at the place of business, habitual residence, or
mailing address.
• If the above mentioned places cannot be found after making reasonable inquiry, the
communication will be deemed to have been received by the addressee if it is sent to his last
know place of business, habitual residence or mailing address by a registered letter or by any
other means which provide a record of attempt to deliver it as per S.3(1).
• The communication will be deemed to have been received by the addressee on the date when
it is so delivered to him.
• This section is not applicable to written communications in respect of proceedings of any
judicial authority.
SECTION 4: WAIVER OF RIGHT TO OBJECT
• The right of waiver can be exercised when a party knows that there has been non-
compliance of:
a) Any derogable provision of Part I of the Act; or
b) Any requirement under the arbitration agreement
But does not raise any objection of such non-compliance without undue delay, or within the
time limit provided for stating that objection, he shall be deemed to have waived his right to
so object. Waiver arises out of consent or acquiescence which must be an intentional act
with knowledge.