Big Charter Pvt Ltd v. Ezen Aviation Pty Ltd
OMP (I) Commercial No. 112 of year 2020
- Big Charter Pvt Ltd (Petitioner) was engaged in the business of providing air operator services by the name 'FlyBig', while the Respondents were engaged in the business and lease of aircrafts.
- The Petitioner proposed to lease an aircraft from the Respondent, for a term of 36 months commencing from date of delivery. Petitioner was then advised to obtain necessary clearances from the Directorate General of Civil Aviation (DGCA).
- Upon an exchange of numerous correspondences, on September 2, 2019, a Letter of Intent (LoI) was issued by Respondents to Petitioner. While the Governing Law of the LoI was India, the parties had agreed to exclusively submit to the jurisdiction of courts in Singapore.
- In March 2020, a dispute occurred, and allegations were levelled by both parties.
- Since Respondents were not willing to amicably settling the dispute and had stopped replying to any correspondence, Petitioner had filed a Section 9 ap
Issue at hand?
- Whether Indian Courts have jurisdiction even when parties have contractually agreed to the exclusive jurisdiction of a foreign court?
The judgment is a step in the right direction to bring Indian arbitration law in conformity with international jurisprudence. The Court has clarified that since arbitration law in India was codified in the form of Act, the issue of jurisdiction of a Section 9 Petition must emanate from the Act itself, and any reference to UNCITRAL Model would only be required if there is an ambiguity in the provisions of the Act.
Decision of the Court
- At the outset, the Court stated that since arbitration law in India was codified in the form of the Act, the issue of jurisdiction of a petition under Section 9 must emanate from the Act itself. The Court remarked that any reference to the UNCITRAL Model or to any textual commentaries may be justified only if there is any ambiguity in any of the provisions of the Act, which requires resolution.
- Court noted that there was little doubt that once the 'seat of arbitration' was fixed as Singapore, courts in Singapore would have exclusive jurisdiction to supervise the arbitral proceedings.
- It was also stated that the jurisdiction exercised by a Court under Section 9 of the Act, had to be differentiated and that since the 2015 amendment, Section 9 of the Act will apply to International Commercial Arbitrations as well.
- The contention could not be accepted on the ground that the Courts at Singapore had no power to grant the relief under Section 9, the Court said. The Court further noted that the lease in question was executed much after the introduction of the proviso in Section 2(2) in 2019.
- With regards to the merit of the application for grant of interim relief was concerned, HC stated that apart from the three criteria of prima facie case, balance of convenience and irreparable loss, the Petitioner in Section 9 Petition was also required to establish that if urgent interim relief was not granted, there was a chance of the arbitral proceedings being frustrated.
- The Petition was accordingly disposed of with a direction that the amount of INR 4,30,00,000 shall remain deposited by the Respondent with the Registry of the High Court, pending further orders
GE Power Conversion Pvt Ltd v. PASL Wind Solutions Pvt Ltd
R/Petition under Arbitration Act no. 131 of 2019 and 134 of 2019
- Two Indian companies, GE Power Conversion Pvt Ltd (Applicants) and PASL (Respondents) entered into a contract for sale-purchase of converters to the Respondent. Certain disputes and differences arose between the parties in respect of the purchase orders and warranty offered by Applicants on the convertors. In order to resolve the dispute, the parties entered into a settlement agreement dated December 23, 2014.
- The parties had agreed that any disputes between them would be settled by an arbitration under the Swiss Law, with Zurich being the seat of arbitration. The arbitration proceedings will be conducted in accordance with the Rules of ICC. The substantive law governing the settlement agreement was Indian law. Upon the request of the parties, ICC appointed a sole arbitrator Mr. Ian Meakin in Geneva under ICC Rules. The central issue of dispute between the parties was interpretation of clause 5.2 of the Settlement Agreement.
- A foreign award dated April 18, 2019 was passed by Arbitral Tribunal seated in Zurich, Switzerland in favor of Applicants. The arbitrator rejected the contentions of the Respondent and granted he Applicants INR 25,976,330 and USD 40,000 in legal costs and expenses with accumulated interest in accordance with Indian Interest Act, 1978.
- Applicants filed an application for execution of award under Order-XXI, Rule 11 of Code of Civil Procedure before the Gujarat High Court (HC) for enforcement of arbitral award in terms of Part-II of Arbitration and Conciliation Act, 1996 (Act), which deals with enforcement of certain foreign awards. Further, Section 9 application was also filed along with execution petition in order to seek an injunction from disposal of assets of Respondents in order to secure the foreign award.
- Respondents disputed the applicability of Part-II of the Act and opposed the enforcement of foreign awards on the basis that it was a domestic award, being one between two Indian parties established in Indian territory. Therefore, according to them, Part-I of the Act was claimed to be the proper law.
- Respondents placed their reliance on Section 44 of the Act and submitted that the said section is not applicable to resident parties. Further, they submitted that any interpretation to the contrary would defeat the purpose of the legislation and allow domestic parties to take advantage of relatively more lenient criteria for scrutiny before enforcing an award.
- Counsel for Respondents submitted that since the Act defines an International Commercial Arbitration as one where at least one of the parties is located outside India, arbitration in question could not be characterized as an International Commercial Arbitration. Therefore, arbitration was domestic and the award a domestic award.
- The Counsel for the Respondents disputed the seat of arbitration being outside India, stating that Mumbai being most closely connected to the transaction, should be deemed to be the seat of arbitration. While making the claim that the seat of arbitration was outside India, Applicants had restricted the legal recourse available to the parties, which voided the contract, while relying on Section 28 and Section 23 of the Indian Contract Act, 1872. They also opposed the enforcement on the ground that award was against the public policy of India as envisaged in Section 34 read with Section 48 of the Act.
- On the other hand, the Applicants submitted that it was neither the nationality of the parties nor the venue of the arbitration which affected the nature of the award and made it a foreign award – it was a foreign award since the parties had decided the seat of arbitration to be in Zurich.
- The Applicants further submitted that whether the arbitration was a domestic or international commercial arbitration was irrelevant since the award was covered by Part-II of the Act. Also, nothing in law prevents two Indian parties from having a foreign seat of arbitration.
- Further, the Applicants while relying on BALCO1 submitted that the assets of the Respondent against which enforcement was sought were located with the jurisdiction of HC.
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