//
you're reading...
legal issues

Arbitration & Conciliation Act – Jurisdiction of Indian courts or English courts – German company established an Indian company under name & Style – Enercon (India) Ltd. (hereinafter referred to as “EIL”), in 1994 EIL, having its registered office at Daman in joint venture with respondents – Apex court held that neither party belongs to England nor the business meant for England – mere mentioning of venue as London, does not confer the English courts with jurisdiction over the disputed subject – and further held that when arbitration clause was mentioned – non- clarity about the number of arbitrators does not invalid the Arbitration clause and further held that Anti suit injunction restraining a party from initiating proceeding in England is maintainable as the English courts have no jurisdiction over the subject matter – further directed the parties to go with arbitration proceedings as per Indian laws = Enercon (India) Ltd. & Ors. …Appellants VERSUS Enercon GMBH & Anr. …Respondents= 2014 (Feb.Part) judis.nic.in/supremecourt/filename=41227

Arbitration & Conciliation Act – Jurisdiction of Indian courts or English courts – German company established an Indian company under name & Style – Enercon (India) Ltd. (hereinafter referred to as “EIL”),  in  1994 EIL, having its registered office at Daman in joint venture with respondents – Apex court held that neither party belongs to England nor the business meant for England – mere mentioning of venue as London, does not confer the English courts with jurisdiction over the disputed subject – and further held that when arbitration clause was mentioned – non- clarity about the number of arbitrators does not invalid the Arbitration clause and further held that Anti suit injunction restraining a party from initiating proceeding in England is maintainable as the English courts have no jurisdiction over the subject matter – further directed the parties to go with arbitration proceedings as per Indian laws =

 

On 5th  October,  2012,

          the  Bombay  High  Court  dismissed  the  writ  petitions  by  the

          order/judgment impugned before us,  wherein  it  has  been,  inter

          alia, held as under:

          A. The scope of the enquiry under the  Writ  Petition  No.7804  of

             2009  is  restricted  to  the  existence  of  the   arbitration

             agreement and not the main underlying contract  (which  can  be

             challenged before the Arbitral Tribunal);

          B. Prima facie, there is an arbitration agreement;

          C. The curial law of the arbitration agreement is India;

          D. London, designated as the venue in Clause  18.3  of  the  draft

             IPLA, is only a convenient geographical location;

          E. London is not the seat;

          F. English Courts have concurrent jurisdiction since the venue  of

             arbitration is London.=

 

i) Is the IPLA a valid and concluded contract?

             ii) Is it for the Court to decide issue No. (i) or should it be

                 left to be considered by the Arbitral Tribunal?

            iii) Linked to (i) and (ii) is the issue whether the  Appellants

                 can refuse to join arbitration on the plea that there is no

                 concluded IPLA?

             iv) Assuming that the IPLA is  a  concluded  contract;  is  the

                 Arbitration Clause 18.1 vague and unworkable,  as  observed

                 by both the Arbitrators i.e. Mr. V.V.  Veeder  QC  and  Mr.

                 Justice B.P. Jeevan Reddy?

              v) In case the arbitration clause is held to be  workable,  is

                 the seat of arbitration in London or in India?

             vi) In the event it is held that the seat is  in  India,  would

                 the English Courts have  the  concurrent  jurisdiction  for

                 taking  such  measures  as  required  in  support  of   the

                 arbitration as the venue for the arbitration proceedings is

                 London?

            vii) Linked to (v) & (vi) is the issue  whether  the  Appellants

                 are entitled for an anti-suit injunction?

This apart, we have earlier noticed that the main  contract,  the

          IPLA is to be performed in  India.   The  governing  law  of  the

          contract is the law of India.  Neither  party  is  English.   One

          party is Indian, the other is German.   The  enforcement  of  the

          award will be in India.  Any interim measures  which  are  to  be

          sought against the assets of Appellant No. 1 ought to be in India

          as the assets are  situated  in  India.   We  have  also  earlier

          noticed that Respondent No.1 has not  only  participated  in  the

          proceedings in the Daman courts and the Bombay  High  Court,  but

          also filed independent proceedings under  the  Companies  Act  at

          Madras  and  Delhi.   All  these  factors  would  indicate   that

          Respondent No.1 does not even consider the Indian Courts as forum-

          non-conveniens. In view of the above, we are  of  the  considered

          opinion that the  objection  raised  by  the  Appellants  to  the

          continuance of the parallel proceedings in England is not  wholly

          without justification. The  only  single  factor  which  prompted

          Respondent No.1 to pursue the action  in  England  was  that  the

          venue  of  the  arbitration  has  been  fixed  in  London.    The

          considerations for designating a convenient venue for arbitration

          can not be understood as conferring  concurrent  jurisdiction  on

          the English Courts over the arbitration proceedings  or  disputes

          in general.  Keeping in view the aforesaid, we  are  inclined  to

          restore the anti-suit  injunction  granted  by  the  Daman  Trial

          Court.

 
 

 Civil Appeal No.2086 of 2014 @  SLP  (C)  No.10924  of  2013  is

      partly allowed as follows:

            a. The conclusion of the Bombay High Court that the seat of the

               arbitration is in India is upheld;

b. The conclusion that the English Courts would have concurrent

               jurisdiction is overruled and consequently set aside;


c. The conclusion of the Bombay High Court that  the  anti-suit

               injunction  granted  by  the  Daman  Trial  Court  has  been

               correctly vacated by Daman Appellate Court is overruled  and

               hence set aside.

            d. Consequently, the Respondents are restrained from proceeding

               with any of the actions the details of which have been given

               in the judgment of Eder, J. dated 23rd March, 2012  and  the

               order dated 27th March, 2012 as  well  as  the  judgment  of

               Justice Cooke  dated  30th  November,  2012.  These  matters

               include:

                 All  or  any  of  the  proceedings/  applications/  reliefs

                 claimed by the Respondents in the  Arbitration  Claim  2011

                 Folio 1399, including but not limited to:

(1) Application under Section 18 of the English Arbitration

                 Act, 1996;

(2) Injunctions pursuant  to  Section  44  of  the  English

                 Arbitration Act, 1996 and /or  Section  37  of  the  Senior

                 Courts Act, 1981.

The Respondents are also restrained from  approaching

                 the      English      Courts      for      seeking      any

                 declaration/relief/clarification and/or  to  institute  any

                 proceedings that may result in delaying or otherwise affect

                 the  constitution  of  the  arbitral   tribunal   and   its

                 proceedings thereafter.

148.  In view of the above, the parties are  directed  to  proceed  to

      arbitration in accordance with law



2014 (Feb.Part) judis.nic.in/supremecourt/filename=41227

SURINDER SINGH NIJJAR, FAKKIR MOHAMED IBRAHIM KALIFULLA

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2086 OF 2014
(Arising out of SLP (C) No. 10924 of 2013)
Enercon (India) Ltd. & Ors. …Appellants
VERSUS
Enercon GMBH & Anr. …Respondents
With
CIVIL APPEAL NO.2087 OF 2014
(Arising out of SLP (C) No. 10906 of 2013)
J U D G M E N T
SURINDER SINGH NIJJAR, J.
1. Leave granted.
2. These civil appeals have been filed against the order and judgment
dated 5th October, 2012, passed by the Bombay High Court in CWP
Nos.7804 of 2009 and 7636 of 2009. The Bombay High Court by the
impugned order dismissed both the aforesaid Civil Writ Petitions.

3. Appellants No.2 and 3 (members of the Mehra family) and the
Respondent No.1 (a company incorporated under the laws of Germany,
having its registered office at Aurich, Germany) entered into a
joint venture business by setting up the Appellant No. 1-Company –
Enercon (India) Ltd. (hereinafter referred to as “EIL”), in 1994.
EIL, having its registered office at Daman, was to manufacture and
sell Wind Turbine Generators (“WTGs”) in India. One Dr. Alloys
Wobben is the Chairman of the Respondent No.1. Respondent No.2, a
company incorporated under the laws of Germany, has the patent of
technology in connection with the aforesaid WTGs. In furtherance of
their business venture, the parties entered into various
agreements, which can be briefly noticed:
Share Holding Agreement:
4. On 12th January, 1994, the Appellant Nos. 2 and 3 entered into a
Share Holding Agreement (“SHA”) with the Respondent No.1. In terms
of the SHA, the Respondent No. 1 was to hold 51% shares of the
Appellant No. 1-Company, and the Appellant Nos. 2 and 3,
collectively, were to hold 49% shares.
Technical Know How Agreement:
5. On the same day, i.e. 12th January, 1994, the Appellant No. 1 and
the Respondent No. 1 entered into a Technical Know-How Agreement
(“TKHA”) by which the Respondent No. 1 agreed to transfer to the
Appellant No. 1 the right and the technical know-how for the
manufacture of WTGs specified therein and their components. Under
the terms of the TKHA, the Respondent No. 1 has to supply special
components to the Appellant No. 1. Under the TKHA, the Respondent
No. 1 is the licensor and the Appellants are the licensees.
Supplementary Shareholding Agreements:
6. The SHA was subsequently amended by two Supplementary Share Holding
Agreements (“SSHAs”) dated 19th May, 1998 and 19th May, 2000.
Pursuant to the said SSHAs, the shareholding of Respondent No. 1
in the Appellant No. 1-Company increased to 56% whilst the
shareholding of the Appellant Nos. 2 and 3 was reduced to 44%.
Supplementary Technical Know-How Agreement:
7. A Supplementary Technical Know-How Agreement (“STKHA”) amending the
TKHA was executed on 19th May, 2000, by which a further license to
manufacture the E-30 and E-40 WTGs was granted by the Respondent
No. 1 to the Appellants.
Heads of Agreement:
8. In April 2004, the period of the TKHA expired; however, the
Respondent No. 1 continued to supply the WTGs and components to the
Appellant No.1. At this stage, there were discussions between the
parties about the possibility of a further agreement which would
cover future technologies developed by Respondents. On 23rd May,
2006, these negotiations were recorded in a document titled “Heads
of Agreement”.
Agreed Principles:
9. On 29th September, 2006, the Appellants and the Respondent No. 1
entered into what is known as the “Agreed Principles” for the use
and supply of the windmill technology. The second page of the
Agreed Principles, inter alia, provides as follows:
“The Agreed Principles as mentioned above, in their form and
substance, would be the basis of all the final agreements which
shall be finally executed.
The agreed principles shall be finally incorporated into the
A. IPLA “Draft enclosed”
B. Successive Technology Transfer Agreement
C. Name Use Licence Agreement
D. Amendment to Existing Share Holding Agreement.
The above agreements will be made to the satisfaction of all
parties. And then shall be legally executed.”
IPLA (dated 29th September, 2006):
10. On the same day, i.e. 29th September, 2006, Intellectual Property
License Agreement (“IPLA”) was executed between the parties. It
appears that Appellant No.2 has signed the IPLA on behalf of the
Appellants No. 2 and 3. However, the Appellants have contended that
this IPLA is not a concluded contract. According to the Appellants,
the draft IPLA was initialled by Appellant No.2 only for the
purpose of identification, with the clear understanding that the
said draft still contained certain discrepancies which had to be
brought in line with the Agreed Principles. Thus, the case of the
Appellant is that the draft IPLA was not a concluded contract.
On the other hand, Respondent No.1 has taken the stand that IPLA
is a concluded contract and hence, binding on the parties. Both the
parties refer to various e-mails/letters addressed to each other
for substantiating their respective stands. It would be useful to
notice here some of the emails and other communication exchanged
between the parties:
E-mails, letters & Text message:
i. 30.09.2006: A handwritten letter was addressed by Appellant No.2 to
Dr. Wobben, Chairman of Respondent No. 2. In this letter, Appellant
No.2 admits signing the IPLA. The fact that IPLA does not provide
for E-82 model is also referred to in this letter.
ii. 02.10.2006: Dr. Wobben, Chairman of Respondent No.2, addressed a
letter to Appellant No.2, stating therein his offer to acquire 6%
of Equity shares of the Appellant No.1 Company which were being
held by the Mehra Family, for 40 million Euros.
iii. 04.10.2006: Email by one Ms. Nicole Fritsch, on behalf of
Respondent no.1, wherein it was inter alia stated as
follows:
“…we will do our utmost to prepare/adapt the agreements according to the
agreed principles until 19, October and will send the drafts to you.”
iv. 18.10.2006: Ms. Fritsch wrote a letter to the Appellant
No.2, stating therein that IPLA has been signed on 29th
September, 2006 and also that the drafts of the remaining
agreements have been prepared in the light of the Agreed
Principles.
v. 01.11.2006: SMS/text message sent by Dr. Wobben to the
Appellant No.2, wherein it was stated that he wishes to buy
12% of shares held by Appellant No.2 for 40
million Euros.
vi. 03.11.2006: E-mail written by the Appellant No.2 to Dr.
Wobben, wherein the aforesaid offer of acquisition of
shares of the Appellant No.1 company was rejected. Further,
Appellant No.2 wrote that it would be a prudent exercise to
put together the IPLA and the relevant amendments to the
SHA in good shape, so that Agreed Principles get reflected
in the documents at the time of their signing. Appellant
No.2 also highlighted certain discrepancies between IPLA
and the Agreed Principles.
vii. 24.11.2006: E-mail sent by Ms. Fritsch to
Appellant No.2, wherein she apologised for the delay in
sending outstanding drafts of the “Final IPLA, Shareholding
Agreement, and other Successive Agreements”. It was also
mentioned that there are some discrepancies in the
contracts and the Agreed Principles for which the
Respondent has to discuss the matter internally.
viii. 01.01.2007: Ms. Fritsch wrote an email to the Appellant
No.2, wherein it was stated that the Respondent No.2 would
be sending the revised drafts of the outstanding contracts
to the Appellants, so as to let Appellant No.2 and their
lawyers verify those drafts.
ix. 29.01.2007: Ms. Fritsch forwarded the amended SHA of 1994,
Corporate Name User Agreement, and Successive Technology
Licence Agreement to Appellant No.2.
x. 31.01.2007: An email was sent to Respondent No.1 by the
Appellant No.1, wherein it was categorically stated that
the IPLA is not a “done deal,” the same being not in
conformity with the Agreed Principles.

11. The Appellants claim that Respondent No.1, in February, 2007,
unilaterally decided to stop all shipments of supplies to India in
order to pressurize them to sell the share holding as desired by
Dr. Wobben. However in March, 2007, after discussions between
the parties, Respondent No.1 resumed supplies. Thereafter, the
supplies were stopped once again in July, 2007. This was followed
by institution of the following legal proceedings:

LITIGATION:
12. We may notice only those proceedings between the parties that have
a bearing on the issues arising before us.
Derivative Suit:
13. Appellants No.2 and 3 filed a derivative suit (in Civil Suit
No.2667 of 2007) on 11th September, 2007 before the Bombay High
Court (“Bombay Suit”), seeking resumption of supplies, parts and
components. In this suit, Respondent No.1 has taken out an
Application under Section 45 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the ‘Indian Arbitration Act,
1996’). The Bombay Suit and the Application under Section 45 of
the Indian Arbitration Act, 1996 are pending disposal.
On 31st October, 2007, the Bombay High Court, by an interim
order without prejudice to the individual contentions of the
parties, directed the Respondent No.1 to resume the supplies to
Appellant No.1 until further orders. It appears that initially the
supplies were resumed in compliance of the aforesaid order.
However, the Appellants claim that the Respondent no.1 after
sometime stopped the supplies again. Thereafter, a Contempt
Petition was filed before the Bombay High Court at the instance of
the Appellants for non-compliance of the aforesaid order by
Respondent No.1. This contempt petition is pending
adjudication.

Nomination of Arbitrator :
14. On 13th March, 2008, a letter was sent on behalf of the Respondent
No. 1 to the Appellant Nos. 2 and 3, wherein the Respondent No. 1
invoked the arbitration agreement, contained in Clause 18.1 of the
IPLA. The letter nominates Mr. V.V. Veedor QC as the licensors’
arbitrator. It inter-alia stated that “Enercon and WPG are happy
to allow EIL to nominate its arbitrator and for the two party
(sic) nominated arbitrators to select the third arbitrator,
subject to consultation with the parties. The third arbitrator
will act as the Chairman of the Tribunal.” In the aforesaid
letter, the Respondent No.1 also identified the issues that
require determination through arbitration.

Arbitration Claim Form:
15. On 27th March, 2008, “Arbitration Claim Form” was issued by the
Respondents seeking several declaratory reliefs in relation to the
IPLA from the High Court of Justice, Queens Bench Division,
Commercial Court, United Kingdom (“the English High Court”). The
reliefs which were claimed included the constitution of Arbitral
Tribunal under the IPLA. Claim form was annexed to the letter
dated 2nd April, 2008 sent by the UK Solicitors of Respondent No.1
to the Appellants.

16. Meanwhile on 31st March, 2008, a letter was addressed by the
Appellant No.2 on behalf of himself and Appellant No.3, in
response to letter of Respondent No.1 dated 13th March, 2008,
wherein it was stated that since the draft IPLA was not a
concluded contract, there is no question of a valid arbitration
agreement between the parties and as such, there is no question of
nominating any arbitrator.

17. In response to the aforesaid, a letter was addressed by the UK
Solicitors of Respondent to the Appellants on 2nd April, 2008,
stating therein that in the event the Appellants do not nominate
their arbitrator within 7 days of the receipt of the said letter,
the Respondents shall proceed under Section 17(2) of the English
Arbitration Act, 1996 to appoint their nominee arbitrator Mr.
V.V. Veeder, QC, as the sole arbitrator. The aforesaid letter was
received by the Appellants on 3rd April, 2008 in Daman.
The Arbitration Claim Form which had been filed before the
English High Court was also served on the Appellant No.1 in Daman
on 4th April, 2008.

Daman Suit:
18. On 8th April, 2008, the Appellants filed Regular Suit No. 9 of
2008 (Daman Suit) before the Court of Civil Judge, Sr. Division,
“Daman Trial Court” seeking, inter alia, a declaration to the
effect that the draft IPLA was not a concluded contract and
correspondingly there was no arbitration agreement between the
parties to the draft IPLA. On the same day, i.e. 8th April, 2008,
the Daman Trial Court passed an order in the favour of the
Appellants, wherein the Respondents were directed to maintain
status quo with regard to the proceedings initiated by them before
the English High Court.

19. Meanwhile on 11th April, 2008, Appellant No.1, without prejudice,
nominated Mr. Justice B.P. Jeevan Reddy, a former Judge of this
court as arbitrator. On 24th May, 2008, Mr. Justice B.P. Jeevan
Reddy intimated to the Solicitors of the Appellants that the
arbitrators felt that there were inherent defects in the
arbitration clause contained in the draft IPLA and therefore, the
same was unworkable. The letter also expressed the inability of
the arbitrators to appoint the third arbitrator. On 5th August,
2008, a joint letter was addressed by both the nominated
arbitrators, wherein it was reiterated that they are unable to
appoint the third and presiding arbitrator.

20. Thereafter, the Respondents filed an Application under Section
45 of the Indian Arbitration Act in the Daman Suit. On the other
hand, the Appellants moved an Application for interim injunction
ex-parte in the same suit, seeking to restrain Respondents from
pursuing the proceedings they had initiated in the English High
Court (anti-arbitration injunction). The Daman Court dismissed the
Application under Section 45 of the Indian Arbitration Act, 1996
on 5th January, 2009. On the other hand, the Application filed by
the Appellants, seeking interim reliefs in form of anti-
arbitration injunction was allowed on 9th January, 2009. Both the
aforesaid orders of the Daman Trial Court were challenged by the
Respondents by filing four appeals before the District Court of
Daman (“Daman Appellate Court”).

Daman Appellate Court :
21. The Daman Appellate Court allowed all the appeals of the
Respondents by order dated 27th August, 2009 and set aside both
the orders of the Daman Trial Court. The anti-arbitration
injunction was vacated, and the Application under Section 45 of
the Indian Arbitration Act, 1996 was allowed. The aforesaid order
dated 27th August, 2009 was challenged by the Appellants herein by
filing two writ petitions before the High Court of Bombay,
viz. Writ Petition No. 7636 of 2009, filed in respect of the anti-
arbitration injunction and Writ Petition No. 7804 of 2009, filed
in respect of Section 45 of the Indian Arbitration Act.

Bombay High Court :
22. On 4th September, 2009, the Bombay High Court ordered that the
status quo order dated 8th April, 2008, passed by the
Daman Trial Court be continued in Writ Petition No. 7636 of 2009.
On 9th September, 2009, the Bombay High Court continued the
stay of the reference under Section 45 of the Indian Arbitration
Act until the next date of hearing. In the course of hearing of
the both writ petitions, the Bombay High Court, on 25th January,
2010, directed that the interim order(s) granted earlier be
continued until further orders.

English Proceedings:
23. In spite of the aforesaid interim order(s), the Respondents filed
Arbitration Claim Form 2011 Folio No.1399 before the English High
Court, under Section 18 of the English Arbitration Act, 1996 for
the constitution of an Arbitral Tribunal under the provisions of
IPLA. The following two grounds were raised by the Respondents:-
A. that the anti-arbitration injunction passed by the Bombay
High Court had fallen away;
B. that the Appellants had not pursued the writ petitions before
the Bombay High Court.
24. On 25th November, 2011, the English High Court passed an order in
form of an anti-suit injunction that had the effect of restraining
the Appellants from prosecuting/arguing the writ petitions before
the Bombay High Court. The Appellants were restrained from
approaching the Bombay High Court to clarify whether ad-interim
stay granted by it was in place. Meanwhile, on 15th February,
2012, the English High Court passed an ex-parte freezing
injunction restraining the Appellant No.1 from disposing of its
assets in excess of 90 Million Euros.

25. On 23rd March, 2012, the English High Court (Eder, J.) delivered
its judgment, wherein the freezing injunction was discharged. It
was inter-alia held in Paragraph 51 of the judgment that anti-
arbitration injunction of the Bombay High Court was in force. On
27th March, 2012, the English High Court discharged the anti-suit
injunction subject to the undertakings given by Appellant No.1. It
would be useful to notice here some of these undertakings:
i) to apply forthwith to the Bombay High Court to have the
hearing of the Writ Petitions expedited and to take all
reasonable and necessary steps within its power to have the
writ petitions concluded as expeditiously as possible;
ii) until the determination of the Application filed by the
Respondents in the English High Court, not to seek further
directions in relation to prayer (c) of the Writ Petition
No.7636 of 2009 – which is a prayer for interim relief.

26. The Appellants took necessary steps for an expeditious listing
and hearing of the writ petitions before the Bombay High Court.
However on 11th June, 2012, the Respondents filed an Application
before the English High Court for constituting an Arbitral
Tribunal. On 26th June, 2012, since the High Court had not
disposed of early hearing Application of the Appellants, the
Appellants approached this Court by Special Leave Petitions
No.11676 and 11677 of 2012 for expeditious hearing of the writ
petitions. This Court vide order /judgment dated 22nd June, 2012,
requested the Bombay High Court to take up the writ petitions for
hearing on 2nd July, 2012.

Resumption of Writ Petitions before Bombay High Court:
27. The hearing of the writ petitions in the Bombay High Court
resumed on 2nd July, 2012. On 3rd July, 2012, the English High
Court passed an order by consent, adjourning the Respondents’
Application dated 11th June, 2012, until after the Bombay High
Court delivers judgment in the writ petitions, and also vacating
the hearing listed for 3rd-4th July, 2012. On 5th October, 2012,
the Bombay High Court dismissed the writ petitions by the
order/judgment impugned before us, wherein it has been, inter
alia, held as under:
A. The scope of the enquiry under the Writ Petition No.7804 of
2009 is restricted to the existence of the arbitration
agreement and not the main underlying contract (which can be
challenged before the Arbitral Tribunal);
B. Prima facie, there is an arbitration agreement;
C. The curial law of the arbitration agreement is India;
D. London, designated as the venue in Clause 18.3 of the draft
IPLA, is only a convenient geographical location;
E. London is not the seat;
F. English Courts have concurrent jurisdiction since the venue of
arbitration is London.

English Proceedings :
28. On 5th October, 2012, the English Solicitors of Respondent No.1
addressed a letter to the English Solicitors of Appellant No.1, in
relation to re-listing of their Application dated 11th June, 2012
for appointment of a third arbitrator/re-constitution of the
Arbitral Tribunal. In October, 2012, the parties communicated with
each other for getting Applications of both the parties listed,
which, apart from the Application dated 11th June, 2012, included
the following:
A. An Application notice issued by Appellant No.1 on 16th October,
2012:
i. for a declaration that the undertaking given by Appellant
No.1 as set out in Appendix A to the order dated 27th
March, 2012 do not prevent it from filing a Special Leave
Petition before the Supreme Court of India and, if leave be
granted, pursuing such appeals; or
ii. if the undertakings (contrary to Appellant No.1’s
contention), do prevent Appellant No.1 from filing Special
Leave Petitions before the Supreme Court of India or
pursuing the same, then, a variation of the Undertakings to
permit such Special Leave Petitions to be filed and, if
leave be granted, to permit such appeals to be pursued.

B. An Application notice issued by the Respondents on 17th
October, 2012 for:
i. a declaration that Appellant No.1 would be breaching the
Undertakings by filing Special Leave Petitions to the
Indian Supreme Court.
ii. an anti-suit injunction to restrain Appellant No.1 from
filing Special Leave Petitions; and
iii. expedition for the hearing of the Respondent’s Application
issued on 11th June, 2012.

29. In the aforesaid Applications, the English High Court (Cooke, J.)
in its judgment dated 30th November, 2012 observed inter alia as
follows:
“Paragraph 32: There are two critical issues with which the
Damman (sic) Court and the Bombay High Court have been
concerned. First, is there a binding arbitration agreement?
Secondly, is the seat of the putative arbitration in London?
What has arisen out of the Bombay High Court decision in
addition is the question whether there is room for a supervisory
jurisdiction in the English Courts where the seat is not in
England under the provisions of s.2(4) of the English
Arbitration Act.”
“Paragraph 60: If the Supreme Court of India were, in due
course, to consider that the Bombay High Court was wrong in its
conclusion as to the seat of the arbitration or that there was a
prima facie valid arbitration or that the English Court had
concurrent supervisory jurisdiction, it would be a recipe for
confusion and injustice if, in the meantime, the English Court
were to conclude that England was the seat of the putative
arbitration, and to assume jurisdiction over EIL and the
putative arbitration, and to conclude that there was a valid
arbitration agreement, whether on the basis of a good arguable
case or the balance of probabilities. Further, for it to
exercise its powers, whether under s.2(1) or 2(4) or s.18 of the
Arbitration Act in appointing a third arbitrator, would create
real problems, should the Supreme Court decide differently.
Paragraph 61: These are the very circumstances which courts
must strive to avoid in line with a multitude of decisions of
high authority, from the Abidin Daver (1984) AC 398 onwards,
including E.I. Dupont de Nemours v. Agnew [1987] 2 Lloyd’s Rep
585. The underlying rationale of Eder J.’s judgment leads
inexorably, in my view, to the conclusion that the issues to be
determined in India, which could otherwise fall to be determined
here in England, must be decided first by the Indian Courts and
that, despite the delay and difficulties involved, the decision
of the Indian Supreme Court should be awaited.”
30. From 3rd December to 14th December, 2012, the learned counsel
for the parties made efforts to finalize a draft of the Form of
Order and the accompanying undertaking(s) to be submitted to the
English High Court; and ultimately, parties agreed to a short
hearing before the English High Court. After a hearing, on 19th
December, 2012 the parties again made efforts to finalize the Form
of Order. Ultimately on 15th February, 2013, the English High
Court passed an order declaring that the undertakings given on
27th March, 2012 (dealt with earlier in Para 25 of this judgment)
do not prevent the defendant (Appellant herein) from filing and
pursuing the Special Leave Petitions and, if leave be granted, the
Substantive Appeals. The English High Court further ordered the
Appellant No.1 herein to give some fresh undertaking which will
supersede and replace the undertakings given earlier on 27th
March, 2012. These undertakings restrain the Appellants herein
from seeking an injunction against the Respondents save if this
Court determines that the seat of the arbitration is in India. It
was further directed that the Appellants shall not seek an
injunction restraining the Respondents from pursuing proceedings
instituted in the English High Court against the Appellant on
various grounds enumerated in the said undertakings.

31. Thereafter in February, 2013, the order/judgment
dated 5th October, 2012 passed by the Bombay High Court was
challenged in this court by way of present appeals.

Submissions:
32. We have heard the learned senior counsel for the parties.

I. Re: Concluded Contract:
33. The first submission of Mr. Rohinton Nariman is that there can be
no arbitration agreement in the absence of a concluded contract.
It was submitted that IPLA is not a concluded contract since it is
not in consonance with the Agreed Principles. It was submitted
that the parties merely entered into the ‘Agreed Principles’
on 29th September, 2006, to which a draft
IPLA was annexed. Mr. Nariman submitted that the Agreed
Principles formed the fundamental basis on which the final IPLA
“was to be made to the satisfaction of all parties and then to be
legally finally executed”. Mr. Nariman reiterated that there are
certain discrepancies between the Agreed Principles and the IPLA.
By its letter dated 3rd November, 2006, Appellant
pointed out material discrepancies between the IPLA and the Agreed
Principles. These discrepancies have been accepted to be present
by the Respondents in the letter dated 24th November, 2006. In
fact, the Respondents have never contended that IPLA is in
accordance with the Agreed Principles. The Respondents have by
their letters dated 29th October, 2006 and
24th November, 2006 accepted the primacy of the Agreed Principles.

34. Further, the Appellants have relied upon the correspondence prior
and subsequent to the signing of the IPLA to demonstrate that
there is no concluded contract. According to the learned senior
counsel, the Respondents have deliberately not dealt with the
correspondence subsequent to the IPLA except to submit that the
same refers to agreements other than the IPLA. This, according to
the learned senior counsel, is incorrect in view of the fact that
email dated 24th November, 2006 refers to “final IPLA”. According
to Mr. Nariman, the outstanding contracts had to be in consonance
with the Agreed Principles; therefore, there is no plausible
explanation as to why only the IPLA should not be in consonance
with the Agreed Principles. The subsequent correspondence,
therefore, necessarily refers to all the four agreements mentioned
in the Agreed Principles.

35. Mr. Nariman also pointed out that the reliance upon prior
contracts/agreements or correspondence is not permissible to
determine whether IPLA is concluded or not. On the contrary,
subsequent correspondence and contracts can be looked into for the
purpose of determining whether the substantive contract containing
arbitration agreement is concluded or not. He relied on Godhra
Electricity Co. Ltd. And Anr. Vs. The State of Gujarat and Anr.[1]
According to Mr. Nariman, subsequent correspondence in this
regard clearly demonstrates the unconcluded nature of the IPLA.

36. Mr. Nariman submitted that under Clause 12 of the IPLA, the
duration of the IPLA was till the expiry of the last of the
patents, and since the patents portfolio was absent, the duration
of IPLA could not be ascertained. He pointed out that the
Respondents have wrongly contended that the IPLA has been
concluded as the parties have duly signed the same. According to
Mr. Nariman, mere signing of a document will not make it a
concluded document, if in law, the contract is not concluded. In
this context, reliance was placed upon British Electrical vs.
Patley Pressings,[2] Harvey vs. Pratt,[3] Bushwall vs. Vortex,[4]
Kollipara vs. Aswathanarayana[5] and Dresser Rand vs. Bindal
Agro.[6]

II. Re: Existence of Arbitration Agreement
37. As noticed above, the primary submission of the Appellants, is
that IPLA is not a concluded contract. It was then submitted that
since there is no concluded contract, there is no question of an
arbitration agreement coming into existence. In any event, the
challenge to the existence of the substantive agreement is a
matter required to be determined by the Court seized of the matter
in the exercise of jurisdiction under Section 45 of the Indian
Arbitration Act, 1996. Reliance was placed upon Chloro Controls
(I) Pvt. Ltd. Vs. Severn Trent Water Purification Inc. & Ors.[7]
According to Mr. Nariman, it is no longer open to
contend that the question whether the contract is concluded or not
can be gone into by the Arbitral Tribunal.
III. Re: Un-workability of Arbitration Agreement
38. It was submitted that Clause 18.1 of the IPLA is incapable of
being performed and therefore, there can be no reference to
arbitration under Section 45 of the Indian Arbitration Act, 1996.
It was submitted that the High Court has held that “each of the
licensors (Respondents) has to appoint an arbitrator and the
licensee (Appellant No.1) is to appoint one arbitrator
……………………………. making it in all three arbitrators”. As such, the
High Court has misread Clause 18.3 of the IPLA to mean that each
of the licensors (Respondent No.1 and Respondent No.2) has a right
to appoint an arbitrator and that the Appellant No.1 also has the
right to appoint an arbitrator. The construction of Clause 18.1 of
the IPLA in the aforesaid manner, according to learned senior
counsel, is contrary to the expressed terms of Clause 18.1 in the
light of the definition of licensor and licensors contained
therein as well as certain other provisions of the IPLA. Mr.
Nariman also pointed out that the Respondents, however, have not
sought to sustain the aforesaid reasoning of the High Court.

39. He further submitted that even though an arbitration clause can be
construed by the Court in such a way as to make it workable when
there is a defect or an omission, nonetheless, such an exercise
would not permit the Court to rewrite the clause. In support of
the submissions, he relied upon Shin Satellite Public Co. Ltd. Vs.
Jain Studio Ltd.[8] He also submitted that the reconstruction of
the arbitration clause in the present case cannot be achieved
without doing violence to the language to the arbitration clause;
and that this would not be permissible in law. For this
proposition, reliance was placed upon Bushwall Vs. Vortex (supra).
He submitted that the submissions made by the Respondents fly in
the face of Section 45 of the Indian Arbitration Act, 1996 which
does not permit the Court to make a reference to arbitration if
the arbitration agreement relied upon is incapable of being
performed.
IV. Re: Seat of Arbitration.
40. Mr. Nariman submitted that for the purposes of fixing the seat of
arbitration the Court would have to determine the territory that
will have the closest and most intimate connection with the
arbitration. He pointed out that in the present case provisions of
the Indian Arbitration Act, 1996 are to apply; substantive law of
the contract is Indian law; law governing the arbitration is
Indian Arbitration law; curial law is that of India; Patents law
is that of India; IPLA is to be acted upon in India; enforcement
of the award is to be done under the Indian law; Joint Venture
Agreement between the parties is to be acted upon in India;
relevant assets are in India. Therefore, applying the ratio of
law in ‘Naviera Amazonica Peruana S.A. Vs. Compania Internacional
De Seguros Del Peru[9]’, the seat of arbitration would be India.
The submission is also sought to be supported by the Constitution
Bench decision of this Court in “Bharat Aluminium Company Vs.
Kaiser Aluminium[10] (“BALCO”). Mr. Nariman submitted that the
interpretation proposed by the Respondents that the venue London
must be construed as seat is absurd. Neither party is British, one
being German and the other being Indian. He submits that the
Respondents have accepted that the choice of law of the underlying
agreement is Indian. But, if ‘venue of arbitration’ is to be
interpreted as making London the seat of arbitration it would:
(a) make the English Act applicable when it is not chosen by
the parties; (b) would render the parties’ choice of the Indian
Arbitration Act, 1996 completely nugatory and otiose. It would
exclude the application of Chapter V of the Indian Arbitration
Act, 1996 i.e. the curial law provisions and Section 34 of the
Indian Arbitration Act, 1996. On the other hand, interpretation
propounded by the Appellants would give full and complete effect
to the entire clause as it stands.

41. Mr. Nariman also submitted that there are even more clear
indicators within the arbitration clause which show that the
parties intended to be governed only by the Indian Arbitration
Act, 1996. The clause uses the word Presiding Arbitrator and not
Chairman; this language is expressly used in Sections 11 and 29 of
the Indian Arbitration Act, 1996 as distinct from Section 30 of
the English Arbitration Act, 1996.
42. Mr. Nariman gave another reason as to why London can’t be the
seat of the Arbitration. According to him, if the interpretation
propounded by the Respondents is accepted, it would lead to utter
chaos, confusion and unnecessary complications. This would result
in absurdity because the Indian Arbitration Act, 1996 would apply
to the process of appointment under Section 11; English
Arbitration Act, 1996 would apply to the arbitration proceedings
(despite the choice of the parties to apply Chapter V to the Part
I of the Indian Arbitration Act, 1996); challenge to the award
would be under English Arbitration Act, 1996 and not under the
Part I of the Indian Arbitration Act, 1996; Indian Arbitration
Act, 1996 (Section 48) would apply to the enforcement of the
award.
43. Lastly, it was submitted by Mr. Nariman that provisions of Section
18 of the English Arbitration Act, 1996 are derogable and in any
event the parties have chosen the Indian Court for constitution of
Arbitral Tribunal.

V. Re: Anti Suit Injunction

44. It was submitted on behalf of the Appellants that since the seat
of arbitration is India, the Courts of England would have no
jurisdiction. Appellants rely upon Oil & Natural Gas Commission
Vs. Western Company of North America[11]. Reliance was also placed
upon Modi Entertainment Network & Anr. Vs. W.S.G. Cricket Pte.
Ltd.[12], in support of the submission that in exercising
discretion to grant an anti-suit injunction, the Court must be
satisfied that the defendant is amenable to the personal
jurisdiction of the Court and that if the injunction is declined
the ends of justice will be defeated. The Court is also required
to take due notice of the principle of comity of Courts,
therefore, where more than one forum is available, the Court would
have to examine as to which is forum conveniens.

45. According to Mr. Nariman, all the tests which authorise the Indian
Courts to exercise jurisdiction to grant the necessary relief, as
laid down are being satisfied by the Appellants. According to Mr.
Nariman, the English Courts are not available to the Respondents
since London is only a venue. Therefore, an injunction ought to be
issued restraining the Respondents from pursuing proceedings
before the English Court. Mr. Nariman pointed out that the
Respondents have given up the contention that Indian and English
Courts have concurrent jurisdiction.

46. Reliance is placed on the judgment of this Court in Harshad Chiman
Lal Modi Vs. DLF Universal[13], in support of the submission that
since Respondent No.1 has share holding in a company which has
registered office within the territorial limits of the Daman
Court, therefore relief can be necessarily granted to the
Appellants for restraining Respondent No.1 for proceeding in the
English Courts. It was also pointed out that Respondent No.1 has
approached the Company Law Board under Section 397 of the
Companies Act; the Delhi High Court alleging infringement of its
intellectual property rights; and the Madras High Court against
the orders passed by the Intellectual Property Appellate Board,
revoking patents in the name of Dr. Wobben in India. Therefore,
it has already submitted to the jurisdiction of Courts in India.
Mr. Nariman, however, points out that in view of the
orders of the English Court dated 15th February, 2013, restraining
the Appellants from seeking an injunction against the Respondents
save if this Court determines the seat of the arbitration is
India, the Appellants shall not seek any injunction from this
Court, unless this Court determines that the seat of arbitration
is in India.
Respondents’ Submissions:
47. Dr. Abhishek Manu Singhvi, learned senior counsel, appeared for
Respondents No.1 and 2. Dr. Singhvi submitted that the over-
riding principle for the Courts in Arbitration is to see whether
there is an intention to arbitrate. According to Dr. Singhvi, the
Appellants attack the existence of the main contract, but it is
only the arbitration clause that the court has to concern itself
with. The court in this case, according to Dr. Singhvi, is not
required to determine whether there is a concluded contract, under
the Indian Contract Act, 1872. The court has to see whether there
is a valid Arbitration Agreement. Dr. Singhvi emphasised that it
is for the arbitrator to decide the question with regard to the
formation of the underlying contract (IPLA).
Further, learned senior counsel submitted that
the status of IPLA will not nullify
the arbitration clause.

48. The Respondent, according to the learned senior counsel, has to
establish the existence of arbitration agreement. Dr. Singhvi, in
this context, relied upon Section 7 of the Indian Arbitration Act,
1996 which has three constituents, viz. (i) Intention to
arbitrate; (ii) Existence of a dispute; (iii) Existence of some
legal relationship. Further, it was submitted that an agreement
under Section 7 of the Indian Arbitration Act, 1996 does not
require any offer and acceptance.

49. It was further submitted that Section 16 of the Indian Arbitration
Act, 1996 is a drastic departure since the Arbitral Tribunal can
rule on its own jurisdiction. Further, it was submitted under
Section 16(a) of the Indian Arbitration Act, 1996 the existence of
the arbitration clause in the contract would be treated as an
agreement independent of the contract. Learned senior counsel
also brought to our attention Section 45 of the Indian Arbitration
Act, 1996 and its interpretation by this court in Chloro Controls
India Pvt. Ltd. v. Severn Trent Water Purification Inc (supra). In
the aforesaid case, this Court, in Para 120, relied upon the
earlier judgment of National Insurance Company Ltd. V. Bhogara
Polyfab Pvt. Ltd.[14], and categorised the issues that have to be
decided under Section 45 as follows:
A. The issues which the Chief Justice/his designate will have to
decide: the question as to whether there is an arbitration
agreement.
B. The issues which the Chief Justice/his designate may choose to
decide or leave them to be decided by the Arbitral Tribunal:
the question as to whether the claim is a dead claim (long-
barred) or a live claim.
C. The issues which the Chief Justice/his designate should leave
exclusively to the Arbitral Tribunal. The question concerning
the merits or any claim involved in the arbitration.

50. Dr. Singhvi then submitted that leaving aside the question of un-
workability of the arbitration clause for the moment, the
intention of the parties in the instant case may be determined
from the following clauses of IPLA:
“17 GOVERNING LAW
17.1 This Agreement and any dispute of claims arising out of or
in connection with its subject matter are governed by and
construed in accordance with the Law of India.
18. DISPUTES AND ARBITRATION
18.1 All disputes, controversies or differences which may arise
between the Parties in respect of this Agreement including
without limitation to the validity, interpretation, construction
performance and enforcement or alleged breach of this Agreement,
the Parties shall, in the first instance, attempt to resolve
such dispute, controversy or difference through mutual
consultation. If the dispute, controversy or difference is not
resolved through mutual consultation within 30 days after
commencement of discussions or such longer period as the Parties
may agree in writing, any Party may refer dispute(s),
controversy(ies) or difference(s) for resolution to an arbitral
tribunal to consist of three (3) arbitrators, of who one will be
appointed by each of the Licensor and the Licensee and the
arbitrator appointed by Licensor shall also act as the presiding
arbitrator.
18.2 * * *
18.3 A proceedings in such arbitration shall be conducted in
English. The venue of the arbitration proceedings shall be in
London. The arbitrators may (but shall not be obliged to) award
costs and reasonable expenses (including reasonable-fees of
counsel) to the Party (ies) that substantially prevail on merit.
The provisions of Indian Arbitration and Conciliation Act, 1996
shall apply.
The reference of any matter, dispute or claim or arbitration
pursuant to this Section 18 or the continuance of any
arbitration proceedings consequent thereto or both will in no
way operate as a waiver of the obligations of the parties to
perform their respective obligations under this Agreement.”
51. Dr. Singhvi also drew our attention to the fact that the Heads of
the Agreement have been accepted to be final and binding and that
the parties have irrevocably accepted the Arbitration Agreement
contained in Clause 18. It was also brought to our notice that the
said document has been signed by the Appellant No.1 and Respondent
No.1.

52. Learned Senior Counsel also submitted that an arbitration
agreement would include the following:
a. Intention to arbitrate;
b. Intention to settle by Arbitration after failure of ADR i.e.
negotiations/conciliation/mediation.
C. Some law (i.e. proper law) to settle the Disputes (which
in this case is Indian Law)
D. Does the arbitration clause cover all disputes or is there
a carve out? In this case the clause covers all disputes.
E. Substantive Law to Arbitrate. Here it is the Indian
Arbitration Act, 1996.
It was further submitted that since all the essential elements of the
arbitration are present, clumsy drafting will not make any difference in
interpretation of the Arbitration clause.

53. The next submission of Dr. Singhvi, broadly put, is that the
arbitration clause is not un-workable. The crucial question in
this context is not whether the Arbitration Clause could be
differently drafted, but the clause has to be seen in the manner
it has been drafted. Dr. Singhvi submitted that in fact there is
no mismatch between different parts of the clause. The clause,
according to Dr. Singhvi, talks of three arbitrators: one by the
licensee, one by the licensor. The implication is that the third
one is to be appointed by the two arbitrators. Dr. Singhvi submits
that the sentence “the third arbitrator shall be appointed by the
two arbitrators” seems to have been missed out by the draftsman.
This can be supplied by the Court to make the arbitration clause
workable.
54. It was further submitted that the missing sentence in the
arbitration clause can be supplied with the aid of some of the
provisions of the Indian Arbitration Act, 1996. In this context,
learned senior counsel brought to our attention Sections 10 (1)
and (2) read with section 11 of the Indian Arbitration Act, 1996.
Section 10 (1) and 2 read as:
“10. Number of arbitrators.
(1) The parties are free to determine the number of arbitrators,
provided that such number shall not be an even number.
(2) Failing the determination referred to in sub- section (1),
the arbitral tribunal shall consist of a sole arbitrator.”
Section 11(1) & (2) reads as:
Appointment of arbitrators.
(1) A person of any nationality may be an arbitrator, unless
otherwise agreed by the parties.
(2) Subject to sub- section (6), the parties are free to agree
on a procedure for appointing the arbitrator or arbitrators.

55. Learned senior counsel also pointed out that the object underlying
Sections 10 and 11 is to avoid failure in appointment of
arbitrators. In fact, the Respondents tried to avoid the failure
by making a concession to let the third arbitrator to be the
Presiding Arbitrator. The Letter/email dated 13th March, 2008
clearly demonstrates this intention of Respondents. It was also
submitted that the Appellant is determined to avoid the
arbitration. Dr. Singhvi submitted that there exists
a manifest intention to refer disputes to arbitration and even if
there is lacuna it can be cured. Furthermore, according to Dr.
Singhvi, the number of arbitrators is only machinery and,
therefore, its failure cannot affect the Arbitration Clause.
Learned senior counsel relied upon the law laid down in MMTC v.
Sterlite Industries (India) Ltd.,[15] Shin Satellite Public Co.
Ltd. v. Jain Studios Ltd., (supra) Visa International Ltd. v.
Continental Resources (USA) Ltd.,[16] Jagdish Chander v. Ramesh
Chander & Ors.,[17] Smt. Rukmanibai Gupta v. Collector, Jabalpur &
Ors.,[18] and Nandan Biometrix Ltd. v. D.I. Oils.[19] After taking
us through the afore cited cases, Dr. Singhvi submitted that the
parties in the instant case had expressed an intention to
arbitrate and that there is no contrary intention.

56. The next submission of Dr. Singhvi is that the IPLA is final. It
was submitted that IPLA was to succeed the Know How Agreement that
contained an Arbitration Clause. Learned Senior counsel brought to
our attention following provisions of the Heads of Agreement on a
Proposed IPLA dated 23.05.2006:
“1.6 The Parties have discussed intensively the most
appropriate structure and arrangements reflected in the draft
IPLA dated 22, May 2006 attached as ANNEX 1 (“Draft IPLA”). This
draft IPLA expresses the final views of the parties and provides
for detailed terms whereunder Enercon will make available to EIL
the benefit of all its technology including patents, design
rights, copyrights, trademarks and know how relating to the
Products, including but not limited to:
…………………………………………………………………….”
“3. GOVERNING LAW AND JURISDICTION
3.1 This paragraph is legally binding.
3.2 This Heads of Agreement is (and all negotiations and any
legal agreement prepared in connection with IPLA shall be
governed by and construed in accordance with the law of Germany.
3.3 The parties irrevocably agree that Clause 18 of the proposed
draft IPLA shall apply to settle any dispute or claim that
arises out or in connection with this memorandum of
understanding and negotiations relating to the proposed IPLA.”
“4.1 This Heads of Agreement represents the good faith
intentions of the parties to proceed with the proposed IPLA on
the basis of the Draft IPLA but is not legally binding and
creates no legal obligations on either party. Its sole purpose
is to set out the principles on which the parties intend in good
faith to negotiate legally definitive agreements.”
57. Learned Senior Counsel also pointed out the email sent on
27.06.2006 by Nicole Fritsch on behalf of Respondents to the
Appellant No.2 and also the email sent by Appellant No.2 on
16.09.2006 to Nicole Fritsch in context of the submission that
IPLA is final. These emails have already been noticed in the
earlier part of this judgment.

58. It was also pointed out that the Appellant by his letter dated
30th September, 2006 expressly admitted to having signed the IPLA.
Thus, it was submitted that the Appellant cannot get out of the
contract unless there is coercion and/or fraud. To argue that
there is now a presumption of validity in favour of IPLA being a
concluded contract, reliance was sought to be placed upon Grasim
Industries Ltd. & Anr. v. Agarwal Steel[20] and J.K. Jain v. Delhi
Development Authority.[21]

59. Dr. Singhvi also brought to our notice that the execution and
finality of the IPLA is also demonstrated by the fact that first
page of Heads of Agreement dated 23rd May, 2006 reads as “A
PROPOSED INTELLECTUAL PROPERTY LICENSE AGREEMENT.” Whereas, the
word proposed or draft is conspicuously absent in the IPLA dated
29th September, 2006. This, according to the learned senior
counsel, shows that the IPLA was a concluded contract. Dr.
Singhvi further submitted that on 29th September, 2006 three
drafts, viz. Successive Technical Transfer Agreement, Name Use
License Agreement and amendments to the existing Shareholders
Agreement were ready and available to the parties, but at that
point of time these agreements were under discussion and being
negotiated. Admittedly, none of these agreements were initialled,
let alone signed by the parties. This, according to Dr. Singhvi,
is a clear indication that the parties were aware of the documents
that were to be finalised between them and also of the documents
that were required to be executed. This fact was also relied upon
to support the contention that IPLA is a final and concluded
agreement that was knowingly and willingly executed by Appellant
No.2. To add credibility to this submission, learned senior
counsel pointed out that ‘E-82 Model’ is expressly excluded from
the product description in the IPLA. This according to Dr.
Singhvi, is a deviation from the earlier agreement, and it has
been acknowledged by the Appellant. Dr. Singhvi also pointed out
the difference as to the provision of royalty between the IPLA and
earlier draft to support his contention.

60. The next set of submissions made by Dr. Singhvi relate to the seat
of arbitration. Learned senior counsel submitted that the court
has to determine where the centre of gravity for arbitration is
situated. The terms that are normally used to denote seat are
“venue”, “place” or “seat”. According to the learned senior
counsel, the court cannot adopt a semantic approach. It was also
submitted that under sub sections (1), (2) and (3) of Section 20
of Arbitration Act, 1996 the term ‘place’ connotes different
meanings. Under Section 20(1), place means seat of arbitration,
whereas under section 20(3), place would mean venue. Therefore,
the expression “the venue of arbitration proceedings” will have
reference only to the seat of arbitration. It was submitted that
all the surrounding circumstances would also show that parties
intended to designate England as the seat of arbitration.

61. It was also submitted that all the proceedings between the parties
would indicate that there is nothing to indicate India as the
choice of the seat of arbitration. Learned senior counsel relied
upon Shashoua v. Sharma,[22] Dozco India Pvt. Ltd. V. Doosan
Infracore Company Ltd.[23] Videocon Industries v. Union of
India,[24] Yograj Infrastructure Ltd. V. Ssang Yong Engineering
and Construction Ltd.[25] National Agricultural Coop. Marketing
Federation India (supra).
62. It was further submitted that three potential laws that govern an
arbitration agreement are as follows :
1. The proper law of the contract ;
2. The law governing the arbitration agreement ;
3. The law governing the conduct of the arbitration also
known as curial law or lex arbitri.
63. Reliance was placed upon the following except of Naviera Amazonica
Peruana SA (supra):
“……..in the majority of cases all three will be same but (1)
will often be different from (2) and (3). And occasionally, but
rarely, (2) may also differ from (3).”
64. The next submission of Dr. Singhvi is that law of the seat
dictates the curial law, and that the proper law of the
arbitration agreement does not overwhelm law of the seat. Laying
particular emphasis on Naviera, Dr. Singhvi submitted that
intention of the parties is important to determine the seat. If
place is designated then curial law will be that of such place.
Dr. Singhvi relied on the ratio of Naviera and submitted that the
proper law, law of arbitration and the curial law have all been
expressly mentioned in the present case. It was also submitted
that in the present case London as venue has to be interpreted
having conferred London the status of seat, unless some contrary
intention has been expressed.

65. According to Dr. Singhvi, closest connection test is completely
irrelevant when the parties have specified all the three laws
applicable in a contract. Further, close connection test is to be
applied only when nothing has been mentioned in the agreement. The
effort of the court is always to find the essential venue. He
relied upon Dicey, Morris & Collins[26] to submit that in most
cases, seat is sufficiently indicated by the country chosen as the
place of the arbitration. Dr. Singhvi submitted that the proper
law and law of arbitration cannot override curial law.

66. Dr. Singhvi relied heavily on the ratio of the law laid down in
Naviera (supra). Reliance was also placed upon the cases of
C vs. D.[27] and Union of India v/s McDonnel.[28] He also
relied upon the ratio of Balco in support of the submission that
London is the seat of arbitration. Particular reference was made
to Paras 75,76, 96, 100, 104, 113, 116 and 117 of BALCO’s judgment
to submit that since the seat is outside India, only those
provisions of Part I of the Indian Arbitration Act, 1996 will be
applicable, which are not inconsistent with the English Law, i.e.,
English Arbitration Act, 1996.

Anti-Suit injunction:
67. Dr. Singhvi submitted that the prayer of Appellants for an anti
suit injunction is subject to determination by this court that the
seat is India. Dr. Singhvi, however, argued that such an
injunction be denied even if this court holds that the seat of
arbitration is India since there is no occasion that warrants the
grant of such an injunction. The Respondents relied upon the
judgment of this court in Modi Entertainment Network v. W.S.G.
Cricket Pte. Ltd. (supra) to submit that the present case does not
fall within any, let alone all, of the parameters set out in the
aforesaid case that determine the grant of an anti-suit
injunction.

68. Mr. C.U. Singh, learned senior advocate, appeared for Respondent
no.2. Mr. Singh adopts the submissions made before this court by
Dr. Singhvi. Besides, Mr. Singh submitted that after the
enactment of the Indian Arbitration Act, 1996 the distinction
between the seat and the venue has blurred. The term that has been
used by the Parliament is ‘place’ which denotes the place of
physical sitting of the Arbitral Tribunal. This is the place which
governs the curial law. However, Arbitrators have been given the
flexibility to hold meetings anywhere. He also relied upon the
judgment of this court in Chloro (supra) (Paras 80-83) to submit
that the approach of the court is to make the arbitration clause
workable. Reliance was also placed upon Reva Electric Car Company
P. Ltd. v. Green Mobil.[29]

Issues :
69. We have anxiously considered the submissions of the learned
counsel for the parties. We have also considered the written
submissions.
The issues that arise for consideration of this Court are :
i) Is the IPLA a valid and concluded contract?
ii) Is it for the Court to decide issue No. (i) or should it be
left to be considered by the Arbitral Tribunal?
iii) Linked to (i) and (ii) is the issue whether the Appellants
can refuse to join arbitration on the plea that there is no
concluded IPLA?
iv) Assuming that the IPLA is a concluded contract; is the
Arbitration Clause 18.1 vague and unworkable, as observed
by both the Arbitrators i.e. Mr. V.V. Veeder QC and Mr.
Justice B.P. Jeevan Reddy?
v) In case the arbitration clause is held to be workable, is
the seat of arbitration in London or in India?
vi) In the event it is held that the seat is in India, would
the English Courts have the concurrent jurisdiction for
taking such measures as required in support of the
arbitration as the venue for the arbitration proceedings is
London?
vii) Linked to (v) & (vi) is the issue whether the Appellants
are entitled for an anti-suit injunction?
These, of course, are only broad based issues; many other
supplementary questions will have to be examined in order to give a
definitive determination.
Our Conclusions :
Issues (i), (ii) and (iii)
70. Is the IPLA a valid and a concluded contract? Is it for the Court
to decide this issue or have the parties intended to let the
arbitral tribunal decide it?

71. The Bombay High Court upon consideration of the factual as well as
the legal issues has concluded that “there can be no escape for
the Appellants from the consequences flowing from the signing of
the IPLA; and the signing of the IPLA by the parties is therefore
a strong circumstance in arriving at a prima facie conclusion as
enunciated in Shin-Etsu Chemicals Co. Ltd.’s case for referring
the parties to arbitration.”

72. The Daman Trial Court on the basis of the material on record came
to the conclusion that IPLA was not a concluded contract for the
want of free consent, and was executed due to undue influence,
fraud, misrepresentation and mistake. It further held that the
plaintiffs (the Appellants herein) would suffer heavy economic
loss if the arbitration is held at London. These findings were
reversed by the Daman Appellate Court. It was held that since IPLA
has been signed by the parties, there was a valid arbitration
agreement for reference of the disputes to arbitration. It was
also held that assuming that there was some defect in the
methodology for appointment of the arbitrators that would not come
in the way of enforcement of the arbitration agreement. The Daman
Appellate Court has further held that since the parties had agreed
to London being the seat of arbitration, the Appellants
(plaintiffs) could not raise a grievance as regards the
jurisdiction of the English Courts.
73. Mr. R.F. Nariman, learned senior counsel, appearing for the
Appellants has vehemently argued that there is neither a concluded
IPLA between the parties nor is there a legally enforceable
arbitration agreement. In any event, the arbitration can not
proceed as the arbitration clause itself is unworkable. As
noticed earlier, learned senior counsel has submitted that in the
absence of a concluded contract, there can be no arbitration
agreement. In short, the submission is that there can be no
severability of the arbitration clause from the IPLA. Since the
IPLA is not a concluded contract there can be no arbitration
agreement.

74. On the other hand, Dr. Singhvi has submitted, as noticed earlier,
that the intention of the parties to arbitrate is clear. Even if
the existence of the main contract is under dispute, the court is
concerned only with the arbitration agreement i.e. the arbitration
clause. The submission of Dr. Singhvi is that the absence of IPLA
will not nullify the arbitration clause.

75. We find considerable merit in the submissions made by Dr.
Singhvi. It cannot be disputed that there is a legal relationship
between the parties of a long standing. Section 44 of the Indian
Arbitration Act, 1996 applies to arbitral awards of differences
between persons arising out of legal proceedings. Such a
relationship may be contractual or not, so long it is considered
as commercial under the laws in force in India. Further, that
legal relationship must be in pursuance of an agreement, in
writing, for arbitration, to which the New York Convention
applies. The court can decline to make a reference to arbitration
in case it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed. There are no
pleadings to that effect in the plaint. The Daman Trial Court
findings that the contract is null and void and not based on free
consent were rendered in the absence of relevant pleadings. There
is a mention in one of the e-mails that Dr. Wobben has taken
advantage of his friendship with Mr. Yogesh Mehra. But that seems
to be more of a sulk than a genuine grievance. Even if one
accepts the truth of such a statement, the same is not reflected
in the pleadings. Therefore, no serious note could be taken of
that statement at this stage. The Daman Appellate Court upon
reconsideration of the pleadings found that there is no plea to
the effect that the agreement is null, void or incapable of being
performed. Justice Savant has not examined the pleadings as the
issue with regard to the underlying contract has been left to be
examined by the Arbitral Tribunal. Before us also, it is not the
plea of the Appellants that the arbitration agreement is without
free consent, or has been procured by coercion, undue influence,
fraud, misrepresentation or was signed under a mistake. In other
words, it is not claimed that the agreement is null and void,
inoperative and incapable of being performed as it violates any of
the provisions under Sections 14, 15, 16, 17, 18, 19, 19A and 20
of the Indian Contract Act, 1872. The submission is that the
matter cannot be referred to arbitration as the IPLA, containing
the arbitration clause/agreement, is not a concluded contract.
This, in our opinion, would not fall within the parameters of an
agreement being “null and void, inoperative or incapable of being
performed”, in terms of Sections 14, 15, 16, 17, 18, 19 and 20 of
the Indian Contract Act, 1872. These provisions set out the
impediments, infirmities or eventualities that would render a
particular provision of a contract or the whole contract void or
voidable. Section 14 defines free consent; Section 15 defines
coercion in causing any person to enter into a contract. Section
16 deals with undue influence. Fraud in relation to a contract is
defined under Section 17; whereas misrepresentation is defined
and explained under Section 18. Section 19 states that “when
consent to an agreement is caused by coercion, fraud or
misrepresentation, the agreement is a contract voidable at the
option of the party whose consent was so caused”. Section 19A
gives the party who was unduly influenced to enter into a contract
an option similar to the one provided by the preceding section.
Section 20 makes an agreement void where both the parties thereto
are under a mistake as to a matter of fact. In our opinion, all
the aforesaid eventualities refer to fundamental legal
impediments. These are the defences to resist a claim for specific
performance of a concluded contract; or to resist a claim for
damages for breach of a concluded contract. We agree with Savant,
J. that the issue as to whether there is a concluded contract
between the parties can be left to the Arbitral Tribunal, though
not for the same reasons.

76. In our opinion, all the issues raised by the Appellants about the
non-existence of a concluded contract pale into insignificance in
the face of “Heads of Agreement on the proposed IPLA dated 23rd
May, 2006”. Clause 3 of the Heads of Agreement provides as under:-
“3. Governing Law and Jurisdiction
3.1 This paragraph is legally binding.
3.2 This Heads of Agreement is (and all negotiations and any
legal agreements prepared in connection with the IPLA shall be)
governed by and construed in accordance with the law of Germany.
3.3 The parties irrevocably agree that Clause 18 of the
proposed draft IPLA shall apply to settle any dispute or claim
that arises out of or in connection with this memorandum of
understanding and negotiations relating to the proposed IPLA.”
77. A bare perusal of this clause makes it abundantly clear that the
parties have irrevocably agreed that clause 18 of the proposed
IPLA shall apply to settle any dispute or claim that arises out of
or in connection with this Memorandum of Understanding and
negotiations relating to IPLA. It must also be noticed here that
the relationship between the parties formally commenced on 12th
January, 1994 when the parties entered into the first SHA and
TKHA. Even under that SHA, Article XVI inter alia provided for
resolution of disputes by arbitration. The TKHA also contained an
identically worded arbitration clause, under Article XIX. This
intention to arbitrate has continued without waiver. In the face
of this, the question of the concluded contract becomes
irrelevant, for the purposes of making the reference to the
Arbitral Tribunal. It must be clarified that the doubt raised by
the Appellant is that there is no concluded IPLA, i.e. the
substantive contract. But this can have no effect on the
existence of a binding Arbitration Agreement in view of Clause 3.
The parties have irrevocably agreed to resolve all the disputes
through Arbitration. Parties can not be permitted to avoid
arbitration, without satisfying the Court that it would be just
and in the interest of all the parties not to proceed with
arbitration. Furthermore in arbitration proceedings, courts are
required to aid and support the arbitral process, and not to bring
it to a grinding halt. If we were to accept the submissions of Mr.
Nariman, we would be playing havoc with the progress of the
arbitral process. This would be of no benefit to any of the
parties involved in these unnecessarily complicated and convoluted
proceedings.

78. In the facts of this case, we have no hesitation in concluding
that the parties must proceed with the Arbitration. All the
difficulties pointed out by Mr. Rohinton Nariman can be addressed
by the Arbitral Tribunal.

79. Further, the arbitration agreement contained in clause 18.1 to
18.3 of IPLA is very widely worded and would include all the
disputes, controversies or differences concerning the legal
relationship between the parties. It would include the disputes
arising in respect of the IPLA with regard to its validity,
interpretation, construction, performance, enforcement or its
alleged breach. Whilst interpreting the arbitration agreement
and/or the arbitration clause, the court must be conscious of the
overarching policy of least intervention by courts or judicial
authorities in matters covered by the Indian Arbitration Act,
1996. In view of the aforesaid, it is not possible for us to
accept the submission of Mr. Nariman that the arbitration
agreement will perish as the IPLA has not been finalised. This is
also because the arbitration clause (agreement) is independent of
the underlying contract, i.e. the IPLA containing the arbitration
clause. Section 16 provides that the Arbitration clause forming
part of a contract shall be treated as an agreement independent of
such a contract.

80. The concept of separability of the arbitration clause/agreement
from the underlying contract is a necessity to ensure that the
intention of the parties to resolve the disputes by arbitration
does not evaporate into thin air with every challenge to the
legality, validity, finality or breach of the underlying contract.
The Indian Arbitration Act, 1996, as noticed above, under Section
16 accepts the concept that the main contract and the arbitration
agreement form two independent contracts. Commercial rights and
obligations are contained in the underlying, substantive, or the
main contract. It is followed by a second contract, which
expresses the agreement and the intention of the parties to
resolve the disputes relating to the underlying contract through
arbitration. A remedy is elected by parties outside the normal
civil court remedy. It is true that support of the National
Courts would be required to ensure the success of arbitration, but
this would not detract from the legitimacy or independence of the
collateral arbitration agreement, even if it is contained in a
contract, which is claimed to be void or voidable or unconcluded
by one of the parties.

81. The scope and ambit of provision contained in Section 16 of the
Indian Contract Act has been clearly explained in Reva Electric
Car (supra), wherein it was inter alia observed as follows:
“54. Under Section 16(1), the legislature makes it clear that
while considering any objection with respect to the existence or
validity of the arbitration agreement, the arbitration clause
which formed part of the contract, has to be treated as an
agreement independent of the other terms of the contract. To
ensure that there is no misunderstanding, Section 16(1)(b)
further provides that even if the Arbitral Tribunal concludes
that the contract is null and void, it should not result, as a
matter of law, in an automatic invalidation of the arbitration
clause. Section 16(1)(a) presumes the existence of a valid
arbitration clause and mandates the same to be treated as an
agreement independent of the other terms of the contract. By
virtue of Section 16(1)(b), it continues to be enforceable
notwithstanding a declaration of the contract being null and
void. In view of the provisions contained in Section 16(1) of
the Arbitration and Conciliation Act, 1996, it would not be
possible to accept the submission of Mr. Ahmadi that with the
termination of the MoU on 31-12-2007, the arbitration clause
would also cease to exist.”
The aforesaid reasoning has also been approved by a two Judge
bench of this Court in Today Homes and Infrastructure Pvt. Ltd. vs.
Ludhiana Improvement Trust and Anr.,[30] wherein it was inter alia
held as under:
“14. The same reasoning was adopted by a member of this Bench
(S.S. Nijjar, J.), while deciding the case of Reva Electric Car
Company Private Limited Vs. Green Mobil [(2012) 2 SCC 93],
wherein the provisions of Section 16(1) in the backdrop of the
doctrine of kompetenz kompetenz were considered and it was inter
alia held that under Section 16(1), the legislature makes it
clear that while considering any objection with regard to the
existence or validity of the arbitration agreement, the
arbitration clause, which formed part of the contract, had to be
treated as an agreement independent of the other terms of the
contract. Reference was made in the said judgment to the
provisions of Section 16(1)(b) of the 1996 Act, which provides
that even if the arbitral tribunal concludes that the contract
is null and void, it should not result, as a matter of law, in
an automatic invalidation of the arbitration clause. It was also
held that Section 16(1)(a) of the 1996 Act presumes the
existence of a valid arbitration clause and mandates the same to
be treated as an agreement independent of the other terms of the
contract. By virtue of Section 16(1)(b) of the 1996 Act, the
arbitration clause continues to be enforceable, notwithstanding
a declaration that the contract was null and void.”
In view of the aforesaid, we are not inclined to accept the submission of
Mr. Nariman that Arbitration Agreement will perish as the IPLA has not been
finalised.

Issue (iv)

82. We now come to the next issue that even if there is a valid
arbitration agreement/clause, can the parties be denied the
benefit of the same on the ground that it is unworkable? Both the
Arbitrators, as noticed above, are of the opinion that the parties
cannot proceed to arbitration as the arbitration clause is
unworkable. The Bombay High Court has taken the view that the
arbitration clause is workable as two Arbitrators are to be
appointed by the licensors and one by the licensee. We are not
inclined to agree with the aforesaid finding/conclusion recorded
by the High Court. Respondent No.1 is the licensor and Respondent
No.2 is undoubtedly 100% shareholder of Respondent No.1, but that
is not the same as being an independent licensor. It would also
be relevant to point out here that before this Court the
Respondent has not even tried to support the aforesaid conclusion
of the High Court.

83. In our opinion, the Courts have to adopt a pragmatic approach and
not a pedantic or technical approach while interpreting or
construing an arbitration agreement or arbitration clause.
Therefore, when faced with a seemingly unworkable arbitration
clause, it would be the duty of the Court to make the same
workable within the permissible limits of the law, without
stretching it beyond the boundaries of recognition. In other
words, a common sense approach has to be adopted to give effect to
the intention of the parties to arbitrate. In such a case, the
court ought to adopt the attitude of a reasonable business person,
having business common sense as well as being equipped with the
knowledge that may be peculiar to the business venture. The
arbitration clause cannot be construed with a purely legalistic
mindset, as if one is construing a provision in a statute. We may
just add here the words of Lord Diplock in  The Antaios Compania
Neviera SA v Salen Rederierna AB,[31] which are as follows:
“If detailed semantic and syntactical analysis of words in a
commercial contract is going to lead to a conclusion that flouts
business common sense, it must be made to yield to business
common sense.”
We entirely agree with the aforesaid observation.
This view of ours is also supported by the following judgments
which were relied upon by Dr. Singhvi:
In Visa International Limited (supra), it was inter alia held
that:
“25….No party can be allowed to take advantage of inartistic
drafting of arbitration clause in any agreement as long as clear
intention of parties to go for arbitration in case of any future
disputes is evident from the agreement and material on record
including surrounding circumstances.
26. What is required to be gathered is the intention of the
parties from the surrounding circumstances including the conduct
of the parties and the evidence such as exchange of
correspondence between the parties….”
Similar position of law was reiterated in Nandan Biomatrix Ltd.
(supra), wherein this court observed inter alia as under:
28. This Court in Rukmanibai Gupta v. Collector, Jabalpur has
held (at SCC p. 560, para 6) that what is required to be
ascertained while construing a clause is “whether the parties
have agreed that if disputes arise between them in respect of
the subject-matter of contract such dispute shall be referred to
arbitration, then such an arrangement would spell out an
arbitration agreement”.
29. In M. Dayanand Reddy v. A.P. Industrial Infrastructure
Corpn. Ltd., this Court has held that: (SCC p. 142, para 8)
“8. … an arbitration clause is not required to be stated in any
particular form. If the intention of the parties to refer the
dispute to arbitration can be clearly ascertained from the terms
of the agreement, it is immaterial whether or not the expression
arbitration or ‘arbitrator’ or ‘arbitrators’ has been used in
the agreement.”
(original emphasis supplied)
30. The Court is required, therefore, to decide whether the
existence of an agreement to refer the dispute to arbitration
can be clearly ascertained in the facts and circumstances of the
case. This, in turn, may depend upon the intention of the
parties to be gathered from the correspondence exchanged between
the parties, the agreement in question and the surrounding
circumstances. What is required is to gather the intention of
the parties as to whether they have agreed for resolution of the
disputes through arbitration. What is required to be decided in
an application under Section 11 of the 1996 Act is: whether
there is an arbitration agreement as defined in the said Act.”

84. It is a well recognized principle of arbitration jurisprudence in
almost all the jurisdictions, especially those following the
UNCITRAL Model Law, that the Courts play a supportive role in
encouraging the arbitration to proceed rather than letting it come
to a grinding halt. Another equally important principle
recognized in almost all jurisdictions is the least intervention
by the Courts. Under the Indian Arbitration Act, 1996, Section 5
specifically lays down that : “Notwithstanding anything contained
in any other law for the time being in force, in matters governed
by this Part, no judicial authority shall intervene except where
so provided in this Part”. Keeping in view the aforesaid, we find
force in the submission of Dr. Singhvi that the arbitration clause
as it stands cannot be frustrated on the ground that it is
unworkable.

85. Dr. Singhvi has rightly submitted that the un-workability in this
case is attributed only to the machinery provision. And the
arbitration agreement, otherwise, fulfils the criteria laid down
under Section 44 of the Indian Arbitration Act, 1996. Given that
two Arbitrators have been appointed, the missing line that “the
two Arbitrators appointed by the parties shall appoint the third
Arbitrator” can be read into the arbitration clause. The omission
is so obvious that the court can legitimately supply the missing
line. In these circumstances, the Court would apply the officious
bystander principle, as explained by MacKinnonn, LJ in Shirlaw v.
Southern Foundries,[32] to interpret the clause. In Shirlaw, it
was held that:

“prima facie that which in any contract is left to be implied
and need not be expressed is something so obvious that it goes
without saying; so that, if, while the parties were making their
bargain, an officious bystander were to suggest some express
provision for it in their agreement, they would testily suppress
him with a common ‘Oh, of course!”
In construing an arbitration clause, it is not necessary to
employ the strict rules of interpretation which may be necessary to
construe a statutory provision. The court would be well within its
rights to set right an obvious omission without necessarily leaving
itself open to the criticism of having reconstructed the clause.
Further, we find support in this context from the following
extract of Halsbury’s Laws of England (Vol. 13, Fourth Edition, 2007
Reissue):
“The words of a written instrument must in general be taken in
their ordinary or natural sense notwithstanding the fact that
such a construction may appear not to carry out the purpose
which it might otherwise be supposed the parties intended to
carry out; but if the provisions and expressions are
contradictory, and there are grounds, appearing on the face of
the instrument, affording proof of the real intention of the
parties, that intention will prevail against the obvious and
ordinary meaning of the words; and where the literal (in the
sense of ordinary, natural or primary) construction would lead
to an absurd result, and the words used are capable of being
interpreted so as to avoid this result, the literal construction
will be abandoned.”

86. Mr. Rohinton Nariman had very fairly submitted that it is
permissible for the Court to construe the arbitration clause in a
particular manner to make the same workable when there is a defect
or an omission in it. His only caveat was that such an exercise
would not permit the Court to re-write the contract. In our
opinion, in the present case, the crucial line which seems to be
an omission or an error can be inserted by the Court. In this
context, we find support from judgment of this court in Shin
Satellite Public Co. Ltd. (supra), wherein the ‘offending part’ in
the arbitration clause made determination by the arbitrator final
and binding between the parties and declared that the parties have
waived the rights to appeal or an objection against such award in
any jurisdiction. The Court, inter-alia, held that such an
objectionable part is clearly severable being independent of the
dispute that has to be referred to be resolved through
arbitration. By giving effect to the arbitration clause, the court
specifically noted that the “it cannot be said that the Court is
doing something which is not contemplated by the parties or by
‘interpretative process’, the Court is rewriting the contract
which is in the nature of ‘novatio’ (sic). The intention of the
parties is explicit and clear; they have agreed that the dispute,
if any, would be referred to an arbitrator. To that extent,
therefore, the agreement is legal, lawful and the offending part
as to the finality and restraint in approaching a Court of law can
be separated and severed by using a ‘blue pencil’.”

87. There is another reason which permits us to take the aforesaid
view and accept the submission made by Dr. Singhvi that while
construing the arbitration agreement/clause the same can be
construed to make it workable, as such an approach is statutorily
provided for. For this submission, Dr. Singhvi has rightly relied
upon the provision contained in Sections 10 and 11 of the Indian
Arbitration Act, 1996. The object of these two provisions is to
avoid failure of the arbitration agreement or the arbitration
clause if contained in contract. Under Section 10(1), there is
freedom given to the parties to determine the number of
Arbitrators, provided that such number shall not be an even
number. The arbitration clause in this case provides that the
arbitral tribunal shall consist of three arbitrators. Further, it
must also be noticed that the Respondents have been trying to seek
adjudication of disputes by arbitration. As noted earlier, the
Respondent No.2 in its email dated 13th March, 2008 clearly
offered that the third and the presiding arbitrator be appointed
by the respective arbitrators of the Appellants and the
Respondents. On the other hand, the attitude of the Appellants is
to avoid arbitration at any cost.

88. In this context, reliance placed by Dr. Singhvi upon MMTC Limited
(supra) is justified. In MMTC, the provisions contained in
Sections 10(1) and (2) of the Indian Arbitration Act, 1996 have
been held to be machinery provisions by this Court. It was further
held that the validity of an arbitration agreement does not depend
on the number of arbitrators specified therein. The Court declined
to render the arbitration agreement invalid on the ground that it
provided an even number of arbitrators. In the present case,
Mr. Rohinton Nariman had rightly not even emphasised that the
arbitration agreement itself is illegal. The learned sr. counsel
only emphasised that the arbitrators having expressed the view
that the arbitration clause is unworkable, the parties ought not
to be sent to the arbitration.
Similarly, other provisions contained in Sections 8, 11 and 45 of the
Indian Arbitration Act, 1996 are machinery provisions to ensure that
parties can proceed to arbitration provided they have expressed the
intention to Arbitrate. This intention can be expressed by the parties, as
specifically provided under Section 7 of the Indian Arbitration Act, 1996
by an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement. Such intention
can even be expressed in the pleadings of the parties such as statements of
claim and defence, in which the existence of the agreement is alleged by
one party and not denied by the other. In view of the above, we are of the
opinion that the parties can be permitted to proceed to arbitration.

Issue No. V/Re: Seat
89. This now clears the decks for the crucial question, i.e., is the
‘seat’ of arbitration in London or in India. This is necessarily
so as the location of the seat will determine the Courts that will
have exclusive jurisdiction to oversee the arbitration
proceedings. Therefore, understandably, much debate has been
generated before us on the question whether the use of the phrase
“venue shall be in London” actually refers to designation of the
seat of arbitration in London.

90. We find much substance in the submissions of Mr. Nariman that
there are very strong indicators to suggest that the parties
always understood that the seat of arbitration would be in India
and London would only be the “venue” to hold the proceedings of
arbitration. We find force in the submission made by learned
senior counsel for the Appellants that the facts of the present
case would make the ratio of law laid down in Naviera Amazonica
Peruana S.A. (supra) applicable in the present case. Applying the
closest and the intimate connection to arbitration, it would be
seen that the parties had agreed that the provisions of Indian
Arbitration Act, 1996 would apply to the arbitration proceedings.
By making such a choice, the parties have made the curial law
provisions contained in Chapters III, IV, V and VI of the Indian
Arbitration Act, 1996 applicable. Even Dr. Singhvi had submitted
that Chapters III, IV, V and VI would apply if the seat of
arbitration is in India. By choosing that Part I
of the Indian Arbitration Act, 1996 would apply, the parties have
made a choice that the seat of arbitration would be in India.
Section 2 of the Indian Arbitration Act, 1996 provides that Part I
“shall apply where the place of arbitration is in India”. In
Balco, it has been categorically held that Part I of the Indian
Arbitration Act, 1996, will have no application, if the seat of
arbitration is not in India. In the present case, London is
mentioned only as a “venue” of arbitration which, in our opinion,
in the facts of this case can not be read as the “seat” of
arbitration.

91. We are fortified in taking the aforesaid view since all the three
laws applicable in arbitration proceedings are Indian laws. The
law governing the Contract, the law governing the arbitration
agreement and the law of arbitration/Curial law are all stated to
be Indian. In such circumstances, the observation in Naviera
Amazonica Peruana S.A. (supra) would become fully applicable. In
this case, the Court of Appeal in England considered the agreement
which contained a clause providing for the jurisdiction of the
courts in Lima, Peru in the event of judicial dispute; and at the
same time contained a clause providing that the arbitration would
be governed by the English law and the procedural law of
arbitration shall be the English law. The Court of Appeal
summarised the state of the jurisprudence on this topic.
Thereafter, the conclusions which arose from the material were
summarised as follows:
“All contracts which provide for arbitration and contain a
foreign element may involve three potentially relevant systems
of law: (1) the law governing the substantive contract; (2) the
law governing the agreement to arbitrate and the performance of
that agreement; (3) the law governing the conduct of the
arbitration. In the majority of cases all three will be the
same. But (1) will often be different from (2) and (3). And
occasionally, but rarely, (2) may also differ from (3).”
It was observed that the problem about all these formulations,
including the third, is that they elide the distinction between the
legal localisation of arbitration on the one hand and the appropriate
or convenient geographical locality for hearings of the arbitration on
the other hand.

92. On the facts of the case, it was observed in Naviera Amazonica
case (supra) that since there was no contest on Law 1 and Law 2,
the entire issue turned on Law 3, “the law governing the conduct of
the arbitration”. This is usually referred to as the curial or
procedural law, or the lex fori. Thereafter, the Court approvingly
quoted the following observation from Dicey & Morris on the
Conflict of Laws (11th Edn.): “English Law does not recognise the
concept of a delocalised arbitration or of arbitral procedures
floating in the transnational firmament, unconnected with any
municipal system of law”. It is further held that “accordingly
every arbitration must have a ‘seat’ or ‘locus arbitri’ or ‘forum’
which subjects its procedural rules to the municipal law which is
there in force”. The Court thereafter culls out the following
principle:
“Where the parties have failed to choose the law governing the
arbitration proceedings, those proceedings must be considered,
at any rate prima facie, as being governed by the law of the
country in which the arbitration is held, on the ground that it
is the country most closely connected with the proceedings.”
The aforesaid classic statement of the conflict of law rules as quoted in
Dicey & Morris on the Conflict of Laws (11th Edn.), Vol. 1, was approved by
the House of Lords in James Miller & Partners Ltd. v. Whitworth Street
Estates (Manchester) Ltd.[33] Mustill, J. in Black Clawson International
Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G.[34], a little later
characterised the same proposition as “the law of the place where the
reference is conducted, the lex fori”. The position of law in India is the
same.

93. The Court in Naviera Amazonica, also, recognised the proposition
that “there is equally no reason in theory which precludes parties
to agree that an arbitration shall be held at a place or in
country X but subject to the procedural laws of Y”. But it points
out that in reality parties would hardly make such a decision as
it would create enormous unnecessary complexities. Finally it is
pointed out that it is necessary not to confuse the legal seat of
arbitration with the geographically convenient place or places for
holding hearings. In the present case, Dr.Singhvi, it seems to us,
is confusing the geographically convenient place, which is London,
with the legal seat which, in our opinion, is undoubtedly India.

94. Further, on examination of the facts in Naviera Amazonica case,
the Court of Appeal observed that there is nothing surprising in
concluding that these parties intended that any dispute under this
policy should be arbitrated in London. But it would always be open
to the Arbitral Tribunal to hold hearings in Lima if this was
thought to be convenient, even though the seat or forum of the
arbitration would remain in London. In the present case, with the
utmost ease, “London” can be replaced by India, and “Lima” with
London.

95. Having chosen all the three applicable laws to be Indian laws, in
our considered opinion, the parties would not have intended to
have created an exceptionally difficult situation, of extreme
complexities, by fixing the seat of arbitration in London.
In view of the above, we are unable to accept the submissions made by Dr.
Singhvi that in this case, the term “venue” ought to be read as seat.

96. We are also unable to accept the submission made by
Dr. Singhvi that in this case the venue should be understood as
reference to place in the manner it finds mention in Section
20(1), as opposed to the manner it appears in Section 20(3), of
the Indian Arbitration Act, 1996. Such a submission cannot be
accepted since the parties have agreed that Curial law would be
the Indian Arbitration Act, 1996.
97. In Balco, it has been clearly held that concurrent jurisdiction is
vested in the Courts of seat and venue, only when the seat of arbitrations
is in India (Para 96). Reason for the aforesaid conclusion is that there
is no risk of conflict of judgments of different jurisdictions, as all
courts in India would follow the Indian Law. Thus, the reliance placed by
D. Singhvi on Balco in this context is misplaced.

98. It is correct that, in virtually all jurisdictions, it is an
accepted proposition of law that the seat normally carries with
it the choice of that country’s arbitration/Curial law. But this
would arise only if the Curial law is not specifically chosen by
the parties. Reference can be made to Balco (supra), wherein
this Court considered a number of judgments having a bearing on
the issue of whether the venue is to be treated as seat.
However, the court was not required to decide any controversy
akin to the one this court is considering in the present case.
The cases were examined only to demonstrate the difficulties that
the court will face in a situation similar to the one which was
considered in Naviera Amazonica (supra).

99. We also do not agree with Dr. Singhvi that parties have not
indicated they had chosen India to be the seat of arbitration.
The judgments relied upon by Dr. Singhvi do not support the
proposition canvassed. In fact, the judgment in the case Braes of
Doune Wind Farm (Scotland) Limited Vs. Alfred McAlpine Business
Services Limited[35], has considered a situation very similar to
the factual situation in the present case.
100. In Braes of Doune, the English & Wales High Court considered
two Applications relating to the first award of an arbitrator.
The award related to an EPC (engineering, procurement and
construction) contract dated 4th November, 2005 (the EPC
contract) between the claimant (the employer) and the defendant
(the contractor), whereby the contractor undertook to carry out
works in connection with the provision of 36 WTGs at a site some
18 km from Stirling in Scotland. This award dealt with
enforceability of the clauses of the EPC contract which provided
for liquidated damages for delay. The claimant applied for leave
to appeal against this award upon a question of law whilst the
defendant sought, in effect, a declaration that the court had no
jurisdiction to entertain such an Application and for leave to
enforce the award. The Court considered the issue of jurisdiction
which arose out of application of Section 2 of the English
Arbitration Act, 1996 which provides that:
“2. Scope of application of provisions.—(1) The provisions of
this Part apply where the seat of the arbitration is in England
and Wales or Northern Ireland.”

101. The Court notices the singular importance of determining the
location of juridical seat in terms of Section 3, for the purposes
of Section 2, in the following words of Akenhead, J.:
“15. I must determine what the parties agreed was the ‘seat’ of
the arbitration for the purposes of Section 2 of the Arbitration
Act, 1996. This means by Section 3 what the parties agreed was
the ‘juridical’ seat. The word ‘juridical’ is not an irrelevant
word or a word to be ignored in ascertaining what the ‘seat’ is.
It means and connotes the administration of justice so far as
the arbitration is concerned. It implies that there must be a
country whose job it is to administer, control or decide what
control there is to be over an arbitration.”
(emphasis supplied)
102. Thus, it would be evident that if the “juridical seat” of the
arbitration was in Scotland, the English courts would have no
jurisdiction to entertain an Application for leave to appeal. The
contractor argued that the seat of the arbitration was Scotland
whilst the employer argued that it was England. There were to be
two contractors involved with the project.
The material clauses of the EPC contract were:
“1.4.1. The contract shall be governed by and construed in
accordance with the laws of England and Wales and, subject
to Clause 20.2 (Dispute Resolution), the parties agree that
the courts of England and Wales have exclusive jurisdiction
to settle any dispute arising out of or in connection with
the contract.
(a) … any dispute or difference between the parties to this
agreement arising out of or in connection with this
agreement shall be referred to arbitration.
(b) Any reference to arbitration shall be to a single
arbitrator … and conducted in accordance with the
Construction Industry Model Arbitration Rules, February
1998 Edn., subject to this clause (Arbitration Procedure)….
(c) This arbitration agreement is subject to English law
and the seat of the arbitration shall be Glasgow, Scotland.
Any such reference to arbitration shall be deemed to be a
reference to arbitration within the meaning of the
Arbitration Act, 1996 or any statutory re-enactment.”
103. The arbitration was to be conducted under the arbitration rules
known colloquially as the “CIMAR Rules”. Rule 1 of the aforesaid
Rules provided that:
“1.1. These Rules are to be read consistently with the
Arbitration Act, 1996 (the Act), with common expressions having
the same meaning.”
“1.6. (a) a single arbitrator is to be appointed, and
(b) the seat of the arbitration is in England and Wales or
Northern Ireland.”
The Court was informed by the parties in arguments that the Scottish
Court’s powers of control or intervention would be, at the very least,
seriously circumscribed by the parties’ agreement in terms as set out in
para 6 of the judgment. It was further indicated by the counsel that the
Scottish Court’s powers of intervention might well be limited to cases
involving such extreme circumstances as the dishonest procurement of an
award. In construing the EPC, the Court relied upon the principles stated
by the Court of Appeal in Naviera Amazonica Peruana S.A.

104. Upon consideration of the entire material, the Court formed
the view that it does have jurisdiction to entertain an
Application by either party to the contract in question under
Section 69 of the English Arbitration Act, 1996. The Court gave
the following reasons for the decision:
“(a) One needs to consider what, in substance, the parties
agreed was the law of the country which would juridically
control the arbitration.
(b) I attach particular importance to Clause 1.4.1. The parties
agreed that essentially the English (and Welsh) courts have
‘exclusive jurisdiction’ to settle disputes. Although this is
‘subject to’ arbitration, it must and does mean something other
than being mere verbiage. It is a jurisdiction over disputes and
not simply a court in which a foreign award may be enforced. If
it is in arbitration alone that disputes are to be settled and
the English courts have no residual involvement in that process,
this part of Clause 1.4.1 is meaningless in practice. The use of
the word ‘jurisdiction’ suggests some form of control.
(c) The second part of Clause 1.4.1 has some real meaning if the
parties were agreeing by it that, although the agreed disputes
resolution process is arbitration, the parties agree that the
English court retains such jurisdiction to address those
disputes as the law of England and Wales permits. The
Arbitration Act, 1996 permits and requires the court to
entertain applications under Section 69 for leave to appeal
against awards which address disputes which have been referred
to arbitration. By allowing such applications and then
addressing the relevant questions of law, the court will settle
such disputes; even if the application is refused, the court
will be applying its jurisdiction under the Arbitration Act,
1996 and providing resolution in relation to such disputes.
(d) This reading of Clause 1.4.1 is consistent with Clause
20.2.2(c) which confirms that the arbitration agreement is
subject to English law and that the ‘reference’ is ‘deemed to be
a reference to arbitration within the meaning of the Arbitration
Act, 1996’. This latter expression is extremely odd unless the
parties were agreeing that any reference to arbitration was to
be treated as a reference to which the Arbitration Act, 1996 was
to apply. There is no definition in the Arbitration Act, 1996 of
a ‘reference to arbitration’, which is not a statutory term of
art. The parties presumably meant something in using the
expression and the most obvious meaning is that the parties were
agreeing that the Arbitration Act, 1996 should apply to the
reference without qualification.
(e) Looked at in this light, the parties’ express agreement that
the ‘seat’ of arbitration was to be Glasgow, Scotland must
relate to the place in which the parties agreed that the
hearings should take place. However, by all the other references
the parties were agreeing that the curial law or law which
governed the arbitral proceedings … establish that, prima facie
and in the absence of agreement otherwise, the selection of a
place or seat for an arbitration will determine what the curial
law or ‘lex fori’ or ‘lex arbitri’ will be, [we] consider that,
where in substance the parties agree that the laws of one
country will govern and control a given arbitration, the place
where the arbitration is to be heard will not dictate what the
governing or controlling law will be.
(f) In the context of this particular case, the fact that, as
both parties seemed to accept in front of me, the Scottish
courts would have no real control or interest in the arbitral
proceedings other than in a criminal context, suggests that they
can not have intended that the arbitral proceedings were to be
conducted as an effectively ‘delocalised’ arbitration or in a
‘transnational firmament’, to borrow Kerr, L.J.’s words in
Naviera Amazonica.
(g) The CIMAR Rules are not inconsistent with my view. Their
constant references to the Arbitration Act, 1996 suggest that
the parties at least envisaged the possibility that the courts
of England and Wales might play some part in policing any
arbitration. For instance, Rule 11.5 envisages something called
‘the court’ becoming involved in securing compliance with a
peremptory order of the arbitrator. That would have to be the
English court, in practice.”
105. In our opinion, Mr. Nariman has rightly relied upon the ratio
in Braes of Doune case (supra). Learned senior counsel has
rightly pointed out that unlike the situation in Naviera
Amazonica (supra), in the present case all the three laws: (i)
the law governing the substantive contract; (ii) the law
governing the agreement to arbitrate and the performance of that
agreement (iii) the law governing the conduct of the arbitration
are Indian. Learned senior counsel has rightly submitted that the
curial law of England would become applicable only if there was
clear designation of the seat in London. Since the parties have
deliberately chosen London as a venue, as a neutral place to hold
the meetings of arbitration only, it cannot be accepted that
London is the seat of arbitration. We find merit in the
submission of Mr. Nariman that businessmen do not intend absurd
results. If seat is in London, then challenge to the award would
also be in London. But the parties having chosen Indian
Arbitration Act, 1996 – Chapter III, IV, V and VI; Section 11
would be applicable for appointment of arbitrator in case the
machinery for appointment of arbitrators agreed between the
parties breaks down. This would be so since the ratio laid down
in Bhatia will apply, i.e., Part I of the Indian Arbitration Act,
1996 would apply even though seat of arbitration is not in India.
This position has been reversed in Balco, but only prospectively.
Balco would apply to the agreements on or after 6th September,
2012. Therefore, to interpret that London has been designated as
the seat would lead to absurd results.

106. Learned senior counsel has rightly submitted that in fixing
the seat in India, the court would not be faced with the
complications which were faced by the English High Court in the
Braes of Doune (supra). In that case, the court understood the
designation of the seat to be in Glasgow as venue, on the
strength of the other factors intimately connecting the
arbitration to England. If one has regard to the factors
connecting the dispute to India and the absence of any factors
connecting it to England, the only reasonable conclusion is that
the parties have chosen London, only as the venue of the
arbitration. All the other connecting factors would place the
seat firmly in India.

107. The submission made by Dr. Singhvi would only be worthy of
acceptance on the assumption that London is the seat. That would
be to put the cart before the horse. Surely, jurisdiction of the
courts can not be rested upon unsure or insecure foundations. If
so, it will flounder with every gust of the wind from different
directions. Given the connection to India of the entire dispute
between the parties, it is difficult to accept that parties have
agreed that the seat would be London and that venue is only a
misnomer. The parties having chosen the Indian Arbitration Act,
1996 as the law governing the substantive contract, the agreement
to arbitrate and the performance of the agreement and the law
governing the conduct of the arbitration; it would, therefore, in
our opinion, be vexatious and oppressive if Enercon GMBH is
permitted to compel EIL to litigate in England. This would
unnecessarily give rise to the undesirable consequences so
pithily pointed by Lord Brandon and Lord Diplock in Abidin Vs.
Daver.[36] It was to avoid such a situation that the High Court
of England & Wales, in Braes of Doune, construed a provision
designating Glasgow in Scotland as the seat of the arbitration as
providing only for the venue of the arbitration.
108. At this stage, it would be appropriate to analyse the
reasoning of the Court in Braes of Doune in support of construing
the designated seat by the parties as making a reference only to
the venue of arbitration. In that case, the Court held that
there was no supplanting of the Scottish law by the English law,
as both the seat under Section 2 and the “juridical seat” under
Section 3, were held to be in England. It was further concluded,
as observed earlier, that where in substance the parties agreed
that the laws of one country will govern and control a given
arbitration, the place where the arbitration is to be heard will
not dictate what the governing law will be.

109. In Braes of Doune, detailed examination was undertaken by the
court to discern the intention of the parties as to whether the
place mentioned refers to venue or the seat of the arbitration.
The factual situation in the present case is not as difficult or
complex as the parties herein have only designated London as a
venue. Therefore, if one has to apply the reasoning and logic of
Akenhead, J., the conclusion would be irresistible that the
parties have designated India as the seat. This is even more so
as the parties have not agreed that the courts in London will
have exclusive jurisdiction to resolve any dispute arising out of
or in connection with the contract, which was specifically
provided in Clause 1.4.1 of the EPC Contract examined by
Akenhead, J. in Braes of Doune. In the present case, except for
London being chosen as a convenient place/venue for holding the
meetings of the arbitration, there is no other factor connecting
the arbitration proceedings to London.

110. We also do not find much substance in the submission of Dr.
Singhvi that the agreement of the parties that the arbitration proceedings
will be governed by the Indian Arbitration Act, 1996 would not be
indicative of the intention of the parties that the seat of arbitration is
India. An argument similar to the argument put forward before us by Dr.
Singhvi was rejected in C vs. D by the Court of Appeal in England as well
as by Akenhead, J. in Braes of Doune. Underlying reason for the conclusion
in both the cases was that it would be rare for the law of the arbitration
agreement to be different from the law of the seat of arbitration.

111. C v. D[37] the Court of Appeal in England was examining an appeal
by the defendant insurer from the judgment of Cooke, J. granting an
anti-suit injunction preventing it from challenging an arbitration
award in the US courts. The insurance policy provided that “any
dispute arising under this policy shall be finally and fully
determined in London, England under the provisions of the English
Arbitration Act, 1950 as amended”. However, it was further provided
that “this policy shall be governed by and construed in accordance
with the internal laws of the State of New York….” A partial award
was made in favour of the claimants. It was agreed that this
partial award is, in English law terms, final as to what it
decides. The defendant sought the tribunal’s withdrawal of its
findings. The defendant also intimated its intention to apply to a
Federal Court applying the US Federal Arbitration Law governing the
enforcement of arbitral award, which was said to permit vacatur of
an award where arbitrators have manifestly disregarded the law. It
was in consequence of such an intimation that
the claimant sought and obtained an interim anti-suit
injunction. The Judge held that parties had agreed that any
proceedings seeking to attack or set aside the partial award would
only be those permitted by the English law. It was not, therefore,
permissible for the defendant to bring any proceedings in New York
or elsewhere to attack the partial award. The Judge rejected the
arguments to the effect that the choice of the law of New York as
the proper law of the contract amounted to an agreement that the
law of England should not apply to proceedings post award. The
Judge also rejected a further argument that the separate agreement
to arbitrate contained in Condition V(o) of the policy was itself
governed by New York Law so that proceedings could be instituted in
New York. The Judge granted the claimant a final injunction.

112. The Court of Appeal noticed the submission on behalf of the
defendant as follows:
“14. The main submission of Mr Hirst for the defendant insurer
was that the Judge had been wrong to hold that the arbitration
agreement itself was governed by English law merely because the
seat of the arbitration was London. He argued that the
arbitration agreement itself was silent as to its proper law but
that its proper law should follow the proper law of the contract
as a whole, namely, New York law, rather than follow from the
law of the seat of the arbitration, namely, England. The fact
that the arbitration itself was governed by English procedural
law did not mean that it followed that the arbitration agreement
itself had to be governed by English law. The proper law of the
arbitration agreement was that law with which the agreement had
the most close and real connection; if the insurance policy was
governed by New York law, the law with which the arbitration
agreement had its closest and most real connection was the law
of New York. It would then follow that, if New York law
permitted a challenge for manifest disregard of the law, the
court in England should not enjoin such a challenge.”

113. Justice Longmore of Court of Appeal observed:
“16. I shall deal with Mr Hirst’s arguments in due course but,
in my judgment, they fail to grapple with the central point at
issue which is whether or not, by choosing London as the seat of
the arbitration, the parties must be taken to have agreed that
proceedings on the award should be only those permitted by
English law. In my view they must be taken to have so agreed for
the reasons given by the Judge. The whole purpose of the balance
achieved by the Bermuda Form (English arbitration but applying
New York law to issues arising under the policy) is that
judicial remedies in respect of the award should be those
permitted by English law and only those so permitted. Mr Hirst
could not say (and did not say) that English judicial remedies
for lack of jurisdiction on procedural irregularities under
Sections 67 and 68 of the Arbitration Act, 1996 were not
permitted; he was reduced to saying that New York judicial
remedies were also permitted. That, however, would be a recipe
for litigation and (what is worse) confusion which cannot have
been intended by the parties. No doubt New York law has its own
judicial remedies for want of jurisdiction and serious
irregularity but it could scarcely be supposed that a party
aggrieved by one part of an award could proceed in one
jurisdiction and a party aggrieved by another part of an award
could proceed in another jurisdiction. Similarly, in the case of
a single complaint about an award, it could not be supposed that
the aggrieved party could complain in one jurisdiction and the
satisfied party be entitled to ask the other jurisdiction to
declare its satisfaction with the award. There would be a
serious risk of parties rushing to get the first judgment or of
conflicting decisions which the parties cannot have
contemplated.
17. It follows from this that a choice of seat for the
arbitration must be a choice of forum for remedies seeking to
attack the award.”
(emphasis supplied)
On the facts of the case, the Court held that the seat of the
arbitration was in England and accordingly entertained the challenge
to the award.
114. The cases relied upon by Dr. Singhvi relate to the phrase
“arbitration in London” or expressions similar thereto. The same
cannot be equated with the term “venue of arbitration proceedings
shall be in London.” Arbitration in London can be understood to
include venue as well as seat; but it would be rather stretching
the imagination if “venue of arbitration shall be in London” could
be understood as “seat of arbitration shall be London,” in the
absence of any other factor connecting the arbitration to London.
In spite of Dr. Singhvi’s seemingly attractive submission to
convince us, we decline to entertain the notion that India would
not be the natural forum for all remedies in relation to the
disputes, having such a close and intimate connection with India.
In contrast, London is described only as a venue which Dr. Singhvi
says would be the natural forum.

115. In Shashoua, such an expression was understood as seat instead of
venue, as the parties had agreed that the ICC Rules would apply to
the arbitration proceedings. In Shashoua, the ratio in Naviera and
Braes Doune has been followed. In this case, the Court was
concerned with the construction of the shareholders’ agreement
between the parties, which provided that “the venue of the
arbitration shall be London, United Kingdom”. It provided that the
arbitration proceedings should be conducted in English in
accordance with the ICC Rules and that the governing law of the
shareholders’ agreement itself would be the law of India. The
claimants made an Application to the High Court in New Delhi
seeking interim measures of protection under Section 9 of the
Indian Arbitration Act, 1996, prior to the institution of
arbitration proceedings. Following the commencement of the
arbitration, the defendant and the joint venture company raised a
challenge to the jurisdiction of the Arbitral Tribunal, which the
panel heard as a preliminary issue. The Tribunal rejected the
jurisdictional objection.

116. The Tribunal then made a costs award ordering the defendant to pay
$140,000 and £172,373.47. The English Court gave leave to the
claimant to enforce the costs award as a judgment. The defendant
applied to the High Court of Delhi under Section 34(2)(a)(iv) of
the Arbitration Act, 1996 to set aside the costs award. The
claimant had obtained a charging order, which had been made final,
over the defendant’s property in UK. The defendant applied to the
Delhi High Court for an order directing the claimants not to take
any action to execute the charging order, pending the final
disposal of the Section 34 petition in Delhi seeking to set aside
the costs award. The defendant had sought unsuccessfully to
challenge the costs award in the Commercial Court under Section 68
and Section 69 of the English Arbitration Act, 1996 and to set
aside the order giving leave to enforce the award.

117. Examining the fact situation in the case, the Court observed as
follows:
“The basis for the court’s grant of an anti-suit injunction of
the kind sought depended upon the seat of the arbitration. An
agreement as to the seat of an arbitration brought in the law of
that country as the curial law and was analogous to an exclusive
jurisdiction clause. Not only was there agreement to the curial
law of the seat, but also to the courts of the seat having
supervisory jurisdiction over the arbitration, so that, by
agreeing to the seat, the parties agreed that any challenge to
an interim or final award was to be made only in the courts of
the place designated as the seat of the arbitration.
Although, ‘venue’ was not synonymous with ‘seat’, in an
arbitration clause which provided for arbitration to be
conducted in accordance with the Rules of the ICC in Paris (a
supranational body of rules), a provision that ‘the venue of
arbitration shall be London, United Kingdom’ did amount to the
designation of a juridical seat….”
In para 54, it is further observed as follows:
“There was a little debate about the possibility of the issues
relating to the alleged submission by the claimants to the
jurisdiction of the High Court of Delhi being heard by that
Court, because it was best fitted to determine such issues under
the Indian law. Whilst I found this idea attractive initially,
we are persuaded that it would be wrong in principle to allow
this and that it would create undue practical problems in any
event. On the basis of what I have already decided, England is
the seat of the arbitration and since this carries with it
something akin to an exclusive jurisdiction clause, as a matter
of principle the foreign court should not decide matters which
are for this Court to decide in the context of an anti-suit
injunction.”
(emphasis supplied)
If the aforesaid observations are applied to the facts of the
present case, it would be apparent that the Indian Courts would have
jurisdiction in the nature of exclusive jurisdiction over the disputes
between the parties.
118. In Shashoua case (supra), Cooke, J. concluded that London is the
seat, since the phrase “venue of arbitration shall be London,
U.K.” was accompanied by the provision in the arbitration clause
for arbitration to be conducted in accordance with the Rules of
ICC in Paris (a supranational body of rules). It was also noted
by Cooke, J. that “the parties have not simply provided for the
location of hearings to be in London……” In the present case,
parties have not chosen a supranational body of rules to govern
the arbitration; Indian Arbitration Act, 1996 is the law
applicable to the arbitration proceedings.
119. Also, in Union of India v. McDonnell Douglas Corpn., the
proposition laid down in Naviera Amazonica Peruana S.A. was
reiterated. In this case, the agreement provided that:
“The arbitration shall be conducted in accordance with the
procedure provided in the Indian Arbitration Act of 1940 or any
re-enactment or modification thereof. The arbitration shall be
conducted in the English language. The award of the arbitrators
shall be made by majority decision and shall be final and
binding on the parties hereto. The seat of the arbitration
proceedings shall be London, United Kingdom.”
120. Construing the aforesaid clause, the Court held as
follows:
“On the contrary, for the reasons given, it seems to me that by
their agreement the parties have chosen English law as the law
to govern their arbitration proceedings, while contractually
importing from the Indian Act those provisions of that Act which
are concerned with the internal conduct of their arbitration and
which are not inconsistent with the choice of English arbitral
procedural law.”
121. The same question was again considered by the High Court of
Justice, Queen’s Bench Division, Commercial Court (England) in
SulameRica CIA Nacional De Seguros SA v. Enesa Engenharia SA –
Enesa. The Court noticed that the issue in this case depends upon
the weight to be given to the provision in Condition 12 of the
insurance policy that “the seat of the arbitration shall be
London, England.” It was observed that this necessarily carried
with it the English Court’s supervisory jurisdiction over the
arbitration process. It was observed that “this follows from the
express terms of the Arbitration Act, 1996 and, in particular,
the provisions of Section 2 which provide that Part I of the
Arbitration Act, 1996 applies where the seat of the arbitration
is in England and Wales or Northern Ireland. This immediately
establishes a strong connection between the arbitration agreement
itself and the law of England. It is for this reason that recent
authorities have laid stress upon the locations of the seat of
the arbitration as an important factor in determining the proper
law of the arbitration agreement.” The Court thereafter makes a
reference to the observations made in C v. D by the High
Court as well as the Court of Appeal. The observations made in
paragraph 12 have particular relevance which are as under:
“In the Court of Appeal, Longmore, L.J., with whom the other two
Lord Justices agreed, decided (again obiter) that, where there
was no express choice of law for the arbitration agreement, the
law with which that agreement had its closest and most real
connection was more likely to be the law of the seat of
arbitration than the law of the underlying contract. He referred
to Mustill, J. (as he then was) in Black Clawson International
Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. as saying that it
would be a rare case in which the law of the arbitration
agreement was not the same as the law of the place or seat of
the arbitration. Longmore, L.J. also referred to the speech of
Lord Mustill (as he had then become) in Channel Tunnel Group
Ltd. v. Balfour Beatty Construction Ltd. and concluded that the
Law Lord was saying that, although it was exceptional for the
proper law of the underlying contract to be different from the
proper law of the arbitration agreement, it was less exceptional
(or more common) for the proper law of that underlying contract
to be different from the curial law, the law of the seat of the
arbitration. He was not expressing any view on the frequency or
otherwise of the law of the arbitration agreement differing from
the law of the seat of the arbitration. Longmore, L.J. agreed
with Mustill, J.’s earlier dictum that it would be rare for the
law of the separable arbitration agreement to be different from
the law of the seat of the arbitration. The reason was
‘that an agreement to arbitrate will normally have a closer
and more real connection with the place where the parties
have chosen to arbitrate, than with the place of the law of
the underlying contract, in cases where the parties have
deliberately chosen to arbitrate, in one place, disputes
which have arisen under a contract governed by the law of
another place’. (C case, Bus LR p. 854, para 26)”
122. Upon consideration of the entire matter, it was observed in
SulameRica supra that “In these circumstances it is clear to me
that the law with which the agreement to arbitrate has its closest
and most real connection is the law of the seat of arbitration,
namely, the law of England”. It was thereafter concluded by the
High Court that the English law is the proper law of the agreement
to arbitrate.

The aforesaid observations make it abundantly clear that the submissions
made by Dr. Singhvi cannot be supported either in law or in facts. In the
present case, all the chosen laws are of India, therefore, it cannot be
said the laws of England would have any application.

123. We also do not find any merit in the submission of Dr. Singhvi that
the close and the most intimate connection test is wholly
irrelevant in this case. It is true that the parties have
specified all the three laws. But the Court in these proceedings
is required to determine the seat of the arbitration, as the
Respondents have taken the plea that the term “venue” in the
arbitration clause actually makes a reference to the “seat” of the
arbitration.

124. It is accepted by most of the experts in the law relating to
international arbitration that in almost all the national laws,
arbitrations are anchored to the seat/place/situs of arbitration.
Redfern and Hunter on International Arbitration (5th Edn., Oxford
University Press, Oxford/New York 2009), in para 3.54 concludes
that “the seat of the arbitration is thus intended to be its centre
of gravity.” In Balco, it is further noticed that this does not
mean that all proceedings of the arbitration are to be held at the
seat of arbitration. The Arbitrators are at liberty to hold
meetings at a place which is of convenience to all concerned. This
may become necessary as Arbitrators often come from different
countries. Therefore, it may be convenient to hold all or some of
the meetings of the arbitration in a location other than where the
seat of arbitration is located. In Balco, the relevant passage from
Redfern and Hunter, has been quoted which is as under:
“The preceding discussion has been on the basis that there is
only one ‘place’ of arbitration. This will be the place chosen
by or on behalf of the parties; and it will be designated in the
arbitration agreement or the terms of reference or the minutes
of proceedings or in some other way as the place or ‘seat’ of
the arbitration. This does not mean, however, that the Arbitral
Tribunal must hold all its meetings or hearings at the place of
arbitration. International commercial arbitration often
involves people of many different nationalities, from many
different countries. In these circumstances, it is by no means
unusual for an Arbitral Tribunal to hold meetings—or even
hearings—in a place other than the designated place of
arbitration, either for its own convenience or for the
convenience of the parties or their witnesses… It may be more
convenient for an Arbitral Tribunal sitting in one country to
conduct a hearing in another country — for instance, for the
purpose of taking evidence…. In such circumstances each move of
the Arbitral Tribunal does not of itself mean that the seat of
arbitration changes. The seat of arbitration remains the place
initially agreed by or on behalf of the parties.”
These observations have also been noticed in Union of India Vs.
McDonald Duglas Corporation (supra).
125. In the present case, even though the venue of arbitration
proceedings has been fixed in London, it cannot be presumed that
the parties have intended the seat to be also in London. In an
International Commercial Arbitration, venue can often be different
from the seat of arbitration. In such circumstances, the hearing
of the arbitration will be conducted at the venue fixed by the
parties, but this would not bring about a change in the seat of the
arbitration. This is precisely the ratio in Braes of Dounne.
Therefore, in the present case, the seat would remain in India.

126. In Naviera Amazonica Peruana S.A. (supra), the Court of Appeal
observed that it would always be open to the Arbitral Tribunal to
hold the hearings in Lima if this were thought to be convenient,
even though the seat or forum of the arbitration would remain in
London.
Issue No. VI/ Re: Concurrent Jurisdicion:
127. Having held that the seat of arbitration is in India, in our
opinion, the Bombay High Court committed an error in concluding
that the Courts in England would have concurrent jurisdiction.
Holding that the Courts in England and India will have concurrent
jurisdiction, as observed on different occasions by Courts in
different jurisdictions, would lead to unnecessary complications
and inconvenience. This, in turn, would be contrary to
underlying principle of the policy of dispute resolution through
arbitration. The whole aim and objective of arbitration is to
enable the parties to resolve the disputes speedily, economically
and finally. The kind of difficulties that can be caused by
Courts in two countries exercising concurrent jurisdiction over
the same subject matter have been very succinctly set down by
Lord Brandon in Abdin Vs. Daveu (supra)– as
follows:-
“In this connection it is right to point out that, if concurrent
actions in respect of the same subject matter proceed together
in two different countries, as seems likely if a stay is refused
in the present case, one or other of the two undesirable
consequences may follow: first, there may be two conflicting
judgments of the two courts concerned; or secondly, there may be
an ugly rush to get one action decided ahead of the other in
order to create a situation of res judicata or issue estoppel in
the latter.”

Lord Diplock said in the same case:
“comity demands that such a situation should not be permitted to
occur as between courts of two civilised and friendly states”;
it would be, he said, “a recipe for confusion and injustice”. As
Bingham LJ said in Dupont No 1 the policy of the law must be to
favour the litigation of issues only once in the most
appropriate forum. The interests of justice require that one
should take into account as a factor the risks of injustice and
oppression that arise from concurrent proceedings in different
jurisdictions in relation to the same subject matter.”

128. Once the seat of arbitration has been fixed in India, it would be
in the nature of exclusive jurisdiction to exercise the
supervisory powers over the arbitration. This view of ours will
find support from the judgment of the Court of Appeal in England
in recognizing the difficulties that the parties will face in
case the Courts in India and England have concurrent
jurisdiction. Cooke J. in his judgment in (1) Enercon GMBH (2)
Wobben Properties GMBH Vs. Enercon (India) Ltd., dated 30th
November, 2012, (2012) EWHC 3711(Comm), observed as under:
“14. A lifting of the stay in this country and an appoint of a
third arbitrator under s. 18 of the English Act would, if the
Indian proceedings continue and the Supreme Court decides the
matter differently from the Bombay High Court and this court,
give rise to the possibility of conflicting judgments with all
the chaos that might entail. In practice, therefore, the
question of lifting the stay here and the grant of the anti-suit
injunction against EIL are closely interconnected.
15. It cannot, in my judgment, be right that both English and
Indian courts should be free to reach inconsistent judgments on
the same subject matter, whether or not the current ultimate
result in India, which allows for an English court to appoint an
arbitrator by virtue of s.2(4) of the English Act, will or will
not involve any inconsistent judgment, and whether there is or
is not a current issue estoppels which would debar Enercon from
contending that London is the seat of the arbitration, which is
its primary case, giving rise, as it says, to the court’s power
to appoint an arbitrator under s.18 of the English Act by virtue
of s.2(1) of that Act and by reference to s.3 of that Act.
xx xxx xx xxx xx
56. Comity and the avoidance of inconsistent judgments require
that I should refrain from deciding matters which are possibly
going to be decided further in India. It would be a recipe for
confusion and injustice if I were not to do so. Issue estoppels
is already said to arise on the question of the seat of
arbitration and curial law, and that raises very difficult
questions for the court to decide. If the stay was lifted, then
I could decide the matter differently from Savant J. or from a
later final decision on appeal in the Supreme Court of India, if
that matter went ahead. The Indian courts are seised and should
reach, in my judgment, a concluded decision, albeit on an
expedited basis.
xx xxx xx xxx xx
60. If the Supreme Court in India were, in due course, to
consider that the Bombay High Court was wrong in its conclusion
as to the seat of the arbitration or that there was a prima
facie valid arbitration or that the English court had concurrent
supervisory jurisdiction, it would be a recipe for confusion and
injustice if, in the meantime, the English court were to
conclude that England was the seat of the putative arbitration,
and to assume jurisdiction over EIL and the putative
arbitration, and to conclude that there was a valid arbitration
agreement, whether on the basis of a good arguable case or the
balance of probabilities. Further, for it to exercise its
powers, whether under s.2(1) or 2(4) or s.18 of the Arbitration
Act in appointing a third arbitrator, would create real
problems, should the Supreme Court decide differently.
61. These are the very circumstances which courts must strive
to avoid in line with a multitude of decisions of high
authority, from the Abidin Daver [1984] AC 398 onwards,
including E.I. Dupont de Nemours v. Agnew [1987]2 Lloyd’s Rep
585. The underlying rationale of Eder J.’s judgment leads
inexorably, in my view, to the conclusion that the issues to be
determined in India, which could otherwise fall to be determined
here in England, must be decided first by the Indian courts and
that, despite the delay and difficulties involved, the decision
of the Indian Supreme Court should be awaited.
62. It is also fair to point out in this context that, even if
I were to decide the seat issue here on the basis of full
argument (which I have not heard) whether in the way that Eder
J. did or otherwise, the possibility or likelihood of one side
or another wishing to appeal with subsequent delay might then
arise in the context of the English proceedings. But, if I did
make such a decision, in line with Eder J., I would be making a
determination which is directly contrary to that of Savant J.
and it seems to me that that is inappropriate as a matter of
comity, whether or not there is any issue estoppels.
63. Moreover, it would be a recipe for confusion and
injustice, and to back it up with an anti-suit injunction would
merely fan the flames for a continued battle, which is contrary
to the principles of comity when the position is unclear and the
agreement itself is governed by Indian law.”
129. In our opinion, these observations of Justice Cooke foresee the
kind of intricate complexities that may arise in case the Courts of
India and England were to exercise the concurrent jurisdiction in
these matters.

130. We are unable to agree with the conclusion reached by Justice
Savant that the Courts in England would exercise concurrent
jurisdiction in the matter. Having concluded that the seat of
arbitration is in India, the conclusions reached by the Bombay High
Court seem to be contrary in nature. In Paragraph 45, it is
concluded that the law relating to arbitration agreement is the
Indian Arbitration Act. Interpreting Clause 18.3, it is observed
as follows:-
“45. ……………….The said clause provides that the provisions of the
Indian Arbitration and Conciliation Act, 1996 shall apply. If
the said clause is read in the ordinary and natural sense, the
placement of the words that “the Indian Arbitration and
Conciliation Act shall apply” in the last clause 18.3 indicates
the specific intention of the parties to the application of the
Indian Arbitration Act, not only to the Arbitration Agreement
but also that the curial law or the Lex Arbitri would be the
Indian Arbitration Act. The application of the Indian
Arbitration Act therefore can be said to permeate clause-18 so
that in the instant case laws (2) and (3) are same if the
classification as made by the learned authors is to be applied.
The reference to the Indian Arbitration Act is therefore not
merely a clarification as to the proper law of the arbitration
agreement as is sought to be contended on behalf of the
Respondents. It has to be borne in mind that the parties are
businessmen and would therefore not include words without any
intent or object behind them. It is in the said context,
probably that the parties have also used the word “venue” rather
than the word “seat” which is usually the phrase which is used
in the clauses encompassing an Arbitration Agreement. There is
therefore a clear and unequivocal indication that the parties
have agreed to abide by the Indian Arbitration Act at all the
stages, and therefore, the logical consequence of the same would
be that in choosing London as the venue the parties have chosen
it only as a place of arbitration and not the seat of
arbitration which is a juristic concept.”
131. This conclusion is reiterated in Paragraph 46 in the following
words:-
“46. The proposition that when a choice of a particular law is
made, the said choice cannot be restricted to only a part of the
Act or the substantive provision of that Act only. The choice is
in respect of all the substantive and curial law provisions of
the Act. The said proposition has been settled by judicial
pronouncements in the recent past…….”
132. Having said so, learned Judge further observes as follows:-
“49. Though in terms of interpretation of Clause 18.3, this
Court has reached a conclusion that the lex arbitri would be the
Indian Arbitration Act. The question would be, whether the
Indian Courts would have exclusive jurisdiction. The nexus
between the “seat” or the “place” of arbitration vis-à-vis the
procedural law i.e. the lex arbitri is well settled by the
judicial pronouncements which have been referred to in the
earlier part of this judgment. A useful reference could also be
made to the learned authors Redfern and Hunter who have stated
thus :-

“the place or seat of the arbitration is not merely a
matter of geography. It is the territorial link between the
arbitration itself and the law of the place in which that
arbitration is legally situated….”
The choice of seat also has the effect of conferring exclusive
jurisdiction to the Courts wherein the seat is situated.”
Here the Bombay High Court accepts that the seat carries with it, usually,
the notion of exercising jurisdiction of the Courts where the seat is
located.
133. Having said so, the High Court examines the question whether the
English Courts can exercise jurisdictions in support of arbitration
between the parties, in view of London being the venue for the
arbitration meetings. In answering the aforesaid question, the
High Court proceeds on the basis that there is no agreement between
the parties as regards the seat of the arbitration, having
concluded in the earlier part of the judgment that the parties have
intended the seat to be in India. This conclusion of the High
Court is contrary to the observations made in Shashoua (supra)
which have been approvingly quoted by this Court in Balco in
(Paragraph 110). On the facts of the case, the Court held that the
seat of the arbitration was in England and accordingly entertained
the challenge to the award.
134. In A Vs. B[38] again the Court of Appeal in England observed
that:-
“…..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 made only in the courts of the place designated as the
seat of arbitration.”

(emphasis supplied)
135. In our opinion, the conclusion reached by Justice Savant that
the Courts in England would have concurrent jurisdiction runs
counter to the settled position of law in India as well as in
England and is, therefore, not sustainable. The Courts in England
have time and again reiterated that an agreement as to the seat
is analogous to an exclusive jurisdiction clause. This agreement
of the parties would include the determination by the court as to
the intention of the parties. In the present case, Savant, J.
having fixed the seat in India erred in holding that the courts
in India and England would exercise concurrent jurisdiction. The
natural forum for all remedies, in the facts of the present case,
is only India.
Issue (vii)/Re: Anti-Suit Injunction:
136. Having held that the Courts in England would have concurrent
jurisdiction, the Bombay High Court on the basis thereof
concludes as follows:-
“In view of the conclusion that this Court has reached, namely
that the English Courts would have concurrent jurisdiction to
act in support of arbitration, the case of the Appellants for an
anti suit injunction does not stand to scrutiny. However, in so
far as the aspect of forum non-conveniens is concerned, in my
view, since the Appellants have agreed to London as the venue
for arbitration, they cannot be heard to complain that the
Courts at London are forum non-conveniens for them. The
Appellants have appeared before the said Courts, and therefore,
the case of forum non- conveniens is bereft of any merit.”
137. The aforesaid conclusion again ignores the principle laid down by
this Court in Oil & Natural Gas Commission Vs. Western Company of
North America (supra), wherein it is held as follows:-
“As per the contract, while the parties are governed by the
Indian Arbitration Act and the Indian Courts have the exclusive
jurisdiction to affirm or set aside the award under the said
Act, the Respondent is seeking to violate the very arbitration
clause on the basis of which the award have been obtained by
seeking confirmation of the award in the New York Court under
the American Law. This amounts to an improper use of the forum
in American (sic) in violation of the stipulation to be governed
by the Indian law, which by necessary implication means a
stipulation to exclude the USA Court to seek an affirmation and
to seek it only under the Indian Arbitration Act from an Indian
Court. If the restraint order is not granted, serious prejudice
would be occasioned and a party violating the very arbitration
clause on the basis of which the award has come into existence
will have secured an order enforcing the order from a foreign
court in violation of that very clause..”
138. Again in the case of Modi Entertainment Network & Anr. (supra),
it was held that :-
“24(1). In exercising discretion to grant an anti-suit
injunction the court must be satisfied of the following aspects:
(a) the defendant, against whom injunction is sought, is
amenable to the personal jurisdiction of the court; (b) if the
injunction is declined, the ends of justice will be defeated and
injustice will be perpetuated; and (c) the principle of
comity — respect for the court in which the commencement or
continuance of action/proceeding is sought to be restrained —
must be borne in mind.”
139. In Paragraph 24(2) of the same decision, this Court further
observed that :-
“24(2). In a case where more forums than one are available, the
court in exercise of its discretion to grant anti-suit
injunction will examine as to which is the appropriate forum
(forum conveniens) having regard to the convenience of the
parties and may grant anti-suit injunction in regard to
proceedings which are oppressive or vexatious or in a forum non-
conveniens.”
140. Examining these aspects, Eder, J. in fact also came to the
conclusion that the anti-suit injunction granted by the English
Court needed at-least to be stayed during the pendency of
proceedings in India. The reasons given by Eder, J. in support
of the conclusions are as under:-
“48. Bearing these general principles in mind and recognising
the permissive nature of CPR Part 62.5, the important point, in
my view, is that the claimants did not pursue their applications
in the original proceedings that they issued in this court in
March 2008. On the contrary, they engaged fully (albeit perhaps
reluctantly) in the Indian proceedings before the Daman court.
When they lost at first instance before Judge Shinde, they
appealed to the DCC with the result indicated above. That is the
choice they made. Having made that choice and now some years
down the line, it seems to me that the English court should at
least be extremely cautious to intervene at this stage and, in
Mr Edey QC’s words, to “wrest” back the proceedings to England.
To do so at this stage when those proceedings are, in effect,
still pending would give rise to the “recipe for confusion and
injustice” which Lord Diplock specifically warned against in The
Abidin Daver as referred to in the passage of the judgment of
Hobhouse J which I have quoted above. For that reason alone, I
have decided somewhat reluctantly that I should follow the
course suggested by Mr Edey QC ie that these proceedings should
be stayed at least for the time being pending resolution of the
Writ Petitions currently before the BHC……”
141. It must be noticed that Respondent No. 1 was initially having 51
per cent shareholding of the Appellant No.1 company, which was
subsequently increased to 56 per cent. This would be an
indicator that the Respondent No. 1 is actively carrying on
business at Daman. This Court considered the expression “carries
on business” as it occurs in Section 20 of the Civil Procedure
Code in the case of Dhodha House Vs. S.K. Maingi[39] and observed
as follows:-
“46. The expression “carries on business” and the expression
“personally works for gain” connote two different meanings. For
the purpose of carrying on business only presence of a man at a
place is not necessary. Such business may be carried on at a
place through an agent or a manager or through a servant. The
owner may not even visit that place. The phrase “carries on
business” at a certain place would, therefore, mean having an
interest in a business at that place, a voice in what is done, a
share in the gain or loss and some control thereover. The
expression is much wider than what the expression in normal
parlance connotes, because of the ambit of a civil action within
the meaning of Section 9 of the Code…..”
142. The fact that Daman trial court has jurisdiction over the matter
is supported by the judgment of this Court in Harshad Chiman Lal
Modi (supra), which was relied upon by Mr. Nariman. The
following excerpt makes it very clear:-
“16………..The proviso to Section 16, no doubt, states that though
the court cannot, in case of immovable property situate beyond
jurisdiction, grant a relief in rem still it can entertain a
suit where relief sought can be obtained through the personal
obedience of the defendant…… The principle on which the maxim
was based was that the courts could grant relief in suits
respecting immovable property situate abroad by enforcing their
judgments by process in personam i.e. by arrest of the defendant
or by attachment of his property.”

143. This apart, we have earlier noticed that the main contract, the
IPLA is to be performed in India. The governing law of the
contract is the law of India. Neither party is English. One
party is Indian, the other is German. The enforcement of the
award will be in India. Any interim measures which are to be
sought against the assets of Appellant No. 1 ought to be in India
as the assets are situated in India. We have also earlier
noticed that Respondent No.1 has not only participated in the
proceedings in the Daman courts and the Bombay High Court, but
also filed independent proceedings under the Companies Act at
Madras and Delhi. All these factors would indicate that
Respondent No.1 does not even consider the Indian Courts as forum-
non-conveniens. In view of the above, we are of the considered
opinion that the objection raised by the Appellants to the
continuance of the parallel proceedings in England is not wholly
without justification. The only single factor which prompted
Respondent No.1 to pursue the action in England was that the
venue of the arbitration has been fixed in London. The
considerations for designating a convenient venue for arbitration
can not be understood as conferring concurrent jurisdiction on
the English Courts over the arbitration proceedings or disputes
in general. Keeping in view the aforesaid, we are inclined to
restore the anti-suit injunction granted by the Daman Trial
Court.
144. For the reasons recorded above, Civil Appeal No.2087 of 2014 @
SLP (C) No.10906 of 2013 is dismissed. The findings recorded by
the Appellate Court that the parties can proceed to arbitration
are affirmed. The findings recorded by the Trial Court dismissing
the Application under Section 45 are set aside. In other words,
the Application filed by the Respondents for reference of the
dispute to arbitration under Section 45 has been correctly
allowed by the Appellate Court as well as by the High Court. The
findings of the High Court are affirmed to that extent. All the
disputes arising between the parties in relation to the following
agreements viz. SHA, TKHA, SSHAs and STKHA, Agreed Principles and
IPLA, including the controversy as to whether IPLA is a concluded
contract are referred to the Arbitral Tribunal for adjudication.

145. In the normal circumstances, we would have directed the parties
to approach the two learned arbitrators, namely Mr. V.V. Veeder,
QC and Mr. Justice B.P. Jeevan Reddy to appoint the third
arbitrator who shall also act as the presiding arbitrator.
However, keeping in view the peculiar facts and circumstances of
this case and the inordinate delay which has been caused due to
the extremely convoluted and complicated proceedings indulged in
by the parties, we deem it appropriate to take it upon ourselves
to name the third arbitrator. A perusal of the judgment of Eder,
J. gives an indication that a list of three names was provided
from which the third arbitrator could possibly be appointed. The
three names are Lord Hoffmann, Sir Simon Tuckey and Sir Gordon
Langley. We hereby appoint Lord Hoffmann as the third arbitrator
who shall act as the Chairman of the Arbitral Tribunal.

146. In view of the above, Regular Civil Suit No. 9 of 2008, pending
before the Court of Civil Judge, Senior Division, Daman; and the
Application under Section 45 of the Arbitration Act, 1996 filed
in the Civil Suit No.2667 of 2007 and Contempt Petition in
relation to Civil Suit No.2667 of 2007 pending before the Bombay
High Court at the instance of the Appellants are stayed. Parties
are at liberty to approach the Court for the appropriate orders,
upon the final award being rendered by the Arbitral Tribunal.
This will not preclude the parties from seeking interim measures
under Section 9 of the Indian Arbitration Act, 1996.
147. Civil Appeal No.2086 of 2014 @ SLP (C) No.10924 of 2013 is
partly allowed as follows:
a. The conclusion of the Bombay High Court that the seat of the
arbitration is in India is upheld;
b. The conclusion that the English Courts would have concurrent
jurisdiction is overruled and consequently set aside;

c. The conclusion of the Bombay High Court that the anti-suit
injunction granted by the Daman Trial Court has been
correctly vacated by Daman Appellate Court is overruled and
hence set aside.
d. Consequently, the Respondents are restrained from proceeding
with any of the actions the details of which have been given
in the judgment of Eder, J. dated 23rd March, 2012 and the
order dated 27th March, 2012 as well as the judgment of
Justice Cooke dated 30th November, 2012. These matters
include:
All or any of the proceedings/ applications/ reliefs
claimed by the Respondents in the Arbitration Claim 2011
Folio 1399, including but not limited to:
(1) Application under Section 18 of the English Arbitration
Act, 1996;
(2) Injunctions pursuant to Section 44 of the English
Arbitration Act, 1996 and /or Section 37 of the Senior
Courts Act, 1981.
The Respondents are also restrained from approaching
the English Courts for seeking any
declaration/relief/clarification and/or to institute any
proceedings that may result in delaying or otherwise affect
the constitution of the arbitral tribunal and its
proceedings thereafter.
148. In view of the above, the parties are directed to proceed to
arbitration in accordance with law.
………………………………..J.
[Surinder Singh Nijjar]
……..…………………………………J.
(Fakkir Mohamed Ibrahim Kalifulla]
New Delhi
February 14, 2014.
———————–
[1] (1975) 1 SCC 199
[2] [1953] 1 WLR 280
[3] [1965] 1 W.L.R. 1025
[4] [1976] 1 WLR 591
[5] (1968) 3 SCR 387
[6] (2006) 1 SCC 751
[7] (2013) 1 SCC 641
[8] (2006) 2 SCC 628
[9] 1988 (1) Lloyd’s Rep 116
[10] (2012) 9 SCC 552
[11] 1987 SCR (1) 1024
[12] (2003) 4 SCC 341
[13] (2005) 7 SCC 791
[14] (2009) 1 SCC 267
[15] AIR 1997 SC 605 Para 8-13
[16] (2009) 2 SCC 55, Paras 24-25
[17] (2007) 5 SCC 719, pp. 7-8
[18] (1980) 4 SCC 556, pp. 6-7
[19] (2009) 4 SCC 495 , pp. 26-30 & 40
[20] (2010) 1 SCC 83, p6
[21] (1995) 6 SCC 571
[22] (2009) 2 LLR 376
[23] (2011) 6 SCC 179 (Paras 4,15 and 18)
[24] (2011) 6 SCC 161 (Paras 3 and Paras 20 to 23)
[25] (2011) 9 SCC 735 (Paras 46-52)
[26] Dicey, Morris & Collins Fifteenth Edition at 16-035.
[27] (2007) 2 Lloyd’s Law Reports 367
[28] (19993) 2 Lloyd’s Rep 48
[29] (2012) 2 SCC 93
[30] 2013 (7) SCALE 327
[31] [1985] 1 AC 191
[32] [1937 S. 1835]
[33] [1970] 1 Lloyd’s Rep. 269; [1970] A.C.583
[34] [1981] 2 Lloyd’s Rep. 446 at P. 453
[35] [2008]EWHC 426 (TCC)
[36] [1984] AC 398
[37] [2007] EWCA Civ 1282
[38] [2007] 1 Lloyds Report 237
[39] (2006) 9 SCC 41

———————–
114

Advertisements

About advocatemmmohan

ADVOCATE

Discussion

Comments are closed.

Blog Stats

  • 1,806,271 hits

ADVOCATE MMMOHAN

archieves

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,863 other followers

Follow advocatemmmohan on WordPress.com