Submission To Foreign Court Does Not Bar Jurisdiction of Indian Courts Under Arbitration Act : Delhi High Court

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The Delhi High Court held that parties’ mere submission to the exclusive jurisdiction of a Foreign Court in an arbitration agreement would not take away the jurisdiction of Indian Courts under Section 9 of the Arbitration and Conciliation Act given the proviso to Section 2(2) of the Act. The Court contemplated the issue in the matter of Big Charter Pvt Ltd vs Ezen Aviation Pvt Ltd

Brief Facts

The Petitioner and the Respondent, Ezen Aviation Pty Ltd were parties to lease agreements in connection with an aircraft. The Petitioner provided scheduled air operator services. The Respondent engaged in the business and lease of aircraft. The Petitioner asserted that there was a clear and undeniable breach of the agreement by the Respondent. 

The Petitioner invoked arbitration and moved the High Court under Section 9 of the Arbitration Act. This was done for the grant of interim relief. Advocate Gautam Narayan with Advocates Asmita Singh, Aditya Nair appeared for the Petitioner. Senior Advocate Arvind Kamath with Advocates Prashant Popat, Nikit Bala, Karishma Naghnoor, Pai Amit, Rahat Bansal, Souvik Majumdar represented the Respondent.

Contentions

The Petitioner stated that if the present petition was not entertained, the same would be rendered remediless. This was insofar as its prayer for pre-arbitral interim relief was concerned. It inter alia was stated that proviso to Section 2(2) conferred Section 9 jurisdiction on the High Court. This applied even in respect of foreign seated arbitrations.

The Respondent’s preliminary objection concerned the territorial jurisdiction of the High Court to entertain the petition. As per the Respondent, the parties had agreed to subject themselves to the jurisdiction of courts in Singapore. It was stated that the seat of arbitration was Singapore. The arbitration proceedings had to be conducted following the Arbitration Rules of the Singapore International Arbitration Centre (SIAC).

Court’s Observations

Hon’ble Justice C Hari Shankar passed a detailed judgment in a Section 9 plea instituted by Big Charter Pvt Ltd. The Court clarified that the arbitration law in India was codified in the form of the 1996 Act. Thus, the issue of jurisdiction of a petition under Section 9 must emanate from the 1996 Act itself. The Court stated that “Any reference to the UNCITRAL Model or any textual commentaries may be justified only if there is any ambiguity. This was concerning any of the provisions of the 1996 Act, which requires resolution”.

The issue of the situs of jurisdiction, concurrent jurisdiction, and exclusion of jurisdiction had been the subject matter of consideration in numerous decisions of the Supreme Court. This was under Sections 9, 11, 34, and 36. The Court perused in detail the decisions rendered in Bharat Aluminium Co. vs Kaiser Aluminium Technical Services Inc. and others.

The Court observed dehors the proviso to Section 2(2). The Court noted that there was little doubt that once the “seat of arbitration” was fixed as Singapore, courts at Singapore would have exclusive jurisdiction to supervise the arbitral proceedings. The Court stated that the jurisdiction exercised by a Court under Section 9, had to be differentiated. 

This was different from the jurisdiction exercised by the Court under other provisions such as Sections 11, 34, and 36. The Court took into account the 246th Law Commission Report. This was on the deleterious consequences of excluding the applicability of Section 9, in the case of foreign-seated arbitrations. The Court refused to accept the Respondent’s contention. The Court stated that an agreement on the exclusive jurisdiction of courts of Singapore constituted “agreement to the contrary”. 

The contention could not be accepted on the ground that the Courts at Singapore had no power to grant the relief under Section 9, the Court said. The Court further noted that the lease in question was executed much after the introduction of the proviso in Section 2(2) in 2019. Yet, there was no specific clause to suggest to the contrary. The Court reiterated that the three criteria -of prima facie case, the balance of convenience, and irreparable loss. 

Apart from this, the Court stated that the Petitioner was also required to prove the frustration of arbitral proceedings. This was pertinent if urgent interim relief was not granted. 

Court’s Decision

The petition was disposed of with a direction given by the Court. The amount of Rs 4,30,00,000 was to be remain deposited with the Registry of the High Court by the Respondent, pending further orders. 

Click here to read judgment


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