Dr Mohan R Bolla Law Lecture The icc rules of arbitration
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The Supreme Court held that the petition challenging arbitration awards under Section 34 of the Indian Arbitration and Conciliation Act was not maintainable. This was because the parties' agreement specified resolving disputes via arbitration under the ICC Rules, and the ICC determined the seat of arbitration would be London. As the seat was outside India, Part I of the Indian Arbitration Act, which includes Section 34, did not apply based on the parties' agreement and the admissions made by the respondent during the arbitration process.
Dr Mohan R Bolla Law Lecture The icc rules of arbitration
- 1. the ICC Rules of Arbitration
- 2. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 The High Court held that the petition under Section 34 of the Arbitration and Conciliation Act, filed by the respondent-M/S E-City Entertainment (I) Pvt. Ltd. against two partial final awards dated 11.02.2006, 24.08.2007, and third final award dated 27.03.2008 was maintainable. The appellant had objected to the maintainability of the petition under Section 34 of the Arbitration Act on the ground that the arbitration clause excluded the applicability of Part-I which contains the said section. The only issue before us is whether the petition under Section 34 of the Arbitration Act is maintainable before a court in India
- 3. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 On 28.09.2000, the appellant entered into an agreement with the respondent for a supply of large format projection systems for cinema theatres to be installed in theatres all across India. Clause 14 of the agreement contained an arbitration clause which reads as follows: "This Agreement shall be governed by and construed according to the laws of Singapore, and the parties attorn to the jurisdiction of the courts of Singapore. Any dispute arising out of this master agreement or concerning the rights, duties or liabilities of E-City or Imax hereunder shall be finally settled by arbitration pursuant to the ICC Rules of Arbitration." • 6. On 16.06.2004, the appellant filed a request for arbitration with the ICC, and claimed damages. On 08.10.2004, the ICC i.e. the chosen arbitral forum fixed London as the place of arbitration i.e. the juridical seat of arbitration, after consulting the parties.
- 4. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 FIRST PARTIAL FINAL AWARD On 11.02.2006, the first partial final award was made in favour of the appellant declaring that the respondent was in breach of the agreement and therefore liable for damages. The award stated that the decision on the other issues, including damages/costs would be reserved for a future award. The aforementioned declaration was made after observing in the award that the court of the ICC had decided to fix London as the juridical seat of arbitration in accordance with the powers vested in the court under Article 14(1) of the ICC Rules. The observation read as follows: "As well be noticed, no provision was made for a venue for any arbitration contemplated by Clause 14, but subsequently the court of the ICC decided on the 8th of October, 2004 to fix London as the juridical seat of the arbitration in accordance with the powers vested in the court under Article 14 of the ICC Rules. Accordingly, this is an arbitration to which Part-I of the English Arbitration Act 1996 applies."
- 5. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 The appellant filed its statement of damages before the Arbitral Tribunal. The respondent filed its statement of defence. On 05.09.2006 the respondent objected that the appellant has no legal status and the law firm representing them is not authorized to pursue the arbitration. In that application, the respondent stated as follows: "The seat of this arbitration is London. Therefore, English law determines the effect of any want of capacity suffered by "Imax Ltd" under the Canadian law as a result of its amalgamation into Imax Corporation with effect from 1st January, 2001."
- 6. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 SECOND PARTIAL FINAL AWARD- On 24.08.2007, the Arbitral Tribunal passed the second partial award rejecting the above objection filed by the respondent. By this award, the tribunal determined the quantum of damages payable to the appellant. This award was also made in London, the juridical seat of this arbitration. A sum of $9,406,148.31 was awarded to the appellant. THIRD FINAL AWARD The Arbitral Tribunal passed a final award on 27.03.2008 on the issue of interest and costs. A sum of $1,118,558.54 by way of interest and a further sum of $2,512.60 per day from 01.10.2007 until the payment of the award was awarded in favour of the appellant. Sums of $400,000 and $384,789.21 by way of costs of arbitration fixed by the ICC and costs by way of attorney’s fees, expert fees and related expenses were also directed to be paid. Final award dated 27.03.2008 was received by the respondent on 01.04.2008. The final award on the issues of interest and costs was amalgamated with the earlier awards, both of which were incorporated by reference into itself. The third final award also stated that the place of arbitration is London. On 21.07.2008, the respondent challenged the aforesaid awards under Section 34 of the Arbitration Act before the Bombay High Court. The learned Single Judge allowed the notice of motion on the condonation of delay and held that the petition under Section 34 was maintainable before the Bombay High Court. Hence, this appeal.
- 7. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 THE ICC RULES The ICC Rules provide for the entire conduct of arbitration from its commencement to the passing of an award. They provide that the arbitration shall be conducted by the court i.e. the International Court of Arbitration, appointed by the council of the ICC. A party wishing to have recourse to arbitration under the rules is required to submit a Request for Arbitration to the Secretariat of the ICC along with the information prescribed and in particular comments as to the place of arbitration. The ICC Rules clearly stipulate that the seat of arbitration shall be fixed by the court, in the following words:- “1. The place of the arbitration shall be fixed by the Court unless agreed upon by the parties. 2. The Arbitral Tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate unless otherwise agreed by the parties. 3. The Arbitral Tribunal may deliberate at any location it considers appropriate.”
- 8. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 In this case, the appellant had proposed the venue of arbitration to be Paris in France. Upon notice being issued, the respondent was obliged to file an answer including a comment concerning the number of arbitrators and their choice as to the place of arbitration. The respondent, in their answer stated that the venue suggested by the claimant i.e. Paris in France would unnecessarily increase the cost of arbitration and therefore suggested that Singapore would be the most appropriate and convenient venue for the arbitration, vide “Answer to Request for Arbitration pursuant to Article 5(1) of the ICC Rules of Arbitration” dated 30.08.2004.
- 9. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 The International Court of Arbitration decided inter alia that London, United Kingdom will be the juridical seat of the arbitration in view of Article 14(1) of the ICC Rules and, therefore, proceeded on the basis of the Part-I of the English Arbitration Act, 1996. What is significant and needs to be pointed out is that the parties had agreed in pursuance of the agreement to have the dispute decided in accordance with the ICC Rules by submitting the dispute to the ICC. The court (of the ICC) considered the stand of the parties on the venue for arbitration and fixed London as the seat of arbitration.
- 10. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 Redfern and Hunter (supra):- “This introduction tries to make clear, 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: When one says that London, Paris or Geneva is the place of arbitration, one does not refer solely to a geographical location. One means that the arbitration is conducted within the framework of the law of arbitration of England, France or Switzerland or, to use an English expression, under the curial law of the relevant country. The geographical place of arbitration is the factual connecting factor between that arbitration law and the arbitration proper, considered as a nexus of contractual and procedural rights and obligations between the parties and the arbitrators.
- 11. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 The seat of arbitration is thus intended to be its centre of gravity.” Further, in the same work on International Arbitration by Redfern and Hunter (supra), the following passage emphasizes the connection between the lex arbitri and lex fori:- “Parties may well choose a particular place of arbitration precisely because its lex arbitri is one which they find attractive. Nevertheless, once a place of arbitration has been chosen, it brings with it its own law. If that law contains provisions that are mandatory so far as arbitration are concerned, those provisions must be obeyed. It is not a matter of choice any more than the notional motorist is free to choose which local traffic laws to obey and which to disregard.” Thus, it is clear that the place of arbitration determines the law that will apply to the arbitration and related matters like challenges to the award etc,
- 12. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 The respondent contends before us that Part-I of the award was applicable, however they themselves stated the place of arbitration to be London. It is pertinent to reproduce the relevant portion in the respondent’s application before the ICC while objecting to the authority of the law firms representing the appellant. It stated:- “The seat of this arbitration is London.” Therefore, the two reasons for Part-I not being applicable are as follows:- Parties agreed that the seat maybe outside India as may be fixed by the ICC; and It was admitted that the seat of arbitration was London and the award was made there. Therefore, there is no doubt that Part-I has no application because the parties chose and agreed to the arbitration being conducted outside India and the arbitration was in fact held outside India.
- 13. S.A. Bobde, J., Imax Corporation vs M/S E-City Entertainment (I) decided on 10 March, 2017 In view of the foregoing observations, we find that the High Court committed an error in observing that the seat of arbitration itself is not a decisive factor to exclude Part-I of the Arbitration Act. We therefore set aside the judgment of the High Court and dismiss the petition filed by the respondent under Section 34 of the Arbitration Act before the Bombay High Court.