IMPORTANT POINT
Part I of the Arbitration and Conciliation Act, 1996, is to apply also to International Commercial arbitrations which take place out of India, unless the parties by agreement, express or implied exclude it or any of its provisions.

Headnote:Arbitration and Conciliation Act, 1996-Section 9-Applicability-Arbitration in Paris as per rules of International Chamber of Commerce-Application u/s 9 for an order of injunction restraining appellant and 2nd respondent from alienating, transferring and/or creating third party right etc.-Whether maintainable-(Yes)-Part I of the Act would apply to arbitrations where place of arbitration is not in India-Whether Section 9 gets excluded by ICC Rules of Arbitration-(No).
       Held : The provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India the provisions of Part I would compulsory apply and parties are free to deviate only to the extent permitted by the derogable provisions of Part I. In cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any provision, in Part I, which is contrary to or excluded by that law or rules will not apply. (Para 32)
       Article 23 of the ICC rules permits parties to apply to a competent judicial authority for interim and conservatory measures. Therefore, in such cases an application can be made under Section 9 of the said Act. Lastly it must be stated that the said Act does not appear to be a well drafted legislation. Therefore the High Courts of Orissa, Bombay, Madras, Delhi and Calcutta cannot be faulted for interpreting it in the manner indicated above. However, in our view a proper and conjoint reading of all the provisions indicates that Part I is to apply also to international commercial arbitrations which take place out of India, unless the parties by agreement, express or implied exclude it or any of its provisions. Such an interpretation does not lead to any conflict between any of the provisions of the said Act. On this interpretation there is no lacunae in the said Act. This interpretation also does not leave a party remedyless. Thus such an interpretation has to be preferred to the one adopted by the High Courts of Orissa, Bombay, Madras, Delhi and Calcutta. It will therefore have to be held that the contrary view taken by these High Courts is not good law. (Paras 34 & 35)

JUDGMENT

S.N. Variava, J.-This Appeal is against a Judgment dated 10th October, 2000 passed by the Madhya Pradesh High Court.

2. Briefly stated the facts are as follows:

The Appellant entered into a contract with the 1st Respondent on 9th May, 1997. This contract contained an arbitration clause which provided that arbitration was to be as per the rules of the International Chamber of Commerce (for short ICC). On 23rd October, 1997 the 1st Respondent filed a request for arbitration with ICC. Parties agreed that the arbitration be held in Paris, France. ICC has appointed a sole arbitrator.

3. 1st Respondent filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter called the said Act) before the IIIrd Additional District Judge, Indore, M.P. against the Appellant and the 2nd Respondent. One of the interim reliefs sought was an order of injunction restraining these parties from alienating, transferring and/or creating third party right, disposing of, dealing with and/or selling their business assets and properties. The Appellant raised the plea of maintainability of such an application. The Appellant contended that Part I of the said Act would not apply to arbitrations where the place of arbitration is not in India. This application was dismissed by the IIIrd Additional District Judge on 1st February, 2000. It was held that the Court at Indore had jurisdiction and the application was maintainable. The Appellant filed a Writ Petition before the High Court of Madhya Pradesh, Indore Bench. The said Writ Petition has been dismissed by the impugned Judgment dated 10th October, 2000.

4. On behalf of the Appellants, Mr. Sen submits that Part I of the said Act only applies to arbitrations where the place of arbitration is in India. He submits that if the place of arbitration is not in India then Part II of the said Act would apply. He relies on sub-section (2) Section 2 of the said Act which provides that Part I shall apply where the place of arbitration is in India. He submits that sub-section (2) of Section 2 makes it clear that the provisions of Part I do not apply where the place of arbitration is not in India. Mr. Sen points out that the said Act is based on UNCITRAL Model Law on International Commercial Arbitration. He points out that Article 1(2) of UNCITRAL Model Law provides that the law, except Articles 8, 9, 35 and 36 of the Model Law, would apply only if the Arbitration takes place in the territory of the State. Mr. Sen submits that Article 9 of the UNCITRAL Model Law permits a party to request a Court for interim measure even if the arbitration is not in the territory of the State. He submits that whilst framing the said Act the Legislature has purposely not adopted Article 1(2) of the UNCITRAL Model Law. He submits that this clearly shows the intention of the Legislature that they did not want Part I to apply to arbitrations which take place outside India.

5. Mr. Sen points out that Section 2(f) of the said Act defines an "international commercial arbitration". Mr. Sen submits that an international commercial arbitration could take place either in India or outside India. He submits that if the international commercial arbitration takes place out of India then Part I of the said Act would not apply. He submits that Part II of the said Act applies to foreign awards.

6. Mr. Sen fairly draws the attention of this Court to sub-sections (3), (4) and (5) of Section 2, which read as follows:

"2(3) This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

(4) This Part except sub-section (1) of Section 40, Sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement except in so far as the provisions of this Part are inconsistent with that other enactmen

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2002 Supreme(SC) 347

IMPORTANT POINTPart I of the Arbitration and Conciliation Act, 1996, is to apply also to International Commercial arbitrations which take place out of India, unless the parties by agreement, express or implied exclude it or any of its provisions.

Cases Referred (1)

IMPORTANT POINT
Part I of the Arbitration and Conciliation Act, 1996, is to apply also to International Commercial arbitrations which take place out of India, unless the parties by agreement, express or implied exclude it or any of its provisions.