IMPORTANT POINTS
Contract should be construed as a whole and the approach should be straight and plain, yet cohesive and logical.
Approaches in interpreting legislative enactments, professional documents like deeds and instruments drafted by laymen like Wills are different. While context and purpose is important in interpreting a statute, text and purpose is important in second category also. However, in the third category, simply the intention of the executor is relevant.
In agreements of arbitration, party autonomy being the grundnorm, how the parties worked out the agreement indicates intention of the parties.

JUDGMENT :

Kurian, J.

1. The residue of the Constitution Bench Judgment in Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 is the subject matter of the present appeal. At the instance of the appellant, the Bench resolved the conflicting, if not, confusing views on the applicability of Part I of Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Arbitration Act’) and held that “… Part I of the Arbitration Act is applicable only to all the arbitrations which take place within the territory of India”, overruling a three-Judge Bench decision of this Court in Bhatia International v. Bulk Trading S.A. and another, (2002) 4 SCC 105. Exercising its the power under Article 142 of the Constitution of India, the Constitution Bench however, held that the law declared by it would only operate prospectively. In other words, all agreements executed prior to 06.09.2012 were to be governed by the decision in Bhatia International (supra).

2. In Bhatia International (supra), it was held that even in cases of international commercial arbitrations held out of India, provisions of Part I would apply unless the parties by agreement express or implied, excluded all or any of its provisions. To quote paragraph-32:

“32. To conclude, we hold that 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 compulsorily 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.”

3. Therefore, the simple question before us is whether the parties by agreement, express or implied, have excluded wholly or partly, Part I of the Arbitration Act.

4. The bare necessary facts of the case are that an agreement dated 22.04.1993 was executed between the appellant and the respondent with relation to supply of equipment, and modernization and up-gradation of the production facilities of the appellant at Korba in the state of Chhattisgarh. Certain disputes arose between the parties and the same were referred to arbitration. The arbitration proceedings were held in England and the arbitral tribunal made two awards in favour of the respondent dated 10.11.2002 and 12.11.2002. The appellant filed applications, under Section 34 of the Arbitration Act before the District Judge, Bilaspur, which were dismissed. Aggrieved, the appellant filed appeals before the High Court of Chhattisgarh. The High Court dismissed the appeals.

5. Party autonomy being the brooding and guiding spirit in arbitration, the parties are free to agree on application of three different laws governing their entire contract – (1) proper law of contract, (2) proper law of arbitration agreement and (3) proper law of the conduct of arbitration, which is popularly and in legal parlance known as curial law. The interplay and application of these different laws to an arbitration has been succinctly explained by this Court in Sumitomo Heavy Industries Limited v. ONGC Limited and others, (1998) 1 SCC 305 which is one of the earliest decisions in that direction and which has been consistently followed in all the subsequent decisions including the recent Reliance Industries Limited and another v. Union of India, (2014) 7 SCC 603.

6. In order to ascertain the applicable laws, we have to certainly refer to the relevant clauses of the arbitration agreement, viz., Article 17 and Article 22, which read as follows:-

“Article 17 –ARBITRATION

17.1: Any dispute or claim arising out of or relating to this agreement shall be in the first instance endeavour to be settled amicably b