IN THE HIGH COURT OF DELHI AT NEW DELHI
Pradeep Nandrajog, Mukta Gupta, JJ.
Videocon Industries Limited - Appellant
Versus
Union of India, Ministry of Petroleum & Natural Gas - Respondent
FAO(OS) 450/2015 and FAO(OS) 519/2015
Decided On : 03-05-2016
Arbitration and Conciliation Act, 1996 - Section 9 - Malaysian Arbitration Act - Section 44 - Contract - Arbitration proceedings - Multiple parties - Admission - Contract is governed by the laws in India - Seat of the arbitration is at Kuala Lumpur - Concededly curial remedies concerning any award pronounced by the Arbitral Tribunal has to be in Kuala Lumpur - A separate dispute relatable to the same contract the Arbitral Tribunal passed an award granting declarations and expressing a confidence that both parties shall now settle the cost recovery issues in the light of the award - Reasoning of the majority arbitrator is challenged - Remedies available to the parties are concededly in Kuala Lumpur where Union of India had challenged the award pronounced - There is an inherent contradiction in the impugned order - Single Judge has relied upon Section 44 of the Malaysian Arbitration Act to hold, on the reasoning that any grievance relating to the award had to be as per the Malaysian Arbitration Act - If this be so, the logical corollary would be that any decision taken by the Arbitral Tribunal could be challenged in the Court of Competent Jurisdiction in Kuala Lumpur and not in any other jurisdiction and especially when the challenge was to the merits of the decision - Applying the principles of forum non convenience and finding prima-facie waiver to enforce remedy under the arbitration clause, anti-suit injunction was granted - In the Board of Trustees of Port of Kolkata decision was enforceable only against the Union of India - It was held that continuance of arbitration proceedings against KoPT would be oppressive in view of the reasons stated in the decision - Both appeals are allowed - Both order impugned Order are set aside.
[Paras 28, 41, 43]
Pradeep Nandrajog, J.
1. Though arising out of two separate proceedings and two separate orders being challenged in the above captioned appeals, the factual backdrop though different but giving birth to the same legal issue, is the reason why the two appeals are being decided by a singular decision. Whereas Videocon Industries challenges the order dated July 21, 2015 passed in CS (OS) No. 2074/2015, wherein the learned Single Judge has, in an anti-suit injunction matter, directed the Arbitral Tribunal comprising Hon'ble Justice (Retd.) G.T. Nanawati, Hon'ble Justice (Retd.) J.K. Mehra and Sh. Soli J. Sorabjee, Senior Advocate to hold arbitral proceedings only at Kuala Lumpur (Malaysia) and has restrained the Tribunal from holding a hearing at Colombo (Sri Lanka); Cairn India Ltd., Ravva Oil (Singapore) and Videocon Industries Ltd. challenge the order dated August 14, 2015 passed in CS (OS) No. 2445/2015 in a suit filed by the Union of India restraining the defendants in the suit from participating in the arbitration proceedings before the Arbitral Tribunal comprising Andrew Berkeley, Sir Anthony Evans and Justice (Retd.) A.S. Anand.
2. The two arbitration proceedings emanate from the same contract, having multiple parties thereto. It is the admitted position between the parties that as per Article 33.1 of the Contract it is governed by the laws in India. As per Article 34.12 the seat of the arbitration is at Kuala Lumpur (Malaysia) and therefore concededly curial remedies concerning any award pronounced by the Arbitral Tribunal has to be in Kuala Lumpur. As per the second limb of Article 34.12 of the Contract the arbitration agreement between the parties is governed by the laws of England and thus the constitution of the Arbitral Tribunal and the procedure to be adopted by the Arbitral Tribunal and the proper law of the arbitration would be the laws of England. As per Article 35.2 the contract could not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the parties with the instrument stating the date upon which the amendment/modification shall become effective.
3. We do not intend to make a catalogue of decisions, which are legion, evincing that such kind of agreements, where the underlying law of the contract is of one municipal jurisdiction, curial remedies of another and procedure of arbitration of the third are a fertile ground of litigation in Courts frustrating the very purpose of arbitration. If not a cheap remedy but at least a remedy where decisions are arrived at in the least possible time. For, as was held by the Supreme Court of India in the decision reported as (2014) 7 SCC 603 Reliance Industries Ltd. & Anr. v. Union of India, three sets of law may apply under a contract : (i) proper law of the contract; (ii) proper law of the arbitration agreement/lex arbitri; and (iii) proper law of the conduct of arbitration/lex fori/curial law. The doctrine of severability was explained. Thus, under a contract parties are entitled to agree that law of one country would govern the substantive contract and laws of other country would apply to arbitration proceedings and the parties can also agree that conduct of reference to arbitration would be governed by laws of yet a third country.
4. The Union of India, as the custodian of natural resources including petroleum in the territorial waters of India, and therefore exercising the right as the owner thereof, through the Ministry of Petroleum and Natural Gas, entered into a Production Sharing Contract on October 28, 1994 at New Delhi. The contract was executed between the Union of India on the one hand and a consortium of four companies comprising Oil and Natural Gas Corporation Limited (ONGC), Videocon Petroleum Limited, Command Petroleum (India) Private Limited and Ravva Oil (Singapore) Private Limited. In terms of the contract, the consortium was granted an exploration licence and mining lease to explore and produce hydro-c
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