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2011 Supreme(Mad) 2151
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Vinod K. Sharma, J.
Financial Software & Systems Pvt. Ltd., rep. by its Head-Finance, Chennai – 600 113
Versus
ACI Worldwide Corp., USA. and Others
O.A. Nos. 155 to 157 of 2011 and A. No. 1002 of 2011
Decided On : 12 April 2011
The provisions of Part-1 of the Arbitration and Conciliation Act, 1996, are excluded by express or implied consent of the parties if the substantive law, procedural law, and seat of arbitration are all outside India.
Headnote:
ARBITRATION - INTERNATIONAL COMMERCIAL ARBITRATION - JURISDICTION - ARBITRATION AGREEMENT - VALIDITY - EXCLUSION OF PART-1 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - INTERIM MEASURES - JURISDICTION OF INDIAN COURTS - INTERPRETATION OF ARBITRATION CLAUSE - SEAT OF ARBITRATION - APPLICABLE LAW - SUBSTANTIVE LAW - PROCEDURAL LAW - IMPLIED EXCLUSION OF PART-1 OF THE ACT.
Fact of the Case:
The applicant, a distributor of ACI's software products in India, entered into a Settlement and Release Agreement (SRA) with ACI to settle disputes and differences between them. The SRA provided for assignment of the applicant's existing customer contracts, bifurcation of the software agreements/customer contracts, and withdrawal of all pending litigation in India and Singapore. The parties also agreed to settle disputes by arbitration in accordance with the Singapore International Arbitration Centre (SIAC) rules. However, the SRA did not specify the seat of arbitration.
Finding of the Court:
1. The arbitration agreement contained in Clause 14.6 of the SRA is a valid and enforceable arbitration agreement. 2. The provisions of Part-1 of the Arbitration and Conciliation Act, 1996, are excluded by express or implied consent of the parties. 3. The Indian Courts have no jurisdiction to entertain and try applications moved under Section 9 of the Arbitration and Conciliation Act, 1996, as the substantive law, procedural law, and seat of arbitration are all outside India.
Issues: 1. Whether Clause 14.6 of the SRA is a valid arbitration agreement? 2. Whether the provisions of Part-1 of the Arbitration and Conciliation Act, 1996, are excluded by express or implied consent of the parties? 3. Whether the Indian Courts have jurisdiction to entertain and try applications moved under Section 9 of the Arbitration and Conciliation Act, 1996?
Ratio Decidendi: 1. The arbitration agreement contained in Clause 14.6 of the SRA is a valid and enforceable arbitration agreement as it meets the requirements of Section 7 of the Arbitration and Conciliation Act, 1996. 2. The provisions of Part-1 of the Arbitration and Conciliation Act, 1996, are excluded by express or implied consent of the parties as the parties have agreed to be governed by the laws of Singapore, the arbitration shall be in accordance with the arbitration rules of the Singapore International Arbitration Centre (SIAC), and the seat of arbitration is Singapore. 3. The Indian Courts have no jurisdiction to entertain and try applications moved under Section 9 of the Arbitration and Conciliation Act, 1996, as the substantive law, procedural law, and seat of arbitration are all outside India.
Final Decision: All the applications are dismissed.
VINOD K. SHARMA, J.
1. The applicant Financial Software & Systems Pvt. Ltd. has moved three applications under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act ‘), for grant of interim measures.
2. In O.A. No. 155 of 2011, the interim measures prayed for are for grant of ad interim injunction restraining the respondents their affiliates, associates, agents, men, servants and/or any person/s claiming through or under the respondents either directly or indirectly from providing any support whatsoever nature to other System Integrators/Service Providers/Partners of the respondents, by whatever name called, in violation of Clause 6 of the Settlement and Release Agreement (SRA) dated 17.2.2010.
3. In O.A. 156 of 2011, the prayer made by the applicant is for grant of ad interim injunction restraining the respondents their affiliates, associates, agents, men, servants and/or any person/s claiming through or under the respondents either directly or indirectly from invoicing the applicant ‘s customer banks (listed in Schedule 1 of this application) without bifurcation of the applicant ‘s intellectual properties and services and ACI ‘s intellectual properties and services by the applicant and the respondents.
4. In O.A. No. 157 of 2011, the prayer made is for appointment of receiver to raise AMC invoices for the period commencing from 1.4.2010 to 31.3.2011 on the existing customers (as listed in Schedule 1 of this application) of the applicant in the already existing format of the applicant and to receive the amounts so invoiced from the applicant ‘s customers and to deposit the same in the bank account to be opened for this specific and exclusive purpose, pending disposal of the proposed arbitration proceedings.
5. Thereafter, another A. No. 1022 of 2011 has been moved for grant of interim direction, directing the respondents to provide all required products, licenses, common development, environment and other support services including but not limited to product upgrades, version upgrades, fixes and release upgrades, etc as per the Purchase Order dated 7.1.2011 issued by Kotak Mahindra Bank, as agreed to between the applicant, Kotak Mahindra Bank and the respondents, to enable the applicant to meet the requirements of the RFP released by Kotak Mahindra Bank, on the basis the letter of support dated 2.12.2010 issued by the 3rd respondent to Kotak Mahindra Bank.
6. In support of these applications, referred to above, in the affidavit, it is pleaded that the applicant was a distributor of ACI ‘s software products, such as “BASE24 ” and “PRM ” in India, under an International Distribution Agreement (IDA), executed on 29.4.1998, between the applicant and ACI Worldwide (Asia) Pvt. Ltd, Singapore, the 2nd respondent. In the year 2005, certain disputes and differences arose between the parties and to settle those disputes and differences, several rounds of discussions and consultations took place, which culminated into the Settlement and Release Agreement (SRA) dated 17.2.2010.
7. The very intention of SRA was to settle some of the disputes and differences, subject to fulfillment of the terms and conditions of the SRA. The pending disputes and differences were agreed to be settled in good faith by the parties. The applicant and ACI simultaneously entered into a letter agreement of even date agreeing to settle the pending disputes and differences in good faith, on or before 31.3.2010.
8. The disputes, which were agreed to be settled, read as under:
“(i) To modify the existing MCIND Agreement and transition the same to a new agreement to be called FSSNeT Processing Services Agreement on or before 31.3.2010.
(ii) The Software Agreements/Customer Contracts identified in Exhibit C of the SRA included the Applicant ‘s Intellectual Property and it was agreed that the parties will separate/bifurcate the Applicant ‘s Intellectual Property from the Software Agreements and cause the customers to enter into a sep
