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1997(10) Supreme 157
SUPREME COURT OF INDIA
(From Bombay High Court)
J.S.Verma, CJI., S.P. Bharucha, S.C. Sen, JJ.
Sumitomo Heavy Industries Ltd.-Appellant
versus
ONGC Ltd. & Ors. -Respondents
Civil Appeal No. 8341 of 1997
Decided on 4-12-1997
Counsel for the Parties :
For the Appearing Parties, Soli J. Sorabjee, Shanti Bhushan, B. Dutta, Milon K. Banerjee, Sr. Advocates, P.H. Parekh, Amit Dhingra, Nikhil Shakharande, G. Joshi, G. Khandpal, Virendra, G.K. Banerjee, Advocates.
Held that the curial law operates during the continuance of the proceedings before the arbitrator to govern the procedure and conduct thereof. The courts administering the curial law have the authority to entertain applications by parties to arbitrations being conducted within their jurisdiction for the purpose of ensuring that the procedure that is adopted in the proceedings before the arbitrator conforms to the requirements of the curial law and for reliefs incidental thereto. Such authority of the courts administering the curial law ceases when the proceedings before the arbitrator are concluded. (Para 10)
The proceedings before the arbitrator commence when the enters upon the reference and conclude with the making of the award. As the work by Mustill and Boyd aforementioned puts it, with the making of a valid award the arbitrator s authority, powers and duties in the reference come to an end and he is "functus officio" (page 404). The arbitrator is not obliged by law to file his award in court but he may be asked by the party seeking to enforce the award to do so. The need to file an award in court arises only if it is required to be enforced, and the need to challenge it arises if it is being enforced. The enforcement process is subsequent to and independent of the proceedings before the arbitrator. It is not governed by the curial or procedural law that governed the procedure that the arbitrator followed in the conduct of the arbitration. (Para 11)
Further held that the curial law does not apply to the filing of an award in court must, accordingly, hold good. We find support for the conclusion in the extracts from Mustill and Boyd which we have quoted earlier. Where the law governing the conduct of the reference is different from the law governing the underlying arbitration agreement, the court looks to the arbitration agreement to see if the dispute is arbitrable, then to the curial law to see how the reference should be conducted, "and then returns to the first law in order to give effect to the resulting award." (Para 13)
The law which would apply to the filing of the award, to its enforcement and to its setting aside would be the law governing the agreement to arbitrate and the performance of that agreement. (Para 14)
(ii) ARBITRATION-Contract to install and commission on turnkey basis an oil platform at Bombay High -Contract stipulated that all questions disputes or differences arising under, shall be subject to laws of India-Arbitration clause stating that arbitration proceedings shall be held at London in accordance with the provisions of International Chamber of Commerce-Arbitration award-Petition filed by 1st respondent praying that award be filed in Court at Bombay - Maintainability - Issue regarding jurisdiction of English Courts-Whether provisions of Indian Arbitration Act, 1940 are subject to provisions of the Foreign Awards (Recognition and Enforcement) Act, 1961-Held, No-1961 Act does not apply to any award made on an arbitration agreement governed by law of India-Held, on facts, Courts in India are entitled to receive the award made by second respondent.
Held : By reason of Section 9(b), the 1961 Act does not apply to any award made on an arbitration agreement governed by the law of India. The 1961 Act, therefore, does not apply to the arbitration agreement between the appellant and the first respondent. The 1940 Act, applies to it and, by reason of Section 14(2) thereof, the courts in India are entitled to receive the award made by the second respondent. We must add in the interests of completeness that it is not the case of the appellant that the High Court at Bombay lacked the territorial jurisdiction to do so. (Para 15)
(iii) Indian Arbitration Act, 1940 -Section 9-Saving-Foreign Awards (Recognition and Enforcement) Act, 1961 does not apply to any award made on an arbitration agreement governed by law of India. (Para 15)
JUDGMENT
Bharucha, J.-This appeal by special leave assails the correctness of the judgment and order of a learned single Judge of the High Court at Bombay. By the judgment and order the petition of the first respondent for the issuance of a direction to the second respondent to file the award that he had made as the umpire in arbitration proceedings between the appellant and the first respondent in that court was allowed.
2. Briefly stated, these are the facts relevant to the issue in the appeal:
The appellant and the first respondent entered into a contract on 7th September, 1983, whereunder the appellant agreed to install and commission on turnkey basis an oil platform at Bombay High, about 100 miles north-west of Bombay. The contract stipulated the following:
"17.0. Laws/Arbitration
17.1. Applicable Laws
All questions disputes or differences arising under, out of or in connection with this Contract shall be subject to the laws of India.
17.2. Arbitration
If any dispute, difference or question shall at any time hereafter arise between the parties hereto or their respective representatives or assigns in respect of the construction of these presents or concerning anything herein contained or arising out of these presents or as to the rights, liabilities or duties of the said parties hereunder which cannot be mutually resolved by the parties, the same shall be referred to arbitration, the proceedings of which shall be held at London, U.K. Within 30 days of the receipt of the notice of intention of appointing arbitrators each party shall appoint an arbitrator of its own choice and inform the other party. Before entering upon the arbitration, the two arbitrators shall appoint an umpire. In case the parties fail to appoint its arbitrator within 30 days from the receipt of a notice from the other party in this behalf or if any dispute in selection of umpire, the President of International Chamber of Commerce, Paris, shall appoint the arbitrator and/or the umpire as the case may be.
The decision of the arbitrators and failing to an agreed decision by them, the decision of the umpire shall be final and binding on the parties.
The arbitration proceedings shall be held in accordance with the provision of International Chamber of Commerce and the rules made thereunder as amended from time to time. The arbitration proceedings shall be conducted in English language."
3. Disputes having arisen subsequent to the completion of the work under the contract, the appellant served notice of arbitration on the first respondent and appointed Mr. Robert A. MacCrindle its arbitrator. The first respondent appointed Mr. Justice Chandrasekhar (Retired) its arbitrator. The arbitrators nominated the second respondent as the umpire. Preliminary hearings commenced. The appellant then applied to the Queens Bench Division, Commercial Court in London for leave to issue and serve on the first respondent an Originating Summons seeking an order under Section 5 of the English Arbitration Act, 1979, to confirm that the arbitrators had the power to proceed with the arbitration in default of a defence having been served by the first respondent. A learned Judge of the Commercial Court granted to the first respondent leave to issue and serve the said summons. It was heard and decided in favour of the appellant. Thereafter the first respondent s defence was served, and a summons was issued on the first respondent s behalf in the Commercial Court to set aside its earlier orders. The application made by the first respondent was decided on 23rd July, 1993 by Potter, J. (The judgment and order is reported in (1994) 1 Lloyd s Law Reports 45). The arbitrators having differed, the second respondent entered upon the reference and, on 27th June, 1995, made his award. The award was served on the first respondent on 10th July, 1995.
4. On 26th July, 1995, the first respondent filed in the High Court at Bombay a petition praying that the second responden
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