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S. H. KAPADIA, D. K. JAIN, S. S. NIJJAR, RANJANA PRAKASH DESAI, JAGDISH SINGH KHEHAR
Bharat Aluminium Co. Ltd. – Appellant
Versus
Kaiser Aluminium Technical Service, Inc. – Respondent
What is the scope of Part I of the Arbitration Act, 1996 and its applicability to arbitrations outside India? What is the correct interpretation of Section 2(2) in relation to territoriality and the seat/place of arbitration? Does Part I apply to foreign seated international arbitrations or are Part I and Part II wholly segregated?
Key Points: - The Act adopts the territorial principle; Part I applies to arbitrations within India and not to foreign-seated arbitrations, with prospectivity to future agreements (overruling Bhatia International and Venture Global Engineering) (!) (!) (!) . - Section 2(2) is an explicit declaration limiting Part I to arbitrations with seat/place in India; omission of the word "only" in Model Law is not adopted to imply extraterritorial application, according to the Court's interpretation (!) (!) (!) . - Part I and Part II are mutually exclusive yet harmonized; Part II governs enforcement/annulment of foreign awards and may involve two fora, but Part I cannot be extended to arbitrations outside India; the Court concludes Part I applies prospectively to arbitrations executed after the judgment (!) (!) .
Judgment :
SURINDER SINGH NIJJAR , J .
1. Whilst hearing C.A. No. 7019 of 2005, a two Judge Bench of this Court, on 16th January, 2008, passed the following order:-“In the midst of hearing of these appeals, learned counsel for the appellant has referred to the three-Judges Bench decision of this Court in Bhatia International Vs. Bulk Trading S.A. & Anr., (2002) 4 SCC 105. The said decision was followed in a recent decision of two Judges Bench in Venture Global Engineering Vs. Satyam Computer Services Ltd. & Anr. 2008 (1) Scale 214. My learned brother Hon'ble Mr. Justice Markandey Katju has reservation on the correctness of the said decisions in view of the interpretation of Clause (2) of Section 2 of the Arbitration and Conciliation Act, 1996. My view is otherwise. Place these appeals before Hon'ble CJI for listing them before any other Bench.”
2. Pursuantto the aforesaid order, the appeal was placed for hearing before a three Judge Bench, which by its order dated 1st November, 2011 directed the matters to be placed before the Constitution Bench on 10th January, 2012.
3. Since the issue raised in the reference is pristinely legal, it is not necessary to make any detailed reference
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