PRICOL LIMITED Vs. JOHNSON CONTROLS ENTERPRISE LTD & ORS
Supreme Court of India (Single Judge)
Arbitration Case, 30 of 2014, Judgment Date: Dec 16, 2014
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION CASE (CIVIL) NO.30 OF 2014
PRICOL LIMITED ...PETITIONER
VERSUS
JOHNSON CONTROLS ENTERPRISE LTD.
& ORS. ...RESPONDENTS
JUDGMENT
1. Appointment of an Arbitrator under the Joint Venture
Agreement dated 26th December, 2011 (for short "the JVA") by and
between the parties has been sought by means of the present
application.
2. There is no dispute between the parties with regard
to the existence of the JVA and/or with regard to the fact that
disputes and differences over the respective rights and
liabilities of the parties under the JVA have surfaced. The
Arbitration clause under the JVA is in the following terms:
| |"ARTICLE 30 |
| |ARBITRATION |
|30.1 |If any dispute arises between any of the|
| |Parties hereto during the subsistence or|
| |thereafter, in connection with the |
| |validity, interpretation, implementation|
| |or alleged material breach of any |
| |provision of this JVA or regarding any |
| |question, including the question as to |
| |whether the termination of this JVA by |
| |any Party hereto has been legitimate, |
| |the Parties hereto shall endeavour to |
| |settle such dispute amicably. The |
| |attempt to bring about an amicable |
| |settlement is considered to have failed |
| |as soon as one of the Parties hereto, |
| |after reasonable attempts which attempt |
| |shall continue for not less than sixty |
| |(60) days, given fifteen (15) days |
| |notice thereof to the other Party in |
| |writing. |
|30.2 |In case of such failure, the dispute |
| |shall be referred to sole arbitrator to |
| |be mutually agreed upon by the Parties. |
| |In case the Parties are not able to |
| |arrive at such an arbitrator, the |
| |arbitrator shall be appointed in |
| |accordance with the rules of arbitration|
| |of the Singapore Chamber of Commerce. |
|30.3 |The arbitration proceedings shall be |
| |held at Singapore. The arbitration |
| |proceeding s shall be in English |
| |language. The award shall be |
| |substantiated in writing. The court of |
| |arbitration shall also decide on the |
| |costs of the arbitration proceedings. |
| |The award shall be binding on the |
| |disputing Parties subject to applicable |
| |laws and the award shall be enforceable |
| |in any competent court of law. The |
| |provisions of this clause shall survive |
| |the termination of this JVA for any |
| |reason whatsoever. |
|30.4 |Each of the Parties agree and |
| |acknowledge that damages would be |
| |inadequate to compensate for the breach |
| |of this JVA by either Party, and each |
| |Party shall be entitled to equitable |
| |relief by way of interim injunction or |
| |specific performance by recourse to |
| |courts/judicial forum with appropriate |
| |jurisdiction. |
| |ARTICLE 31 |
| |GOVERNING LAW |
|31.1 |This JVA shall be governed and construed|
| |in accordance with the laws of India." |
3. There are certain facts and events which have
occurred during the pendency of the present proceeding which
must immediately be taken note of.
4. The parties are not in dispute that the "Singapore
Chamber of Commerce" mentioned in clause 30.2 of the JVA is not
an Arbitration Institution having any Rules for appointment of
Arbitrators. However, construing the said reference to the
"Singapore Chamber of Commerce" to be one to the "Singapore
International Arbitration Centre" ("SIAC" for short), the first
respondent, invoking the arbitration clause, had moved the said
Authority i.e. SIAC for appointment of an Arbitrator. This was
so done on 5th September, 2014. A copy of the said
notice/intimation was received by the petitioner on 11th
September, 2014. Thereafter, the petitioner had instituted the
present proceeding on 15th September, 2014. In the meantime,
the SIAC, exercising its powers under Section 8(2) read with
Section 8(3) of the Singapore International Arbitration Act
(Cap. 143A) (for short "the IAA"), had appointed one Mr. Steven
Y.H. Lim as the sole Arbitrator. In a preliminary meeting
between the parties and the learned sole Arbitrator held on 30th
October, 2014, it was indicated by the petitioner that it would
be challenging the jurisdiction of the sole Arbitrator appointed
by the SIAC. Accordingly, on directions of the learned sole
Arbitrator, there has been an exchange of written submissions on
the issue of jurisdiction. A hearing on the question of
jurisdiction was also held in Singapore on 18th November, 2014.
Thereafter, by a partial award, dated 27th November, 2014, the
sole Arbitrator had ruled that the appointment made by the SIAC
under the IAA is valid as the parties have expressly agreed that
Singapore would be the seat of Arbitration.
5. On behalf of the petitioner, it is contended that
under clause 31.1, the rights of the parties under the JVA is to
be governed by the laws of India. Therefore, in the absence of
any contrary intention, even the arbitration agreement will be
governed by Indian Law i.e. the Act of 1996. Clause 30.3 by
which the parties had agreed that "arbitration proceedings shall
be held at Singapore" has to be consequently construed to mean
that the seat of Arbitration continues to be India and Singapore
is only the venue of the hearings to be conducted in the
Arbitration proceedings. On the said basis, it is contended that
the present application under Section 11(6) of the Act would
justify appropriate orders from the Court. It is also argued
that the parties to the JVA have not excluded the application of
Part I of the Act of 1996. The JVA has been signed earlier to
the decision of this Court in Bharat Aluminium Company vs.
Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC 552].
Therefore, the procedural law governing the conduct of the
arbitration would be the law prevailing in India.
6. It is alternatively submitted that even assuming that
the seat of Arbitration is Singapore, as the rights of the
parties are to be governed by the Indian Law, it
is only the curial law of Singapore that would apply to regulate
the proceedings after the appointment of the Arbitrator is made
and till the passing of the Award. Reference in this regard is
made to Sumitomo Heavy Industries Ltd. vs. ONGC Ltd. and others
[(1998) 1 SCC 305] On the aforesaid basis, it is claimed that
the appointment of the sole Arbitrator by the SIAC is without
jurisdiction and this Court ought to proceed to exercise its
powers under Section 11(6) of the Act.
7. In reply, the respondents submit that clause 30.3 of
the JVA makes it, ex facie, clear that the parties have agreed
that the seat of Arbitration would be Singapore. Though the
substantive Law that would govern the rights of the parties
under the JVA would be the Indian Law so far as the appointment
of Arbitrator is concerned, it is the agreed terms (clause 30.2)
which will prevail. It is submitted that on a reasonable
understanding of clause 30.2, the request of the respondents to
the SIAC for appointment of a sole Arbitrator and the
appointment made does not suffer from any infirmity. It is
claimed that the "Singapore Chamber of Commerce", not being an
Arbitration Institution, the real intention of the parties in
clause 30.2 was to approach the SIAC for appointment of an
Arbitrator in the event of the failure of a mutual agreement on
this score. This has been so done by the respondents. Learned
counsel for the respondents has also taken the Court to the past
history of the dispute between the parties commencing with the
grant of interim measures by the Civil Court at Coimbatore under
Section 9 of the Act and the failure on the part of the
petitioner to agree to the appointment of a retired judge of the
Supreme Court of India as the sole Arbitrator. The said facts
have been pointed out in support of the contention that the
petitioner has dragged its feet in the matter so as to gain
maximum advantage of the interim order granted in its favour by
the Civil Court at Coimbatore. Lastly, it is submitted that the
Arbitrator having been appointed by the SIAC in accordance with
the relevant Arbitration clause in the JVA and the petitioner
having submitted to the jurisdiction of the Arbitrator and, in
fact, a partial award having been passed by the sole
Arbitrator on the issue of jurisdiction, the present is not a
fit case for invoking the powers of this Court under Section
11(6) of the Act.
8. On a consideration of the respective submissions made
by the parties and the several precedents cited at the bar, this
Court is inclined to hold that clause 30.2, on a reasonable and
meaningful construction thereof, would mean that in case the
parties are not able to name a sole Arbitrator by mutual
agreement, the Arbitrator is to be appointed by the SIAC
inasmuch as the entity contemplated in clause 30.2 i.e.
"Singapore Chamber of Commerce" is admittedly not an Arbitration
Institution' having its own Rules for appointment of
Arbitrators. Given the circumstance, the most reasonable
construction of the said clause would be to understand the
reference to "Singapore Chamber of Commerce" as to the "SIAC".
9. From the relevant facts of the case, it is also clear
that the respondents at one time had suggested the name of a
retired judge of the Supreme Court of India as the sole
Arbitrator, which was not agreed to by the petitioner, who in
turn, was inclined to nominate another learned judge. Be that
as it may, in such a situation, the respondents by invoking
Arbitration clause 30.2 had approached SIAC for appointment of
an Arbitrator. This was on 5th September, 2014 i.e. before the
present proceeding was instituted by the petitioner. Though the
notice of the said request was served on the petitioner on 11th
September, 2014, no steps were taken by the petitioner to pre-
empt the appointment of a sole Arbitrator by SIAC. Mr. Steven
Y.H. Lim came to be appointed as the sole Arbitrator by the SIAC
on 29th September, 2014. The petitioner has submitted to the
jurisdiction of Mr. Steven Y.H. Lim. Even if it is held that
such participation, being under protest, would not operate as an
estoppel, what must be acknowledged is that the appointment of
the sole Arbitrator made by SIAC and the partial award on the
issue of jurisdiction cannot be questioned and examined in a
proceeding under Section 11(6) of the Act which empowers the
Chief Justice or his nominee only to appoint an Arbitrator in
case the parties fail to do so in accordance with the terms
agreed upon by them. To exercise the said power, in the facts
and events that has taken place, would really amount to sitting
in appeal over the decision of SIAC in appointing Mr. Lim as
well as the partial award dated 27th November, 2014 passed by
him acting as the sole Arbitrator. Such an exercise would be
wholly inappropriate in the context of the jurisdiction under
Section 11(6) of the Act, a view already expressed by this Court
in a recent decision in Antrix Corp. Ltd. vs. Devas Multimedia
P. Ltd. [Arbitration Petition NO.20 of 2011 decided on May 10,
2013, reported in (2013) 6 SCR 453].
10. For the aforesaid reasons, this application under
Section 11(6) of the Act has to fail. It is, accordingly,
dismissed, however, leaving it open to the petitioner to avail
of such remedies as may be available to it in law.
....................,J.
(RANJAN GOGOI)
NEW DELHI
DECEMBER 16, 2014
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