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Case study: Jurisdiction of Indian courts over foreign seated arbitration

E-City Entertainment (I) Pvt. V. IMAX Corporation is the latest case in which defendants face charges. According to the Supreme Court of India, its courts cannot exercise jurisdiction over arbitration living abroad.
The Court considered an application challenging the external award under section 34 (application for waiver of arbitration award) of the Arbitration Act, 1996 (Arbitration Act). Arranged the institutional arbitration, namely the ICC Rules of Arbitration, and the arbitration body thereafter decided to hold arbitration in London outside section I of the Arbitration Act and also the power of the Indian courts to hear the challenge facing the award given abroad.

In agreement with E-City Entertainment (I) Pvt. Ltd. (E-City), IMAX Corporation (IMAX) will offer major theatre projects throughout India. The clause in the agreement reads as follows:
“This Agreement shall be governed by and construed in accordance with the laws of Singapore, and its affidavits of the Singapore Judiciary. . “
The agreement was governed by Singapore law and arbitration was governed by the ICC Rules of Arbitration. However, the law governing the mediation process was not selective.
IMAX filed a lawsuit with the ICC in June 2014 and sought damages in connection with the dispute. The ICC decided to mediate in London after negotiations with the parties in October 2004. IMAX received its first final award in February 2006, holding E-City in breach of contract and liable for payment. The second partial award was made in August 2007 and the last one was awarded in March 2008, collectively called the ‘prize’.
The first E-City award was made more than two years ago, when the company filed an appeal against the awards in the Bombay High Court. Due to the close link between the agreement and India and the delay, the Supreme Court acquitted the delay and held that the Indian courts would have jurisdiction to challenge the award of prizes made in India without explicit exclusion of Part I of the Arbitration Act parties.
The Supreme Court reverses the decision of the Supreme Court
Bombay High Court decision on IMAX appealed to the High Court. The Supreme Court was required to rule that the challenge of an award submitted under Part they could bring me of the Arbitration Act to an Indian court.
In considering the location of the arbitration and where the actual trial took place, the Supreme Court has stated that it must be decided whether the parties intend for the arbitration to take place and whether it has occurred. In addition, it has been noted that when an arbitration agreement states that it will take place outside of India, Part I of the Mediation Act will be excluded from the application.
The parties explicitly agreed that arbitration would be carried out in accordance with the ICC Resolution Rules and agreed to allow the ICC to choose a mediation venue. Both parties agreed that the arbitrator should be arrested in London after consultation with the ICC, and the arbitration took place without opposition. All prizes were awarded in London and presented to the teams. As a result, the Supreme Court found that the conduct of the parties was a clear indication that Part I of the Mediation Act should not apply.
As the Supreme Court noted, there was no selection of arbitration chair in the agreement, only institutional arbitration rules. The rules of the ICC Arbitration provide the conditions for adjusting the arbitration seat. It would be assumed that the parties intending to elect London as the mediator seat under the ICC Rules as their consultations were agreed upon after due consultation. Therefore, the Indian courts could no longer exercise their powers under Part I of the Mediation Act.
According to that ruling, in the Indian courts, there will be no challenge to the prizes.

AL Review:

The Supreme Court has clearly stated the principle that the rules of the arbitration tribunal shall govern. To prevent unnecessary interference by the Indian courts in the formal settlement of foreign affairs, this decision is significant because it supports the close relationship between the arbitration tribunal and the law governing the arbitration agreement.
This decision also highlights the important differences between ‘law of contract’ and ‘law of mediation’. In contrast, contractual law refers to the law that governs what parties are entitled to do under the agreement (i.e., applicable law) while arbitration law states how disputes between parties are resolved through arbitration. In procedural law, the way in which the applicable law will apply is determined by the use of technology. Although Singapore law was set up as a law governing the agreement, the parties failed to clarify the law of arbitration.

By Tanay Sharma