MISC. APPEAL N0. %4° OF 2004 v. KAISER ALUMINIUM

Mr. Vivek Tankha, Mr. S.N. Mukherjee, Sr. Advocates with Mr.Abhishek Sinha learned counsel for the appellant. Mr. Ravish Agrawal, Sr. Adv.. with Mr. Sanjay S. Agrawaf learned counsel for the respondent. ORDER (Passed on \ottt>fAugust, 2008) byA.K.Patnaik, CJ: - The following Order of the Court was passed The two miscellaneous appeafs are appeals under Section 37(1 )(b) of the Arbitration and Conciliation Act, 1996 (hereinaUer referred to as "the Indian Act1). •

The facts briefly are that an agreement dated 22.04.1993 was executed between the appellant and the respondent under which the respondent was to supply instatted equipment for modernizatipn and upgradation of the production facilities of the appellant at Korba in the State of Chhattisgarh. The agreement provided for settlement of disputes by arbitration. Certain disputesarose between the parties and were > ^ referred to arbitration. The arbitration was held in England and the arbitral tribunal made t^o awards dated 10.11.2002 and 12.11.2002 in England. The appellant thereafter, filed applications under Section 34 ofthe Indian Act for setting aside the two awards dated 10.11.2002 and 12.11.2002 in .the Court of learned District Judge. Bilaspur which were numbered as MJC Nos.92 of 2003 and 14 of 2003, respectively. By order dated

20.07.2004, the learned District Judge, Bilaspur held that the applications filed by the appellant under Section 34 of the Indian Act for setting aside the two foreign awards are not tenable and accordingty dismissed the same. Aggrieved, the appetlant has filed these appeals.

Mr. Vivek Tankha and Mr.S.N. Mukherjee, learned counsei appearing for the appellant in the two appeals submitted that in the impugned order dated 20.07.2004, the learned District Judge has held that the apptication filed by the appellant under Section 34 of the Indian Act was not maintainable, but the learned District Judge has not recorded any reason whatsoever for coming to the aforesaid conclusion. They argued that the learned District Judge should have decided the issues of fact and law raised by the parties in their respective pleadings, but no such exercise has been undertaken by the jearned District Judge in the impugned order. They submitted that since the impugned order is without any reason, it is liable to be set aside. In support oftheir submission, they relied on the decision of the Supreme Court in Smt. Swaran Lata Ghosh vs. Harendra Kumar Banerjee & Another, AIR 1969 SC 1167 and State of Punjab vs. Bhag Singh, 2004 AIR SCW 102.

Mr. Tankh.a,,next submitted that the leamed District Judge has proceeded on the assumption that the provisions of Section 34 ofthe Indian Act are not applicable to a award" and for this reason held that the "foreign applications filed by the appeltant under Section 34 of the Indian Act to set asi$le the foreign awards were not maintainable. He submitted that this view taken by the learned District Judge is contrary to the decision of the Supreme Court in Bhatia International vs. Bulk Trading S.A. & Another (2002) 4 SCC 105 in which it has been held that the Indian Act applied to the arbitration which are hetd in India between the Indian Nationals as well as to internationa! commercial arbitrations whether held in India or out of India. He also cited the decision of the Gujarat High Court in Nirma Ltd. vs. Lurgi Energie Und Entsorgung GMBH, Germany & Others, AIR 2003 GUJARAT 145 in which a Division Bench ofthe Gujarat High Court has taken a view that when the agreement between the parties was governed by the Indian law, then the application for setting aside the award made outside the country can also be filed in a Court in India under Section 34 of the Indian Act. Mr. Tankha submitted that since the agreement between the parties was governed by the Indian law, the learned District Judge should have held that the applications for setting aside the awards could be filed under Section 34 of the Indian Act before the learned District Judge at Bilaspur.

Mr. Mukherjee, learned counsel appearing for the appellant further submitted that Article 22 of the agreement between the parties provided that the agreement will be governed by the prevailing law of India and therefore parties to the agreement have chosen the prevailinglaw of India as the law governing the rights of the parties. He submitted that since the substantive rights of the parties to the agreement are to be governed by the law prevailing in India, even though the arbitration has taken place and the awards have been made in England can be challenged in a Court in India by an application under Section 34 of the Indian Act. He submitted in the case of Bhatia International Vs. Bulk Trading S.A. and another (Supra) the Supreme Court has laid down the test that if a Court has jurisdiction to entertain an application under Section 9 ofthe tndian Act it would also have jurisdiction to eritertain an application under Section 34 of the Indian Act to set aside an award made by the arbitrator.

Mr. Mukherjee also relied on the decisions of the Supreme Court in NTPC Vs. Singer Company and others (1992) 3 SCC 551 and Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. (1998) 1 SCC 305 in support of his contention that if the proper taw of contract chosen by the parties is the law of then the Courts in India would have the jurisdiction to consider the appfications for setting aside awards made by arbitrators outside the country. He atso relied on a similar view taken by India, Justice Potter in the decision of the Queens Bench Division in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. reported in (1994) Lloyd's Law Reports 45. He finalty submitted that in view ofthe aforesaid law laid down by the Courts, the appeals should be allowed and the impugned order dated 20/07/2004 of the learned District Judge should be set aside and the mattep should be remanded back to the learned District Judge to decide the matter afresh in accordance with taw.

Mr. Ravish Agrawat, Sr. Advocate, on the other hand, submitted that Articte 1J.1 of the agreement between the parties provided thatany dispute or clai^rising out of or relating to the agreement shatl be in the first instance settled amicably by negotiation befr^een the parties fajling which the same witl be settled by arbitration pursuant to the English Arbitration Law and subsequent amendments thereto. He pointed out that Article 17.2 of the agreement between the parties further provided that the arbitration proceedings shatl carried by two arbitrators; one appointed by the appellant and the other appointed by the respondent chosen freely and without any bias and the Court of arbitration shad be held wholly in London, England. He submitted that Article 22 of the agreement between the the agreement will be govemed by the parties not only provided that prevailing law of India but also that "in case of Arbitration the English Law shall apply", He argued that a reading of the aforesaid clauses of the agreement between the parties would show that the English Arbitration Act, 1996 (hereinafter referred to as "the English Act'^ was to apply to the conduct of arbitration and the award was to be made under the English Act.

Mr. Agrawal submitted that Part-1 of the tndian Act applied only to cases where the place of arbitration is India and the award made by the arbitrator is a domestic one and this will be clear from sub-Section 5 of Section 2 of the Indian Act. He further submitted that Part-tl of the Indian Act provides for enforcement of certain foreign awards and Chapter-1 of Part-tl ofthe Indian Act relatesto New York Convention Awards and appties to an arbitral award on differences between persons made on and after the in writing for 11th day of October. 1960 in pursuance of an agreement arbitration to which the Convention set forth in the First Schedute applies as would be clear from Section 44 in Chapter-1 of Part-11 of the Indian Act. He relates to further submitted that Chapter-11 of Part-11 of the Indian Act Geneva Convention Awards and applies to arbitral awards on differences in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies. He argued that to arbitral awards referred to including jn Sections 44 and 53 of the Indian Act the provisions of Part;-! Section 34 ofthe Indian Act has no application.

Mr. Agrawal further submitted that enforcement of the foreign award may be refused only one of the conditions mentioned in Section 48 in Part-11 of the Indian Act. He submrtted that Section 48(1)(e) provides that a foreign award may be refused to be enforced at the request of the party against whom it is invoked if that party furnishes to the Court proof that the award has not yet become binding on the parties or has been set aside or suspended by a competeht authority of the country in which, or under the law of which, that award was made. In the instant case, the award has been made in England and also under the law of arbitrationin England and could be set aside or suspended by a competent authority of England and not.by a Court in India. Hence, the Court of the learned Di'stricf Judge Bilaspur had no jurisdiction to entertain the application under Section 34 of the Indian Act to set aside the award.

Mr. Agrawat relied qn the decision of the Supreme Court in Transocean Shipping Agency (P) Ltd. vs. Black Sea Shipping & Others reported in (1998) 2 SCC 281, in which it has been held that since no steps have been taken in accordance with the law of Ukraine to chaltenge the :m:: r "enforcement of arbitration or the award. the award had beconle final and binding as per the Ukrainian law. He also relied on the decisions in Force Shippjng Limited vs. Ashapura Minechem Limited reported in MANU/MH/0260/2003 in which, the High Court of Bombay has held that Part-1! of the Indian Act make special provisions for foreign award" and the provisions in Part-1 of the Indian Act dealing with those aspects as provided in Part-11 will not appty to foreign awards. He also cited the decision of the High Court of Bombay in Jindal Drugs Limited vs. Noy Vallesina Engineerlng SpA and Others, reported in 2002(2) Arb.

20.07.2004 that the applications filed by the appellant for setting aside the is: & 'NINNII§y^ 8 awards under Section 34 ofthelndian Act were not maintainable and has rightly dismissed the same and this Court should not impugned order in the present appeals. interfere with the

On a reading of the said impugned order dated 20/07/200-4 we find that the learned District Judge has recorded the contentions of the learned counsel for the parties and has atso quoted the decisions cited by the learned counsel for the parties and has finally held in paragraph 16 of the impugned order that the application filed by the appellant under Section 34 ofthe Indian Act was not tenable and was liable to be dismissed, but he has not given his reasons for this conclusion. Since the learned District Judge has failed to give his reasons for comingto the conctusion that the application fited by the appeltant under Section 34 ofthe Indian Act was not tenable and was liable to be dismissed, it is now incumbent upon this Court as an appellate Court to consider the contentions of the parties on the maintainability of the application fited by the appellant under Section 34 of the Indian Act and give adequate reasons for recording its conclusion on the issue. Only if it is not possibte for this Court to decide the issue with regard to the maintainability of the applications under Section 34 of the Indian Act filed by the respondent on the basis of the materials available before the Court, the Court will have to set aside the order passed by the District Judge and remand the matter to the learned District Judge to decide the issue afresh after giving opportunity to the parties to adduce the relevant evidence.

In Smt. Swaran Lata Ghosh vs. Harendra Kumar Banerjee for the appetlant, & Another (supra) cite'd' by the learned counsel Supreme Court found that neither the trial Judge nor the High Court in appeal recorded reasons in support of their conclusion that the plaintiff had prpved the case in the plaint and for this reason the Supreme Court set aslde the decree passed by .the High Court and remanded the suit to the trial Court for trial according to law. This will be clear from the following observations of the Supreme Court in paragraph 6 of the said judgment as reported in AIR 1969 SC 1167:- "tt is unfortunate that the leamed Trial Judge has recorded no reasons in support of his conclusion, • ancf the High Court <n appeal merely recorded that they thought that the plaintiff had sufFiciently proved the case in the plaint. "

Similarly, in State of Punjab vs. Bhag Singh (supra) crted by the tearned counsel for the appeltant, the Supreme Court found that neither the trial Court nor the High Court had appreciated the entire evidence f<jr coming to the conclusion on the guilt or otherwise of the accused and accordingly set aside the judgment of the High Court and directed the High in accordance with law. The Court to hear and dispose of the appeal relevant portion of the judgmentof the Supreme Court in State of Punjab vs. Bhag Singh (supra) is quoted herein below: "The trial Court was required to carefully appraise If the the entire evidence and then come to a conctusion. lapse in this regard the High Court was triat Court was at obtiged to uncfertake such an exercise by entertaining the appeal. The tnal Court on the facts of this case dld not perform rts di.ities. as was enjolned on (t by law. The High Court ought to have in such circumstances granted leave and thereafter as a first Court of appeal, reappreciated the entire evidence on the record independently and retumed (ts flndings objectively as regards guiit or othen/vise of the accusecf.

ln the present case. we find that we can decide the issue with regard to the maintainability of the applications fil©dby the appellant under Section 34 of the Indian Act in the Court of the learned District Judge, Bilaspur on the basis of th'g'-agreement between the parties and the awards made by the arbitrator which were part of the records of the Court of learned District Judge and which have also been annexed to the memorandum of appeal. We do not think therefore that it is necessary to remand the matter to the tearned District Judge for fresh decision on this issue in accordance with law.

The only question which has to be decided by us in the two appeats is whether Section 34 of the tndian Act can be invoked by the appellant to set aside the awards dated 12.11.2002 and 10.11.2003 in favour ofthe respondent. Section 34 ofthe Indian Act is tocated in part-t of the Indian Act, which is titled "Arbitration". Part-11 ofthe Indian Act is titled V. ^ 10 "Enforcement of certain foreignawards". In Bhatia International vs. Bulk Trading S.A. & Another (supra) the question whether Part-1 of the Indian Act applies to arbitration which take place only in India or also to international arbitration which takes place outside India came up for consicleration and the Supreme Court held that Part-1 of the Indsan Act appll©s not only to arbitrations which take place in tndia but also to {nternational arbitrations which take plac® outside India. In th® said declsion, however, the Supreme Court clearly hetd that Part-11 ofthe Indian Act contains speciat provisions for enforcement of certain foreign awards and to the extent that part-11 provides a separate definition of arbltral award and separate provisions for enforcement of foreign awards, the provisions in part-1 dealing with this aspect will not apply to foreign awards.

There is no dispute in this case that the arbitration was held in England and that the award was also made in England. There is also no dispute over the fact that England is a New York convention country. is titted "New York Convention Chapter-1 of Part-11 of Awards". Section 44 in Part-11 of the Indian Act defines a "foreign award" and is quoted herein below: the Indjan Act "PART-11 ENFORCEMENT OF CERTAIN FOREIGN AWARDS CHAPTERI New York Convention Awards 44. Definition. - IN this Chapter, unless the context otherwise requires, "foreign award" means an arbitration award on differences between persons arising out of relationshlps, whether contractual or not. considerea as commercial under the (aw in force in fndia, made on or afterthe 11<hday of October, 1960- (a) (b) in pursuance of an agreement in wrlting for arbitratlon to which the Convention set forth in the First Schedule applies, and- in one of such territories as the Central Government, being satisfied that reciprocal provisbns have been made may, by notiftcation in the Officiat Gazette, declare to be temtories to which the said Convention applies.

12.11.2003 are sought in India. Hence two awards dated 10.11.2002 and 12.11.2003 are "foreign awards" withi'n the meaning of Chapter-l of Part-ll of the Indian Act. Sections 48 and 49 in Chapter-1 of Part-11 of the Indian Act which relate to enforcement of the foreign awards and which apply to the foreign awards dated 10.11.2002 and 12.11.2003 are? quoted herein below: for enforeement of "48. Condttlons forelgn awards.-(l) Enforcement of a foreian award mav be refused. at the reauest of the partv aaainst whom.iys invoked. onlv if that partv furnishes to ttie court proof that- (a) the parties to the agreement refen-ed to in section 44 were, i.1nc1er the law apptjcable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, fading any indication thereon. under the law of the country where the award was made; or (b) the part against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbttral proceedings or was otherwise unable to present his case; or (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it »^t 13 contains decisions on mattere beyond the soope of the submission to arbitratton: Provided that, the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submttted to arbjtration may be enforced; or (d) the composition of the arbitral authortty or the arbitral proceclure was not in accordanoe wtth the agreement of the faiting such agreement, was not in aooordance partieci. or, with the law of the countrY where the arbitration took plaoe; (e) the award has not yet become bindina on the parties. or has been set aside or suspended bv a competent authority of the countrv in which. or under the taw of which. that award was made (2) Enforcement of an arbitral award may atso be refused if the Court finds that- the difference is not capable of (a) (b) the subject-m^ter of settlement by arbitration under the law of India; or the entorcement of public poticy of India. the award would be contrar/ to the ; i Explanatjon.- Without prejudice to the generality of ctause is hereby declared, for the avoidance of any doubt, that an (b), award is in conflict with the public poficy of India ifthe making ofthe award was induoect or affected by fraud or oorruptton.

(3) If an application for the setting aside or suspension of the award has been madetb a competent authorrty referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjoum the dectsjon on the enforcement of the award and may atso, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

Enforcement of foreign awards. - Whether the Court satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court. " It will be clear from Section 48(1 )(e) of the Indian Act that enforcement of a foreignaward may be refused at the request of the party against whom it is invoked, if that party furnishes to the Court proof that the award has been ^ 14 set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. To the extent Section 48 (e) makfls provlslon regardlng the competent authority whlch can set aside a forelgn award, excluded as per the decision of the Supreme Court in the case of Bhatia International vs. Bulk Trading S.A. & Another (supra). the provlslon In Section 34 of Part-1 of the Indian Act

While the case of the appellant is that the award was made under the law of India and accordingly under Section 48(1)(e) ofthe Indian Act the Court in tndia is the competent authority to set aside or suspend the awards. the case of the respondent is that the two awards have been made in England and under the law of England and accordingly under Section 48(1 )(e) of the Indian Act it is only the Court in England which may set aside or suspend the award. Henc^, the question to be decided is whether the award has been made under the law of India or under the law of England. Articles 17.1, 17.2, 17.3and 22 of the agreement between the parties are quoted herein below: "ARTICLE 17- ARBITRATION 17.1 Any dispute or claim arising out of or relatjng to this

17.2 Agreement shall be in the first instance, endeavor to be settled amjcably by negotiation between the parties hereto and failing which the same wilt be settted by arbitration to the English Arbitration Law and subsequent pureuant amendments thereto. The arbitration proceedings shall be camed by two Arbitrators one appointed by BALCO and one by KATSI chosen freety and without any bias. The Court of Arbitration shall be held wholty in London, England, and shaff use the English language in the proceedings. The ftndings and awarcl of the Court of Arbitration shatt be finat and binding upon the parties.

17.3 Before entering upQn the arbitration, the two Arbitrators shall If the two arbitrators are not able to appoint an Umpire. reach an agreement on the selection of an Umpire, Umpire shall be nominated by the International Chamber of Pans ARTICLE 22 - GOVERNING LAW 15 This Agreement will be governed by the prevailing law of india and in case of Arbitratlon, th®Engtish Lawshall appty," It will be clear from the article 17.1 of the aflreementquoted above that disputes between parties were to be settled by "arbitration pursuant to the English Arbitration Law", It witl also be clear from article 17.2 quoted above that the Court of Arbitration was to be held wholly in London, England. Article 17.3 further provides that before entering upon the arbitration, the two Arbitrators shatl appoint an Umpire. Chapter-llt ofthe Indian Act tt'tled "Composition of Arbitral Tribunal" and in particular Sections 10and 11 therein do not provide for appointment of an Umpire. On the other hand, Section 1B(6)(b) of the English Act provides for appointment of an Umpire. Artlcle 22 ofthe agreement provides thatthe agreement will be governed by prevailing law of India and in case of arbltration the English Law shall apply. It witl thus be clear from the various provisions of the agreement between the parties that the arbitration was to be conducted in accordance with the English Law.

Moreover, the arbitration has in fact been conducted and the award has been made in accordance with the English Law and this will be clear from paragraphs 32, 37, 42 and 45 of the award dated 12.11.2002 which are quoted herein below: "32. Pursuant to the provisions of Article 17 of Negotiations to reach a settlement of these disputes were unsuccessrul. Modernlsation Agreement and Seotion 14 ofthe Engtish Arbitration the Ctaimant submitted a written Notice and Request Act Arbitration to the Respondent on November 13*' 1997. The Notice was accompanied by a ietter dated November 13m 1997 from Mr. David Kjos, Vice-President of the Claimant. Under Article 17.3 of

the Modernisation Agreement and section 16(6)(b) of the English Arbitration Act, the arbitrators are required to appoint an Umpire before any substantive hearing of a djspute.

the Umptre. attendance of The parties were unable to agree on the precise role and In these circunnstances the Tribuna! ordered on May 27'" 1999 that the arfciitration proceed in accordance with sections 21 (2), (3) and (4) ofthe Engtish Artoitration Act. <^ ^ > -.^— r^. 16 On 45, July 18tn2000 Mr Redfem aoknowledged the Respondent's confirmation that it wlshed me to act as Umpire as opposed to Chairman, Mr Redfern observed that the wording of th© Respondent's fax Intimatecl that it understood the procedure to be that, (f there was a dlsagreement between the arbitrators. that issue alone was to b@ referrecl to m®for sole det©rmtnatlon, but the arbitrator^ were to oontinue to determine other issues arlslng In the dispute. Mr Redfem obser^ed that this was not how he understood the wording of section 21 of the English Arbitration Act. He had understood it to mean that if the arbitrators faited to agree on an Issue their role as arbitrators would cease and the Umpire would oontinue <n effeot as the sole arbitrator. Mr Redfern Invited submissions from the parties on this point. It further appears from paragraph 64 of the award dated 12.11.2002 that compound interest under Section 49 the English Act has been claimed and awarded by the arbitrator. We are thus of the view that the arbitration has been conducted and the two awards have been made under the law of England and under Section 48(1 )(e), it is a competent authority of Engtand which can set aside or suspend the two awards dated 10.11.2002 and

12.11.2002 and Section 34 of the tndian Act which empowers a Court in India to set aside an award made by an arbitrator each to that extent excluded.

We are unable to accept the submissi'on of Mr. Mukherjee that 'rt since article 22 of the agreement provides that the agreement will be is the law of India under which governed by the prevailing law of India and the award has been made and the competent Court in India can set aside the two awards under Section 48(1 )(e) ofthe Indian Act. Section 48(1 )(a) of the Indian Act provides that enforcement of foreign award may be refused. at the request of the party against whom it is invoked if that party furnishes to the Court proof the agreement between the parties is not valid "under the law to which the parties have subjected if. But the tanguage used in Section 48(1 )(e) is different and it says that the enforcement of the foreign award may be refused at the request ofthe party againstwhom it is invoked only if that party furnishes to the Court proof that the award has been set aside or suspended by a competent authority of the country under the law of which that award was made. The Legislature by using two 17 djfferent expressions namely, "faw to which the parties have subjected the agreemenf and "the taw under which the award was made" obviously has intended two different meanings and both the expressions cannot mean one and the same thing. In the present case, Stnce Article 22 of the agreement provides that the agreement wilt be governed by the prevailing law in India, India to which parties have subjected the agreement within the meaning ofthe expression used in Section 48(1 )(a) of the Indian Act. But since Article 22 atso provides that in the case of Arbitration, the English Law witl apply, it is the English Law under which the arbitration has been conducted and the award has been made. is the law of <-,

In National Thermal Power Corporation Vs. Singer Company and others (Supra) cited by Mr. Mukherjee, agreements dated 17/08/1982 were entered into at New Delhi between the said Corporation the Contract provided that and Singer Company, a foreign company for supply of equipment. erection and commissioning of certain works in India for the Corporation. The general terms and conditions of the contract were expressly incorporated in the said agreements and clause 7.2 thereof provided that the laws applicable to this contract shall the laws in force in India. The courts of Delhi shall have exclusive jurisdiction in all maters arising under this contract. Ctause 27.6 of the General Terms provided for arbitration of disputes between the parties and Clause 27.7 of the General Terms and Conditions of the rules of concttiation and arbitration of the International Chamber of Commerce shalt appty to the arbftration and the arbitratlon shall be conducted as such places as the arbitration may determine.

In Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. and others (supra) cited by Mr. Nukherjee, Sumitomo Heavy Industries Ltd. and the ONGC Ltd entered into a contract on 07/09/1983 whereunder Sumitomo Heavy Industries Ltd. agreed to commission on turnkey basis an oil platform at Bombay High, about 100 miles north west of Bombay. Ctause 17.0 of the said contract provided for Laws/Arbitration and Clause 17.1 ofthe said contract reads as follows: "171 Applicable Laws: All question, disp'jtes or differences arising under, out of or in connection with thts contract shatl be subject to the law of Inclia" . r^ 19 Clause 17.2 of the contract provided for arbitration of any dispute, difference or question that may arise between the parties and inter alia stipulated that the arbitration proceedings shall be held at London, U.K. and shall be held in accordance with the provisions of Internationa! Chamber of Commerce and the rules thereunder as amended from time to time. The Supreme Court held that the law which would apply to the filing of the to its enforcement and to its setting aside would be the law award, governing the agreement agreement and having regard to the clear terms of clause 17 of the contract to arbitrate and the performance of between the parties, parties arising from their agreement to arbitrate, and, in particular, obligations to submit disputes to arbitration and to honour the award, the the law governing the rights and obligations of the law which would apply is the law of India. In the said case of Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. there was again no provision in the agreement between the parties as in the present case, that in case of arbitration English law of arbitration would apply and that the (supra) arbitration will be in accordance with the English Arbitration Act as amended by subsequent amendments. Rather, clause 17 of the contract provided that the applicable law for arbitration of disputes will be the law of India.

In White Industries Australia Limited Vs. Coal India ^ Limited (supra) cited by Mr. Mukherjee an agreement dated 28/09/1989 India Limited and While Industries was executed in India between Coal / Australia Limited for developing an Open Cast Coal Mine at Piparwar in India. Clauses 3.2 and 4,1 in the said agreement provided as follows: "3.2: Should the parties fails to reach an agreement withln thlrty (30) days after the dispute arises or any such greater penod as may be mutuafly agreed upon, the dispute may be submitted by either party to Arbitration for finat settlement under the rules of conciliation and arbitration of the Intemational Chamber of Commerce, Paris, France, by one or more arbitrators appointed in accordanoe with the Rules. " "4.1: This Agreemerit shall be subject to and governed by the laws in force in tndia except that the tndian Arbitratjw Act of 1940 shall not appty. " -^/ 1 -» ^ 20 Disputes and differences arose befr^veen the parties and the arbitration sittings were held in London and the award was made and published in France at Paris.

In Nirma Ltd. Vs. Lurgi Energie Und Entsorgung GMBH, Germany (supra) cited by both Mr. Tankha and Mr. Mukherjee, Nirma entered into an agreement on 01/09/1997 with Lurgi and Articles XV and XVI ofthe said agreement provided as follows: "Article XV: ARBITRATION: 15.1 lf.at any time any question/dispute or difference whatsoever shall arise between LENTJES and NIRMA out of or in connection with this Agreement, the same shall be ftnalty settled by arbitration in accordance with the Rules of Concdiation and Arbitration of 21 Intemational Chamber of Commerce (!CC). The place of arbitration shall be London and arbitration proceedings shall be London and arbitration proceedings shatl be camed out in Engdsh " "AfflfileJCyi: GENERAL CONDITIONS : 16.2 Agreement The govemed aocording to the laws of India," After the arbitration was held in London and the first partiat award dated 08/04/2002 was made by the International Court of Arbitration of International Chamber of Commerce, Nirma filed an application under Section 34 of the Indian Act for setting aside the said award. A Division Bench of the Gujrat High Court held that there was no doubt about the fact that the proper lawgoverning the arbitration is the law of India and not onty the provisions of the Indian Arbitration Act apply to the arbjtration but the jurisdiction in Indla had jurisdiction to entertain Court of competent tn the aforesaid case of applications under Section 34 of the Indian Act. Nirma Ltd. vs. Lurgi Energie Und Entsorgung GMBH, Germany & Others (supra) also the onty provision in the agreement was that agreement shall be govemed according to the taws of India and there was no separate agreement that in case of arbitration the English Law would ,_^_, apply and that the arbftration witt be conducted in accordance with the English Act and the amendments thereto as in the present case.

Coming now to the view of Justice Potter in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. reported in (1994) LIoyd's Law Reports 45 cited on behalf'df the appetlants, Justice Potter after referring to ~1! the provisions of the agreement betweeh the parties has held: "In this case, as to (1), the parties have made an , express choice of Incfian law as the proper law of the ' contract As to (2). ft seems to me tlkely (although it is not necessary finally to decide) that the proper law of the arbftration agreement is sjmjlarly Indian law, since the arbttration agreement substance of the underlying contract and the temns is part of of cl. 17.1 are clear in that respect. " 22 It will be clear from the aforesajd reasoning of Mr. Justice Potter that since in the case of Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. (supra) the parties had made an express choice of the proper law of contract as Indian law and since the arbitration agreement was part ofthe substance of the underiying contract, it was hetd by Mr.

For the aforesaid reasons, we hold that the applications filed by the appellant under Section 34 of the Indian Act are not maintainable against the two foreign awards dated 10.11.2002 and<12.11.2002 and accordingly dismiss Misc. Appeal No. 889 of 2004 and Misc. Appeal No. 890 of 2004, but order that the parties shall bear their own costs.___- Sd/- Chief Justice Sd//- V.K.Shrivastava Judge