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2013 DIGILAW 17 (CAL)

Coal India v. Canadian Commercial Corporation

2013-01-15

ASHIM KUMAR BANERJEE, SHUKLA KABIR SINHA

body2013
JUDGMENT :- Ashim Kumar Banerjee. J. Private International Law is a subject, less cultivated in Indian judiciary, yet the learned Judge considered all the relevant precedents so far delivered by Indian judiciary as well as abroad. Learned Judge also considered comments of various authors on the subject. The judgment and order impugned runs in 200 (two hundred) pages, full of discussions of the law on the subject backed up by thorough research. The judgment is unique having distinguishing feature. Whether we would agree with the ultimate finding or not, would be a different consideration that we would be venturing very soon. At the outset, we must praise the learned Judge for a painstaking effort to present a piece that would be worth reading. BACKDROP: Coal India Limited (hereinafter referred to as ‘CIL’) a wholly owned public sector undertaking entered into a contract with a foreign party being Canadian Commercial Corporation (hereinafter referred to as ‘CCC’), another public sector organization, established by the Act of Parliament of Canada being wholly owned by Crown Corporation of Canada. Under the contract, CCC was to develop Rajmahal-A, opencast coal mine. They would be managing the said coal mine and develop the mining system. Dispute arose between two parties that the parties referred to arbitration as per the agreement. Clause 34 would prescribe the procedure for an alternate dispute resolution of the dispute. The said clause is quoted below: “34.0 DISPUTES 34.1 The Parties mutually agree that in the event of a dispute of any nature whatsoever, related directly or indirectly to this Contract, they shall use every means at their disposal to settle said disputes on an amicable basis. 34.2 Should the Parties fail to reach an agreement within thirty(30) days after the dispute arises or any such greater period as may be mutually agreed upon the dispute may be submitted by either. Party to Arbitration for final settlement under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris, France, by one or more arbitrators appointed in accordance with the Rules. 34.3 Said arbitration shall be held in Geneva, Switzerland and be conducted in the English Language. 34.4 The Parties mutually agree that if the decision rendered as a result of the aforementioned conciliation or arbitration involves the payment of compensation, the amount of such compensation shall be expressed and payable in Dollars. 34.3 Said arbitration shall be held in Geneva, Switzerland and be conducted in the English Language. 34.4 The Parties mutually agree that if the decision rendered as a result of the aforementioned conciliation or arbitration involves the payment of compensation, the amount of such compensation shall be expressed and payable in Dollars. 34.5 Both Parties shall make Endeavour’s not to delay the arbitration proceedings. The decision of the arbitrator(s) shall be final and binding on both the parties. Enforcement thereof may be entered in any court having jurisdiction.” One more clause, apparently in conflict, being Clause 32 is also quoted below: “GOVERNING LAW This Contract shall be subject to and governed by the laws in force in India.” CIL nominated a former Judge of the Apex Court as their nominee Arbitrator whereas CCC nominated another Arbitrator. Under Clause 34 the International Chamber of Commerce (hereinafter referred to as ‘ICC’), Paris was to name the third Arbitrator. Accordingly, ICC nominated the third Arbitrator and the Arbitral Tribunal was thus constituted. There had been protracted litigations in the mean time that may not be relevant for the purpose of the present case. CIL became aggrieved by the final award published by the Tribunal. They applied before this Court for setting aside of the award by invoking Section 48 read with Section 34 of the Arbitration and Conciliation Act 1996 and Sections 47 and 151 of the Code of Civil Procedure, 1908. The learned Single Judge upon hearing the contentions rejected the application, holding it not maintainable by His Lordship’s two hundred pages judgment and order delivered on the 6th day of conclusion of hearing. Significant to note, the hearing was concluded on March 15, 2012 whereas His Lordship delivered the judgment on March 20, 2012. We appreciate. Being aggrieved, CIL preferred the instant appeal that we heard on the above-mentioned dates. RIVAL CONTENTIONS: Hearing commenced when Mr. Anirban Roy, learned counsel, appearing for CIL started placing the judgment and order of the learned Single Judge. Mr. Roy took us to the elaborate judgment of His Lordship and while doing so, made his comments on the issue that we would be dealing with very soon. Taking it over from Mr. Roy, Mr. RIVAL CONTENTIONS: Hearing commenced when Mr. Anirban Roy, learned counsel, appearing for CIL started placing the judgment and order of the learned Single Judge. Mr. Roy took us to the elaborate judgment of His Lordship and while doing so, made his comments on the issue that we would be dealing with very soon. Taking it over from Mr. Roy, Mr. Jayanta Kumar Mitra, learned senior counsel also appearing for CIL placed Clauses 32 and 34 of the agreement quoted above and tried to contend, Clause 32 being the guiding law of the contract, the award could only be challenged under the Indian law as stipulated in Clause 32. Commenting on Clause 34, Mr. Mitra contended, Clause 34 would provide for mechanism for alternate dispute resolution. The arbitration was held at Sweden. The Tribunal followed the ICC rules for conduct of the arbitration. Once the Tribunal published their award, it became functus officio and the parties would be free to take their next approach under the governing law to pray for setting aside or enforcement of the said award, as the case may be. Elaborating his argument, Mr. Mitra would contend, the performance of the contract was under Indian law being the governing law of the contract whereas the procedure for alternate dispute resolution was to be under the law prevalent at the place of arbitration. However, the enforcement and/or challenge to the award could never be made under the procedural law as it would require interpretation of various clauses of the contract and the rights and obligations of the parties under the contract that would be under the Indian law as per Clause 32. To support his contention, he placed five decisions that were also considered by the learned Single Judge. The said decisions are as follows: 1. White Industries Australia Limited Vs. Coal India Ltd. reported in 2004 Volume II Calcutta Law Journal Page-197. 2. National Thermal Power Corporation Vs. Singer Company and Ors. Reported in 1992 Volume III Supreme Court page-551. 3. Sumitomo Heavy Industries Limited Vs. ONGC Ltd. & Ors. reported in 1998 Volume I Supreme Court Cases page-305. 4. Venture Global Engineering Vs. Satyam Computers Services Limited and Anr. reported in 2008 Volume IV Supreme Court Cases page-190. 5. Bhatia International Vs. Bulk Trading S.A. and Anr. reported in 2002 Volume IV Supreme Court Cases page-105. Commenting on the decisions, Mr. ONGC Ltd. & Ors. reported in 1998 Volume I Supreme Court Cases page-305. 4. Venture Global Engineering Vs. Satyam Computers Services Limited and Anr. reported in 2008 Volume IV Supreme Court Cases page-190. 5. Bhatia International Vs. Bulk Trading S.A. and Anr. reported in 2002 Volume IV Supreme Court Cases page-105. Commenting on the decisions, Mr. Mitra contended, in the decision in the case of Bhatia International (supra), the Apex Court categorically observed, interim protection under Section 9 of the Arbitration and Conciliation Act 1996 would also be available to a foreign arbitration where matrix contract was governed by Indian law. Paragraph 32 of the said decision being relevant herein is quoted below: “To conclude, we hold that the provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India the provisions of Part I would compulsorily apply and parties are free to deviate only to the extent permitted by the derogable provisions of Part I. In cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any provision, in Part I, which is contrary to or excluded by that law or rules will not apply.” Commenting on the second decision in the case of Venture Global (supra), Mr. Mitra relied on various paragraphs including paragraph 47 where the Apex Court followed Bhatia International (supra) and observed as follows: In terms of the decision in Bhatia International we hold that Part I of the Act is applicable to the award in question even though it is a foreign award. We have not expressed anything on the merits of claim of both the parties. It is further made clear that if it is found that the court in which the appellant has filed a petition challenging the award is not competent and having jurisdiction, the same shall be transferred to the appropriate court. Since from the inception of ordering notice in the special leave petition both parties were directed to maintain status quo with regard to transfer of shares in issue, the same shall be maintained till the disposal of the suit. Since from the inception of ordering notice in the special leave petition both parties were directed to maintain status quo with regard to transfer of shares in issue, the same shall be maintained till the disposal of the suit. Considering the nature of dispute which relates to an arbitration award, we request the court concerned to dispose of the suit on merits one way or the other within a period of six months from the date of receipt of copy of this judgment. Civil appeal is allowed to this extent. No costs.” He also relied on NTPC (supra). He placed emphasis on paragraphs 51, 52 and 53 that are quoted below: “In sum, it may be stated that the law expressly chosen by the parties in respect of all matters arising under their contract, which must necessarily include the agreement contained in the arbitration clause, being Indian law and the exclusive jurisdiction of the courts in Delhi having been expressly recognised by the parties to the contract in all matters arising under it, and the contract being most intimately associated with India, the proper law of arbitration and the competent courts are both exclusively Indian, while matters of procedure connected with the conduct of arbitration are left to be regulated by the contractually chosen rules of the ICC to the extent that such rules are not in conflict with the public policy and the mandatory requirements of the proper law and of the law of the place of arbitration. The Foreign Awards Act, 1961 has no application to the award in question which has been made on an arbitration agreement governed by the law of India. The Tribunal has rightly held that the “substantive law of the contract is Indian law”. The Tribunal has further held “the laws of England govern procedural matters in the arbitration”. All substantive rights arising under the agreement including that which is contained in the arbitration clause are, in our view, governed by the laws of India. In respect of the actual conduct of arbitration, the procedural law of England may be applicable to the extent that the ICC Rules are insufficient or repugnant to the public policy or other mandatory provisions of the laws in force in England. In respect of the actual conduct of arbitration, the procedural law of England may be applicable to the extent that the ICC Rules are insufficient or repugnant to the public policy or other mandatory provisions of the laws in force in England. Nevertheless, the jurisdiction exercisable by the English courts and the applicability of the laws of that country in procedural matters must be viewed as concurrent and consistent with the jurisdiction of the competent Indian courts and the operation of Indian laws in all matters concerning arbitration insofar as the main contract as well as that which is contained in the arbitration clause are governed by the laws of India.” He also relied upon Sumitomo (supra) wherein the Apex Court considered the English decisions including Dicey & Morris on the “conflict of laws” and Mustil & Boyd on “Law And Practice Of Commercial Arbitration In England, 2nd Edition”. He lastly cited a Division Bench decision of our Court in White Industries (supra) wherein all the earlier decisions except the Venture Global (supra) that were delivered later on, were taken into account and the Division Bench in paragraph 81 observed as follows: “The learned Judges clarified this by saying that the non-obstante Clauses in Sections 45 and 54 have been used to indicate that the provisions of Part I, unless excluded, would apply to Part II. The said position has been further reiterated in Paragraph 32 of the Judgment by saying that Part I will apply to all arbitrations and to all proceedings relating thereto and it was also held that in the cases of international commercial arbitration, held out of India, also Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provision. In such a case of express exclusion, the laws or rules chosen by the parties would prevail. This Court finds that while construing the provisions of ACA 96, a consolidating and amending statute, the Hon’ble Supreme Court, if I may say so with respect, followed a comprehensive mode of interpretation by considering the intention behind the law and also by considering the Act as a whole.” Citing the above five decisions, Mr. Mitra submitted that the learned Judge could not have ignored the proposition of law so clearly held by the Apex Court. Mitra submitted that the learned Judge could not have ignored the proposition of law so clearly held by the Apex Court. He contended that the subsequent decision of the Constitution Bench of the Apex Court in the case of Balco and White Industries reported in 2012 Volume-IX Supreme Court Cases page552 would have no implication as the learned Judge delivered the judgment at a stage when the decision of the Constitution Bench was not delivered. He lastly cited three more decisions which are as follows: 1. National Agricultural Coop. Marketing Federation India Ltd. Vs. Gains Trading Ltd. reported in 2007 Volume V Supreme Court Cases page-692. 2. ograj Infrastructure Limited Vs. Ssangyong Engineering and Construction Company Limited reported in 2011 Volume IX Supreme Court Cases page-735. 2. Fuerst Day Lawson Limited Vs. Jindal Exports Limited reported in 2011 Volume VIII Supreme Court Cases page-333. He concluded his argument referring to paragraph 201 in the case of Balco (supra). ARGUMENT BY CCC: Mr. Tilak Bose, learned senior counsel argued on behalf of the respondent. Mr. Bose distinguished the earlier judgments of the Supreme Court referred to by Mr. Mitra. According to him, the view expressed by the Apex Court in Sumitomo (supra) was under the old law. The decision in the case of Bhatia International (supra) was rendered in a situation when a party to the arbitration agreement invoked Section 9 of the said Act of 1996 for interim protection. The decision in the case of Venture Global (supra) was rendered in a civil suit and not in an arbitration proceeding. He rather relied on the decision of Yograj Infrastructure Limited (supra) cited by Mr. Mitra to contend, the Apex Court changed its earlier view that culminated in the Constitution Bench judgment in Balco (supra). He placed the law on the subject and discussed the change of trend and the reason for such change. According to him, prior to 1996 there were various laws in our country to deal with the domestic award as well as foreign award. The Arbitration Act 1940 was governing the field of domestic arbitration whereas Foreign Award (Protocol & Convention) Act, 1937 and Foreign Award (Recognition & Enforcement) Act, 1961 were dealing with the foreign arbitration and/or the award. However, a composite law came into existence in 1996 to take care of all situations in the field of arbitration. The Arbitration Act 1940 was governing the field of domestic arbitration whereas Foreign Award (Protocol & Convention) Act, 1937 and Foreign Award (Recognition & Enforcement) Act, 1961 were dealing with the foreign arbitration and/or the award. However, a composite law came into existence in 1996 to take care of all situations in the field of arbitration. Our country enacted the said law to honour the UNCITRAL Model law that was a product of United Nations Convention where India was a party. According to Mr. Bose, when foreign parties were involved in a contract with an Indian party there would be different situations and the law would be different to deal with such situation. According to him, Part-I of 1996 Act would have the guiding effect on the domestic arbitration whereas Part-II would deal with foreign situation. Distinguishing the clauses 32 and 34, Mr. Bose contended, Clause 32 would inter alia provide, Indian law would be the governing law of the matrix contract, meaning thereby the CCC, although being a foreign party, would be obliged to be guided by Indian law while performing under the contract. If there was any breach by any party under the contract, such breach was to be adjudicated under the contract law of our country. The arbitration agreement being an independent agreement, although stipulated in the same contract, would however, be guided under Clause 34 wherein the arbitration was to be conducted as per rules of ICC, Paris. The venue was also agreed as Switzerland that was however changed to London by mutual agreement. According to Mr. Bose, the law of arbitration would have no nexus with the governing law under the matrix contract. When the law of arbitration was silent, the law prevalent at the venue would be the law to consider a post award situation or any interim protection during conduct of the arbitration. Clause 34 did not specify any law as to conduct of arbitration. The venue was suggested as Switzerland, hence, the Swiss law could be applicable. Since the contract was silent on the law of arbitration the English law could also play a role in view of London being the place of arbitration. In any event, the challenge to the award could not be made before the Indian Court that too, under Section 34. Section 34 would deal with domestic awards only. Since the contract was silent on the law of arbitration the English law could also play a role in view of London being the place of arbitration. In any event, the challenge to the award could not be made before the Indian Court that too, under Section 34. Section 34 would deal with domestic awards only. Even if it was assumed Section 48 would have a role to play that would not give right to a party to challenge the award under the said Act of 1996. He heavily relied on the decision of Fuerst Day Lawson (supra) particularly, paragraph 89 that is quoted below: “It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P.S. Sathappan) was held to be a selfcontained code. Now, if the Arbitration Act, 1940 was held to be a selfcontained code, on matters pertaining to arbitration, the Arbitration and Conciliation Act, 1996, which consolidates, amends and designs the law relating to arbitration to bring it, as much as possible, in harmony with the UNCITRAL. Model must be held only to be more so. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapukar, J., that it carries with it “a negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done”. In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded.” The Apex Court in the paragraph quoted (supra) recognized the 1996 Act as a complete code to deal with domestic as well as foreign situations in the field of arbitration and observed, it was enacted in harmony with UNCITRAL model law. He also relied upon Yograj (supra) where Apex Court in paragraph 55 observed, it was no longer available to the appellant to contend that the proper law of the agreement would apply to arbitration proceedings. He also relied upon Yograj (supra) where Apex Court in paragraph 55 observed, it was no longer available to the appellant to contend that the proper law of the agreement would apply to arbitration proceedings. While observing so the Apex Court considered Bhatia International (supra) and Venture Global (supra) and commented that it would have no application once the parties agreed that the arbitration would be held at Singapore and to be guided by the Singapore International Arbitration Centre Rules. Pertinent to note, our Clause 34 would also contemplate similar situation where the parties mutually agreed, the arbitration would be conducted as per ICC Rules of Arbitration, Paris and the arbitration would be held at Geneva, Switzerland. Commenting on the power of the aggrieved party to challenge an award under Section 48, Mr. Bose referred to Article 2 (v) of UNCITRAL model law that would clearly provide, the aggrieved party could only use it as a shield but not as a sword, meaning thereby, once the award holder tried to enforce the award under Section 48 the aggrieved party would be at liberty to resist such action by contending, the same was not enforceable on the ground mentioned in the objection. In the present situation, CCC was yet to enforce the award in our country under Section 48. Hence, the application for setting aside was not maintainable. In this regard, he relied on three Indian decisions in the case of Invent a Fischer Gmbh & Co., K.G. Vs. Polygenta Technologies Ltd. reported in 2005(2) Arbitration Law Reporter page-125, in the case of Bharti Televentures Ltd. Vs. DSS Enterprises Pvt. Ltd. & Ors. reported in 2005(2) Arbitration Law Reporter page-561 and in the case of Gold crest Exports Vs. Swissgen N.V. & Anr. reported in 2005(3) Arbitration Law Reporter page 58. He also relied upon two English decisions in the case of C Vs. D reported in 2008 (1) Llyod’s Law Reports page-239 and in the case of Shashoua and Ors. Vs. Sharma reported in 2009 Volume II Lloyd’s Law Reports page-376. He also relied upon the American precedent in the case of Karaha Bodas Co., L.L.C. (Cayman Islands) Vs. Perusahaan Pertambangan Minyak Dan Gas Bumi Negra (Indonesia), et al. reported in Volume-29 Yearbook page-482 and in the case of Steel Corporation of the Philippines (Philippines) Vs. International Steel Services, Inc. (US) reported in Volume–35 Yearbook page-668. He also relied upon the American precedent in the case of Karaha Bodas Co., L.L.C. (Cayman Islands) Vs. Perusahaan Pertambangan Minyak Dan Gas Bumi Negra (Indonesia), et al. reported in Volume-29 Yearbook page-482 and in the case of Steel Corporation of the Philippines (Philippines) Vs. International Steel Services, Inc. (US) reported in Volume–35 Yearbook page-668. The Swiss precedent cited by Mr. Bose in the case of Bulgarian Foreign Trade Bank Ltd. (Bulgaria) Vs. A.I. Trade Finance Inc. (US) was reported in Volume-26, Year Book page-291 on Commercial Arbitration. On the issue of comments of Dicey and Morris so relied upon by the Division Bench in White Industries (supra) Mr. Bose contended, the Division Bench failed to consider the new edition. It would say otherwise. In this regard he relied upon paragraph 43 of the current edition that is quoted below: “The learned authors also held if there is an express choice of law govern the contract as a whole, the arbitration will also be governed by it and further clarified it by saying “this is so whether or not the seat of the arbitration is stipulated and irrespective of the place of the seal” (Dicey and Morris, the Conflict of Laws, 13th Edition, para 16-015).” He relied on Red fern and Hunter particularly paragraph 3.11, 3.14, 3.21, 3.34 and 3.41 to 43 wherein the author considered the seat of arbitration and the law applicable thereto. It observed, the forum and/or venue of the arbitration and the publication of the award including any right to challenge it in Courts, would be the place of arbitration and not otherwise, particularly when the law of arbitration was not specified in the contract although, the venue and the rules applicable thereto were specifically stated. Resuming his argument on the next day, Mr. Bose again referred to Red fern and Hunter (supra) particularly paragraphs 3.50, 3.52 and 3.58. Paragraph 3.50 would say, the party to an arbitration were free to choose between the law governing arbitration and a set of procedural rules. The key point is simply that the procedural law of an International Arbitration is not necessarily governed by the lexloci arbitri but may be regulated by another system of rules chosen or designed by the parties or, in the absence of choice, by the arbitrators. The key point is simply that the procedural law of an International Arbitration is not necessarily governed by the lexloci arbitri but may be regulated by another system of rules chosen or designed by the parties or, in the absence of choice, by the arbitrators. Paragraph 3.52 would suggest, the New York Convention would maintain the reference to the law of the country where the arbitration took place and synonymously to the law of the country where the award is made. Paragraph 3.58 would suggest, each move of the Arbitral Tribunal does not of itself mean that the seat of the arbitration changes. The seat of the arbitration remains the place initially agreed by and on behalf of the parties. He would also refer to the foreign decisions referred to above and some of his arguments by saying, in an International Arbitration the parties may chose the law and the rules to govern the arbitration. Once they do so, the Court of law must honour the same. In absence of any such choice being exercised the law governing the place where the seat of arbitration was situated, should govern the arbitration proceeding and the consequential move relating to arbitration. Any change of venue for convenience of the arbitrators and/or the parties would be of no consequence with regard to governing law ruling the arbitration. He would sum up his argument in the present context by contending, clause 34 would prescribe the rules governing the field of arbitration wherein the parties agreed that the arbitration would be governed by the rules ICC, Paris. The parties also agreed that the seat of arbitration would be at Geneva, Switzerland. Hence, the Indian law would have no effect on the arbitration or the consequential move thereto. He would further contend, clause 32 would govern the field of work by the contracting parties that would govern the contract but not the arbitration which was an independent agreement, although contained in the same instrument. REPLY OF THE COAL INDIA While giving reply, Mr. Mitra contended that the subject controversy stood resolved by the Apex Court in the case of Venture Global Engineering (supra) that would still hold the field particularly in view of observation of the Apex Court in its constitutional bench decision in the case of Balco (supra). REPLY OF THE COAL INDIA While giving reply, Mr. Mitra contended that the subject controversy stood resolved by the Apex Court in the case of Venture Global Engineering (supra) that would still hold the field particularly in view of observation of the Apex Court in its constitutional bench decision in the case of Balco (supra). Commenting on the two Single Bench decisions of the Bombay High Court and one of the Delhi High Court in the case of Inventa Fischer Gmbh & Co. (supra), Gold Crest Exports (supra) and Bharti Televentures Ltd. (supra), Mr. Mitra contended, those decisions were no longer good law being impliedly overruled by Venture Global (supra). In this regard, he referred to paragraph 5 to 11 of the decision in the case of Venture Global (supra). Mr. Mitra also took us to paragraph 171, 199 and 200 of the decision in the case of Balco (supra). According to him, the earlier observations of the Apex Court in the said constitution bench decision would not be available in the present case in view of the clear observation of the Apex Court in paragraph 201. Distinguishing the decision in Shashoua (supra), he referred to Section 3 of the English Arbitration Act where “juridical seat” was clearly defined that was conspicuously absent in Indian Law. In the case of C -Vs- D (supra) the Law of Arbitration was specified as English Law that would provide for juridical seat. Hence, according to him, the decisions in the case of Shashoua (supra) and C -Vs- D (supra) would be of no assistance to Mr. Bose to support his contention. Mr. Mitra lastly referred to Red fern and Hunter, particularly paragraph 3.34 to 3.39 and paragraph 3.45 to 3.66 and contended, the author’s commentary on the seat of arbitration as contained therein would be in the context of English Law where juridical seat was clearly provided. Mr. Mitra concluded his argument by contending when Law of Arbitration was not specifically provided in the agreement and the venue was not a relevant factor in Indian Law, the governing law of the matrix contract should have the dominant role. OUR VIEW: Before we go into the present controversy, it would be apt to quote few paragraphs of a Single Bench decision delivered by one of us (Ashim Kumar Banerjee, J.) in the case of Vinayak Oil Fats Private Ltd. Vs. OUR VIEW: Before we go into the present controversy, it would be apt to quote few paragraphs of a Single Bench decision delivered by one of us (Ashim Kumar Banerjee, J.) in the case of Vinayak Oil Fats Private Ltd. Vs. Andre (Vayman Islands) Trading Co. Ltd. reported in 2005 Volume-II Calcutta High Court Notes page-29 while deciding a winding up petition based on a foreign award where law on the subject was discussed in detail:- “ARBITRATION LAW: LAWS BEFORE: Before 1996 the Indian Law of Arbitration was governed by Arbitration Act, 1940 (hereinafter referred to as the “said Act, 1940). If a domestic award was made under this law it could be given effect to after a judgment in terms of the award was passed under Section 17 of the Act and thereafter the award could be executed as decree passed in terms of the award by court. In short, a domestic award could be enforced after it was made a rule of court. This situation was, however, diluted by various judgments of this court in various winding proceeding. In case of Dalhousie Jute (Supra) this court observed that an unfilled award before it could be made a rule of court was a good piece of evidence of a claim and a just debt due and could be made a subject matter of a winding up proceeding. In case of a foreign award the Arbitration (Protocol and Convention) Act, 1937 and Foreign Awards (Recognition & Enforcement) Act, 1961 were holding the field. Under Section 4 of the Act, 1937 a foreign award was enforceable in India as if it were an award made on a matter referred to arbitration in India. Under section 5 the person interested in a foreign award could apply to court for having rule of court on the said award. Under sections 7 and 8 conditions of enforcement of foreign award had been prescribed. The 1961 Act was brought into force repealing the 1937 Act. Here also any person interested in a foreign award could apply to court for having a rule of court on the said award as also for its enforcement. Section 7 prescribed conditions for enforcement of the foreign award. The 1961 Act was brought into force repealing the 1937 Act. Here also any person interested in a foreign award could apply to court for having a rule of court on the said award as also for its enforcement. Section 7 prescribed conditions for enforcement of the foreign award. LAW AT PRESENT: In 1996, the Arbitration and Conciliation Act, 1996 came into force by which the domestic award as well as foreign award were brought under one act by repealing the 1940 Act as well as 1961 Act. This act was brought in because of the international convention. This act was a product of unicitral modal laws on international commercial arbitration in 1985. This 1996 Act came into force to comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and conciliation. In case of domestic award one stage of proceeding suggested in the earlier act has been done away with. Domestic award under this act need not have any judgment pronounced by any court of law on the same. It can be straight away put to execution provided the time for setting aside the said award has expired or the application having been made has been refused. Under the old law under sections 30 and 33 the award could be challenged. The grounds of challenge in the present law have been substantially narrowed down. Although we are not concerned with the domestic award to resolve the present point in issue these are being discussed only to find out the intention of the legislature while enacting the 1996 Act. Foreign award has been dealt with by Part-II of the Act. This act specially section 44 to section 49 has given a complete procedure as to the enforcement of the foreign award in our country. To mitigate hardship and inconvenience to the person against whom the award was made section 48 has suggested the conditions for enforcement of foreign awards and at the same time granted liberty to the person against whom the award has been published to contest the enforcement the said award by pointing out that the conditions embodied in section 48 have not been fulfilled. This was there in 1937 Act as well as 1961 Act. However, the present law under section 48 is in a modified form. This was there in 1937 Act as well as 1961 Act. However, the present law under section 48 is in a modified form. Subsection 3 of section 48 also entitles the person against whom the award is made to seek adjournment on the ground that the setting aside application or application for suspension of award has been made to a competent authority. However, section 49 prescribes that if the conditions of section 48 are fulfilled the award shall be deemed to be a decree of the Indian Court. INTERPRETATION OF PART-II OF THE SAID ACT OF 1996 BY THE INDIAN COURTS: AIR 2001 Supreme Court, Page 2293 (M/s Fuerest Day Lawson Ltd. Vs. Jindal Exports Ltd.): While interpreting 1996 Act apropos a foreign award the Apex Court held that no separate proceeding is necessary. By one to decide the enforceability of a foreign award and the other for execution it would only have effect of protracting the litigation and adding to the sufferings of litigant in terms of money, time and energy. In paragraph 29 of the said judgment the Apex Court held that in one proceeding the court could first decide the issue of enforceability and once the court decides that the award is enforceable it can proceed to take further effective steps for execution of the same. To come to such a conclusion the Apex Court heavily relied on the statements, objects and reasons of sections 47 to 49 and the scheme of the Act. Jindal Drugs Ltd. Vs. Nay Vallesina Engineering SpA & Ors. reported in 2002(2), Arbitration Law Reporter 322 [Bombay]: Learned single judge of Bombay High Court in this case held that once an application for enforcement of a foreign award is made under Section 48 the person against whom the award has been made can appear before the court and request the court to refuse enforcement of the said award. The Court held that the person against whom the foreign award has been made is not required to challenge the same because it cannot be executed against him in India unless the court finds that it is enforceable. In the said case the person against whom the award had been made challenged the award by making an application. The Court held that the person against whom the foreign award has been made is not required to challenge the same because it cannot be executed against him in India unless the court finds that it is enforceable. In the said case the person against whom the award had been made challenged the award by making an application. The learned judge further held that the said application was premature and was not maintainable in view of the fact that there was no application made by the awardees for enforcement of the award. However, the Apex Court judgment in the case of M/s Fuerest Day Lawson Ltd. Vs. Jindal Exports Ltd. was not considered. Unreported decision in the case of Sea Stream Navigation Ltd. – Vs.- LMJ International Ltd. : MHS Ansari.J of this court relied on the Apex Court decision in the case of Furest Day Lawson Ltd. (Supra) and came to a finding that the award was enforceable in India and then proceeded to execute it in the same proceeding.” As observed at the outset, “Private International Law” is a concept less cultivated in the Indian Courts. In 1940, the Arbitration Act was enacted, prior thereto Arbitration Protocol and Convention Act, 1937 was holding the field of foreign award. In 1961, the Act of 1961 came into force. In Geneva Convention the countries sat together and expressed difficulties to resolve dispute in commercial parlance, particularly when traders from different countries would transact and/or contract to perform any commercial activity. The convention decided to have a model law applicable in all countries that should be simple and result oriented. India, being the signatory to the said Treaty and/or the Convention, framed a complete and composite law in the field of arbitration and enacted the Arbitration and Conciliation Act 1996 by repeal of the other three Acts referred to above operating in the field. If we look to the UNCITRAL model law and compare it with our Act of 1996, we would find, it was enacted keeping harmony with the model law and the Convention. Hence, the earlier Acts would have no role to play. If we look to the UNCITRAL model law and compare it with our Act of 1996, we would find, it was enacted keeping harmony with the model law and the Convention. Hence, the earlier Acts would have no role to play. If we look to our new law, we would find, Part – I of the Act would contemplate a situation to operate in the domestic field, meaning thereby, an arbitration being held between two Indian parties having venue within the country and the law of arbitration not specified in the agreement, even if specified that would be Indian law being the Act of 1996. The other situations would involve a foreign party, either arbitration held in India having agreed to be guided under a foreign law or arbitration being held abroad having applicability of law other than Indian law or the rules other than the Indian rules or where venue was abroad without specifying the particular law of arbitration. These situations were taken care of under Part – II of the said Act of 1996. Section 48 was the appropriate provision for enforcement of an award under Part – II being a foreign award involving a foreign party that would have no nexus with the right of a party to challenge a domestic award under Section 34 stipulated in Part – I. Section 48 being relevant herein is quoted below: “48. Section 48 was the appropriate provision for enforcement of an award under Part – II being a foreign award involving a foreign party that would have no nexus with the right of a party to challenge a domestic award under Section 34 stipulated in Part – I. Section 48 being relevant herein is quoted below: “48. Conditions for enforcement of foreign awards – (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that - (a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral 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 contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if 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 submitted to arbitration may be enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. (2) Enforcement of an arbitral award may also be refused if the Court finds that- (a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary to the public policy of India Explanation-Without prejudice to the generality of Clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of subsection (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.” On a close reading of the Section we find, it never contemplates a situation where a foreign award could be challenged in Indian Court. It was rather a right given to the award holder to enforce the award coupled with a right to the losing party to resist such action on the grounds that would be available to him. The losing party did not have any right at all to challenge the award in our country. The logic is obvious. The basic concept of law would suggest, the forum available to you would be the place where incident occurs giving rise to a right to approach the forum. If a contracting party feels, his counterpart in the contract committed any breach the place of committing of the breach would be ordinarily the place where he should ventilate his grievance. Similarly, when arbitration is held in a particular place and the losing party feels, the Tribunal did not decide the issue in the way it ought to have, he has to approach the Court where the arbitration was held and/or award was published unless the parties mutually agreed to be guided by another law or the law of the place where the contract was performed. It is really a “blue moon situation” where the parties would have to approach the forum by applying the law they agreed to be bound by, to guide the arbitration not being the law of the place of contract or the place of arbitration. Clauses 32 and 34 are totally different, although stipulated in the same instrument. Clause of arbitration is itself an independent contract as recognized in the field of law that would have no nexus with the governing law of the matrix contract. Hence, Indian law, although specified in Clause 32, would have no bearing in the field of arbitration. We are not sure as to what would have happened in case the arbitration was held within the country. Mr. Bose would however contend, the place of arbitration was immaterial once the venue was selected and stipulated in the contract itself. Change of venue would have no implication at all. We do not wish to make any comment. In the case before us, the arbitration was to be held at Geneva, Switzerland as per the rules of ICC, Paris. If we accept Mr. Bose’s contention, it would be the Swiss law to guide the arbitration and post award situation, if CIL wants to challenge it. Even if we discard such argument, it would be the English law guiding the setting aside application as the arbitration was held at London and law of arbitration was not specified. It could have been the French law as the rules of arbitration was mutually agreed to be ICC, Paris, we are not sure. In any event, Indian Court could not have any role to play at all, firstly, as the parties agreed to exclude it that we find on a combined reading of Clause 34, secondly, the law of arbitration being silent, the venue would be the guiding force that would be abroad and thirdly, the arbitration was between an Indian party and a foreign party, having not specifically agreed to be bound by the Indian arbitration law. The English decision in the case of Shashoua (supra) would be of great assistance to us. It would rather support the logic so propounded by the respondent and accepted by the learned Single Judge. The said decision relied upon the earlier decision in C Vs. D (supra). The English decision in the case of Shashoua (supra) would be of great assistance to us. It would rather support the logic so propounded by the respondent and accepted by the learned Single Judge. The said decision relied upon the earlier decision in C Vs. D (supra). In paragraph 34 the Queen’s Bench Division in Shashoua (supra) observed, when there was no express designated venue the law applicable to the seat of arbitration would be the curial law. In our case the parties agreed, the arbitration would be held at Geneva, Switzerland. Hence, the Swiss law could be the curial law. The parties agreed, rules framed by ICC, Paris would be the appropriate procedure. In any event, Indian law would have no role to play when the parties expressly agreed that they would have sitting of arbitration abroad where Indian law would have no force. Bhatia International (supra) dealt with a situation under Section 9 of the said Act of 1996. We do not wish to make any comment. The Constitution Bench in the case of Balco (supra) categorically overruled it. The situation in the case of Venture Global (supra) was however rendered in a civil suit. We are not sure as to whether the said decision would have any effect after the Constitution Bench decision. Hence, we do not wish to make any comment on Venture Global (supra). The Division Bench decision in White Industries (supra) was specifically overruled by the Constitution Bench and would not have any implication at all. Lotwas said on the applicability of the decision in the case of Balco (supra) particularly the last paragraph that is quoted below: “The judgment in Bhatia International (supra) was rendered by this Court on 13th March, 2002. Since then, the aforesaid judgment has been followed by all the High Courts as well as by this Court on numerous occasions. In fact, the judgment in Venture Global Engineering (supra) has been rendered on 10th January, 2008 in terms of the ratio of the decision in Bhatia International (supra). Thus, in order to do complete justice, we hereby order, that the law now declared by this Court shall apply prospectively, to all the arbitration agreements executed hereafter.” According to Mr. In fact, the judgment in Venture Global Engineering (supra) has been rendered on 10th January, 2008 in terms of the ratio of the decision in Bhatia International (supra). Thus, in order to do complete justice, we hereby order, that the law now declared by this Court shall apply prospectively, to all the arbitration agreements executed hereafter.” According to Mr. Mitra, the Constitution Bench decision would have no application at all in the present case as the learned Single Judge delivered His Lordship’s judgment prior to the said decision coming into force. Mr. Mitra heavily relied on the last sentence of the Constitution Bench decision to the effect that the law now declared shall apply prospectively to all arbitration agreement executed hereafter. Even if we give credence to what Mr. Mitra contended before us on the issue, we feel, learned Single Judge approached the problem in a right way giving an accurate interpretation to the relevant clauses quoted (supra) and the law applicable thereto. Even if we ignore the Constitution Bench decision, we cannot avoid Fuerst Day Lawson (supra) and Yograj (supra) that would have a convincing effect on the issue supporting the ultimate finding of His Lordship. The rule of binding force would also recognize a later decision to prevail over the earlier one. Fuerst Day Lawson (supra) and Yograj (supra) being delivered at a later point of time and well before His Lordship’s delivering the judgment and order impugned, we approve the ultimate decision of His Lordship. We do not find any scope of interference. The appeal fails and is hereby dismissed and there would be no order as to costs. Urgent certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.