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Part I of the Arbitration and Conciliation Act, 1996 not applicable when arbitration agreement is governed by laws of England

Supreme Court: In an appeal concerning the maintainability of a petition filed under the  Arbitration and Conciliation Act, 1996 despite the contract stating that the English Law of Arbitration was to be followed in the case of an arbitration arising out of a dispute, a division bench comprising of Surinder Singh and Dr. A. K. Sikri, JJ, following the Videocon India Limited v. Union of India,(2011) 6 SCC 161, held that an agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any claim for a remedy as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of arbitration. In the present case a production sharing contract which provided for production and exploration of oil fields was made by the two parties which was to be governed by the Indian Contract Law. However, in case of a dispute an arbitration procedure was to be instituted which was to be governed by the English Law as specifically mentioned in the agreement. A dispute arose between the two parties where the main contention of the State was that the dispute was to be decided on the basis of Indian laws whereas the appellants argued that the issue of arbitrability is governed by the law of the seat of arbitration which was London in this case.

The Court overturned the decision of Delhi High Court, where it was held that even though the arbitration agreement would be governed by the laws of England and that juridical seat of arbitration would be in London, Part I of the Arbitration Act would still be applicable as the laws governing the substantive contract are Indian Laws. [Reliance Industries Limited v. Union of India, Civil Appeal No.5765 of 2014, decided on 28 May 2014]

 Artcle referred: http://blog.scconline.com/post/2014/06/14/part-i-of-the-arbitration-and-conciliation-act-1996-not-applicable-when-arbitration-agreement-is-governed-by-laws-of-england.aspx

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