In a landmark ruling under Arbitration Petition No. 31 of 2023, the Supreme Court of India has clarified significant legal questions regarding arbitration agreements, jurisdictional mandates, and the application of curial law. This decision is poised to impact how international arbitration proceedings are perceived and regulated under Indian jurisdiction.
The case, presided over by a bench of the Supreme Court, consisted of Chief Justice Dr. Dhananjay Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Mishra. Senior Advocate Mr. P. Chidambaram, representing the respondent, argued against the applicability of certain arbitration principles, while the appellant was represented by Senior Advocate Mr. K.K. Venugopal.
Background of the Case
The case originated from a dispute involving an international arbitration agreement that specified both a venue and a distinct legal framework for arbitration proceedings. This setup created complexities around which courts would hold jurisdiction and what law would govern the arbitration’s procedural conduct versus the arbitration’s enforceability and substantive validity.
The key question was how Indian courts’ jurisdiction interacts with agreements specifying a foreign seat of arbitration, particularly under Part I and Part II of the Indian Arbitration Act, 1996. This debate touched upon previous interpretations in cases such as BALCO and Bhatia International, with principles regarding the role of “curial law” or procedural law in arbitration being a primary issue.
Legal Issues at Stake
1. Curial Law vs. Law Governing the Arbitration Agreement:
The court delineated between the procedural law (curial law) that governs the arbitration process and the law that governs the arbitration agreement itself. The question was whether procedural laws would continue to hold jurisdiction post-arbitration, and if the procedural law could influence the enforceability of awards.
2. Concurrent Jurisdiction Doctrine:
The concurrent jurisdiction doctrine allows both Indian courts and the courts in the foreign arbitration seat to have jurisdictional authority. However, this doctrine has evolved, especially with clarifications in this decision regarding what jurisdiction extends to post-arbitration matters.
3. Implications of Venue vs. Seat of Arbitration:
Another pivotal issue was the distinction between the “seat” and “venue” of arbitration. The seat determines the applicable procedural law, whereas the venue is primarily a physical location for hearings. This distinction carries significant legal implications, particularly for jurisdictions where the seat is outside India.
Supreme Court’s Observations and Ruling
Quoting from the judgment, the Court observed, “The curial law operates during the continuance of the proceedings before the arbitrator to govern the procedure and conduct thereof. The courts administering the curial law have the authority to entertain applications by parties to arbitrations conducted within their jurisdiction for procedural matters. However, such authority ceases with the conclusion of the arbitration proceedings”.
Major Findings of the Court:
1. Termination of Jurisdiction Upon Completion of Proceedings: The Court ruled that the curial law’s jurisdiction terminates when the arbitration proceedings end, disallowing further jurisdictional claims by Indian courts over procedural aspects post-arbitration.
2. Adherence to Territoriality Principle:
Aligning with the principles of BALCO, the Court reiterated that Part I of the Arbitration Act applies solely to arbitrations within India, and Part II governs foreign-seated arbitrations, preventing overlap in jurisdictions and procedural laws between Indian and foreign courts.
3. Distinctive Jurisdiction for Enforcement of Awards:
The Court clarified that while Indian courts can play a role in the enforceability of awards under specific conditions, their procedural jurisdiction over the conduct of arbitration concludes with the award’s issuance, reaffirming a boundary for concurrent jurisdiction.
