CIArb's Survey on Costs now Available.

We had earlier posted about the CIArb here. The results are out. CIArb's Costs of International Arbitration survey ran from November 2010 to June 2011 and was completed by lawyers and international arbitrators from five continents. Information on 254 international arbitrations conducted between 1991 and 2010 was considered to be useful for statistical analysis.

71% of respondents described themselves as party representatives, 25% as tribunal members and 4% did not identify with either category. Over 50% of respondents were from the UK (32%) and the rest of Europe (20%). The remaining 48% came from Asia, the Middle East, Africa, North America, Australasia and other locations.

The survey aimed to gather detailed data about the costs of international arbitration, how those costs are made up, the allocation of costs by arbitrators and the extent to which these may depend upon the nature of the dispute, the seat of arbitration, the amount in dispute, the composition of the arbitral tribunal and the costs incurred prior to, and during, the arbitration.

The survey results were presented at CIArb's Costs of International Arbitration Conference in London on 27 September 2011.

Doug Jones AM FCIArb, President of the Chartered Institute of Arbitrators (CIArb), highlighted the need for arbitrators to draw on a ‘toolkit of processes’ in order to control the rising costs of international arbitration.

Speaking at the end of the first day of CIArb’s Costs of International Arbitration Conference in London yesterday, Doug Jones said ‘After today there is no doubt that costs are an issue for users of international arbitration. This conference is a step on the right path. There is going to be an ongoing exercise in transparency in arbitration costs from now on, building on what we know already.

The key issue arising from the conference is the need for flexibility of process, designed to produce the most suitable process for each dispute. In doing so, international arbitrators need to have a toolkit of processes which can be deployed as appropriate. Various potential ‘tools’ have already been identified. For example, the evidence should be tailored to suit the resolution of the dispute; parties should concentrate only on the key information needed to resolve the dispute; experts should be efficiently deployed; and the hearing must be effectively organised.

Key to the process is a need to gain a deeper understanding of the issues early on in a particular dispute, in order to design processes to fairly and expeditiously resolve those issues.’

Amongst other findings, the survey results indicate that the costs of international arbitration vary depending on where the arbitration takes place, with the UK as the most commonly chosen arbitral seat for survey respondents. Claimant costs noted in this survey averaged nearly 10% higher in the rest of Europe compared with in the UK, while external legal fees were over 26% higher in the rest of Europe. Common costs, such as arbitrators’ fees, were reportedly over 18% higher in Europe than in the UK. Furthermore party costs were returned as around 13% higher in civil law countries than common law countries.

The survey results also showed that claimants spent 12% more than respondents, and that the average length of an arbitration was between 17 and 20 months.

According to the survey, 62% of arbitral proceedings were administered by an institution, with the ICC appearing as the most popular choice for institutional arbitrations.

Humphrey Lloyd FCIArb, Chair of the Conference Organising Committee said ‘CIArb’s survey has produced much needed data about international arbitration and its costs. It provides us with a better understanding of what is involved and should pave the way for further investigations, since, like many surveys, the results need to be studied with care and its limitations must be recognised.’

The conference which welcomed over 100 delegates from the UK, Europe, the US, China, Hong Kong, Singapore, and Australia, amongst others – brought experts in international arbitration together to explore the new data and to discuss how and why costs are incurred with a view to finding ways of making the international arbitration process more efficient and cost effective.

Key speakers include Peter J. Rees (Royal Dutch Shell plc); Michael Schneider (LALIVE, and President of the ASA); Constantine Partasides (Freshfields Bruckhaus Deringer LLP); and David Brynmor Thomas (Thirty-Nine Essex Street).

The Survey is available here.

To arbitrate or not? China and Taipei are deciding

China and Taipei have been negotiating a bilateral investment treaty. Some of the major points of differences between the parties has been highlighted here.

The report states that China is vehemently opposed to the inclusion of a binding investor-State arbitration mechanism in the treaty. It suggests the alternative of mediation, which Taipei is not ready to accept. The report suggests that the reason for China's opposition to an investor-State arbitration with Taipei investors in the fear of "internationalization of cross-strait issues since it has long deemed Taiwan as part of China's territory".

I fail to comprehend how allowing investor-State arbitration will compromise China's claims of sovereignty over Taipei any more than the very entering into a treaty with Taipei and conferring substantive rights on Taipei investors does. A treaty, under Article 2 of the Vienna Convention on the Law of Treaties is, "an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation" [Though there are other categories of treaties involving international organizations, etc. this is the only definition that is relevant to an agreement between two geographic entities]. By entering into a treaty with Taipei, China concedes that Taipei is a State or at the very least a an independent subject of international law. Of course, China may try to word the "treaty" to say that it is without prejudice to its claims of sovereignty. It may even go a step further and state that the instrument in question is not a treaty at all.

In any case, the point remains that if there is a threat to China's claims it arises from the very act of concluding the instrument and not from including an arbitration mechanism within that instrument.

Arbitration services exempted from service tax

The Central Government on September 12, 2011 came out with a notification exempting arbitration services provided by an arbitral tribunal to business entities from service tax.

Finance Act 2011 had amended Section 65(105)(zzzzm) of Finance Act, 1994 to read -

"(zzzzm) (i) to any person, by a business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner;
(ii) to any business entity, by any person, in relation to representational services before any court, tribunal or authority;
 (iii) to any business entity, by an arbitral tribunal, in respect of arbitration.

Explanation.—For the purposes of this item, the expressions “arbitration” and “arbitral tribunal” shall have the meanings respectively assigned to them in the Arbitration and Conciliation Act, 1996"

Notification no. 45/2011 dated 12th September 2011 issued by the Central Government, has exempted taxable services referred to under item (iii) above. Thus services provided by arbitral tribunal in respect of arbitration to any business entity is now exempt from service tax.

It is pertinent to note that the notification exempts only the services provided by the arbitral tribunals in relation to arbitration from the tax liability. Any taxable services rendered by lawyers in relation to arbitration or any ancillary taxable services rendered by arbitral institutions are not affected by the same.

Guest Post on Rasiklal case.

We have already covered the Rasiklal case in an earlier post. Below is a complete analysis of the same case by Mr.Debargha Basu where he has put his comments too. Mr.Basu is currently a Senior Associate at Hemant Sahai Associates. He is an alumnus of NUJS and in past has worked with Nishith Desai Associates and Paras Kuhad & Associates. The readers can direct their queries on this post to him on debargha.basu@hsalegal.com.

The Supreme Court of India (“SC”) recently held in the case of Bharat Rasiklal Ashra (“Appellant”) –Vs- Gautam Rasiklal Ashra (“Respondent no.1”) & Anr. (Civil Appeal No. 7334 of 2011) that while deciding an application u/Sec. 11 of Arbitration & Conciliation Act, 1996, Courts will have to decide the issue relating to the existence of an arbitration agreement before referring the disputes between the parties and towards this shall have to decide questions of fraud, forgery and fabrication of documents if these issues have been raised.

Facts:

A Deed of Partnership (“Partnership Deed”) was entered among one Kanji Pitamber Ashra and his two grandsons, being the Appellant and the Respondent no.1 in the year 1988 to carry a partnership business. One of the clauses of the Partnership Deed provided that death of any partner shall not dissolve the partnership firm.

In the year 1991, Kanji Pitamber Ashra died and the Appellant alleged that the Appellant and Respondent no.1 continued the business of the partnership firm. The Appellant further alleged that subsequently he came to know that the Respondent no.1 was claiming that fresh partnership deeds were executed by the Appellant and Respondent no.1 in 1991 and 2000 (“fresh partnership deeds’). The Appellant claims that he has not executed any fresh partnership deeds. Whereas, according to Respondent no.1, immediately after the death of Kanji Pitamber Ashra a fresh partnership deed was executed in 1991 and subsequently another deed was executed in 2000. It was alleged by the Respondent no.1 that as a result of execution of the fresh partnership deeds, the share of the Appellant was reduced to 10% with a further condition that if the Appellant did not attend to the business of the partnership firm, the entire profit and loss of the partnership business shall either belong to or be borne by the Respondent no.1 as the case may be.

By a letter dated August 19, 2010, the Respondent no.1 wrote to the Appellant raising several disputes in relation to the partnership firm and stated that such disputes needs to be resolved through arbitration in terms of the fresh arbitration deed of 2000. The Respondent no.1 therefore appointed his arbitrator and called upon the Appellant to appoint his arbitrator. The Appellant replied to the said letter stating that he had not signed the fresh partnership deeds and alleged that the fresh partnership deeds were forged documents and therefore appointing an arbitrator in terms of fresh partnership deed of 2000 cannot and did not arise.

Subsequently, the Respondent no.1 filed an application under Section 11 of the Arbitration & Conciliation Act, 1996 (“Section 11 Application”) for appointment of the person named in his letter dated August 19, 2010 as the sole arbitrator in terms of the arbitration agreement contained in the alleged fresh partnership deed of 2000. The Appellant resisted the Sec.11 Application on the ground that the fresh partnership deed of 2000 was forged and therefore the question of appointment of arbitrator in terms of such forged partnership deed did not arise.

When the Sec.11 Application came up for hearing, the designate of the Chief Justice made an order for appointment of a Commissioner for recording the evidence of the parties as it was necessary to decide whether the fresh partnership deeds were valid or not before a reference could be made in terms of arbitration clause contained in fresh partnership deed of 2000.

Subsequently, when the case was heard by another designate of the Chief Justice, the earlier order for recording of evidence was ignored and the Sec.11 application was allowed by appointing a sole arbitrator and by leaving the question of the validity of the fresh partnership deeds to be decided by such sole arbitrator (“impugned order”).

The impugned order was challenged before the SC by way of special leave.

Issue:

In the factual matrix of the case, the issue which was framed before the SC was whether the Chief Justice or his designate in deciding Sec.11 Application can appoint an arbitrator without deciding the validity of an arbitration agreement and by leaving such question open to be decided by the arbitrator.

Judgement:

The SC relied on its decisions in the case of SBP & Co. –Vs- Patel Engineering Ltd. [2005 (8) SCC 618] and National Insurance Co. Ltd. –Vs- Boghara Polyfab Pvt. Ltd. [2009 (1) SCC 267] and held that while deciding Sec.11 Application, it is for the Chief Justice or his designate to decide whether there is an arbitration agreement as defined under the Arbitration & Conciliation Act, 1996 and whether the party making such request is a party to such agreement as because, ‘… the question whether there is an arbitration agreement is a jurisdictional issue and unless there is a valid arbitration agreement, the application under section 11 of the Act will not be maintainable and the Chief Justice or his designate will have no jurisdiction to appoint an arbitrator under section 11 of the Act.”

The SC further held that where allegations of forgery and fabrication are made in regard to the documents, it would be appropriate for the Chief Justice or his designate to decide the issue.

Comments:

While deciding the issue in hand, the SC stated that where allegations of forgery and fabrication are made in regard to the documents, it would be appropriate for the Chief Justice or his Designate to decide the issue.

Though it was contended before the SC that if the Chief Justice or his designate is required to examine the allegations of fabrication and forgery made by a party in regard to the contract containing arbitration agreement before Sec.11 Application is decided, Sec.11 proceedings shall cease to be a summary proceedings and become cumbersome and protracted, the SC refused to accept this contention. The Supreme Court stated that, “Existence of a valid and enforceable arbitration agreement is a condition precedent before an arbitrator can be appointed under Sec.11 of the Act. When serious allegations of fraud and fabrication are made, it is not possible for the Court to proceed to appoint an arbitrator without deciding the said issue which relates to the very validity of the arbitration agreement. Therefore the fact that the allegations of fraud, forgery and fabrication are likely to involve some delay in disposal, are not grounds for refusing to consider the existence of a valid arbitration agreement.”

It was further contended before the SC that allegations of fabrication and forgery is likely to be raised very often with the ulterior motive to protract Sec.11 proceedings thereby defeating the very purpose of Sec.11 of the Arbitration & Conciliation Act, 1996. The SC rejected this contention, however, with a view to safeguard abuse of this process, it clarified that, “where agreements have been performed in part, allegations of forgery shall not be entertained. It is only in a very few cases, where an agreement which had not seen the light of the day is suddenly propounded, or where the agreement had never been acted upon or where sufficient circumstances exist to doubt the genuineness of the agreement, the Chief Justice or his designate will examine this issue….on the ground of termination, performance or frustration of contract, arbitration agreement cannot be avoided.” The Supreme Court also stated that, “if a party is found to have falsely contended that the contract was forged/fabricated, the Chief Justice or his designate may subject such part (sic) to heavy costs so that such false claims are discouraged.”

The judgment has expanded the courts scope to analyze the competence of the arbitrator to deal with the disputes before it. Earlier, the Supreme Court in the case of N. Radhkrishnan v. M/s. Maestro Engineers & Ors. (Civil Appeal No. 7019 of 2009), while deciding a case in the context of an application under Sec.8 of Arbitration & Conciliation Act, 1996 has held that allegations of fraud and serious malpractices “must be tried in court and the Arbitrator could not be competent to deal with such matters which involved an elaborate production of evidence to establish the claims relating to fraud and criminal misappropriation.”

Moreover, inspite of the safeguards put in by the SC, in practice it is not entirely inconceivable that some parties may make allegations fraud, forgery and fabrication of documents with an ulterior motive to prolong litigation and frustrate the legitimate claims of the other parties. This is quite apart from the inordinate delay to be caused in deciding Sec.11 Application which was envisaged to be a summary proceeding under the Arbitration & Conciliation Act, 1996.

For the full text of the judgment please click HERE.

Supreme Court on Implied Exclusion of Part I of the Arbitration and Conciliation Act

On September 1, 2011, a two judge bench of the Supreme Court (Cyriac Joseph and Altamas Kabir) in Yograj Infrastructure Ltd v. Ssang Yong Engineering & Construction Co. Ltd., ruled that where the seat of arbitration was Singapore, rules governing the arbitration were of the Singapore International Arbitration Centre ("SIAC") and the substantive law of contract was Indian law, then Part I of the Arbitration and Conciliation Act, 1996 (the "1996 Act") was excluded by implication. 

Background

The Appellant was an Indian company while the Respondent was a company incorporated in Seoul, South Korea with its registered office at Seoul and its project office at New Delhi. In 2006, the National Highways Authority of India ("NHAI") awarded a contract to the Respondent, for a project in the State of Madhya Pradesh.  The Respondent entered into a Sub-Contract with the Appellant Company for carrying out the work in question.

Arbitration Clause

Clauses 27 and 28 of the Agreement provided for arbitration and the governing law agreed to was the the 1996 Act. 

The arbitration clause contained in the Agreement in Clause 27 read as follows:

"27.1 All disputes, differences arising out of or in connection with the Agreement shall be referred to arbitration. The arbitration proceedings shall be conducted in English in Singapore in accordance with the Singapore International Arbitration Centre (SIAC) Rules as in force at the time of signing of this Agreement. The arbitration shall be final and binding.

27.2 The arbitration shall take place in Singapore and be conducted in English language.

27.3 None of the Party shall be entitled to suspend the performance of the Agreement merely by reason of a dispute and/or a dispute referred to arbitration."

Clause 28 of the Agreement described the governing law and provided:

"This agreement shall be subject to the laws of India. During the period of arbitration, the performance of this agreement shall be carried on without interruption and in accordance with its terms and provisions."

Issues

The issues involved in the instant case were:

(i) whether Indian Courts would have jurisdiction to entertain an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, against an interim order passed by the Arbitral Tribunal with its seat in Singapore; 

(ii) Whether the "law of arbitration" would be the International Arbitration Act, 2002, of Singapore; and 

(iii) whether the "Curial law" would be the laws of Singapore.

Dispute

In 2009, Respondent issued a notice of termination of the Agreement, inter alia, on the ground of delay in performing the work under the Agreement. Settlement talks having failed, the Respondent/claimant, invoked Clause 27 of the Agreement for reference of the disputes to arbitration in accordance with the SIAC Rules. Both the parties filed applications before the Sole Arbitrator seeking interim relief under Rule 24 of the SIAC Rules in June, 2010. The Arbitrator passed an interim order on 29th June, 2010 in favour of Respondent.

Before the lower courts

The appeal filed by the Appellant before the District Court, Narasinghpur, under Section 37(2)(b) of the 1996 Act, against the order of the Sole Arbitrator, was dismissed on the ground of maintainability and lack of jurisdiction, since the seat of the arbitration proceedings was in Singapore and the said proceedings were governed by the laws of Singapore. 

The Civil Revision filed against the said order was dismissed by the Madhya Pradesh High Court in August, 2010. The High Court observed that under Clause 27.1 of the Agreement, the parties had agreed to resolve their dispute under the provisions of SIAC Rules which expressly or, in any case, impliedly also adopted Rule 32 of the said Rules which categorically indicates that the law of arbitration under the said Rules would be the International Arbitration Act, 2002, of Singapore. Against this decision of the High Court, the Appellant filed this Special Leave Petition. 

Before the Supreme Court

Contentions of Appellant

Appellant contended that Indian law is the applicable law of arbitration, in terms of the agreement arrived at between the parties. This explicit agreement is evident from the wording of clause 28 of the Agreement, which provided that the Agreement would be subject to the laws of India and that during the period of arbitration, the performance of the Agreement would be carried out without interruption and in accordance with its terms and provisions. In other words, all interim measures sought to be enforced would necessarily have to be in accordance with Sections 9 and 37(2)(b) of the Act.

As per clause 27.1, SIAC Rules would apply only to the arbitration proceedings, but not to appeals from such proceedings. It was submitted that the right to appeal from an interim order under Section 37(2)(b) is a substantive right provided under the Act and was not governed by the SIAC Rules.

Reliance was also placed on Rule 1.1 of the SIAC Rules which provides:

"Where parties have agreed to refer their disputes to the SIAC for arbitration, the parties shall be deemed to have agreed that the arbitration shall be conducted and administered in accordance with these Rules. If any of these Rules is in conflict with a mandatory provision of the applicable law of the arbitration from which the parties cannot derogate, that provision shall prevail."

Rule 32 (of the 2007 Rules) provides: 

"Where the seat of arbitration is Singapore, the law of the arbitration under these Rules shall be the International Arbitration Act (Chapter 143A, 2002 Ed, Statutes of the Republic of Singapore ) or its modification or re-enactment thereof." 

However, Section 37(2)(b) of the 1996 Act being a substantive and non-derogable provision, providing a right of appeal to parties from a denial of an interim measure, such a provision protects the interest of parties during the continuance of arbitration and as a consequence, Rule 32 of the SIAC Rules which does not provide for an appeal, is in direct conflict with a mandatory non-derogable provision contained in Section 37(2)(b) of the 1996 Act.

It was then submitted that Part I of the 1996 Act was applicable in this case, since: 

(i) it had not been excluded by Clause 27 of the Agreement (the Bhatia International and Venture Global decisions were relied on, as well as Citation Infowares Ltd. v. Equinox Corporation, wherein it was clearly held that where the operation of Part I of the 1996 Act is not expressly excluded by the arbitration clause, the said Act would apply); (ii) Clause 28 of the Agreement expressly provided that the Agreement would be subject to the laws of India and that during the period of arbitration the parties to the Agreement would carry on in accordance with the terms and conditions contained therein. 

The International Arbitration Act of Singapore would have no application to this case, though the conduct of the proceedings of arbitration would be governed by the SIAC Rules.

It was thus argued that the High Court had made an error in its decision by not considering Clause 28 of the Agreement while arriving at such a conclusion. Moreover, the very fact that the Respondents had approached the District Court, Narsinghpur, in India and had filed an application under Section 9 of the 1996 Act,  and even mentioned that the contract was within the jurisdiction of the court, indicated that the Respondent also accepted the applicability of the 1996 Act. 

The Appellant further relied on section 42 in Part I of the 1996 Act, which states: 

"Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."

The concepts of 'proper law' of an arbitration agreement and 'curial law' were explained and distinguished. The proper law is the law which would be applicable in deciding the disputes referred to arbitration, it governs most aspects of the main contract, and the curial law governs the procedural aspect of the conduct of the arbitration proceedings. 

Thus, the appellant argued, the proper law of the arbitration would be the 1996 Act, the curial law would be the SIAC Rules. This difference in the two concepts had been considered by the Apex Court in Sumitomo Heavy Industries Ltd. v. ONGC and NTPC v. Singer, in which the question for decision was what would be the law governing the arbitration when the proper law of the contract and the curial law were agreed upon between the parties. 

Appellant contended that absent any express choice, the proper law of the contract would be the proper law of the Arbitration Agreement. In the instant case, admittedly the proper law of contract was the law of India and since the parties had not expressly made any choice regarding the law governing the Arbitration Agreement, the proper law of contract, namely, the 1996 Act, would be the proper law of the Arbitration Agreement.

The right to appeal, a substantive right under the 1996 Act would be governed by the said Act and the present appeal, was therefore, liable to be allowed, and the order of the High Court, impugned in the appeal, was liable to be set aside.

Contentions of Respondent

Respondent submitted that the parties had agreed that the seat of arbitration would be Singapore and that the arbitration proceedings would be continued in accordance with SIAC Rules, as per Clause 27.1 of the Agreement. It was also agreed that the proper law of the contract would be Indian law and the proper law of the arbitration would be Singapore law.

Respondent contended that an application under Section 9 of the 1996 Act was filed before the District Court prior to the date of invocation of the arbitration proceedings and before the curial law, Singapore law, became operative.The District Judge  directed the applicant to submit its case before the Arbitrator in Singapore. The parties had expressly chosen the proper law of the contract to be Indian Law, the proper law of arbitration to be the Singapore International Arbitration Act, 2002 and the curial law to be Singapore law, since the seat of arbitration was in Singapore. Respondent relied on Sumitomo Heavy Industries Ltd. v. ONGC, where it was held that the curial law, besides determining the procedural powers and duties of the Arbitrators, would also determine what judicial remedies are available to the parties, who wished to apply for security for costs or for discovery or who wished to challenge the Award once it had been rendered and before it was enforced.

Next, it was submitted that choice of the seat of arbitration empowered the courts within the seat of arbitration to have supervisory jurisdiction over such arbitration.  

The decision in NTPC v. Singer related to the applicability of the Indian Arbitration Act, 1940, and the Foreign Awards (Recognition and Enforcement) Act, 1961, to a foreign award sought to be set aside in India under the provisions of the 1940 Act. The said decisions have no relevance to the question raised in the present case which raises the question as to whether the Indian Courts would have jurisdiction to entertain an appeal under Section 37 of the 1996 Act against an interim order of the Arbitral Tribunal, despite the parties having expressly agreed that the seat of arbitration would be in Singapore and the Curial law of the arbitration proceedings would be the laws of Singapore. In the NTPC judgment, the Court had observed that Courts would give effect to the choice of a procedural law other than the proper law of contract only where the parties had agreed that the matters of procedure should be governed by a different system of law. In the above-mentioned case, the Court was dealing with a challenge to a domestic award and not a foreign award. Section 9(b) of the Foreign Awards (Recognition and Enforcement) Act, 1961, provides that the said Act would not apply to an award, although, made outside India, but which is governed by the laws of India. Accordingly, all such awards were treated as domestic awards by the 1961 Act and any challenge to the said award, could, therefore, be brought only under the provisions of the 1940 Act. The law of arbitration in the NTPC case was Indian law as opposed to the present case, where the parties had agreed that the law of arbitration would be the International Arbitration Act, 2002, of Singapore.

By virtue of Clause 27 of the Agreement, and by accepting the SIAC Rules, the parties had agreed that Part I of the 1996 Act would not apply to the arbitration proceedings taking place in Singapore. This was reiterated in the Terms of Reference that the arbitration proceedings would be governed by the laws of Singapore. Even in Bhatia International, relied upon by Appellant, the Court had held that parties by agreement, express or implied, could exclude all or any of the provisions of Part I of the 1996 Act. Consequently, in Bhatia International the Court had held that exclusion of Part I of the 1996 Act could be by virtue of the Rules chosen by the parties to govern the arbitration proceedings.

With respect to Section 42 of the 1996 Act, the High Court had held that by express agreement parties had ousted the jurisdiction of the Indian Courts, while the arbitration proceedings were subsisting. Accordingly, it was only the laws of arbitration as governed by the SIAC Rules which would govern the arbitration proceedings along with the procedural law, which is the law of Singapore.

Decision

The decision turned on Clause 27.1 of the Agreement between the parties. As evident from Clause 27.1, the procedural law with regard to the arbitration proceedings, was unambiguously the SIAC Rules. Clause 27.2 made it clear that the seat of arbitration would be Singapore.

To decide on the law on the basis of which the arbitral proceedings were to be decided, the Court looked to Clause 28 of the Agreement. Clause 28 indicated that the governing law of the agreement would be the law of India, i.e., the 1996 Act. While the proper law governed the agreement itself, in the absence of any other stipulation in the arbitration clause as to which law would apply in respect of the arbitral proceedings, it is the law governing the contract which would also be the law applicable to the Arbitral Tribunal itself. Clause 27.1 made it clear, according to the Court that the curial law, regulating the procedure to be adopted in conducting the arbitration, would be the SIAC Rules. 

The question to be decided was whether in such a case the provisions of Section 2(2) of the 1996 Act, indicating that Part I of the Act would apply where the place of arbitration is in India, would be a bar to the invocation of the provisions of Sections 34 and 37 of the Act, as far as the instant arbitral proceedings, being conducted in Singapore, were concerned.

The Court distinguished Bhatia International, wherein while considering the applicability of Part I of the 1996 Act to arbitral proceedings where the seat of arbitration was in India, the Court was of the view that Part I of the Act did not automatically exclude all foreign arbitral proceedings or awards, unless the parties specifically agreed to exclude the same. In the present case, parties had categorically agreed that the arbitration proceedings, if any, would be governed by the SIAC Rules as the Curial law, which included Rule 32, requiring applicability of the Singapore International Arbitration Act, 2002.

Regarding Rule 1.1 of the SIAC Rules, the Court ruled that Section 2(2) of the 1996 Act indicates that Part I would apply only in cases where the seat of arbitration is in India. Although the Court in Bhatia International, while considering the said provision, held that in certain situations the provision of Part I of the aforesaid Act would apply even when the seat of arbitration was not in India, in the instant case, once the parties had specifically agreed that the arbitration proceedings would be conducted in accordance with the SIAC Rules, which includes Rule 32, the decision in Bhatia International and subsequent decisions relying on it, would no longer apply.

With regard to Section 42 of the 1996 Act, the Court held that the same was applicable at the pre-arbitral stage, when the Arbitrator had not also been appointed. Once the Arbitrator was appointed and the arbitral proceedings were commenced, the SIAC Rules became applicable excluding the applicability of Section 42 as well as Part I of the 1996 Act, including the right of appeal under Section 37 thereof.

Thus the appeal under Section 37 was not maintainable and the instant appeal was dismissed.