June 04, 2013
Indian Courts Held to Lack Jurisdiction for Setting Aside of Interim Awards Passed Under SIAC Rules
In this decision dated May 9, 2013, the High Court of Madhya Pradesh ("Court") set out to decide the jurisdictional authority of Indian Courts to set aside an interim award passed under arbitration proceedings governed by the Singapore International Arbitration Centre Rules, 2007 ("SIAC Rules"). It was held that the Indian Courts had no power to do so when the parties have submitted to the curial law of Singapore since a conjoined reading of the SIAC Rules and the International Arbitration Act ("IA Act") makes specific provisions for setting aside an interim award which excludes the jurisdiction of Indian Courts.
Yograj Infrastructure Limited ("Appellant") and Ssangyong Engineering and Construction Co Limited ("Respondent") are companies engaged in the business of construction, development and execution of projects like road, civil works etc. and the Respondents had sub-contracted a project from the National Highways Authority of India to them but subsequently terminated it on various grounds relating to performance of the agreement.
Both the parties applied for interim reliefs before the District Judge, Narsinghpur and the matter eventually reached the Supreme Court in 2011 which dismissed the appeal and held that the rule laid down Bhatia International v Bulk Trading ("Bhatia International") regarding the applicability of Part - I of the Arbitration and Conciliation Act, 1996 ("Act") did not hold since the parties had agreed to the arbitration proceedings to be referred to arbitration in Singapore under the SIAC Rules ("2011 Case").1
Meanwhile, in the proceedings in Singapore, the arbitrator passed an interim award in favour of the Respondent while dismissing the Appellants application for the same. The Appellants then challenged the award of the arbitrator before the District Judge, Narsinghpur who dismissed the application and this is how the appeal against the District Judges order came to be filed in the Court.
The main issue to be considered by the Court was whether Indian courts had the jurisdiction to set aside an interim award of an arbitrator in proceedings where the seat of arbitration was outside India and following from that, whether the District Judge was correct in dismissing the application of the Appellants to set aside the award.
The judgment re-iterated the lack of jurisdiction of the Indian Courts in relation to the setting aside of foreign awards.
A key point to be noted is that in the subsequent SIAC Rules, Rule 32 which provides for the governing law being the International Arbitration Act has been deleted. The new rules provide for the tribunal to apply the law as designated by the parties failing which it has the discretion to apply any law that it deems appropriate.
(**special thanks to Aanchal Rohira - paralegal with Mumbai office for her immense contribution)