Mere submission to exclusive jurisdiction of foreign court does not bar Indian courts u/s 9 Arbitration Act: Delhi High Court

The Delhi High Court has held that the parties' mere submission to the exclusive jurisdiction of a foreign court in an arbitration agreement does not take away the jurisdiction of Indian courts under Section 9 of the Arbitration and Conciliation Act in view of the proviso to Section 2(2). (Big Charter Pvt Ltd vs Ezen Aviation Pty Ltd).A detailed judgement on the issue was passed by a Single Judge Bench of Justice C Hari Shankar in a section 9 plea instituted by Big Charter Pvt Ltd (Petitioner). .The Petitioner and the Respondent, Ezen Aviation Pty Ltd were parties to lease agreements in connection with an aircraft. .While the Petitioner provided scheduled air operator services, the Respondent engaged in the business and lease of aircraft. .Asserting that there was a clear and undeniable breach of the agreement by the Respondent, the Petitioner invoked arbitration and moved the High Court under Section 9 of the Arbitration Act for grant of interim relief. .The preliminary objection raised by the Respondent was with regards the territorial jurisdiction of the High Court to entertain the petition. .As per the Respondent, the parties had agreed to subject themselves to the jurisdiction of courts at Singapore. It was stated that the seat of arbitration was Singapore and the arbitration proceedings had to be conducted in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (SIAC)..The Petitioner, on the other hand, stated that if the present petition was not entertained, it would be rendered remediless, insofar as its prayer for pre-arbitral interim relief was concerned. .It inter alia was stated that proviso to Section 2(2) conferred Section 9 jurisdiction on the High Court, even in respect of foreign seated arbitrations..The Court, at the outset, clarified that since arbitration law in India was codified in the form of the 1996 Act, the issue of jurisdiction of a petition under Section 9 must emanate from the 1996 Act itself.."Any reference to the UNCITRAL Model, or to any textual commentaries may, if at all, be justified only if there is any ambiguity in any of the provisions of the 1996 Act, which requires resolution.", the Court said. .Stating that the issue of the situs of jurisdiction, concurrent jurisdiction, and exclusion of jurisdiction under Sections 9, 11, 34 and 36 had been the subject matter of consideration in numerous decisions of the Supreme Court, the Court perused in detail the decisions in Bharat Aluminium Co. vs Kaiser Aluminium Technical Services Inc, Swastik Gases Pvt Ltd vs Indian Oil Corporation Ltd, B E Siomese Von Staraburg Niedenthal vs Chhatisgarh Investment Ltd, Indus Mobile Distribution Pvt Ltd vs Datawind Innovations Pvt Ltd, Brahmani River Pellets Ltdvs Kamachi Industries Ltd, BGS SGS Soma JV vs NHPC Ltd and Mankastu Impex Pvt Ltd vs Airvisual Ltd. .The 246th Law Commission Report and the amendments proposed by it were also discussed by the Court in the judgment. .The Court observed that de hors the proviso to Section 2(2), there could be little doubt that once the “seat of arbitration” is fixed as Singapore, courts at Singapore would have exclusive jurisdiction to supervise the arbitral proceedings. .However, on account of proviso to Section 2(2), the same could not be accepted, the Court remarked. .The proviso to Section 2(2), which came into effect on October 23, 2015, changes the goalpost. By operation of this proviso, Section 9 of the 1996 Act would also apply to international commercial arbitration, where the place of arbitration is outside India. It is not in dispute that any arbitral award, issued by the SIAC, would be enforceable and recognised under Part II of the 1996 Act.Delhi High Court said. . The Court added, .With the introduction of this proviso, the fixation of Singapore as the “place” or the “seat” of arbitration would not, ipso facto, divest this Court of Section 9 jurisdiction. Such divestiture would occur only if there is any “agreement to the contrary”..Thus, while determining if there was any such "agreement to the contrary" in the present case, the Court analysed if the exclusive jurisdiction of the courts of Singapore had ousted the jurisdiction of the High Court..The Court stated that the jurisdiction exercised by a Court under Section 9, had to be differentiated from the jurisdiction exercised by the Court under other provisions such as Sections 11, 34 and 36..Iterating that Section 9 was available at the pre-arbitration stage and was specifically included in the proviso to Section 2(2), the Court took into account the Law Commission Report on the deleterious consequences of excluding the applicability of Section 9 in the case of foreign-seated arbitrations. .It noted, ."As has been observed by the Law Commission, in such a situation (where seat of arbitration is abroad), the party seeking pre-arbitral interim injunction, would have to obtain an interim order from the foreign Court, or the arbitral tribunal situated abroad, and, thereafter, to file a civil suit to enforce the right created by such interim order which, otherwise, would not be directly enforceable by way of an execution petition, as it would not qualify as a “judgement” or “decree”... Similarly, disobedience, by the party against whom an injunction may, if at all, be obtained from a foreign Court, would also require the applicant seeking injunction to initiate contempt proceedings in the foreign Court and thereafter, enforce the judgement of the foreign Court under Section 13 and 44A of the CPC.".In view of the above "raison d’etre for the introduction of the proviso to Section 2(2)", the Court refused to accept the Respondent's contention that agreement on the exclusive jurisdiction of courts of Singapore constituted “agreement to the contrary”. .The contention could not be accepted on the ground that the courts at Singapore had no power to grant the relief under Section 9, the Court said. ."The mere submission, by the parties, to the exclusive jurisdiction of courts in Singapore cannot, therefore, wish away the applicability of the proviso to Section 2(2). As already noted hereinabove, the statutory and precedential.. it may be tremendously difficult, if not impossible, for the petitioner to prosecute any proceeding, for grant of pre-arbitral interim relief (in Singapore).", it explained. .The Court further noted that the lease in question was executed much after the introduction of the proviso in Section 2(2) in 2019 and yet, there was no specific clause to suggest to the contrary..As far the merit of the application for grant of interim relief was concerned, the Court stated that apart from the three criteria of prima facie case, balance of convenience and irreparable loss, a Section 9 petitioner was also required to demonstrate that if urgent interim relief was not granted, there was a chance of the arbitral proceedings being frustrated. ."A Section 9 court has also to be circumspect and should not take care not to entrench on the jurisdiction vested in the arbitrator by Section 17. Section 9, at the pre-arbitral stage, is, therefore, a provision in aid of the arbitral proceedings, intended to provide ad hoc protection, till Section 17 could be invoked", the Court clarified. .The petition was accordingly disposed of with a direction that the amount of Rs 4,30,00,000 shall remain deposited with the Registry of the High Court by the Respondent, pending further orders..Advocate Gautaum Narayan with Advocates Asmita Singh, Aditya Nair appeared for the Petitioner. .The Respondent was represented by Senior Advocate Arvind Kamath with Advocates Pashant Popat, Nikit Bala, Karishma Naghnoor, Pai Amit, Rahat Bansal, Souvik Majumdar..Read the Judgement: