Coal India v. Canadian Commercial Corporation

The Calcutta High Court in the case of Coal India v. Canadian Commercial Corporation said that any annulment proceedings in respect of a foreign award can only be made in the country that was the juridical seat of the arbitration.

Facts

The parties entered into an agreement 1989 for the Respondent to set up a coal extracting facility for the Petitioner in the Rajmahal area in the state of Jharkhand. The parties agreed that the agreement was to be governed by the laws of India; that the dispute- resolution mechanism to be followed was of arbitration; and, that the arbitration was to take place under the rules of the International Chamber of Commerce (ICC) in Geneva, Switzerland.

When disputes arose the petitioner sought a reference. The parties nominated their representatives on the arbitral tribunal and the presiding arbitrator was filled in by the ICC. The arbitral tribunal held its meetings in the United Kingdom but acknowledged that the seat of the arbitration was Switzerland. An award was passed in favor of the Respondent.

The Petitioner challenged it under Section 48 of the Arbitration and Conciliation Act, 1996 (“Act”) and also invoked the provisions of Section 34 of the Act and Sections 47 of the Act and 151 of the Code of Civil Procedure, 1908 (“CPC”) to have the award set aside to be able to pursue afresh in support of its claim (“Challenge”)

Arguments by the Parties

A preliminary objection was raised by the respondent, regarding the jurisdiction of any Indian court to receive a challenge to an arbitral award passed in a reference conducted beyond the territorial limits of India. The Respondent argued that in an international commercial arbitration, if the parties agree to a seat of the reference, the law of the seat of the reference would govern a challenge in the nature of setting aside the award unless the parties have expressly agreed otherwise. It is only a competent authority in the country, which is the seat of the arbitration that may receive such a challenge to the exclusion of all other forums.

The Petitioner mentioned that courts India are competent to receive a challenge to the award notwithstanding the place of the arbitration having been outside India and despite the Respondent not having attempted to implement it.

Judgment

The Court observed that Sections 2(1)(e) and 42 of the Act  preclude any Indian court from receiving a petition under Section 34 of the Act  unless the situs of the Respondent therein or a part of the cause of action relating to the subject- matter of the arbitration or a part of the immovable property, which was the subject-matter of the arbitration is within the jurisdiction of the court.

An arbitral award rendered in another New York Convention country will always be regarded as a New York Convention award in this country but the legal fiction that is evident from the Act may permit an arbitral award rendered in another New York Convention country to be regarded as a domestic award within the meaning of that expression in Section 2(7) of the Act.

All factors in assessing the territorial jurisdiction of a court under Indian law would then have been taken into account; and the word "domestic" in Section 2(7) of the Act would have been given its full meaning since in an imaginary case of two parties domiciled abroad, entering into an agreement that has no nexus with India or an agreement that relates to an immovable property, which is not in India, a petition under Section 34 of the Act cannot be carried to any Indian court.

An award rendered in a foreign country and which may even be a "foreign award" within the meaning of Section 44 of the Act, can be a domestic award and amenable to annulment proceedings under Indian law in this country only if such award has been made, pursuant to an agreement between the parties, under the law of India. The Court dismissed rejected challenge filed by the Petitioner as not being maintainable.