Singapore Seat, Indian Parties: Not ICA, Says Rajasthan HC

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Brief Facts

Barminco Indian Underground Mining Services, a limited liability partnership registered under the LLP Act, 2008, contracted with Hindustan Zinc Limited (HZL) on 11.03.2019 to develop HZL's Rampura Agucha Mine (paras 7.1, 7.2). After disputes over unpaid invoices, HZL terminated the contract by a letter of 19.04.2020 (paras 7.4, 7.6). Clause 16 provided for SIAC arbitration with its seat at Singapore (para 7.11). Apprehending encashment of its Rs. 5 crore bank guarantee, Barminco applied to the High Court under Section 9, and an interim order followed on 14.05.2020 (paras 1, 2, 7.10). HZL objected that the arbitration was not international, so the application lay before the Principal Civil Court at Udaipur (paras 3, 5, 22).

Court's Findings

The Court first rejected HZL's side objections. Barminco ought to have disclosed its Indian LLP status more clearly, but this was not deliberate concealment (paras 46-50); nor could it be faulted on negotiation when HZL called a meeting for the same day and terminated the contract on 19.04.2020 (paras 51, 52). On the core question, the forum for a Section 9 application turns solely on whether the arbitration is an international commercial arbitration; the seat is irrelevant (paras 71, 79). The Section 2(1)(f) definition is nationality-centric and needs at least one foreign party (para 72). Section 11 rulings such as TDM Infrastructure still guide interpretation (para 73). That an award would be enforced under Part II does not make the arbitration international (para 74). Barminco, as an LLP, is a body corporate of Indian nationality, and HZL is an Indian company (para 75). The plea that Part I's definitions fall away when the seat is abroad was self-defeating, since Barminco itself relied on the Part I definition of ‘Court’ (paras 81, 84). Applying the anomaly test in Stock v. Frank Jones (Tipton) Ltd., approved in Afcons, the Court read ‘Part’ in Section 2(1) as ‘Act’ (paras 89-92).

Legal Principle

Whether an arbitration is an international commercial arbitration depends on the parties' nationality under Section 2(1)(f), not on the seat. An arbitration between Indian parties seated abroad is a third category: not international, yet yielding a foreign award under Part II; the Section 2(1) definitions apply to the whole Act (paras 79, 93, 94).

Precedents Relied Upon

TDM Infrastructure Pvt. Ltd. v. UE Development India Private Limited (2008) 14 SCC 271
Relied Upon Discussed at ¶ 23, 65, 66, 73
A company incorporated in India can only have Indian nationality, and an arbitration between parties of Indian nationality is not an international commercial arbitration; the Court held that this Section 11 interpretation can guide it although rendered on the administrative side.
Stock v. Frank Jones (Tipton) Ltd. (1978) 1 All ER 948
Applied Discussed at ¶ 89, 91
A court may depart from the plain words of a statute only on four conditions, including a clear and gross anomaly; the Court applied the test to read ‘Part’ in Section 2(1) as ‘Act’.
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Company (2010) 8 SCC 24
Relied Upon Discussed at ¶ 90, 91
Approved and applied the principle in Stock v. Frank Jones (Tipton) Ltd. for departing from the plain meaning of a statute to avoid an anomaly.

View all precedents (10)

Bharat Aluminium Company & Ors. v. Kaiser Aluminium Technical Service Inc. & Ors. (2012) 9 SCC 552
Referred To Discussed at ¶ 62, 63
Part I of the Act has no application to an international commercial arbitration held outside India; the Court cited it to explain why the proviso to Section 2(2) was inserted in 2015.
Sassan Power Limited v. North American Coal Corporation India Pvt. Ltd. 2015 SCC MP 1747, affirmed by the Supreme Court in (2016) 10 SCC 813
Distinguished Discussed at ¶ 37, 76
Cited by counsel for the applicant; the Court held it lends no support, as it decided only that Part I does not apply where the seat is abroad, not whether the arbitration was an international commercial arbitration.
GMR Energy Limited v. Doosan Power Systems India Pvt. Ltd. 2017 SCC Online Del 11625
Distinguished Discussed at ¶ 37, 76
Cited by counsel for the applicant; the Court held it lends no support, as it decided only that Part I does not apply where the seat is abroad, not whether the arbitration was an international commercial arbitration.
M/s Larsen & Toubro Ltd. v. Mumbai Metropolitan Region (2019) 2 SCC 271
Referred To Discussed at ¶ 23, 65, 66
Cited by counsel for the respondent: the central management and control of a consortium led by an Indian company was exercised in India, so the arbitration was not an international commercial arbitration.
State of West Bengal v. Associated Contractors (2015) 1 SCC 32
Referred To Discussed at ¶ 42, 73
Cited by counsel for the applicant: a decision of the Chief Justice or his designate under Section 11 has no precedential value.
P.T.C. Techno Pvt. Ltd. v. Samsung India Electronics Pvt. Ltd. 2019 SCC Online Allahabad 3881
Referred To Discussed at ¶ 23
Cited by counsel for the respondent in support of the contention that the arbitration was not an international commercial arbitration.
M/s Halliburton Offshore Services Inc. v. Vedanta Limited & Anr. Interim order dated 20.04.2020, Delhi High Court
Referred To Discussed at ¶ 15, 53, 54, 56
Relied on by the respondent as the basis of the interim order, since vacated; the Court found it was not a reason for the interim order of 14.05.2020 and its vacation did not dissolve that order.

Singapore Seat Does Not Make Arbitration Between Indian Parties ‘International’: Rajasthan High Court Returns Section 9 Plea

Judgment Intelligence

Key holdings

Brief Facts

Court's Findings

Legal Principle

Precedents Relied Upon

Statutory Provisions