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    REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL  APPEAL No.   3885        OF 2017 (Arising out of SLP (C) No. 34009 of 2013)

 IMAX CORPORATION                  ... APPELLANT

VERSUS

M/S E-CITY ENTERTAINMENT (I) Pvt. LTD.         ... RESPONDENT

JUDGMENT

S. A. BOBDE, J.

Leave granted.

2. The appellant-Imax Corporation has challenged the interim

order dated 10.06.2013 passed by the High Court of Judicature

at Bombay in Notice of Motion No.2560 of 2008 in the Arbitration

Petition (Lodging) No.525 of 2008.

3. By the aforementioned order, the High Court held that the

petition under Section 34 of the Arbitration and Conciliation Act,

1996  (for  short,  "the  Arbitration  Act")  filed  by  the

respondent-M/S E-City Entertainment (I) Pvt. Ltd. against two

partial  final  awards  dated  11.02.2006,  24.08.2007,  and  third

final award dated 27.03.2008 was maintainable.  

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The appellant had objected to the maintainability  of the

petition under Section 34 of the Arbitration Act on the ground

that  the  arbitration  clause  excluded  the  applicability  of  Part-I

which contains the said section.

4. The  only  issue  before  us  is  whether  the  petition  under

Section 34  of the Arbitration Act is maintainable before a court

in India, and in this case, the Bombay High Court.

5. On  28.09.2000,  the  appellant  entered  into  an

agreement  with  the  respondent  for  a  supply  of  large  format

projection systems for cinema theatres to be installed in theatres

all  across  India.  Clause  14  of  the  agreement  contained  an

arbitration clause which reads as follows:

"This Agreement shall  be governed by and construed  according  to  the  laws  of Singapore,  and  the  parties  attorn  to  the jurisdiction of the courts of Singapore. Any dispute arising out of this master agreement or concerning the rights, duties or liabilities of E-City or Imax hereunder shall be finally settled  by  arbitration  pursuant  to  the  ICC Rules of Arbitration."

6. On  16.06.2004,  the  appellant  filed  a  request  for

arbitration with the ICC, and claimed damages.  On 08.10.2004,

the ICC i.e. the chosen arbitral forum fixed London as the place

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of arbitration i.e. the juridical seat of arbitration, after consulting

the parties.

FIRST PARTIAL FINAL AWARD

7. On 11.02.2006, the first partial final award was made in

favour  of  the  appellant  declaring  that  the  respondent  was  in

breach of the agreement and therefore liable for damages. The

award  stated  that  the  decision on  the other  issues,  including

damages/costs would be reserved for a future award.

8. The aforementioned declaration was made after observing

in the award that the court of the ICC had decided to fix London

as the juridical seat of arbitration in accordance with the powers

vested in the court under Article 14(1) of the ICC Rules.  The

observation read as follows:

"As well be noticed, no provision was made for a venue for any arbitration contemplated by Clause 14, but subsequently the court of the ICC decided on the 8th of October, 2004 to  fix  London  as  the  juridical  seat  of  the arbitration  in  accordance  with  the  powers vested in the court under Article 14 of the ICC Rules. Accordingly, this is an arbitration to which Part-I of the English Arbitration Act 1996 applies."

9. The  appellant  filed  its  statement  of  damages  before

the  Arbitral  Tribunal.   The  respondent  filed  its  statement   

of defence.

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10. On 05.09.2006 the respondent objected that the appellant

has no legal status and the law firm representing them is not

authorized  to  pursue  the  arbitration.  In  that  application,  the

respondent stated as follows:

"The  seat  of  this  arbitration  is  London. Therefore, English law determines the effect of  any want of  capacity suffered by "Imax Ltd"  under  the  Canadian  law  as a  result  of  its  amalgamation  into  Imax Corporation  with  effect  from  1st January, 2001."

SECOND PARTIAL FINAL AWARD  

11. On  24.08.2007,  the  Arbitral  Tribunal  passed  the  second

partial  award  rejecting  the  above  objection  filed  by  the

respondent.   By  this  award,  the  tribunal  determined  the

quantum of damages payable to the appellant.  This award was

also made in London, the juridical seat of this arbitration.  A sum

of $9,406,148.31 was awarded to the appellant.  

THIRD FINAL AWARD  

12. The Arbitral Tribunal passed a final award on 27.03.2008

on the issue of interest and costs.  A sum of $1,118,558.54 by

way of interest and a further sum of $2,512.60 per day from

01.10.2007  until  the  payment  of  the  award  was  awarded  in

favour of the appellant. Sums of $400,000 and $384,789.21 by

way of costs of arbitration fixed by the ICC and costs by way of

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attorney’s  fees,  expert  fees  and  related  expenses  were  also

directed to be paid.  Final award dated 27.03.2008 was received

by the respondent on 01.04.2008.

The final  award on the issues of interest  and costs was

amalgamated  with  the  earlier  awards,  both  of  which  were

incorporated by reference into itself. The third final award also

stated that the place of arbitration is London.

PETITION  UNDER  SECTION  34  BEFORE  THE  BOMBAY   HIGH COURT

13. On 21.07.2008,  the respondent challenged the aforesaid

awards  under  Section  34  of  the  Arbitration  Act  before  the

Bombay High Court  in India after  a period of  more than two

years from the first partial award, more than one year from the

second partial award and a period of 3 months, 24 days from the

final award.

14. The learned Single Judge allowed the notice of  motion   

on the condonation of  delay and held  that the petition under

Section 34 was maintainable before the Bombay High Court.  

Hence, this appeal.  

15. The only question that arises for consideration before us is

whether  the  challenge to  the  award  made by the respondent

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under Section 34 of the Arbitration Act is maintainable before a

court in India. Clearly, if the answer is in the negative it is not

necessary to decide the question of delay. Thus, we make it clear

that we are not deciding where else in the world a challenge to

the award would be maintainable.

16. Dr. A.M. Singhvi, learned senior counsel for the respondent

relied on Clause VIII  (2) of the Request  for  Arbitration dated

16.06.2004 wherein the petitioner stated as follows:

"VIII Place of Arbitration, Law and Language

(2)  Section  14  of  the  letter  Agreement  is silent  as  to  the  place  of  the  arbitration. Claimant believes that Paris and France are suitable places for arbitration to take place, indeed, this is the venue chosen by the ICC for  the  related  EML  Arbitration  and  the claimant believes that this arbitration should be consolidated along with the pending EML Arbitration.  Paris  is  roughly  equal  distant from both parties."

17. The above submission was made in response to Mr. Pallav

Shisodia’s argument,  learned senior counsel  for  the appellant,

that  the  respondent  had  in  fact  stated  in  its  petition  under

Section 34 of the Arbitration Act that "the seat of arbitration was

in London".  Also in the counter affidavit before this Court it was

submitted that the seat of arbitration being London in no way

precludes  the  respondent  from challenging  the  awards  under

Section 34 of the Act.

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Having noted the above submissions and statements made

by  the  parties,  we  propose  to  decide  the  question  on  the

construction of Clause 14 and the law governing such challenges.

CLAUSE 14: THE ARBITRATION CLAUSE

18. Clause 14 of the Agreement deals with two matters:  

(i) the laws which will govern the agreement; and  (ii) a provision of settling disputes by arbitration.

As regards  the first,  it  provides that in case a question

arises as to the agreement i.e. what the agreement means or

what the parties intended, it shall be interpreted according to the

laws of Singapore and these laws will govern the understanding

and the acts of the parties.  Further, in case the parties resort to

a court, they shall approach the courts of Singapore which alone

shall  adjudicate upon the issue.  The courts of Singapore will

thus  adjudicate  in  relation  to  any  non-arbitrable  dispute  that

might arise under the agreement or possibly a dispute regarding

the correctness  or  validity  of  an  arbitration  award.   It  is  not

necessary to consider whether a challenge to the award would lie

in Singapore in this case because the award in fact was made in

London and in any case no party has approached the court in

Singapore.

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Secondly, this clause provides that any dispute arising out

of this agreement or concerning the rights, duties or liabilities of

the parties shall be settled by arbitration.  The arbitration shall

be pursuant to the ICC Rules of Arbitration.  In other words, the

parties shall invoke the ICC Rules of Arbitration in case a dispute

arises between them concerning their rights, duties or liabilities.

The intention is to have the dispute settled by and in accordance

with the ICC Rules of Arbitration.  In this sense, the ICC Rules of

Arbitration must be construed as being read into this clause.    

THE ICC RULES

19. The ICC Rules provide for the entire conduct of arbitration

from  its  commencement  to  the  passing  of  an  award.   They

provide that the arbitration shall be conducted by the court i.e.

the International Court of Arbitration, appointed by the council of

the ICC.  A party wishing to have recourse to arbitration under

the rules is required to submit a Request for Arbitration to the

Secretariat of the ICC along with the information prescribed and

in particular comments as to the place of arbitration.  The ICC

Rules clearly stipulate that the seat of arbitration shall be fixed

by the court, in the following words:-

“1. The place of the arbitration shall be   fixed  by  the  Court  unless  agreed   upon by the parties.

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2. The  Arbitral  Tribunal  may,  after   consultation  with  the  parties,   conduct hearings and meetings at   any location it considers appropriate   unless otherwise agreed  by  the   parties.

3. The  Arbitral  Tribunal  may   deliberate at any location  it   considers appropriate.”

In  this  case,  the  appellant  had  proposed  the  venue  of

arbitration to be Paris in France.  Upon notice being issued, the

respondent was obliged to file an answer including a comment

concerning the number of arbitrators and their choice as to the

place of arbitration.   

        The respondent, in their answer stated that the venue

suggested  by  the  claimant  i.e.  Paris  in  France  would

unnecessarily  increase  the  cost  of  arbitration  and  therefore

suggested that  Singapore would be the most appropriate and

convenient venue for the arbitration, vide  “Answer to Request

for  Arbitration  pursuant  to  Article  5(1)  of  the  ICC  Rules  of

Arbitration” dated 30.08.2004.

The  International  Court  of  Arbitration  decided  inter  alia

that  London,  United Kingdom will  be the juridical  seat of  the

arbitration  in  view  of  Article  14(1)  of  the  ICC  Rules  and,

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therefore,  proceeded on the basis of the Part-I of the English

Arbitration Act, 1996.

What is significant and needs to be pointed out is that the

parties had agreed in pursuance of the agreement to have the

dispute decided in accordance with the ICC Rules by submitting

the dispute to the ICC. The court (of the ICC) considered the

stand  of  the  parties  on  the  venue  for  arbitration  and  fixed

London as the seat of arbitration.

INTENTION OF THE PARTIES TO EXCLUDE PART-I  

20. In  this  case,  there  is  an  express  choice  of  the  law

governing the contract as a whole i.e. Singaporean Law.

There is an express agreement that any arbitration would

be  governed  by  the  ICC  Rules  of  Arbitration.   The  general

principle is that, in the absence of any contradictory indication, it

shall be presumed that the parties have intended that the proper

law  of  contract  as  well  as  the  law  governing  the  arbitration

agreement is the same as the law of the country in which the

arbitration is agreed to be held.

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21. It  would  be apposite  to  refer  to  a  case decided  by the

Supreme  Court  of  Sweden  from  a  passage  in  Redfern  and

Hunter1. Quoting the Supreme Court of Sweden it is stated that:-

“…no  particular  provision  concerning  the applicable law for the arbitration agreement itself was indicated [by the parties]. In such circumstances the issue of the validity of the arbitration  clause  should  be  determined  in accordance with the law of the state which the  arbitration  proceedings  have  taken place, that is to say, Swedish Law.”

In the present case, the arbitration clause contemplates an

award made in pursuance to the ICC rules without specifying the

applicable law for the arbitration agreement. It would therefore

be appropriate to hold that the question of validity of the award

should be determined in accordance with the law of the state in

which  the  arbitration  proceedings  have  taken  place  i.e.  the

English Law. Though for the purposes of this decision we would

only hold that the conduct of the parties exclude the applicability

of Part-I.

In  other  words,  where  the  parties  have  not  expressly

chosen  the  law  governing  the  contract  as  a  whole  or  the

1

Redfern and Hunter on International Arbitration, Fifth Edition

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arbitration agreement in particular, the law of the country where

the arbitration is agreed to be held has primacy.

22. Here,  an  express  choice  has  been  made  by  the parties

regarding the conduct of arbitration, i.e., that a dispute shall be

finally  settled  by  arbitration  according  to  the  ICC  Rules  of

Arbitration.  The parties have not chosen the place of arbitration.

They  have  simply  chosen  the  rules  that  will  govern  the

arbitration, presumably aware of the provision in the rules that

the place of arbitration will be decided by the ICC vide Article

14(1) of the ICC Rules.  The ICC having chosen London,

leaves no doubt that the place of arbitration will attract the law

of UK in all matters concerning arbitration.  

23. The arbitration clause appears consistent with Section 2(7)

of  the  Arbitration  Act,  1996 which recognizes  the freedom to

authorize any person including an institution to  determine an

issue such as the choice of the place of arbitration.

24. Dr. Singhvi rightly submitted that the decisions of the court

in  Sakuma Exports Ltd.  vs.  Louis Dreyfus Commodities Suisse

Sa2,  Harmony  Innovation  Shipping  Ltd.  vs.  Gupta  Coal  India

2 (2015) 5 SCC 656

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Ltd.3, and Reliance Industries Ltd. vs. Union of India4 do not help

the  appellant  in  view  of  the  main  difference  between  the

abovementioned  cases  and  the  present  one  i.e.  in  all  these

cases,  the  parties  had  specifically  agreed  that  the  seat  of

arbitration will be London.  The arbitration clause in these cases

itself specified the seat to be at London.  In Reliance Industries

Ltd. (supra), the agreement that the seat of arbitration would be

London was incorporated in the final partial award.  

However,  as  we  shall  see  the  agreement  to  have  the

arbitration conducted by the ICC and the choice of London as the

seat  of  arbitration  has  made  no  material  difference  for  the

purpose of exclusion of Part-I.

The  relevant  clause  in  these  cases  was  undoubtedly

different  in  that  the  seat  of  arbitration  outside  India  was

specified in the clause itself. However, we have found that the

relevant  clause  in  the  present  case  had  the  effect  of  an

agreement to have the seat of the arbitration outside India, as

chosen by the ICC and agreed to by the parties.

25. We find that in the present case, the seat of arbitration has

not  been  specified  at  all  in  the  arbitration  clause.   There  is

3 (2015) 9 SCC 172 4 (2014) 7 SCC 603

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however  an  agreement  to  have  the  arbitration  conducted

according to the ICC rules and thus a willingness that the seat of

arbitration may be outside India.  In any case, the parties having

agreed to have the seat decided by the ICC and the ICC having

chosen  London  after  consulting  the  parties  and  the  parties

having abided by the decision, it must be held that upon the

decision of the ICC to hold the arbitration in London, the parties

agreed that the seat shall be in London for all practical purposes.

Therefore,  there is  an agreement that the arbitration shall  be

held in London and thus Part-I of the Act should be excluded.

26. The construction that  the parties  agreed  to  exclude the

applicability of Part-I of the Act and generally to have the entire

agreement governed not according to Indian law is also apparent

from the express provision that:

“This  agreement shall  be governed by and construed  according  to  laws  of  Singapore and  parties  attorn  to  jurisdiction  of  the Courts of Singapore”.   

In  para  25  of  National  Thermal  Power  Corporation vs.

Singer Company5, this Court held:

“On the other hand, where the proper law of the  contract  is  expressly  chosen  by  the parties,  as  in  the  present  case,  such  law must,  in  the  absence  of  an  unmistakable

5 (1992) 3 SCC 551

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intention  to  the  contrary,  govern  the arbitration  agreement  which,  though collateral or ancillary to the main contract, is nevertheless a part of such contract”.

This  principle  is  again  reiterated  in  Sakuma Exports   

Ltd. (supra).

This  stipulation  expressly  excludes  Part-I  of  the  Act

because it governs both the principal agreement as well as the

accompanying arbitration agreement.

NON- APPLICABILITY OF PART-I

27. It is settled law in India that the provisions of Part-I of the

Arbitration Act would apply to all arbitrations and all proceedings

relating thereto.  In  Bhatia International vs.  Bulk Trading S.A.

and Anr.6, this Court observed:-

“32.  …….Where  such  arbitration  is  held  in India  the  provisions  of  Part  I  would compulsorily  apply  and  parties  are  free  to deviate only to the extent permitted by the derogable provisions of  Part  I.  In  cases of international  commercial  arbitrations  held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties  would  prevail.  Any  provision,  in   Part I, which is contrary to or excluded by that law or rules will not apply.”

6 (2002) 4 SCC 105

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This view has been followed in several cases, See Venture

Global  Engg.  vs. Satyam  Computer  Services  Ltd.7,  Videocon

Industries Limited  vs. Union of India8, Dozco India (P) Ltd.  vs.

Doosan Infracore Co. Ltd.9, Cauvery Coffee Traders  vs. Horner

Resources  (International)  Co.  Ltd.10, Reliance  Industries  Ltd.

(supra)  and  Sakuma Exports  Ltd.  (supra),  Union of  India  vs.

Reliance  Industries  Ltd.11, Harmony  Innovation  Shipping  Ltd.

(supra) and Eitzen Bulk A/S vs. Ashapura Minechem Ltd.12

The  relevant  clause  in  these  cases  was  undoubtedly

different  in  that,  the  seat  of  arbitration  outside  India  was

specified in the clause itself. However, we have found that the

clause in this case had the effect of an agreement to have the

seat of arbitration outside India, as chosen by the ICC, and as

agreed to by the parties.

28. On a true construction of Clause 14 in this case, there is

no doubt the parties have agreed to exclude Part-I by agreeing

that the arbitration would be conducted in accordance with the

ICC Rules. The parties were undoubtedly conscious that the ICC

could choose a venue for arbitration outside India.  That in our

7 (2008) 4 SCC 190 8 (2011) 6 SCC 161 9 (2011) 6 SCC 179 10 (2011) 10 SCC 420 11 (2015) 10 SCC 213 12 (2016) 11 SCC 508

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view is  sufficient  to infer  that  the  parties  agreed  to exclude   

Part-I. The ICC could well  have chosen a venue in India. The

possibility  that  ICC could  have chosen India  is  not  a  counter

indication  of  this  inference.   It  could  also  be  said  that  the

decision to exclude the applicability of Part-I was taken when the

ICC chose London after consulting the parties.  Either way Part-I

was excluded.

29. The view that it is the law of the country where arbitration

is  held  that  will  govern  the  arbitration  and  matters  related

thereto such as a challenge to the award is well entrenched.  In

Dozco India (P) Ltd. (supra), this Court observed:-

“In  the  absence  of  express  agreement, there  is  a  strong  prima  facie  presumption that the parties intend the curial law to be the law of the ‘seat’ of the arbitration i.e. the place  at  which  the  arbitration  is  to  be conducted,  on  the  ground  that  that  is  the country  most  closely  connected  with  the proceedings.  So  in  order  to  determine  the curial  law  in  the  absence  of  an  express choice by the parties it is first necessary to determine  the  seat  of  the  arbitration,  by construing the agreement to arbitrate.”

30. The relationship between the seat of arbitration and the

law  governing  arbitration  is  an  integral  one.  The  seat  of

arbitration  is  defined  as  the  juridical  seat  of  arbitration

designated by the parties, or by the arbitral institution or by the

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arbitrators themselves as the case may be.  It is pertinent to

refer to the following passage from Redfern and Hunter (supra):-

“This  introduction  tries  to  make  clear,  the place or seat of the arbitration is not merely a matter of geography.  It is the territorial link between  the  arbitration  itself  and  the law of the place in which that arbitration is legally situated:

When one says that London, Paris or  Geneva  is  the  place  of arbitration,  one  does  not  refer solely  to  a  geographical  location. One means that the arbitration is conducted within the framework of the law of  arbitration of  England, France or Switzerland or, to use an English  expression,  under  the curial law of the relevant country. The  geographical  place  of arbitration is the factual connecting factor between that arbitration law and  the  arbitration  proper, considered  as  a  nexus  of contractual  and  procedural  rights and  obligations  between  the parties and the arbitrators.   

The seat of arbitration is thus intended to be its centre of gravity.”  

Further, in the same work on International Arbitration by

Redfern and Hunter (supra), the following passage emphasizes

the connection between the lex arbitri and lex fori:-

“Parties may well  choose a particular place of arbitration precisely because its lex arbitri is  one  which  they  find  attractive. Nevertheless, once a place of arbitration has been chosen, it brings with it its own law. If that  law  contains  provisions  that  are

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mandatory  so  far  as  arbitration  are concerned,  those  provisions  must  be obeyed.  It  is  not  a  matter  of  choice  any more than the notional  motorist  is  free to choose which local traffic laws to obey and which to disregard.”

Thus, it is clear that the place of arbitration determines the

law that  will  apply to the arbitration and related matters  like

challenges to the award etc, see Eitzen Bulk A/S (supra).  

31. The significant determinant in each case is the agreement

of the parties as to the place of arbitration and where in fact the

arbitration took place.

If  in  pursuance  of  the  arbitration  agreement,  the

arbitration took place outside India, there is a clear exclusion of

Part-I  of  the  Arbitration Act.  In  the present  case,  the  parties

expressly agreed that the arbitration will be conducted according

to the ICC Rules of Arbitration and left the place of arbitration to

be chosen by the ICC. The ICC in fact, chose London as the seat

of  arbitration after  consulting the parties.  The arbitration was

held in London without demur from any of the parties. All the

awards  i.e.  the  two  partial  final  awards,  and  the  third  final

award, were made in London and communicated to the parties.

We find that this is a clear case of the exclusion of Part-I vide

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Eitzen  Bulk  A/S  (supra),  and  the  decisions  referred  to  and

followed therein.

32. The  respondent  contends  before  us  that  Part-I  of  the

award was applicable, however they themselves stated the place

of arbitration to be London.  

It  is  pertinent  to  reproduce  the  relevant  portion  in  the

respondent’s application before the ICC while objecting to the

authority of the law firms representing the appellant.  It stated:-

“The seat of this arbitration is London.”

Therefore, the two reasons for Part-I not being applicable

are as follows:-

(i) Parties agreed that the seat maybe outside India as may be fixed by the ICC; and

(ii) It  was  admitted  that  the  seat  of  arbitration  was   London and the award was made there.

        Therefore, there is no doubt that Part-I has no application

because the parties chose and agreed to the arbitration being

conducted  outside  India  and  the  arbitration  was  in  fact  held

outside India.     

33. In  view of  the  foregoing observations,  we find  that  the

High  Court  committed  an  error  in  observing  that  the  seat  of

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arbitration itself is not a decisive factor to exclude Part-I of the

Arbitration Act. We therefore set aside the judgment of the High

Court  and  dismiss  the  petition  filed  by  the  respondent  under

Section 34 of the Arbitration Act before the Bombay High Court.

34. In the result the appeal is allowed as no order to costs.

…...................................………J.                                                                          [S.A. BOBDE]

..………………………….…..........…..J.                                                                  [ASHOK BHUSHAN] NEW DELHI,    March 10, 2017

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