Bhatia International v. Bulk Trading S.A.
Supreme Court of India · 13 March 2002 · 3 judges
Overruled in whole or in part by Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012), which says: “With utmost respect, we are unable to agree with the conclusions recorded in the judgments of this Court in Bhatia International (supra) and Venture Global Engineering (supra).”
Part I of the Arbitration and Conciliation Act, 1996 applies to international commercial arbitrations held outside India unless the parties exclude it, so an Indian court can grant interim measures under Section 9 in an ICC arbitration seated in Paris.
Facts
The appellant's contract with the first respondent provided for arbitration under the rules of the International Chamber of Commerce. The first respondent requested arbitration with the ICC, the parties agreed that it be held in Paris, and the ICC appointed a sole arbitrator. The first respondent then applied under Section 9 of the 1996 Act to the IIIrd Additional District Judge, Indore, for interim relief, including an injunction restraining the appellant and the second respondent from alienating or dealing with their business assets and properties. The appellant objected that Part I does not apply where the place of arbitration is outside India. The District Judge held the application maintainable, and the Madhya Pradesh High Court dismissed the appellant's writ petition.
Questions before the Court
- Does Part I of the Arbitration and Conciliation Act, 1996 apply to an international commercial arbitration held outside India?
- Can a court in India grant interim measures under Section 9 where the arbitration is held outside India under the ICC Rules?
What the Court held
- Section 2(2) says Part I applies where the place of arbitration is in India, but it does not say Part I applies only then. Unlike Article 1(2) of the UNCITRAL Model Law, it omits the word 'only' and is an inclusive and clarificatory provision.
- Part I applies to all arbitrations and proceedings relating to them. For arbitrations held in India it applies compulsorily, subject to its derogable provisions. For international commercial arbitrations held outside India it applies unless the parties, expressly or impliedly, exclude all or any of its provisions.
- The contrary reading would leave arbitrations in non-convention countries governed by no law, conflict with Sections 1, 2(4) and 2(5), and leave a party without interim relief in India although the assets are in India. Ouster of jurisdiction must be express.
- Article 23 of the ICC Rules allows parties to apply to a competent judicial authority for interim measures, so Section 9 was not excluded and the Indore court could entertain the application. The contrary view of the High Courts of Orissa, Bombay, Madras, Delhi and Calcutta is not good law. The appeal was dismissed.
Why it matters
The judgment settled, by reading Section 2(2) as non-exclusive, that Part I of the 1996 Act, including Section 9 interim relief, extends to foreign seated international commercial arbitrations unless the parties exclude it expressly or impliedly. It declared the contrary view of five High Courts not good law, and used the consequences of the rival constructions (lacuna, anomaly, a party left remediless) to choose between them.
In the Court's words
Copied from the official judgment; each passage links to its page.
“To conclude we hold that the provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India the provisions of Part I would compulsory 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.”
“Significantly in Section 2(2) the word "only" has been omitted. The omission of this word changes the whole complexion of the sentence. The omission of the word "only" in Section 2(2) indicates that this sub-section is only an inclusive and clarificatory provision. As stated above it is not providing that provisions of Part I do not apply to arbitration which take place outside India.”
“However, in our view a proper and conjoint reading of all the provisions indicates that Part I is to apply also to international commercial arbitrations which take place out of India, unless the parties by agreement, express or implied exclude it or any of its provisions. Such an interpretation does not lead to any conflict between any of the provisions of the said Act. On this interpretation there is no lacunae in the said Act.”
Provisions interpreted
Related judgments
Case and bench
- Parties
- Bhatia International v. Bulk Trading S.A.
- Case
- Appeal (civil) 6527 of 2001
- Decided
- 13 March 2002
- Bench
- G.B. Pattanaik, S.N. Phukan, S.N. Variava
- Opinions
- Unanimous. Judgment of the Court by S.N. Variava, J., signed by all three judges.
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