 arbitration, we thought why not connect with the topic on which there's a lot of debate like can two Indian parties agree to a foreign-seated arbitration. As we all see that at least Mr. Ajay Thomas can make me stand corrected, at least I didn't find any judgment direct of the Supreme Court. Though there have been judgments regarding the Madhya Pradesh from Sassan Power then relying upon the Atlas exports and the reliance of the industries and wherein there was some Supreme Court's reference in this regard in the judgment as to how the validity of the arbitration in respect of two Indian parties can choose regarding the foreign-seated arbitration sector. But without taking much time since I know they're all working days, I would request Mr. Thomas to take things forward and we are happy that he has acceded to our request to share his knowledge. Over to you Ajay. Thank you Vikas and thank you CLC for your kind invitation again to me to actually speak to you on what I believe is one of my very favorite topics in recent times. It's been a favorite topic because the law has been evolving with various decisions coming emanating from the various high courts although we will see today whether there's any definitive Supreme Court decision on the same matter. So that is going to be the focus of my presentation. So can I confirm that my slides are visible? Excellent. So ladies and gentlemen, good morning, good afternoon and good evening depending on which part of the world you are in. I see that we've got some friends of ours who've joined in all the way from England and London more particularly. So welcome to this webinar which is going to be a brief insight or overview of my thoughts on this waxed question as to whether two Indian parties can choose a foreign seat of arbitration or not. And that is going to be the focus of my presentation and speech for the next 35 minutes. So ladies and gentlemen, when you're looking at the issue of whether two Indian parties can choose a foreign seat of arbitration or not, it is very important for us to understand the implications of the choice of a seat of arbitration. Why is it so important to choose a seat of arbitration? Why is it that Indian parties might want to have a seat of arbitration outside of India? Are there any cogent pressing reasons why they might want to do that? And that is also going to be a focus of what I am going to be speaking on today. So when we're looking at seat of arbitration, ladies and gentlemen, we must remember as I said in the last lecture that arbitration doesn't function in a vacuum. Arbitration doesn't operate in a legal vacuum. The process of arbitration requires the public justice system represented by the courts of the land to give validity and sanctity to the process of arbitration. Without the courts and the support of the courts of the land, it will be very difficult for the process of arbitration to be there as a freestanding system of justice. And that is why, ladies and gentlemen, every arbitration is rooted in a particular legal jurisdiction. Every arbitration has a juridical seat. And the juridical seat of arbitration, ladies and gentlemen, is the primary legal jurisdiction to which an arbitration is anchored. And why is this important? Anchoring of the arbitration to a particular seat or a jurisdiction is important because it gives it legitimacy, it gives the arbitration legality, and also it gives it nationality. And this, again, is something which has been beautifully summed up by the Supreme Court in a five-judge constitution bench in that landmark case called Bharat Aluminium versus Kesar Aluminium, where the Supreme Court said that, and I quote the Supreme Court, it is accepted by most experts that in most of the national laws arbitrations are anchored to the seat, place, citus of arbitration. And the Supreme Court goes on to court Redfern and Hunter, one of the most authoritative books on international commercial arbitration to conclude that the seat of arbitration is intended to be the center of gravity of an arbitration. So ladies and gentlemen, it is very important, therefore, to choose a seat of arbitration because of three reasons. Seat fixes which law would govern the conduct of arbitration, it decides which courts can have supervisory and supportive jurisdiction over the arbitration, and it also determines the nationality of an award, which is so important from the purposes of enforcement of an award under the New York Convention. And law of the seat of arbitration, ladies and gentlemen, automatically flows from the choice of a seat of arbitration. The Lex arbitrary, the technical term for the law of the arbitration seat, automatically flows when you make a choice of a particular jurisdiction as a seat of arbitration. It is not a matter of choice. So let me start off, ladies and gentlemen, by sharing with you the results of a study conducted by Queen Mary University of London and its School of Arbitration, which was done in association with the international law firm, White and Case. So this study conducted in 2018, ladies and gentlemen, was titled The Evolution of International Arbitration. And I'm going to share with you just two aspects of this study and the report which this study culminated in. So what you see on your screen, ladies and gentlemen, is a report or the results of a particular question which was asked of the respondents in this survey as to which was the most preferred seat of arbitration of the respondents' organizations. And if you see the results, ladies and gentlemen, London still appears to have the edge, followed by Paris, Singapore, Hong Kong, Geneva, New York and Stockholm. Now, this is important, ladies and gentlemen, because this slide gives you an insight into what are the most popular seats of arbitration internationally. So if you want to look at it from an Indian perspective, from the perspective of an Indian organization, my sense is that it would be Singapore, London, Paris, Hong Kong. That would be the order in terms of the most preferred seats. But of course, the Queen Mary study is an international study and therefore the results are very different from what it would have been had the respondents been predominantly an Indian base of respondents. Again, very interestingly, ladies and gentlemen, what was asked of the respondents was this question as to what were the four most important reasons as to why you would select a particular seat of arbitration. And the results here also make for very interesting reading. If you see the results, it says the number one reason why people chose a particular seat was the general reputation and recognition of that seat. The second most important reason was neutrality and impartiality of the local legal system. Thirdly, national arbitration law. And fourthly, track record and enforcing agreements to arbitrate and arbitral awards. And fifthly, which is not to down the list in terms of ranking is the availability and quality arbitrators who are familiar with the seat. So ladies and gentlemen, these are the five most important reasons why parties would choose a particular jurisdiction to be the seat of arbitration. And if you see these are also probably the reasons why in recent times there has been this trend for Indian parties to have a seat of arbitration outside of India. So you might ask me what is the controversy out here? Two Indian parties are already having a seat of arbitration outside of India. So what is the issue out here? My response to that would be that if the award is not challenged and is voluntarily enforced, there is no problem. But if that award might have to be enforced in India, then there is a big possibility that it might not be enforced because there is a very high likelihood that a court might not uphold that award on the grounds that it interferes with the public policy of India. So that ladies and gentlemen is something that we need to keep in mind. So why do Indian parties, why is it that we have this recent trend I would say of Indian parties wanting to have a foreign seat of arbitration? And this is what I'm trying to be explaining with this slide of mine. I would say that firstly, there is a perception. There's a perception that courts in India tend to interfere in the process of arbitration much more than they would do in other jurisdictions. So I said I'm emphasizing the word perception. It may not be the reality. There is a perception amongst Indian parties that courts in India tend to interfere much more in domestic arbitrations seated in India, vis-a-vis international commercial arbitration seated in India, and foreign seated arbitrations. So this perception ladies and gentlemen has been reinforced I would say in the recent times because of the insertion of section, subsection 2A in section 34 by the 2015 amendments to the Indian arbitration and conciliation act. So if you see section 342A which has been now inserted, it says that an arbitral award arising out of arbitrations other than international commercial arbitrations may also be set aside by the court if the court finds that the award is vitiated by patent illegality appearing on the face of the award. So ladies and gentlemen, so this perception of greater interference by the courts in domestic arbitrations that is arbitrations involving two Indian parties vis-a-vis an international commercial arbitration seated in India and foreign seated arbitrations is not wholly unjustified because now under the 2015 amendments, this ground of patent illegality, this additional ground of patent illegality to set aside an award will be there only in domestic arbitrations. It would not be there when your arbitration is seated outside of India and this ladies and gentlemen to evade or to escape this ground of patent illegality and the setting aside of an award on this ground is one of the predominant reasons why you have parties today and lawyers advising parties to Indian parties to have a seat of arbitration outside of India. And secondly, ladies and gentlemen, there is another perception that arbitration seated outside of India, there is greater speed and efficiency in the delivery of these of awards in these foreign jurisdictions. Again, my view ladies and gentlemen is that I don't think this perception is entirely true. Post 2015 amendments to the Indian arbitration and consolidation act, I believe there has been a great deal of discipline which has been injected into the arbitration process in India by virtue of a deadline for completion of arbitrations. So this perception that arbitration seated outside of India are speedier and more efficient, I think is not justified given the manner in which arbitrations are conducted today post 2015. And that essentially ladies and gentlemen is because there is now a deadline of 12 months from the completion of pleadings for an award to be delivered. Very where would it be for you to find such a timeline or a deadline incorporated in the statute for completion of an arbitration? Let's take the example of say the UK or the arbitration statute in Singapore. There are no deadlines specifically incorporated into the statute with respect to how quickly you should complete an arbitration. But we have that in India. And that was to a large extent because of the great lack of discipline which was there in the process of arbitration in India. And it was those circumstances which forced the government to take a drastic step of having a timeline incorporated into the arbitration statute itself. So ladies and gentlemen, this is why I believe these are my views as to why you find that there has been this trend in recent times for two Indian parties to have a seat of arbitration outside of India. And of course there have been decisions, there have been certain decisions. I would say no definitive decisions, but there have been certain decisions by virtue of which lawyers tend to be using in favour of making a case that the law has evolved to the stage that two Indian parties can actually have a seat of arbitration outside of India. And to what extent has the law evolved? What is the jurisprudence relating to this area of arbitration proceedings? That is going to be the focus of my short brief presentation today. So ladies and gentlemen, when you're looking at this issue of whether two Indian parties can have a seat of arbitration outside of India, you will find that there is an interplay between two basic principles which relate to the process of arbitration. One is the fundamental basic Grund norm, if I may call it, of the doctrine of party autonomy. And second would be the doctrine of public policy. So you would find the interplay, this questing as to whether two Indian parties can have a seat of arbitration outside of India. In deciding this issue, you will find a sort of conflict between these two basic principles affecting arbitration. So what exactly is party autonomy? All of you know that party autonomy is the ability of parties in an arbitration to decide the procedure of arbitration. To decide, arbitration provides parties the flexibility to decide the process of an arbitration. It gives you the flexibility to decide who is going to decide your dispute. It gives you a great deal of flexibility with respect to procedural matters in an arbitration. And that all stems from this fundamental principle of party autonomy. And this party autonomy, ladies and gentlemen, with respect to the choice of a seat of arbitration, which is also called place of arbitration, is there in section 20 of the Indian arbitration and conciliation act. Section 20 says that parties are free to agree on the place of arbitration. So party autonomy effectively is giving parties the freedom to choose the place of arbitration. But section 20, ladies and gentlemen, has to be read with section 2, subsection 2 of the Indian arbitration and conciliation act, which says that this part shall apply only where the place of arbitration is in India. So where the place of arbitration is in India, section 20 applies and it gives parties the full freedom to choose and agree on the place of arbitration. And this to a large extent is derived from article 20 of the Uncitral Model Law, which is the basis on which the 1996 arbitration act in India was based on. And article 20, if you see the language, is very, the language of section 20 of the Indian arbitration and conciliation act is borrowed entirely from article 20 of the Uncitral Model Law. And if you want to go to the English arbitration act of 1996 and section three of the English act, again, you will find that the same freedom and flexibility is also given when your seat of arbitration is in England. And then the English arbitration act applies. Section three says that in this part, the seat of arbitration means the juridical seat of arbitration designated by the parties to the agreement. And if you want to go to Singapore and look at the domestic arbitration act, which is the AA or the arbitration act, section 21 defines the place of arbitration as the place of arbitration means the juridical seat of arbitration designated by the parties to the arbitration agreement. So ladies and gentlemen, the short point I'm trying to make by doing a comparative or looking into a comparative, looking into comparative provisions relating to this party autonomy vis-a-vis choice of arbitration seat is to tell you that the language in the Indian arbitration act is pretty similar to what is there in the statutes which is given the statutes of Singapore and the statute, the arbitration statute in England and Wales and also in the Uncitral Model Law. So this background I believe is very important when people say that the Indian statute does not give parties the autonomy to choose a seat of arbitration. So when somebody tells you that, I think you need to look at the provisions of section 20, subsection one where there is freedom and autonomy given to the parties to decide the seat of arbitration. Okay, so now when you're looking at this ladies and gentlemen, you're looking at party autonomy, you are also looking at the opposite slightly conflicting doctrine of public policy. Now public policy as many of you might be aware is one of the most common grounds for challenging an award in India. Challenge, prior to the 2015 amendments of the arbitration and conciliation act, it was relatively very easy to challenge an award in the grounds of public policy. But now post-2015 amendments, public policy, the contours of public policy, although it's an unruly horse, have been reigned into a certain extent and challenging an award has become much more difficult thanks to the automatic stay removal of the automatic stay on the operation on the execution of an award which was there earlier and which has now been removed under the 2015 amendments of the arbitration and conciliation act. So ladies and gentlemen, one of the grounds on which it has been argued in a lot of cases in India that two parties, two Indian parties, cannot have a seat of arbitration outside of India is that it would be a violation of the principles of public policy allowing permitting two Indian parties to have a seat of arbitration outside of India would effectively mean that these two Indian parties are contracting out of Indian law, Indian substantive law. And in this connection, quite often section 28 is brought into the whole picture. Now section 28 actually deals with the substance of a dispute and if you see section 58 starts with the words where the place of arbitration is situated in India in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being enforced in India. So this ladies and gentlemen has been taken as the basis to state that two Indian parties when the place of arbitration is situated in India cannot choose a foreign substantive law of the contract. But there have been certain decisions where this has been stretched to also refer to the procedural law of the arbitration. And therefore there is a line of thinking if you analyze certain decisions of the High Court and Supreme Court in India that two Indian parties by virtue of having a seat of arbitration outside of India would tend to be derogating from Indian law which would automatically apply to the situation. And the first decision and the most important decision which is quite often cited in favor of the argument that two Indian parties cannot have a seat of arbitration outside of India relates to a series of contracts tended by the National Highway Authority of India to two organizations TDM infrastructure was an UE development. So TDM infrastructure and UE development essentially relates to certain subcontracts of work relating to the construction of National Highway Authority of India highways in India and TDM infrastructure versus UE development which is a 2008 decision of the Supreme Court of India a decision which was delivered by a single judge of the Supreme Court Justice SB Sinha. So if you were to look at the clause in the arbitration agreement out of which this dispute arose it said that it made a provision it made a reference to the provisions of the Indian arbitration Act 1940 and then it went on to say that the venue of the arbitration shall be New Delhi India and the language to be used in the arbitration proceedings shall be English. So here was a case ladies and gentlemen which came up before the Supreme Court with respect to the appointment of an arbitrator and it came up as you all know when there is an international element over there is an international commercial that when there is an international commercial arbitration which has been defined under the Indian arbitration act to have to be an arbitration involving a foreign element or a foreign party then the default appointing authority in those cases is the Supreme Court of India. So it is under bad jurisdiction that the parties approach the Supreme Court of India but here is a case where both the parties were incorporated in India both the parties were incorporated under the provisions of the Indian Companies Act 1956 but the central management and control of TDM infrastructure was exercised in Kuala Lumpur Malaysia and this ladies and gentlemen was essentially due to the fact that the directors and shareholders were residents of Malaysia and the board of directors also held their meetings in Malaysia and therefore ladies and gentlemen it was said that the central management on control of this company was exercised in Malaysia and because it was the central management and control was exercised in Malaysia the arbitration was an international commercial arbitration and the Supreme Court had the power to appoint an arbitrator in this matter. So the issue before the Supreme Court was whether this agreement between the parties essentially two Indian parties two companies incorporated in India but where one of the parties had the central management and control was exercised in Kuala Lumpur Malaysia. So the issue was whether this agreement falls within the purview and the definition of section 21f of the Indian arbitration and conciliation act with which defines the concept of international commercial arbitration and if you read the decision ladies and gentlemen the ratio in this case was that the Supreme Court very clearly held that a company incorporated in India can only have Indian nationality for the purposes of the act. It cannot be said that a company incorporated in India does not have an Indian nationality therefore when both parties have Indian nationality then the arbitration between such parties cannot be said to be an international commercial arbitration. So the test of deciding the nationality of a party here was decided as the place of incorporation of the two parties. So this ladies and gentlemen was a ratio of the case. Please remember this the ratio was with respect to the fact that nationality the place of incorporation of parties is the test to decide whether the arbitration is an international commercial arbitration or not. But from the perspective of public policy and from the perspective of whether two Indian parties can have a seat of arbitration outside of India or not, TDM infrastructure versus UE development is quite often quoted ladies and gentlemen and I believe it's often quoted wrongly because what is quoted is the obiter in this decision and this obiter in this decision is given in para 20 and section para 20 relates to section 28 of the Indian arbitration and consibuation act and it says that the intention of the legislature appears to be clear that Indian nationals should not be permitted to delegate from Indian law and this is part of the public policy of the country. So this lines ladies and gentlemen, the intention of the legislature appears to be clear that Indian nationals should not be permitted to delegate from Indian law. This is a part of the public policy of the country. So para two in TDM infrastructure versus UE development is quite often quoted in support of the contention that two Indian parties cannot have a seat of arbitration outside of India. So ladies and gentlemen, I believe that this quoting of this obiter in TDM infrastructure versus UE development has very shaky presidential value for three reasons. One, the observations which were made with respect to the nationality of the parties and with respect to public policy being violated by Indian parties derogating from Indian law were made in an application under section 11 of the arbitration and consiliation act which relates to the appointment of an arbitrator and which has been argued that such an order of the court is not strictly comes within the definition of a court and therefore the provisions of article 141 of the constitution will not apply. So that's one reason why this is a shaky has got shaky presidential value. The second reason ladies and gentlemen is that the case if you see refers albeit an obiter refers only to the prohibition of two Indian parties contracting out of Indian substantive law because see that it is it has been decided in the background of section 28 of the Indian arbitration and consiliation act which deals with the substantive law of the contract and not to you know not to the Lex arbitrary or the law of the seat of arbitration. So that's another point that you need to keep in mind and totally ladies and gentlemen the balcony decision the landmark Bharat aluminium versus Kesar aluminium decision clearly very very clearly and explicitly stated that section 28 of the Indian arbitration and consiliation act is restricted only to the substantive law of the contract and has got nothing to do with the choice of a foreign seat or a foreign curial law or a foreign Lex arbitrary or a foreign law to govern the arbitration agreement. So Balco very clearly says that section 28 its import is restricted only to substantive law of the contract and not beyond it. So ladies and gentlemen that's one decision which I think quite often quoted in support of the fact that two Indian parties cannot have a seat of arbitration outside of India and that I believe has got is is a very doubtful it's a very doubtful precedent it's got very shaky precedential value. The next case ladies and gentlemen refers to what you see on your screen it's a dispute which arose out of a contract relating to the export of ground nuts. This was the case a 1999 decision of the Supreme Court of India at least exports versus Kotak and Co. This is important ladies and gentlemen because this is a case which is most often quoted by by parties and also by the various courts in support of the proposition that two Indian parties can have a seat of arbitration outside of India. So TDM is quoted very often wrongly in my view for the proposition that two Indian parties cannot have a seat of arbitration outside of India that is at least exports on the other hand you will find that all those decisions wherein the courts have held that two Indian parties can have a seat of arbitration outside of India have quoted at least exports. So it will be very important for us to understand and see what does this decision deal with. Now this was a two-judge bench of the Supreme Court of India comprising of Justices S.C. Babu and R.C. Lahoti. This was a Tritata agreement where the seller was an Indian party the buyer was a organization a company based in Hong Kong and there was also a broker involved in the case Kotak and Co which was an Indian entity. Although there was a Tritata agreement the dispute and the resultant arbitration was only between the seller and the broker and what did the clause say? It's very important for us to look into the clause ladies and gentlemen. Now the clause made a reference to the GAFTA rules. It was a GAFTA contract. GAFTA as most of you would be aware stands for the grain and food trade association which is based out of London and the arbitration clause made a reference to GAFTA arbitration and section 20 and clause 27 of the standard contract number 15 of GAFTA the arbitration clause says that all disputes arising out of this contract shall be settled by arbitration in London in accordance with the arbitration rules of the grain and food trade association limited. So you have a clause which makes a reference to GAFTA rules and the seat of arbitration in London. So what was held in this case ladies and gentlemen? So this was a case it was held so let's look at what were the contentions before looking to what was held in this case. It would be very important for us starting to look at the contentions of the parties in this case. In this case it was held that or rather it was argued by at least the seller in this case that the award should be unenforceable because the contract between the two parties was unenforceable because it was opposed to public policy as mentioned in section 23 red with section 28 of the Indian contract act and under section 23 of the Indian contract act ladies and gentlemen the consideration or objective of an agreement is unlawful if it is opposed to public policy and the argument was made before the court that here was a case where you had two Indian parties and the arbitration agreement was compelling to Indian parties to resort to an arbitration by foreign arbitrators in a foreign land thereby impliedly excluding the remedy which is available to them under the ordinary law of India and because the remedy available to them under the ordinary law of India is unavailable therefore the argument made by Eklis was that this should be held to be opposed to public policy so this was the argument which was run and what did the two judge bench of the Supreme Court hold now this was a decision written by Justice R.C. Lahati who as you know later went on to become the Chief Justice of India and Justice Lahati held that that this case in hand is very clearly covered by exception 1 to section 28. Section 1 to section 28 says that the rules mentioned in section 28 do not apply to arbitrations so Justice Lahati held that the right of parties to have recourse to a legal action is not being excluded by this agreement so merely because the arbitrators are situated in a foreign country and this is important the court went on to hold that nearly because the arbitrators are situated in the foreign country cannot by itself be enough to nullify the arbitration agreement on public policy grounds when the parties have with their eyes open willingly entered into the agreement so if you see ladies and gentlemen Eklis exports the issue involved was as to whether two Indian parties by agreeing to submit their arbitration to foreign arbitrators in a foreign land is that violative of the public policy of India contained in section 23 read with section 28 of the Indian arbitration and of the Indian contract act and here was a case ladies and gentlemen that the court held that merely because of this reason it cannot be a violation of public policy and it cannot be a ground to nullify the arbitration agreement on the public policy grounds so ladies and gentlemen again I honestly believe that atlas exports is again like TDM has got slightly shaky precedential value and I've got three reasons why it is of slightly shaky precedential value one this was a decision under the arbitration act of 1940 the arbitration act of 1940 was replaced in 1996 by a brand new arbitration and conciliation act of 1996 so can the ratio of a decision given under the previous statute which no longer exists can it be used as a precedent does it have solid binding precedential value that's one reason of I think we are not on such solid ground the second reason ladies and gentlemen is that the Supreme Court in atlas exports while upholding the award did not clearly answer the question as to whether two Indian parties can choose a foreign seat of arbitration this issue was not squarely directly before the bench and thirdly ladies and gentlemen if you read the agreement there was a foreign element one of the parties to the arbitration agreement that is a buyer of the ground nuts was a party incorporated in Hong Kong so it was not a case of there being simplicity or just two Indian parties there was a foreign element where the buyer in the original tripartite agreement although the buyer was not a party to the arbitration and the dispute but the buyer was a Hong Kong based party and was definitely a party to the original agreement and therefore ladies and gentlemen these are three reasons why I believe atlas exports has got is is is of doubtful precedential value when you're looking at the proposition as to two Indian parties having the ability to have a seat of arbitration outside of India but atlas exports is the most often quoted decision by the high courts in favor of deciding that two Indian parties can actually have a seat of arbitration outside of India and that is why ladies and gentlemen I wanted to deal with this two decisions first and both I honestly believe with the greatest of respect to the supreme court that both these are of slightly shaky precedential value because precedential value because as this caricature on your screen shows at times I think the courts have owed to see whether what has been mentioned in those decisions is actually the ratio or is it obitur and with the greatest of respect I believe many a times what has been quoted in support of the two respective contentions is not the ratio of those respective cases but it has actually been the obitur in those two decisions so moving on ladies and gentlemen from you know you know from ground nuts I move on to another case which deals with the a tanker wired charter party under a standard form tanker contract of the association of ship brokers and agents of the united states of America better known by its short form as by tank wire so this was a case ladies and gentlemen seven island shipping versus shark petroleum the 2012 single judge decision of the Bombay High Court delivered by Justice B. R. Gawai who today is now on the supreme court and the clause if you read ladies and gentlemen in this case talked about the place of arbitration proceedings to be London slash New York so what happened in this case was a suit was filed before the Bombay High Court by the plaintiff and the defendant sought a reference under section 45 to arbitration because there was an arbitration clause so once there was an arbitration clause a suit would not lie in the matter and therefore there was this application made under section 45 by the defendant in the suit asking for a reference to arbitration so the single judge of the Bombay High Court held that the parties had actually not made a choice between the two seats of arbitration New York and London and there was nothing to show in the arbitration agreement that the arbitration was to be seated in London in accordance with English laws although this was argued by one of the parties that the arbitration club made a reference to arbitration in London in accordance with English laws the court held that there was nothing on the record that the parties had chosen between New York and London and then the court again in this case relying on the Supreme Court single judge decision and TTM infrastructure said that since both the plaintiff and the defendants are companies incorporated in India even for the sake of argument there is an arbitration agreement it cannot be an international arbitration agreement and as such not valid in law and the court quoting TDM infrastructure went on to hold that as per section 28 and the public policy ground two Indian parties should not be permitted to derogate from Indian law so if you see seven islands versus sharp petroleum in a way was saying that two Indian parties cannot derogate out of Indian law and if they were to derogate from Indian law they it would be a violation of public policy and therefore what happened ladies and gentlemen in this case is that the court rejected the the defendant's prayer under section 45 for the reference of the dispute to arbitration so this is another this is another case ladies and gentlemen in support of the proposition that two Indian parties cannot have a seat of arbitration outside of India so you have TDM infrastructure versus UE development single judge of the Supreme Court and you have seven islands versus sharp petroleum single judge of the Bombay High Court ladies and gentlemen the next case in this line of cases on this issue relates to the certain blocks oil and gas blocks which were auctioned by the government of India to reliance um uh you know relating to the top tea and mukta offshore um offshore offshore um you know areas which are basically just off the um you know off the off the coast of western coast of India in the Gulf of Canberra so this ladies and gentlemen um was a case as a two judge bench of the Supreme Court of India just this is Niger and AK Sikri this was a case where there was an application filed challenging an award delivered in an arbitration between reliance and union of India the challenge application was filed under section 34 in the Delhi High Court and this was an appeal filed against the decision of the Delhi High Court allowing for a section 34 application to be filed in a case which was essentially relating to a foreign award foreign award ladies and gentlemen because if you were to read the seat you were to read the arbitration clause the seat of arbitration in this case was London the law of the arbitration agreement was English law but the substantive law of the contract in this case was Indian law so the Supreme Court in this case held that the section 34 application challenging um you know a decision a foreign award would not be maintainable in India because the seat of arbitration in this case was London and the challenge to the award would have to be filed at the courts of the seat of arbitration which is London and therefore ladies and gentlemen the court said that the Delhi High Court did not have the jurisdiction to entertain a section 34 application now this ladies and gentlemen is another case which is quoted in support of the proposition that two Indian parties can have a seat of arbitration outside of India but again ladies and gentlemen in my honest view I believe that this is again a doubtful precedent because this was not a case where the Supreme Court expressly decided the issue as to whether two Indian parties can choose a foreign seat of arbitration or not at best this could be a precedent which recognizes that somehow obliquely or impliedly that two Indian parties could choose a foreign seat this issue was not squarely before the Supreme Court of India and ladies and gentlemen again I believe reliance industries versus union of India is a doubtful precedent because again there was a foreign element in this case this foreign element came in the form of the second appellant who was which was bg exploration production india limited which was a company incorporated under the laws um in the cayman islands so again there was a foreign element it was not a dispute simplicity between two indian parties reliance industries and union of india there was a foreign element with bg exploration which was a cayman islands um a cayman islands incorporated entity so therefore again ladies and gentlemen I believe this cannot be a very strong precedent in favor of the proposition that two indian parties can have a seat of arbitration outside of india the next case ladies and gentlemen is a 2015 decision of the bumbe high court adar mercantile versus shree jagdamba agrico exports this again is a single judge single judge bench of the bumbe high court just as danuka and the clause in this contract was very interesting ladies and gentlemen almost in the words of being um you know a pathological clause it said arbitration in india or singapore and english law to apply this was again an application filed under section 116 for the appointment of an arbitrator and um the single judge of the bumbe high court held that since both the parties are indian and the agreement was executed in india the judge the court relied on the single judge decision of supreme court in tedium infrastructure and held that two indian parties cannot derogate from indian law and therefore it would not be possible to have a seat of arbitration in singapore under english law and the dispute would necessarily have to be resolved through arbitration in india again ladies and gentlemen it is relying on that doubtful precedent tedium infrastructure but again this is a case which is often quoted for the proposition in support of the proposition that two indian parties can have a seat of arbitration outside of india again i think it's not on very solid footing the next case ladies and gentlemen relates to this power project it's a power project of a subsidiary of reliance called sassan power which is in the state of madhya pradesh so this ladies and gentlemen there are two decisions out here there is a madhya pradesh high court division bench decision upholding the fact that two indian parties can actually indeed have a seat of arbitration outside of india and then you have the matter going in appeal to the supreme court and then you'll see what the supreme court decides in this matter so that ladies and gentlemen is in my view one of the most beautiful high courts in india it's the high court of it's the high court of madhya pradesh at jabalpur i think it's a it's a it's a fine it's a very fine specimen of colonial architecture in india so let's see ladies and gentlemen what did the division bench of the high court comprising justices rajendra menon and sushil kumar hold so this was a case ladies and gentlemen as i said relating to a power project sassan power entered into a contract with north american coal corporation and then there was an assignment of that contract by north american coal corporation to its indian subsidiary which was north american coal corporation india so the clause in the contract ladies and gentlemen the governing law made a mention of governing law of the laws of united kingdom and with respect to the dispute resolution it said that the result the dispute should be resolved by arbitration administered by the icc in paris and the place of arbitration would be london england so the matter was this matter basically came up before division bench of the of the madhya pradesh high court against an order passed by a single judge of the madhya pradesh high court upholding the dismissal by the district judge and singrally of a civil suit filed by sassan power person to an application filed by north american coal power corporation india under section 45 the arbitration act read with order seven rule seven of the court so the district court had held that since the parties had entered into an arbitration agreement and the dispute was covered under part two of the act the bar under section 45 was attracted and therefore the suit was not maintainable it was argued by uh you know by sassan power that two indian parties cannot agree for an arbitration of foreign country according to the law of that country and that would be violative of section 23 of the indian contract act and the law laid down by the supreme court in tdm infrastructure and the two judge bench of the madhya pradesh high court held as follows so the the most crucial issue before the madhya pradesh high court was whether two indian parties can have a seat of arbitration outside of india and the court uphold in in this case actually upheld the observations of the supreme court of india in atlas exports and confirmed the fact that two indian parties could choose a foreign seat of arbitration and that there was no prohibition with respect to two indian parties choosing a foreign seat of arbitration so it went on to hold that when parties decided to resolve the arbitration in a seat outside of india part one of the arbitration act which relates to domestic arbitrations and arbitration seated in india would not apply it went on to again very importantly hold that if the agreement satisfied the requirements of part two of the arbitration and conciliation act part two would apply in which case the parties have to be referred to arbitration under section 45 and therefore the ladies and gentlemen the the the division bench of the supreme court dismissed their appeal so here was a case ladies and gentlemen where the two judge bench of the supreme or two judge bench of the madhya pradesh high court held that there was no prohibition on two parties choosing a foreign seat of arbitration and if you see the line of decisions of various high courts sasanta this two judge bench of the supreme court in sasanta seems to be one of the most often quoted decisions in favor of the proposition that two indian parties can have a seat of arbitration outside of india and this ladies and gentlemen this division bench supreme court madhya pradesh high court decision went in appeal to the supreme court of india and the supreme court of india a two judge bench of the supreme court of india uh just give me a minute okay a two judge bench of the supreme court of india ladies and gentlemen held that this issue whether two indian parties could agree to a foreign seat or not did not arise before it it said that the issue before the supreme court of india one of the three issues before the supreme court of india was whether two indian parties could contract out of indian substantive law so if you were to read paras 11 and 12 the supreme court very clearly says that this issue as to whether two indian parties could agree to a foreign seat of arbitration or not was not a point which was brought in appeal before the supreme court of india and the supreme court also clarified in this case that this issue as to whether two indian companies can choose a foreign substantive law or have a seat of arbitration outside of india did not expressly arise because there was a foreign element in this case just like the atlas exports case ladies and gentlemen here was a case where there was a foreign element in so far as there were two contracts out here the contract one was between sassan tau and the north american coal corporation the american subsidiary the belated um you know uh registered company and the second company was a novation between the north american coal corporation and its indian subsidiary so the supreme court held that this was not a simplicity case of two indian parties uh wanting to agreeing to have a seat of arbitration outside of india but there was an there was a foreign element because of the involvement of the american parent of the indian company and therefore ladies and gentlemen this was again in my view uh was a case where the supreme court did not expressly decide this issue as to whether two indian parties can have a seat of arbitration outside of india and moving on from then ladies and gentlemen we come to this 2017 single judge bench of the delhi high court justice mukta gupta who again relying on atlas exports held that two indian parties could indeed seat the arbitration outside of india and the last decision ladies and gentlemen in this line of cases on on this issue on this vexed issue is a very recent decision of two months ago third of november 2020 gujarat high court single judge of the gujarat high court justice berain vashnav and here ladies and gentlemen the gujarat high court very interestingly by quoting atlas exports and susan upheld the freedom of two indian parties to choose a foreign seat of arbitration and it said that once two indian parties make a choice of a foreign seat it cannot be held to be contrary to the public policy of india and the award from that arbitration seated outside of india between two indian parties could be enforced in india as a foreign arbitral award and again it went on to very clearly hold that the applicability of part two would be determined solely on what is the seat of arbitration and the nationality of the parties did not play any role whatsoever in that question but very interestingly ladies and gentlemen the supreme the the gujarat high court in this case held that when two indian parties chose a seat of arbitration outside of india they would not be entitled to interim release from an indian courts in support of an arbitration under section nine so this again ladies and gentlemen i am not too convinced that this uh this ruling is correct because um i don't think it has any substantive basis in any law or any precedent that just because two indian parties have had a seat of arbitration outside of india they could not be granted interim relief in india i believe it goes squarely against what has been the explicit provisions of the 2000 of the 2000 you know of the arbitration and conciliation act as amended by the 2015 amendments so ladies and gentlemen i have given you a list of cases for the proposition and against the proposition with respect to whether two indian parties can have a seat of arbitration outside of india and my conclusion is this that till date there is no determinative decision by the supreme court on this issue as to whether two indian parties can have a seat of arbitration outside of india secondly the arbitration and conciliation act of 1996 as amended by the 2015 and 2019 amendments act is again silent on this issue as to whether two indian parties can have a seat of arbitration outside india or not so ladies and gentlemen given the fact that this matter has not been conclusively decided by the supreme court of india my parting thoughts would be that one would have to tread with caution and if you have to err at all you might want to be erring on the side of caution and not on the side of daring because if you were to err on the side of daring there would be a distinct possibility that the ground of public policy would raise its hood and your award could be challenged on on this ground in an indian court so on that note ladies and gentlemen i'd like to end my presentation and i'd like to thank once again vikas chatharath and clc for their kind invitation to give me this platform to express my views on what i believe is a very very interesting aspect of the procedure relating to indian the indian arbitration law and procedure so on that and if there are any questions i'd be very happy to take up questions now i believe we have a very short time for questions but very happy to take up questions if any there's only one abhay anand says kindly share the citation of the gmr that's the citation okay so abhay you can note down that citation out here we don't have any questions i will just check it out on the facebook so here's closing the screen sharing yeah this is any suggestions to the students who would want or whom you want to suggest on arbitration i'm sorry i didn't get you vikas probably you want to post the question as to what is the everyone that the arbitration act as a scope for a student to take this as a professional thereafter i think arbitration is a is a fantastic profession and given the recent evolution of the jurisprudence relating to arbitration given the recent support that the process of arbitration has got from the government given the recent amendments to the arbitration and conciliation act and the moves of the government to establish india as an arbitration hub i believe the future of arbitration the study of arbitration is very bright and so those of you students in the in the audience who want to make a career in arbitration please do so but i would suggest do not directly specialize in arbitration right from day one it will be very important for you in the first few years of your career to be a general dispute resolution lawyer having an exposure to both the court system as well as arbitrations and then a few years down the line take that conscious decision to specialize only in arbitrations because we must remember as i said at the very beginning of the lecture arbitration doesn't function in a legal vacuum at every point in time you will need the assistance of the courts and therefore arbitration would have that interface with the court system and therefore it is very important for young students and lawyers to understand how that court system functions hence my suggestion that please do not specialize in arbitration right from the word go but try to spend the first few years by being a general dispute resolution lawyer including doing trial work in the in the in the trial courts actually very very important to hone your skills of cross examination which i think plays a very very important role as a good arbitration lawyer there are two questions that popped up from me yes essentially isn't that the procedure for enforcement of domestic award different from the international award if so if two Indian parties go for international arbitration then the award will be deemed to be an international award and enforced in accordance with the new york convention what is your take no that is exactly that is exactly what these decisions seem to be saying that when two Indian parties have seated the arbitrations outside of India part one will not apply part two will apply and all the decisions which are quoted the gujrat high court decision than the delhi high court decision and also atlas exports say that the moment you have made a choice of a seat of arbitration outside of India what really matters is not the nationality of the parties but what matters is the seat of arbitration and once you have agreed to a seat of arbitration outside of India part two of the arbitration act and not part one will apply and one once part two applies then it would be considered to be a foreign award for the purposes of enforcement we don't have any other questions i've just checked it like the youtube as well as on the facebook okay and so which is a which is i think a good sign that um the fact that everybody has understood um that's his concept is crystal clear yeah you always take the sessions which are very painstaking so tomorrow friends the topic would be interpreting the constitution uh the evolution of an indian method by mr siri nidhi k r who is a professor in cmru school of law legal studies in banglore uh so do stay connected with us and uh thank you to all those participants who have been watching us live on the facebook youtube and on this platform and above all to mr ajat thomas who as usual uh gave the session in a very articulated manner and uh as he rightly said since the questions have not come a lot of people would have understood the concept and the gray areas which he wanted to show and certain doubts which would have been there with the participants i think they would have been dispelled with uh thank you aj and thank you to all the participants thank you everyone stay safe stay blessed