Domestic Award Pertaining To International Commercial Arbitration Enforceable By HC U/S 36 Of Arbitration Act: Allahabad High Court
The Allahabad High Court has held that a domestic award pertaining to an international commercial arbitration is enforceable by High Court, which has the jurisdiction, under Section 36 of Arbitration and Conciliation Act, 1996.The bench of Justice Rajan Roy and Justice Rajeev Bharti held that“.. it is the High Court which is the 'Court' for filing an application under Section 36 of...
The Allahabad High Court has held that a domestic award pertaining to an international commercial arbitration is enforceable by High Court, which has the jurisdiction, under Section 36 of Arbitration and Conciliation Act, 1996.
The bench of Justice Rajan Roy and Justice Rajeev Bharti held that
“.. it is the High Court which is the 'Court' for filing an application under Section 36 of the Arbitration and Conciliation Act, 1996 for enforcement of a domestic award pertaining to an international commercial arbitration.”
Section 36 of the Act of 1996 provides for enforcement of arbitral awards in accordance with the provisions of CPC in the same manner as if it were a decree of the court.
Appellant approached the High Court in special appeal against an order of the Single Judge upholding the maintainability of the application of the respondents under Section 36 of the Act of 1996.
The Court observed that no specific forum or court was provided under Section 36 for enforcement of an award passed in an international commercial arbitration. It held that though the arbitral award is not a decree of the Court, it is to be enforced as if it were a decree. The question was which Court would enforce a domestic arbitral award in international commercial arbitration.
'Court' is defined under Section 2(1)(e) of the Act of 1996 as the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction which has the jurisdiction to adjudicate on the subject matter. It bars the jurisdiction of Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes.
Section 2(1)(e)(ii) defined court in case of international commercial arbitration as High Court which has ordinary original civil jurisdiction and has the jurisdiction to decide the questions forming the subject-matter of the arbitration and where the High Court does not have ordinary original civil jurisdiction, the High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court.
Noting that the Allahabad High Cour does not have the ordinary original civil jurisdiction, the Court held that it did have the power to hear appeals from decrees of court subordinate to it.
“Merely because it has to be enforced in accordance with the provisions of Code of Civil Procedure in the same manner as if it were a decree of the Court cannot lead us to conclude that such enforcement is to be done through the Commercial Court at the District level because decrees of Courts are executable in U.P. by District Court as Allahabad High Court does not have original jurisdiction..”
Since Section 36 did not provide for which Court could enforce award passed in an international commercial arbitration, the Court held that the same could be determined on a conjoint reading of Section 36 with Section 2(1)(e) of the Act of 1996.
“High Courts which have original jurisdiction referred in part one of Section 2(i)(e)(ii) will be Courts for International Commercial Arbitration in the context of Part I of the Act 1996, whereas, 'in other cases' a High Court having jurisdiction to hear appeals against decrees of Courts subordinate to it, will be such Courts, for Part I of the Act 1996. Within Part I of the Act 1996, Section 2(1)(e) does not make any distinction between International Commercial Arbitration based on whether it is party-centric or place-centric. To put it differently, wherever Part I of Act 1996 applies, the definition of Court contained in Section 2(1)(e) will apply. It will not apply to Part II of the Act 1996.”
Further, relying on Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc. and PASL Wind Solutions Private Limited vs GE Power Conversion India Private Limited, the Court held that Part II of the 1996 was different from Part-I and definition of 'court ' in Section 2(1)(e) was applicable to Part-I of the Act including Section 36. Therefore, it could not be said that a domestic award in an international commercial arbitration was enforceable by District Commercial Courts.
Regarding the applicability of the Arbitration and Conciliation (Amendment) Act, 2015, the Court held that
“The provision which is applicable is Sub-section 1 of Section 10 of the Act 2015 which itself indicates that in matters of international commercial arbitration all applications or appeals arising out of such arbitration will lie before the High Court. This provision is in sync with Section 2(1)(e)(ii) and Explanation to Section 47 of the Act 1996. Act 2015 was amended subsequent to Act 1996 and the Legislature is presumed to know the earlier enactment especially definition of 'Court' contained in Section 2(1) (e) thereof and explanation to Section 47 contained therein.”
Accordingly, it was held that the order of Single Judge upholding the maintainability of the application of the respondents under Section 36 of the Act 1996 was valid. Consequently, the special appeal was dismissed.