High Courts Without Original Civil Jurisdiction Require Commercial Division For International Arbitration: Karnataka High Court

The Karnataka High Court has ruled that even with respect to a High Court that does not exercise an Ordinary Original Civil Jurisdiction, a Commercial Division is required to be established for the purpose of considering applications and appeals arising out of an International Commercial Arbitration. The Court added that the said Commercial Division must comprise of a Single Judge. The Bench, consisting of Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj, held that though Section 4 of the Commercial Courts Act, 2015 provides for the establishment of a Commercial Division in the High Court that exercises an Ordinary Original Civil Jurisdiction, it does not bar the establishment of a Commercial Division in a High Court that does not exercise the said jurisdiction. A dispute had arisen out of a Technology Collaboration Agreement (TCA) executed between the appellant ITI Limited and the 1st respondent Alphion Corporation. The dispute was referred for arbitration and an arbitral award was passed. The appellant filed a commercial appeal under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) before the Karnataka High Court challenging the arbitral award. Upon filing of the said appeal under Section 34 of the A&C Act, the registry raised an objection that a Commercial Appeal (COMAP) was not maintainable. The appellant thereafter filed a memo stating that the Commercial Division of the Karnataka High Court would have the jurisdiction to hear the challenge against the arbitral award passed in an International Commercial Dispute. The appellant ITI Limited submitted before the High Court that the proceedings under Section 34 of the A&C Act should be heard by a Single Bench since the appellant would otherwise lose the forum of an appeal under Section 37 of the A&C Act. The appellant averred that the dispute between the parties was a commercial dispute in terms of Section 2 of the Commercial Courts Act, 2015 and the value of the said dispute was more than the specified value of Rs. 3 Lakhs. The appellant added that the arbitral proceedings conducted between the parties was an International Commercial Arbitration since the respondent no.1/claimant company is registered in the United States. The appellant submitted that as per the Arbitration Clause, the seat of the arbitration was in Bangalore, India. The appellant added that as per the provisions of Section 10(1) of the Commercial Courts Act, the Commercial Division of the High Court would have the jurisdiction to decide the applications or appeals arising out of an International Commercial Arbitration. The appellant averred that though a Commercial Appellate Division had been established by the High Court of Karnataka, a Commercial Division was not yet constituted and established. The appellant submitted that the jurisdiction of the Commercial Appellate Division of a High Court is restricted to the proceedings under Section 37 of the A&C Act. The appellant added that after the enforcement of the Commercial Courts Act, no separate classification exists with respect to an International Commercial Arbitration in regard to the proceedings initiated under Section 34 of the A&C Act. The appellant added that it was left with no classification under which it could institute proceedings under Section 34 of the A&C Act with the Commercial Division of the High Court. The appellant averred that the registry had classified the appellant's appeal under Section 34 of the A&C Act as a Commercial Appeal (COMAP), which lies before the Division Bench of the High Court. Thus, the appellant contended that since no intra court appeal is available against the judgement of the Division Bench of the Karnataka High Court rendered in a Commercial Appeal (COMAP), the appellant would not be able to take the benefit of an appeal provided under Section 37 of the A&C Act against an order passed in an application under Section 34 of the A&C Act. The Court observed that the arbitration between the parties was held in India and the venue as well as the seat of arbitration was in Bangalore. Thus, the Court held that the High Court would have the jurisdiction to entertain the challenge made to the said International Commercial Arbitral Award. The Court noted that as per the provisions of Section 2(e)(ii) of the A&C Act, with respect to an International Commercial Arbitration, the term 'Court' means the High Court exercising its Ordinary Original Civil Jurisdiction and having the jurisdiction to decide the questions forming the subject-matter of the arbitration. The Court noted that in all other cases, the term 'Court' under Section 2(e)(ii) would mean the High Court having the jurisdiction to hear appeals from decrees of subordinate courts. The Court held that since the High Court of Karnataka does not exercise Ordinary Original Civil Jurisdiction, therefore, the later...

High Courts Without Original Civil Jurisdiction Require Commercial Division For International Arbitration: Karnataka High Court

Parina Katyal

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