Arbitration seat attracts law applicable to such location: SC

In a case where one of the parties was a foreign national, the Supreme Court of India clarified that choosing of the juridical seat of arbitration attracts the law applicable to such location and it would not be necessary to specify which law would apply to the arbitration proceedings since the law of the particular country would apply by the operation of law.

The Court said that where the parties choose a juridical seat of arbitration outside India and provide that the law which governs arbitration will be a law other than Indian law, Part I of the Arbitration and Conciliation Act, 1996 (which deals with Domestic Arbitrations) would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India.

The Court clarified the above position while resolving the conflicting and contradictory views of the High Courts of Gujarat and Bombay.

“…..the parties chose to exclude the application of Part I to the arbitration proceedings between them by choosing London as the venue for Arbitration and by making English law applicable to arbitration, as observed earlier. It is too well settled by now that where the parties choose a juridical seat of arbitration outside India and provide that the law which governs arbitration will be a law other than Indian law, part I of the Act would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India. A Court in India could not have jurisdiction to entertain such objections under Section 34 in such a case”, the Court said.

The Court further said, “As a matter of fact the mere choosing of the juridical seat of arbitration attracts the law applicable to such location. In other words it would not be necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure.”

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