{"id":223187,"date":"1997-12-04T00:00:00","date_gmt":"1997-12-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/sumitomo-heavy-industries-ltd-vs-ongc-ltd-ors-on-4-december-1997"},"modified":"2016-08-16T04:02:12","modified_gmt":"2016-08-15T22:32:12","slug":"sumitomo-heavy-industries-ltd-vs-ongc-ltd-ors-on-4-december-1997","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/sumitomo-heavy-industries-ltd-vs-ongc-ltd-ors-on-4-december-1997","title":{"rendered":"Sumitomo Heavy Industries Ltd vs Ongc Ltd. & Ors on 4 December, 1997"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Sumitomo Heavy Industries Ltd vs Ongc Ltd. & Ors on 4 December, 1997<\/div>\n
Author: Bharucha<\/div>\n
Bench: S.P. Bharucha, S.C. Sen<\/div>\n
           PETITIONER:\nSUMITOMO HEAVY INDUSTRIES LTD.\n\n\tVs.\n\nRESPONDENT:\nONGC LTD. & ORS.\n\nDATE OF JUDGMENT:\t04\/12\/1997\n\nBENCH:\nS.P. BHARUCHA, S.C. SEN\n\n\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
\t       THE 4TH DAY OF DECEMBER, 1997
\nPresent:\n<\/p>\n
\t\t Hon’ble the Chief Justice
\n\t\t Hon’ble Mr.Justice S.P.Bharucha
\n\t\t Hon’ble Mr.Justice S.C.Sen
\nSoli J.Sorabjee,  Shanti Bhushan, B.Dutta, Milon K.Banerjee,
\nSr.Advs., P.H.Parekh,  Amit  Dhingra,  Nikihil\tShakharande,
\nG.Joshi, G.khandpal,  Virendra, G.K.  Banerjee, Advs.,\twith
\nthem for the appearing parties.\n<\/p><\/blockquote>\n
\t\t      J U D G M E N T
\n     The following Judgment of the Court was delivered:\n<\/p><\/blockquote>\n
BHARUCHA, J.\n<\/p>\n
     This appeal by special leave assails the correctness of
\nthe judgment and order of a learned single Judge of the High
\nCourt at  Bombay. By  the Judgment and order the petition of
\nthe first  respondent for the issuance of a direction to the
\nsecond respondent  to file the award that he had made as the
\numpire in  arbitration proceeding  between the appellant and
\nthe first respondent in that court was allowed.\n<\/p>\n
     Briefly stated,  these are\t the facts  relevant to\t the
\nissue in the appeal:\n<\/p>\n
     The appellant  and the  first respondent entered into a
\ncontraction on 7th September, 1983, whereunder the appellant
\nagreed to  install and\tcommission on  trunkey basis  an oil
\nplatform at  Bombay High,  about  100  miles  north-west  of
\nBombay. The contract stipulated the following.\n<\/p>\n
     “17.0 Laws\/Arbitration
\n     17.1 Applicable Laws
\n     All    questions\t  disputes    or
\n     difference arising under, out of or
\n     in connection  with  this\tContract
\n     shall be  subject to  the\tlaws  of
\n     Indian.\n<\/p><\/blockquote>\n
     17.2 Arbitration
\n     If\t any   dispute,\t difference   or
\n     question\tshall\t at   any   time
\n     hereafter arise between the parties
\n     hereto    or    their    respective
\n     representatives   or   assigns   in
\n     respect  of   the\tconstruction  of
\n     these   presents\t or   concerning
\n     anything\therein\t  contained   or
\n     arising out of these presents or as
\n     to\t the   rights,\tliabilities   or
\n     duties   of    the\t  said\t parties
\n     hereunder which  cannot be mutually
\n     resolved by  the parties,\tthe same
\n     shall be  referred to  arbitration,
\n     the proceeding  of which  shall  be
\n     held at London, U.K. Within 30 days
\n     of the  receipt of\t the  notice  of
\n     intention\tof  appoint  arbitrators
\n     each   party   shall   appoint   an
\n     arbitrator of  its own  choice  and
\n     inform  the   other  party.  Before
\n     entering upon  the arbitration, the
\n     two arbitrators  shall  appoint  an
\n     umpire. In case the parties fail to
\n     appoint its  arbitrator  within  30
\n     days from\tthe receipt  of a notice
\n     from the other party in this behalf
\n     of if  any dispute\t in selection of
\n     umpire,\tthe\tpresident     of
\n     International Chamber  of Commerce,
\n     Paris, shall appoint the arbitrator
\n     and\/or or\tthe umpire  as the  case
\n     may be.\n<\/p><\/blockquote>\n
     The decision of the arbitrators and
\n     failing to\t an agreed  decision  by
\n     them, the\tdecision of  the  umpire
\n     shall be  find and\t binding on  the
\n     parties.\n<\/p><\/blockquote>\n
     The arbitration proceeding shall be
\n     held   in\t accordance   with   the
\n     provision of  International Chamber
\n     of\t Commerce  and\tthe  rules  made
\n     thereunder as  amended from time to
\n     time. The\tarbitration  proceedings
\n     shall  be\t conducted  in\t English
\n     language.”<\/p><\/blockquote>\n
     Disputes having  arisen subsequent to the completion of
\nthe work  under the contract, the appellant served notice of
\narbitration on the first respondent and appointed Mr. Robert
\nA. MacCrindle its arbitrator. The first respondent appointed
\nMr. Justice  Chandrasekhar  (Retired)  its  arbitrator.\t The
\narbitrators nominated  the second  respondent as the umpire.
\nPreliminary hearings  commenced. The  appellant then applied
\nto the queens Bench Division, Commercial Court in London for
\nleave  to  issue  and  serve  on  the  first  respondent  an
\nOriginating Summons  seeking an order under Section 5 of the
\nEnglish\t Arbitration   Act,  1979,   to\t confirm   that\t the
\narbitrators had\t the power  toe proceed with the arbitration
\nin default  of a  defence having  been served  by the  first
\nrespondent. A  learned Judge of the Commercial Court granted
\nto the\tfirst respondent  leave to  issue and serve the said
\nsummons.  It   was  heard  and\tdecided\t in  favour  of\t the
\nappellant. Thereafter  the first  respondent’s\tdefence\t was
\nserved, and  a summons\twas issued on the first respondent’s
\nbehalf in  the Commercial  Court to  set aside\tits  earlier
\norders. The  application made  by the  first respondent\t was
\ndecided on  23rd July,\t1993 by Potter, J. (The Judgment and
\norder is  reported in  (1994) 1 LIoyd’s Law Reports 45). The
\narbitrators having  differed, the  second respondent entered
\nupon the  reference and, on 27th June, 1995, made his award.
\nThe award  was served  on the first respondent on 10th July,
\n1995.\n<\/p>\n
     On 26th  July, 1995,  the first respondent filed in the
\nHigh Court  at Bombay  a petition  praying that\t the  second
\nrespondent be  directed, under\tSection\t 14  of\t the  Indian
\nArbitration Act,  1940, to file the award in that court. The
\nfirst respondent  submitted  that  the\taward  was  invalid,
\nunenforceable  and   liable  to\t  be  set  aside  under\t the
\nprovisions  of\t the  said   Act.  The\t learned  Judge,  as
\naforestated, allowed the petition.\n<\/p>\n
     The decision  rendered by\tPotter, J. in the Commercial
\nCourt is  of some importance because the jurisdiction of the
\nEnglish Courts was discussed. The learned Judge said:\n<\/p>\n
     “Before stating my reasons for that
\n     conclusion and  then turning to the
\n     “frustration” argument, and because
\n     questions have arisen as to whether
\n     English  law   or\tIndian\t law  is
\n     appropriate  to   be   applied   at
\n     various stages of this application,
\n     I propose\tbriefly to advert to the
\n     various laws potentially applicable
\n     to\t the   various\taspects\t of  the
\n     arbitral  relationship   which  may
\n     fall for  consideration in cases of
\n     this kind.\n<\/p><\/blockquote>\n
     (1)   The\t proper\t  law\tof   the
\n     underlying contract  i.e.\tthe  law
\n     governing\t the\tcontract   which
\n     creates the  substantive rights and
\n     obligations of  the parties  out of
\n     which the dispute has arisen.
\n     (2)   The\t proper\t  law\tof   the
\n     arbitration agreement, i.e. the law
\n     governing rights and obligations of
\n     the  parties   arising  from  their
\n     agreement\tto   arbitrate\tand,  in
\n     particular,  their\t  obligation  to
\n     submit    their\t disputes     to
\n     arbitration and to honour an award.
\n     This includes  inter alia questions
\n     as\t  to   the   validity\tof   the
\n     arbitration agreement, the validity
\n     of the  notice of\tarbitration, the
\n     constitution of  the  tribunal  and
\n     the question  whether an award lies
\n     within  the   jurisdiction\t of  the
\n     arbitrator.\n<\/p><\/blockquote>\n
     (3)   The\t proper\t  law\tof   the
\n     reference, i.e.  the law  governing
\n     the contract  which  regulates  the
\n     individual\t      reference\t      to
\n     arbitration. This\tis an  agreement
\n     subsidiary to but separate from the
\n     arbitration    agreement\t itself,
\n     coming into effect by the giving of
\n     a notice  of arbitration from which
\n     point   a\t new   set   of\t  mutual
\n     obligations  in   relation\t to  the
\n     conduct of the reference arise upon
\n     lines  canvassed\tin  the\t  Bremer
\n     Vulkan\t   Schiffbau\t     and
\n     Maschinenfabrik  v.   South   India
\n     Shipping  Corporation,   [1981]   1
\n     Lloyd’s Rep.  253\tat  p.\t263  and
\n     developed by  Mr.\tJustice\t Mustill
\n     (as he  then was)\tin Black Clawson
\n     International  Ltd.  v.  Papierwork
\n     Waldhof-Aschaffenburg A.G. [1981] 2
\n     Lioyd’s Rep.  446. That law governs
\n     the questions  of whether by reason
\n     of\t subsequent   circumstances  the
\n     parties   have    been   discharged
\n     (whether\t by    repudiation    or
\n     frustration) from\ttheir obligation
\n     to continue  with the  reference of
\n     the   individual\tdispute,   while
\n     leaving   intact\tthe   continuous
\n     agreement to  refer future disputes
\n     pursuant\tto    the    arbitration
\n     agreement.\n<\/p><\/blockquote>\n
     (4)   The curial  law, i.e. the law
\n     governing\t    the\t     arbitration
\n     proceedings themselves,  the manner
\n     in which  the reference  is  to  be
\n     conducted.\t   It\t  governs    the
\n     procedural powers and duties of the
\n     arbitrators, questions  of evidence
\n     and the determination of the proper
\n     law of the contract.\n<\/p><\/blockquote>\n
     In respect\t of  many  arbitrations,
\n     the applicable law will be the same
\n     in all four cases. (1) will usually
\n     be\t decisive  as  to  (2),\t in  the
\n     absence  of   an  express\tcontrary
\n     choice;  (2)   and\t (3)  will  very
\n     rarely differ.  However, as to (4),
\n     it is not uncommon to encounter the
\n     incidence of a different curial law
\n     in cases  where  the  parties  have
\n     made   an\t  express   choice   for
\n     arbitration (frequently  in London)
\n     in a jurisdiction divorced from the
\n     jurisdiction   with    which    the
\n     contract  in   (1)\t has  most  real
\n     connection.\n<\/p><\/blockquote>\n
     In\t this\tcase,  as  to  (1),  the
\n     parties have made an express choice
\n     of Indian\tlaw as the proper law of
\n     the contract.  As to  (2), it seems
\n     to me  likely (although)  it is not
\n     necessary finally\tto decide)  that
\n     the proper\t law of\t the arbitration
\n     agreement is  similarly Indian law,
\n     since the\tarbitration agreement is
\n     part  of\tthe  substance\t of  the
\n     underlying contract  and the  terms
\n     of\t cl.  17.1  are\t clear\tin  that
\n     respect. As  to (3), it matters not
\n     for the purpose of this application
\n     whether  the   governing\tlaw   in
\n     English or\t Indian law, because Mr.
\n     Dunning has conceded before me that
\n     there  is\tno  material  difference
\n     between   the   two   so\tfar   as
\n     applicable\t to   the  doctrine   of
\n     frustration upon  which  he  relies
\n     (see also\tpar. 7\tof the affidavit
\n     of Mr. Majumdar to that effect).
\n     As to (4), the curial law, it seems
\n     to me  plain that\tit is the law of
\n     England. There  is, it  is true, no
\n     express  choice   of  curial   law.\n<\/p><\/blockquote>\n
     However,\tthere\t is   a\t   clear
\n     requirement  that\tthe  arbitration
\n     proceedings be  held in  London. In
\n     the absence  of express  agreement,
\n     there  is\t a  strong  prima  facie
\n     presumption that the parties intend
\n     the curial law to be the law of the
\n     “seat” of the arbitration, i.e. the
\n     place at  which the  arbitration is
\n     to be conducted, on the ground that
\n     is\t  the\tcountry\t  most\t closely
\n     connected with  the  proceedings  –
\n     see  Mustill  and\tBoyd,  2nd  ed.,
\n     p.64.”<\/p><\/blockquote>\n
     Neither of\t the parties having filed an appeal from the
\njudgment of  Potter, J.,  its finding  bind them. Based upon
\nthese  findings,  it  was  contended  by  Mr.  S.J.Sorabjee,
\nlearned counsel\t for the  appellant, that the petition filed
\nby the\tfirst respondent  in the  High Court  at Bombay fell
\noutside the  jurisdiction of  that Court  for a direction to
\nthe second  respondent to  file his  award in court could be
\ngiven only  by the courts administering the curial law, that
\nis to say the courts in England. The answer of Mr. Banerjee,
\nlearned counsel\t for the first respondent, is that the award
\nhaving been made, the procedural or curial law had ceased to
\nhave effect,  and accordingly,\tthe courts administering the
\ncurial law  and no  jurisdiction  to  issue  to\t the  second
\nrespondent a direction to file his award therein.\n<\/p>\n
     This, then, is the central issue in the appeal: what is
\nthe area of operation of the curial law.\n<\/p>\n
     In Bank  Mellat v. Helliniki Techniki S.A., 1984 (1) QB
\n291, the Court of Appeal said that the fundamental principle
\nwas that  in the absence of any contractual provision to the
\ncountry,  “the\t procedural  (or   curial)   law   governing
\narbitrations’ was  that of  the forum  of  the\tarbitration,
\nsince this was the system of law with which the agreement to
\narbitrate in  the particular  forum would  have its  closest
\nconnection. Parties to international arbitrations might well
\nchoose London as a convenient neutral forum and “English law
\nwill, as  the curial  law,  apply  to  the  conduct  of\t the
\narbitration;  and   the\t parties   will,  by  holding  their
\narbitration here,  subject themselves  for that\t purpose  to
\nEnglish law…….” (Emphasis supplied.)
\n     In\t Naviera   Amazonica  Peruana\tS.A.  vs.   Compania
\nInternational De  Seguros Peru,\t 1988 (1)  Lloyds Law Report
\n116, Lord  Justice Kerr summarised the state of the relevant
\njurisprudence thus:\n<\/p>\n
     “A. All contracts which provide for
\n     arbitration and  contain a\t foreign
\n     element\tmay\tinvolve\t   three
\n     potentially  relevant   systems  of
\n     law.  (1)\tThe  law  governing  the
\n     substantive contract.  (2) The  law
\n     governing\t  the\t agreement    to
\n     arbitrate and  the\t performance  of
\n     that   agreement.\t (3)   The   law
\n     governing\tthe   conduct\tof   the
\n     arbitration.  In  the  majority  of
\n     cases all\tthree will  be the same.
\n     But (1)  will  often  be  different
\n     from (2) and (3). And occasionally,
\n     but rarely,  (2)  may  also  differ
\n     from (3).”<\/p><\/blockquote>\n
     He said,  “Prima facie,  i.e. in  the absence  of\tsome
\nexpress and  clear provision  to the contrary it must follow
\nthat an\t agreement that\t the curial  or procedural law of an
\narbitration is\tto be law of X has the consequence that X is
\nalso to\t be the\t “seat” of  the arbitration. The lex fori is
\nthen the  law of X, and accordingly X is the agreed forum of
\nthe arbitration.  A further  consequence is  then  that\t the
\nCourts which  are competent  to\t control  or  assistant\t the
\narbitration are\t the Courts  exercising jurisdiction  at X”.
\nThe learned  Judge observed  that there\t was  no  reason  in
\ntheory which precluded “parties to agree that an arbitration
\nshall be  held at a place or in country X but subject to the
\nprocedural laws of Y”. (Emphasis supplied.)
\n     In the  Law and  Practice of  Commercial Arbitration in
\nEngland, Second\t Edition by  Mustill and  Boyd, there  is  a
\nchapter on  “The applicable  law and the jurisdiction of the
\nCourt”. Under the subtitle, “Law Governing The Arbitration”,
\nit is said,
\n     “An agreed reference to arbitration
\n     involves two groups of obligations.
\n     The  first\t  concerns  the\t  mutual
\n     obligations  of   the  parties   to
\n     submit  future   disputes,\t or   an
\n     existing  dispute\tto  arbitration,
\n     and to  abide by  the  award  of  a
\n     tribunal constituted  in accordance
\n     with  the\t agreement.  It\t is  now
\n     firmly   established    that    the
\n     arbitration agreement which creates
\n     these  obligations\t is  a\tseparate
\n     contract,\t distinct    from    the
\n     substantive agreement  in which  it
\n     si\t usually  embedded,  capable  of
\n     surviving the  termination\t of  the
\n     substantive      agreement\t     and
\n     susceptible      of       premature
\n     termination by  express or\t implied
\n     consent,  or   by\trepudiation   or
\n     frustration,  in\tmuch  the   same
\n     manner as in more ordinary forms of
\n     contract. Since  this agreement has
\n     a distinct\t life of its own, it may
\n     in\t principle   be\t governed  by  a
\n     proper law\t of its\t own, which need
\n     not  be   the  same   as  the   law
\n     governing the substantive contact.
\n     The second\t group\tof  obligations,
\n     consisting\t of  what  is  generally
\n     referred to  as the `curial law’ of
\n     the   arbitration,\t  concerns   the
\n     manner in which the parties and the
\n     arbitrator are  required to conduct
\n     the  reference   of  a   particular
\n     dispute. According\t to the\t English
\n     theory of\tarbitration, these rules
\n     are to  be ascertained by reference
\n     to the  express or implied terms of
\n     the  agreement  to\t arbitrate.  The
\n     being so,\tit will\t be found in the
\n     great majority  of cases  that  the
\n     curial law,  i.e. the law governing
\n     the conduct  of the  reference,  is
\n     the same  as the  law governing the
\n     obligation\t to  arbitrate.\t It  is,
\n     however, open  to\tthe  parties  to
\n     submit,\t expressly     or     by
\n     implication,  the\tconduct\t of  the
\n     reference to different law from the
\n     one   governing\tthe   underlying
\n     arbitration agreement.  In\t such  a
\n     case, the\tcourt looks first at the
\n     arbitration   agreement\tto   see
\n     whether the  dispute is  one  which
\n     should be arbitrated, and which has
\n     validly been  made the  subject  of
\n     the reference; it then looks to the
\n     curial  law   to\tsee   how   that
\n     reference should  be conducted; and
\n     then returns  to the  first law  in
\n     order  to\t give  effect\tto   the
\n     resulting award.\n<\/p>\n
     XXX\t\t   XXX\t\t\t   XXX
\n     It\t may   therefore  be  seen  that
\n     problems\tarising\t   out\t of   an
\n     arbitration  may,\t at   least   in
\n     theory, call for the application of
\n     any one  or more  of the  following
\n     laws-\n<\/p>\n
     1.\t The proper law of the contract,
\n     i.e. the law governing the contract
\n     which   creates   the   substantive
\n     rights of\tthe parties,  in respect
\n     of which the dispute has arisen.\n<\/p>\n
     2.\t    The\t proper\t  law\tof   the
\n     arbitration agreement, i.e. the law
\n     governing\tthe  obligation\t of  the
\n     parties to\t submit the  disputes to
\n     arbitration,  and\t to  honour   an
\n     award.\n<\/p>\n
     3.\t  The curial  law, i.e.\t the law
\n     governing\tthe   conduct\tof   the
\n     individual reference.\n<\/p>\n
     XXX\t\t       XXX\t\t\tXXX\n<\/p>\n
     1.\t    The\t proper\t  law\tof   the
\n     arbitration agreement  governs  the
\n     validity\tof    the    arbitration
\n     agreement, the  question whether  a
\n     dispute lies  within the  scope  of
\n     the  arbitration\tagreement;   the
\n     validity\tof    the   notice    of
\n     arbitration;  the\tconstitution  of
\n     the tribunal;  the question whether
\n     an\t  award\t   lies\t   within    the
\n     jurisdiction of the arbitrator; the
\n     formal validity  of the  award; the
\n     question whether  the parties  have
\n     been discharged from any obligation
\n     to arbitrate future disputes.\n<\/p>\n
     2.\t  The curial  law  governs’  the
\n     manner in which the reference is to
\n     be conducted; the procedural powers
\n     and  duties   of  the   arbitrator;\n<\/p>\n
     questions\t  of\tevidence;    the
\n     determination of  the proper law of
\n     the contract.\n<\/p>\n
     3.\t The proper law of the reference
\n     governs; the  question whether  the
\n     parties have  been discharged  from
\n     their obligation  to continue  with
\n     the  reference  of\t the  individual
\n     dispute.\n<\/p>\n
     XXX\t\t   XXX\t\t\t       XXX
\n     The conclusion  that we  reach is\tthat the  curial law
\noperates during the continuance of the proceeding before the
\narbitrator to  govern procedure\t and  conduct  thereof.\t The
\ncourts administering  the curial  law have  the authority to
\nentertain applications\tby  parties  to\t arbitrations  being
\nconducted within  their\t jurisdiction  for  the\t purpose  of
\nensuring  that\t the  procedure\t  that\tis  adopted  in\t the
\nproceedings  before   the   arbitrator\t conforms   to\t the
\nrequirements of\t the curial  law and  for reliefs incidental
\nthereto. Such  authority of  the  courts  administering\t the
\ncurial law ceases when the proceedings before the arbitrator
\nare concluded.\n<\/p>\n
     The proceedings  before the arbitrator commence when he
\nenters upon  the reference  and conclude  with the making of
\nthe award.  As the  work by  Mustill and Boyd aforementioned
\nputs, it  with the  making of a valid award the arbitrator’s
\nauthority, powers and duties in the reference come to an end
\nand he\tis “functus  officio” (page  404). The arbitrator is
\nnot obliged  by law to file his award in court but he may be
\nasked by  the party  seeking to\t enforce the award to do so.
\nThe need  to file  an award  in court  arises only  if it is
\nrequired to be enforced, and the need to challenge it arises
\nif it  being enforced. The enforcement process is subsequent
\nto and independent of the proceedings before the arbitrator.
\nIt is  not governed  by the  curial or\tprocedural law\tthat
\ngoverned the  procedure that  the arbitrator followed in the
\nconduct of the arbitrator.\n<\/p>\n
     Mr. Sorabjee  relied upon\tobservations  in  Dicey\t and
\nMorris on  “The Conflict  of Law,  12th Edition”.  The first
\nRule under  the heading\t “Arbitration”\tin  the\t Chapter  on
\n“Arbitration and Foreign Awards” reads thus:\n<\/p>\n
     “Rule 57 – (1) The validity, effect
\n     and    interpretation     of     an
\n     arbitration agreement  are governed
\n     by its applicable law.\n<\/p><\/blockquote>\n
     (2) The  law governing  arbitration
\n     proceeding is the law chosen by the
\n     parties,  or,  in\tthe  absence  of
\n     agreement, the  law of  the country
\n     in which the arbitration is held.”<\/p><\/blockquote>\n
     In discussing  clause (2)\tof the\tRule aforementioned,
\nthis is stated:\n<\/p>\n
     “The   procedural\t  law\tof   the
\n     arbitration will determined how the
\n     arbitrators are to be appointed, in
\n     so far  as this si not regulated in
\n     the  arbitration\tagreement;   the
\n     effect of\tone party’s  failure  to
\n     appoint an arbitrator, e.g. whether
\n     an arbitrator may be appointed by a
\n     court, or\twhether the  arbitration
\n     can   proceed   before   the   sole
\n     arbitrator appointed  by the  other
\n     party, and whether the authority of
\n     an arbitrator  can be  revoked. The
\n     law will  also determine  what  law
\n     the arbitrators  are to  apply, and
\n     whether  they   are   expected   or
\n     allowed to\t decide ex aequo et bono
\n     or as  amiables compositeurs,  and,
\n     if not,  whether  the  parties  can
\n     gave them\tthis power  or impose on
\n     them this\tduty. That law will also
\n     determine the procedural powers and
\n     duties  of\t the  arbitrators,  e.g.
\n     whether   they   must   hear   oral
\n     evidence\t  (but\t   not\t   their
\n     jurisdiction to decide the dispute,
\n     which   is\t   governed    by    the
\n     arbitration agreement  and the  law
\n     applicable to  it) or  whether  the
\n     arbitrators  have\tbeen  guilty  of
\n     misconduct. It  will also determine
\n     what    judicial\t remedies    are
\n     available to  a party who wishes to
\n     apply for security for costs or for
\n     discovery\t or    who   wishes   to
\n     challenge the  award  once\t it  has
\n     been  rendered  and  before  it  is
\n     sought to\tenforce it  abroad,  and
\n     the circumstances in which judicial
\n     remedies\t may\tbe    excluded.”<\/p><\/blockquote>\n
     (Emphasis supplied.)
\n     Mr. Sorabjee  submitted, relying  upon the\t proposition
\nthat  the  procedural  law  would  determine  what  judicial
\nremedies were  available to a party “who wishes to challenge
\nthe award  once it has been rendered and before it is sought
\nto enforce  it abroad”, that the court that administered the
\ncurial law  of\tthe  arbitration  had  the  jurisdiction  to
\nentertain a  challenge to  the\taward  and,  therefore,\t the
\njurisdiction to\t receive it.  The footnote  relative to\t the
\nabove proposition (at pave 583) reads thus:\n<\/p>\n
     “Whitworth\t     Street\t Estates
\n     (Manchester) Ltd. v. James Miller &
\n     Partners  Ltd.   [1970]  A.C.   583
\n     (English remedies\tnot available in
\n     Scots arbitration).”\n<\/p>\n
     Mr. Banerjee  submitted, and it seems to us, correctly,
\nthat the  case of  James Miller\t &  Partners  Vs.  Whitworth
\nStreet Estates,\t 1970  A.C.  583,  does\t not  bear  out\t the
\nproposition. The facts of the case, shortly put, were these:
\nA contract  was entered\t into between  an  English  company,
\nWhitworth,  and\t  a  Scottish  company,\t James\tMiller.\t The
\nScottish company  was to  carry\t out  work  at\tthe  English
\ncompany’s premises in Scotland. The contract did not provide
\nfor the\t place of  arbitration or  its\tprocedure.  Disputes
\narose between  the parties and were referred to arbitration.
\nThe arbitration\t was held  in Scotland,\t in accordance\twith
\nScottish law.  The English  company asked  the arbitrator to
\nstate his  award in  the form  of a  special  case  for\t the
\ndecision of the English courts. The arbitrator refused to do
\nso on  the  ground  that  the  arbitration  was\t a  Scottish
\narbitration, and  he issued  his final\taward. The issue was
\nwhether the arbitrator should be required to state his award
\nin the\tform of\t a special  case. The  case was,  therefore,
\nconcerned with\tthe  question  of  which  law  governed\t the
\nproceedings before  the arbitrator and not with the question
\nof which law governed proceedings to set an award.\n<\/p>\n
     We think  that our\t conclusion that the curial law does
\nnot  apply  to\tthe  filing  of\t an  award  in\tcourt  must,
\naccordingly, hold  good. We  find support for the conclusion
\nin the\textracts from  Mustill and Boyd which we have quoted
\nearlier.  Where\t  the  law  governing  the  conduct  of\t the
\nreference is different from the law governing the underlying
\narbitration agreement,\tthe court  looks to  the arbitration
\nagreement to  see if  the dispute is arbitrable, then to the
\ncurial law  to see  how the  reference should  be conducted,
\n“and then  returns to  the first law in order to give effect
\nto the resulting award”.\n<\/p>\n
     The law  which would  apply to the filing of the award,
\nto its enforcement and to its setting aside would be the law
\ngoverning the  agreement to arbitrate and the performance of
\nthat agreement.\t Having regard\tto the clear terms of Clause
\n17 of  the contract  between the  appellant  and  the  first
\nrespondent, we\tare in\tno doubt  that the law governing the
\ncontract and the law governing the rights and obligations of
\nthe parties  arising from their agreement to arbitrate, and,
\nin particular,\ttheir  obligations  to\tsubmit\tdisputes  to
\narbitration and to honour the award, are governed by the law
\nof India;  nor is  there any dispute in this behalf. Section
\n47 of the Indian Arbitration Act, 1940, reads thus:\n<\/p>\n
     “47.   Act\t   to\tapply\tto   all
\n     arbitrations.  –\tSubject\t to  the
\n     provisions of  Section 46, and save
\n     in so  far as is otherwise provided
\n     by any  law for  the time\tbeing in
\n     force, the\t provisions of\tthis Act
\n     shall apply to all arbitrations and
\n     to all proceedings thereunder”\n<\/p>\n
     Provided that  an arbitration award
\n     otherwise\tobtained  may  with  the
\n     consent   of    all   the\t parties
\n     interested\t   be\t  taken\t    into
\n     consideration as  a  compromise  or
\n     adjustment of  a suit  by any Court
\n     before which the suit is pending.”\n<\/p>\n
     The  only\t other\tstatute\t which\tis  required  to  be
\nconsidered in the context of the provisions of Section 47 of
\nthe  1940   Act\t is  the  Foreign  Awards  (Recognition\t and
\nEnforcement) Act,  1961. For  the  purposes  of\t determining
\nwhether the  provision of  the 1940  Act are  subject to the
\nprovisions of  the 1961 Act, Section 9 is relevant. It reads
\nthus:\n<\/p>\n
     “9. Saving\t – Nothing  in this  Act
\n     shall-\n<\/p><\/blockquote>\n
     (a) prejudice  any rights which any
\n     person would  have had of enforcing
\n     in\t India\t of  any   award  or  of
\n     availing himself  in India\t of  any
\n     award if  this  Act  had  not  been
\n     passed, or\n<\/p><\/blockquote>\n
     (b) apply\tto any\taward made on an
\n     arbitration agreement  governed  by
\n     the law of India.”<\/p><\/blockquote>\n
     By reason\tof Section 9(b), the 1961 Act does not apply
\nto any\taward made  on an  arbitration agreement governed by
\nthe law of India. The 1961 Act, therefore, does not apply to
\nthe arbitration\t agreement between  the\t appellant  and\t the
\nfirst respondent. The 1940 Act, applies to it and, by reason
\nof Section  14(2) thereof,  the courts in India are entitled
\nto receive  the award made by the second respondent. We must
\nadd in\tthe   interests of completeness that is not the case
\nof the\tappellant that\tthe High  Court at Bombay lacked the
\nterritorial jurisdiction to do so.\n<\/p>\n
     In\t the  result,  the  appeal  must  fail,\t and  it  is
\ndismissed with costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Sumitomo Heavy Industries Ltd vs Ongc Ltd. & Ors on 4 December, 1997 Author: Bharucha Bench: S.P. Bharucha, S.C. Sen PETITIONER: SUMITOMO HEAVY INDUSTRIES LTD. Vs. RESPONDENT: ONGC LTD. & ORS. DATE OF JUDGMENT: 04\/12\/1997 BENCH: S.P. BHARUCHA, S.C. SEN ACT: HEADNOTE: JUDGMENT: THE 4TH DAY OF DECEMBER, 1997 Present: Hon’ble […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-223187","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nSumitomo Heavy Industries Ltd vs Ongc Ltd. & Ors on 4 December, 1997 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/sumitomo-heavy-industries-ltd-vs-ongc-ltd-ors-on-4-december-1997\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sumitomo Heavy Industries Ltd vs Ongc Ltd. & Ors on 4 December, 1997 - 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