Report No. 246
In sub-section (1), clause (e) replace sub-clause (ii) by following:
"(ii) in the case of an international commercial arbitration, the High Court exercising jurisdiction over the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Court of a grade inferior to such High Court, or in cases involving grant of interim measures in respect of arbitrations outside India, the High Court exercising jurisdiction over the court having jurisdiction to grant such measures as per the laws of India, and includes the High Court in exercise of its ordinary original civil jurisdiction."
[Note: This is to solve the problem of conflict of jurisdiction that would arise in cases where interim measures are sought in India in case of arbitrations seated outside India. This also ensures that in International Commercial Arbitrations, jurisdiction is exercised by the High Court, even if such High Court does not exercise ordinary original civil jurisdiction.]
(iii) In sub-section (1), clause (f), sub-clause (iii), delete the words "a company or" before the words "an association or a body of individuals
[Note: The reference to "a company" In sub-section (iii) has been removed since the same is already covered under sub-section (ii). The intention is to determine the residence of a company based on its place of incorporation and not the place of central management/control. This further re-enforces the "place of incorporation" principle laid down by the Supreme Court in TDM Infrastructure Private Limited v. UE Development India Private Limited, (2008) 14 SCC 271, and adds greater certainty in case of companies having a different place of incorporation and place of exercise of central management and control]
(iv) In sub-section (1), clause (h), add the words "or any person claiming through or under such party" after the words "party to an arbitration agreement"
[Note: This is just to clarify that a "party" also includes a person who derives his interest from such party, and further re-enforces the decision of the Supreme Court in Chloro Controls (I) P. Ltd. v. Severn Trent Water Purification Inc. and Ors., (2013) 1 SCC 641]
(v) In sub-section (1), after clause (h), insert clause "(hh) "seat of the arbitration" means the juridical seat of the arbitration"
[Note: This definition of "seat of arbitration" is incorporated so as to make it clear that "seat of arbitration" is different from the venue of arbitration. Section 20 has also been appropriately modified.]
(vi) In sub-section (2), add the word "only" after the words "shall apply" and delete the word "place" and insert the word "seat" in its place.
[Note: This amendment ensures that an Indian Court can only exercise jurisdiction under Part I where the seat of the arbitration is in India. To this extent, it over-rules Bhatia International v. Bulk Trading S.A. and Anr.,(2002) 4 SCC 105, and re-enforces the "seat centricity" principle of Bharat Aluminium Company and Ors. etc. v. Kaiser Aluminium Technical Service, Inc. and Ors. etc., (2012) 9 SCC 552]
Also insert the following proviso "Provided that, subject to an express agreement to the contrary, the provisions of sections 9, 27, 37 (1)(a) and 37 (3) shall also apply to international commercial arbitration even if the seat of arbitration is outside India, if an award made, or that which might be made, in such place would be enforceable and recognized under Part II of this Act."
[Note: This proviso ensures that an Indian Court can exercise jurisdiction with respect to these provisions even where the seat of the arbitration is outside India.]
(vii) After the proviso in sub-section (2), insert sub-section "(2A) Notwithstanding any judgment/ decree to the contrary, the amendment to this sub-section (2) shall not apply to applications which are pending before any judicial authority on the date of such amendment, and which have arisen in relation to arbitrations where the date of the arbitration agreement is prior to 06.09.2012."
[Note: This proviso is needed, since the proposed amendment to S 2 (2) does away with the prospective over-ruling of Bhatia International v. Bulk Trading S.A. and Anr., (2002) 4 SCC 105 in Bharat Aluminium Company and Ors. etc. v. Kaiser Aluminium Technical Service, Inc. and Ors. etc., (2012) 9 SCC 552. However, applications that are already pending in an Indian court and which have been filed on the basis of the Bhatia rule, should be protected.]
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