9 July, 2015
The Supreme Court of India has upheld the jurisdiction of a Singapore-based tribunal, notwithstanding the petitioner's submissions about defects in the arbitration clause.
In Pricol Ltd v Johnson Controls Enterprise Ltd, the relevant arbitration agreement provided for (i) appointment of an arbitrator in accordance with the rules of arbitration of the "Singapore Chamber of Commerce" in default of agreement as to a candidate; (ii) arbitration proceedings to be held in Singapore; with (iii) Indian governing law. When a dispute arose, Johnson Controls (no doubt conscious that the Singapore Chamber of Commerce is not in fact an arbitration body) turned to the Singapore International Arbitration Centre ("SIAC") to appoint an arbitrator. Pricol challenged the SIAC-appointed tribunal's jurisdiction. The tribunal issued a partial award holding that it did have jurisdiction.
Pricol then approached the Supreme Court of India seeking the appointment of an arbitrator (and alleging that SIAC was not empowered by the arbitration agreement to do so). Pricol argued that since the rights of the parties under the agreement were governed by Indian law, the arbitration agreement would also, in the absence of any contrary intention, be governed by Indian law, and that Singapore would only be the venue for the proceedings. In particular, Pricol submitted that because the arbitration agreement was executed prior to the Supreme Court's ruling in BALCO (see above post), Part I of the Arbitration Act would apply unless excluded expressly or impliedly, and that it was therefore for the Indian courts to appoint an arbitrator.
In a short judgment, the Supreme Court decided that the "most reasonable construction" of the arbitration clause would be to construe the reference to "the Singapore Chamber of Commerce" as a reference to SIAC. The Court also noted that even if a challenge were to be made to the partial award on jurisdiction, it would not be proper to do so on an application for a court-appointed arbitrator. The Court considered that it was effectively being asked to sit in appeal over SIAC's appointment decision and the partial award on jurisdiction, which would be "wholly inappropriate" in the circumstances.
This pragmatic approach to construction, and the short shrift given to the petition, further underlines the Indian Supreme Court's commitment to supporting arbitration, even where there are defects in the arbitration agreement.
For further information, please contact:
Nicholas Peacock, Partner, Herbert Smith Freehills
nicholas.peacock@hsf.com
Alastair Henderson, Partner, Herbert Smith Freehills
alastair.henderson@hsf.com
Donny Surtani, Herbert Smith Freehills
donny.surtani@hsf.com
