Guest Post: Swastik Gases v Indian Oil Corporation

(In the following post, Ms Renu Gupta, Advocate, analyses the recent judgment of the Supreme Court on exclusive jurisdiction clauses)

The
recent Supreme Court decision of Swastik Gases Private Limited v. Indian Oil
Corporation Limited
, relating to ouster of jurisdiction clauses has
been discussed on this blog here. In this article I have discussed that
this judgment does not provide any helpful guideline to understand the application
of “expressio unius est exclusio alterius”,
i.e., expression of one is the exclusion of another.
The question in Swastik
Gases
was whether an ouster of jurisdiction clause, without the use of
expressions such as “only”, “alone”, “exclusive”, “exclusive jurisdiction”, could
still be construed to oust the jurisdiction of all courts except the one
mentioned, in case of an application made under Section 11 of the Arbitration
and Conciliation Act, 1996 (“Act”).
The agreement
was “subject to jurisdiction of courts at Kolkata”. According to Indian Oil the
agreement had been signed at Kolkata; while Swastik’s stand was that it was
signed at Jaipur and except execution of the agreement at Kolkata, all
necessary facts forming part of the cause of action arose at Jaipur (see para
12).
                                                                                                                                              
Lokur J., in his
separate but concurring judgment, rightly stated that there are two categories
of decisions regarding ouster clauses. First, where the intention of the
parties can be culled out from use of the expressions “only”, “alone”,
“exclusive”. Second, where the exclusion clause is not specific in as
much as words like “only”, “alone” or “exclusively” are not used.
We are here
concerned with the second category of decisions. The underlying basis of all
the decisions in the second category is reliance on the maxim “expressio unius est exclusio alterius”, based
on ABC Laminart.
The Supreme
Court in ABC Laminart while discussing this maxim observed at paragraph
16 that:
“As
regards construction of the ouster clause when words like ‘alone’, ‘only’,
‘exclusive’ and the like have been used there may be no difficulty. Even
without such words in appropriate cases the maxim ‘expressio unius est exclusio
alterius’ – expression of one is the exclusion of another – may be applied
. What is an appropriate case shall depend
on the facts of the case
. In such a case mention of one thing may imply
exclusion of another. When certain jurisdiction is specified in a contract an
intention to exclude all others from its operation may in such cases be inferred. It has therefore to be
properly construed.”
Thus, the Court
in ABC Laminart did not lay down any guideline to determine what may be “an appropriate case” to apply “expressio unius est exclusio alterius
to an ouster clause, and left it to be determined based on facts of each case.
In the table below,
I have analysed the decisions in the second category:
Case
Clause
Part
of cause of action arising in the court not specified in the ouster clause
Decision
Comments
ABC Laminart
Any dispute arising out of this
sale shall be subject to Kaira jurisdiction.
Goods were delivered at the
address of the respondent at Salem.
Jurisdiction of Courts other
than in Kaira were not clearly, unambiguously and explicitly excluded and
therefore, the Court at Salem had jurisdiction.
This work order is issued
subject to the jurisdiction of the High Court situated in Bangalore in the
State of Karnataka. Any legal proceeding will, therefore, fall within the
jurisdiction of the above Court only.
Contract was entered into and
executed within Dhanbad.
Jurisdiction clause is not void
under Section 23 and 28 of Contract Act. Therefore, jurisdiction of all other
courts is excluded.
Relies on ABC Laminart
without any factual analysis as how does the clause unambiguously and
explicitly exclude jurisdiction of all other courts.
Subject to Anand jurisdiction.
Part of cause action arose in
Bombay.
The ouster clause does not use
words like ‘alone’, ‘only’, ‘exclusive’ and the like. Thus the maxim ‘expressio
unius est exclusio alterius’ cannot be applied under the facts and
circumstances of the case and it cannot be held that merely because the
deposit receipt contained the endorsement, the jurisdiction of all other competent
courts is barred.
Relies on ABC Laminart
and in the facts of the case held that the jurisdiction clause is not
exclusionary.
Any legal proceeding arising
out of the order shall be subject to the jurisdiction of the Courts in
Mumbai.
According to plaintiff, ordered
goods were delivered to the defendant in Delhi and the value of goods was to
be paid by the defendant to the plaintiff at Delhi.
Since (i) order was placed at
Bombay, (ii) order was accepted at Bombay, (iii) advance payment was made at
Bombay, (iv) final payment was to be made at Bombay, there was a clear
intention to confine the jurisdiction of the Courts in Bombay to the
exclusion of all other Courts.
Relies on ABC Laminart
and in the facts of the case held that the jurisdiction clause is
exclusionary.
Seemingly the decision was
based on larger part of the cause of action having arisen in Bombay.
The place of arbitration shall
be Kolkata.
For section 9 application – After
discharge of goods at port Pipavav in Gujarat, they were stored in a godown
within the jurisdiction of the Bhavnagar Court.
Parties had knowingly and
voluntarily agreed that the contract would be subject to Kolkata jurisdiction
and even if the courts in Gujarat also had jurisdiction, it has to be held
that the agreement to have the disputes decided in Kolkata was valid.
Relies on ABC Laminart without
any factual analysis as how does the clause unambiguously and explicitly
exclude jurisdiction of all other courts.
Shriram City Union Finance
Corporation v.  Rama
Mishra
…. differences and for disputes
arising out of this agreement shall be filed and referred to the courts in
Calcutta for the   purpose   of jurisdiction.
Through the jurisdiction clause
in the agreement, the parties have bound themselves that the courts in
Calcutta alone which  will have
jurisdiction.
Relies on ABC Laminart without
any factual analysis as how does the clause explicitly exclude jurisdiction
of all other courts.
Evidently, relying
on “expressio unius est exclusio alterius
stated in ABC Laminart, the Courts have applied this maxim, without any
discernible guideline as to its usage.
In Hanila Era,
the only seeming rationale for applying “expressio
unius est exclusio alterius
” is that a larger part of cause of action arose
within the territorial limits of the courts mentioned. However, Section 20(c)
of Code of Civil Procedure, 1908, specifies that all courts where cause of
action, wholly or in part arises have jurisdiction. It does not say that Courts
where larger part of cause of action arose will have preference. Thus, even
applying the test of where a larger part of cause of action does not seem
right.
In Swastik
Gases
the Court held that:
“31…It is a fact
that whilst providing for jurisdiction clause in the agreement the words like  ‘alone’, 
‘only’,  ‘exclusive’ or ‘exclusive
jurisdiction’ have not been used but this, in our view, is not decisive and
does not make any material difference

The intention of
the parties  – by having clause 1 in the
agreement  – is clear and unambiguous
that the courts at Kolkata shall have jurisdiction which means that the courts
at Kolkata alone shall have jurisdiction. It is so because for construction of
jurisdiction clause, like clause 18 in the agreement, the maxim expressio unius
est exclusio alterius comes into play as there is nothing to indicate to the
contrary
.
Further, Lokur
J. held that:
“4. The use of
words like “only”, “exclusively”, “alone” and so on are not necessary to
convey the intention of the parties in an exclusion of jurisdiction clause of
an agreement
.”
With respect,
the aforesaid findings of the Court are contrary to the settle principle of law
that intention of the parties can be culled out from use of the expressions
“only”, “alone” and “exclusive” (see New Moga Transport Co v United
India Insurance
).
In a situation
where there seemed to be no denial by Indian Oil of the fact that except
execution of the agreement at Kolkata, all necessary facts forming part of the
cause of action arose at Jaipur (see para 12), perhaps relying on Hanila Era,
the test of larger part of cause of action could have been applied and
jurisdiction of Jaipur courts could have been respected.
Therefore, just
like the other decisions in the second category, explained above, Swatik Gases
also does not lay down any clear guideline for applying “expressio unius est exclusio alterius”.

With the facts of Swatik Gases, could the
Court have applied some other principles of law regarding interpretation of
contracts and come to the same conclusion as it did with the aid of the maxim “expressio unius est exclusio alterius”?
I will attempt to address this question in a separate post.

About the author

V. Niranjan

1 comment

  • Swastik Gases takes a more commonsensical approach than the past decisions on the 2nd type of cases you've mentioned. Why would parties want to select a jurisdiction unless they intend to make it the only forum given that jurisdiction cannot be conferred by agreement to a court which would not ordinarily have jurisdiction? Swastik Gases thus takes away the artificial distinction between the first and the second cases.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Recent Posts

Topics

Recent Comments

Archives

web analytics