We have discussed on several occasions the scope of the proposition in paragraph 32 of Bhatia International that the parties may “expressly or impliedly” exclude the applicability of Part I of the Arbitration Act in cases in which it would be otherwise applicable. The Court has previously held that Part I is not impliedly excluded merely by choosing a foreign substantive law (Indtel Technical...
The Proviso, Public Interest and Section 391
In Re Subhiksha Trading Services Ltd [161 CompCas 454], a single judge of the Madras High Court has considered a number of important questions relating to the role of the Company Court in sanctioning a scheme of arrangement or amalgamation under sections 391-4 of the Companies Act. Subhiksha Trading Services Ltd. [“STS”], the transferor company, was engaged in the business of trading in articles...
The Role of the Seat of Arbitration in Implied Exclusion
It is becoming increasingly difficult to state with confidence the prevailing position of law in India on a question that should, in principle, have a straightforward answer: in what circumstances will the Indian courts decline to exercise jurisdiction under the Arbitration and Conciliation Act, 1996 [“A and C Act”] and what must a contracting party which wishes to achieve this result insert in...
Hybrid Companies and Restrictions on Transferability
We have previously discussed at length the law on the scope of s. 111A(2) of the Companies Act, 1956 [“CA 1956”]. In its recent judgment in Jer Rutton Kavasmanek v Gharda Chemicals, the Bombay High Court has considered this issue, as well as another controversial area in Indian company law – whether “public” and “private” are exhaustive of the types of companies contemplated by the CA 1956. The...
Fuerst Day Lawson: S. 50 Arbitration Act, and “consolidating legislation”
On Friday, a two-judge Bench of the Supreme Court (Alam and Lodha JJ.) gave judgment in Fuerst Day Lawson v Jindal Exports [hereinafter “FDL”]. The judgment contains a careful and comprehensive examination of a long line of authorities, and an authoritative analysis of two very important issues in arbitration law and civil procedure—whether a Letters Patent Appeal [“LPA”] is maintainable in...
Guest Post: Supreme Court’s View on Substantive and Curial Law in Arbitration
(In the following post, Mr Vijay Kumar, Advocate, Madras High Court and Associate, Iyer & Thomas, discusses the law on implied exclusion) This post analyses few of the significant decisions of the Supreme Court (SC) with reference to the essential difference between the law governing the contract (substantive law) and the law governing the arbitration proceedings between the parties to the...
The 3/4 Formula to Determine Implied Exclusion
(In the following post, Mr Adithya Reddy, Advocate, Madras High Court, considers the law on implied exclusion of Part I of the Arbitration Act) “…we hold that the provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India the provisions of Part I would compulsory apply and parties are free to deviate only to the extent...
The Supreme Court Declines an Invitation to Extend Bhatia International
The cases we have discussed on implied exclusion of Part I of the Indian Arbitration Act are composed of three variants – first, the contract designates a foreign proper law but no seat of arbitration (for example Indtel Technical Services v WS Atkins and Citation Infowares v Equinox Corporation), secondly, the contract designates a foreign seat of arbitration but no proper law, and thirdly the...
UDF at Mumbai and Delhi airports
A Division Bench of the Supreme Court today declared that the User Development Fee [“UDF”] charged by the private operators of the Mumbai and Delhi airports is ultra vires. The judgment, reported as Consumer Online Foundation v Union of India, contains several observations that are crucial in ascertaining the proper scope of the public-private model [“PP”] in the aviation sector. This post set...
A Level Playing Field and Public Interest
One of the striking features of the Indian economy post-1991 is the conception it has of a level playing field as between Government and private enterprises. It should be noted that this cuts both ways, for while there are commercial advantages for certain Government entities, others are required as part of Government policy to bear losses that a private enterprise in that position would choose...
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