Case Law Details
Mankastu Impex Private Limited Vs Airvisual Limited (Supreme Court)
Conclusion: Since the reference to Hong Kong as ‘place of arbitration’ was not a simple reference as the ‘venue’ for the arbitral proceedings; but a reference to Hong Kong was for final resolution by arbitration administered in Hong Kong, therefore, the dispute between assessee-company in India and respondent company in Hong Kong shall be administered arbitration in Hong Kong and Section 11 of the Arbitration and Conciliation Act, 1976 had no application to “International Commercial Arbitrations” seated outside India and the petition filed by under Section 11(6) of the Act was not maintainable as the arbitration was seated at Hong Kong.
Held: Assessee-company incorporated in India conducted business under the brand name “Atlanta Healthcare” and was in the business of air quality management and supply of air purifiers, car purifiers, anti-pollution masks and air quality monitors. The respondent was a company incorporated under the laws of Hong Kong and was in the business of manufacture and sale of air quality monitors as well as air quality information. A Memorandum of Understanding (MoU) was entered into between the parties under which the respondent agreed to appoint assessee as an exclusive distributor for the products for sale within India for a period of five years from the starting date, which date was to commence from the date of delivery of the first lot of Air Quality monitors in India, i.e. 03.10.2016 or 01.11.2016, whichever was later. Thereafter, assessee received an e-mail from one Mr. Charl Cater of IQAir AG (Proposed respondent No.2) informing assessee that the respondent was a part of IQAir AG. IQAir AG had acquired all technology and the associated assets of the respondent. The letter stated that IQAir AG would not assume any contracts or legal obligations of the respondent and would work on a case to case basis with resellers to negotiate new contracts and that the IQAir AirVisual products would be made available under separate dealer agreements. Assessee sent an e-mail to the respondent and IQAir AG seeking Proforma Invoice to enable it to issue purchase orders. IQAir AG offered to supply IQAir branded AirVisual Pro to assessee under a new non-exclusive arrangement with a new wholesale price of USD 172 per unit as against the original price of USD 110 per unit agreed upon between assessee and the respondent. Assessee had issued a notice invoking the arbitration clause provided in Clause 17 the MoU. The respondent also sent its reply dated 05.01.2018 to the notice stating that Clause 17 of the MoU provides for arbitration administered and seated in Hong Kong. The respondent averred that should the petitioner wish to resolve the dispute by arbitration, they should refer the dispute to an arbitration institution in Hong Kong. Further, it was stated that the respondent did not agree to ad hoc arbitration but clearly agreed to administered arbitration in Hong Kong. According to assessee, the proposed arbitration between a company registered in India under the Companies Act, 1956 and the respondent – a body corporate which was incorporated under the laws of Hong Kong, was an “International Commercial Arbitration” as per Section 2(1)(f) of the Arbitration and Conciliation Act, 1996 having seat of arbitration in Delhi. In terms of Section 11(6) read with Section 11(9), assessee therefore sought appointment of arbitrator. Respondent submitted that as per Clause 17.2 of the MoU entered into between the parties, the place of arbitration shall be Hong Kong and since the place of arbitration was outside India, Section 11 of the Arbitration and Conciliation Act had no application to the present dispute. It was held that even though the arbitration agreement entered into between the parties provided Hong Kong as the place of arbitration that by itself would not lead to the conclusion that parties had chosen Hong Kong as the seat of arbitration. Significance of the seat of arbitration was that it determines the applicable law when deciding the arbitration proceedings and arbitration procedure as well as judicial review over the arbitration award. It was all about which court would have the supervisory power over the arbitration. It was well-settled that “seat of arbitration” and “venue of arbitration” could not be used inter-changeably. The intention of the parties as to the “seat” should be determined from other clauses in the agreement and the conduct of the parties. Section 11 had no application to “International Commercial Arbitrations” seated outside India. The words in Clause 17.1 “without regard to its conflicts of laws provisions and courts at New Delhi shall have the jurisdiction” did not take away or dilute the intention of the parties in Clause 17.2 that “….any dispute, controversy, difference arising out of or relating to the MoU “shall be referred to and finally resolved by arbitration administered in Hong Kong”. The words in Clause 17.1 did not suggest that the seat of arbitration was in New Delhi. Since Part-I was not applicable to “International Commercial Arbitrations”, in order to enable the parties to avail the interim relief, Clause 17.3 appeared to have been added. The words “without regard to its conflicts of laws provisions and courts at New Delhi shall have the jurisdiction” in Clause 17.1 was to be read in conjunction with Clause 17.3. Since the arbitration was seated at Hong Kong, the petition filed by assessee under Section 11(6) was not maintainable and was liable to be dismissed. It was however open to assessee to approach Hong Kong International Arbitration Centre for appointment of the arbitrator, if they so desire.
FULL TEXT OF THE SUPREME COURT JUDGEMENT
This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 read with Arbitration and Conciliation (Amendment) Act, 2015 read with the Appointment of Arbitrator by the Chief Justice of India Scheme, 1996 seeking appointment of a sole arbitrator under Clause 17.2 of the Memorandum of Understanding dated 12.09.2016 between petitioner-Company incorporated in India and respondent-incorporated under the laws of Hong Kong.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
