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Lex Arbitri under Arbitration act


Lex Arbitri
Lex Arbitri

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Lex Arbitri: Governing the Arbitral Procedure


The lex arbitri, or the law of the arbitration proceedings, dictates the procedural framework adopted by the tribunal and the involvement of courts at the seat of arbitration. This encompasses various procedural aspects such as evidence admissibility, witness examination, remedies for parties, and more.



Unlike the English Arbitration Act, 1996, which distinguishes between mandatory and non-mandatory provisions, the Indian 1996 Arbitration Act doesn't categorise provisions in such a manner. Indian courts' jurisdiction is activated when the arbitration seat is in India. 



Consequently, certain provisions, including interim relief, arbitrator appointment, and award enforcement, fall within the jurisdiction of Indian courts for both domestic and international commercial arbitrations under Part I of the Act.



In international commercial arbitrations with a seat outside India, Indian courts provide limited assistance, primarily for interim relief and evidence-taking, subject to the parties' agreement. However, Part II provisions become mandatory if the award enforcement is sought in India.



Parties can agree on arbitration procedure, subject to Part I of the 1996 Arbitration Act. In the absence of such agreement, the tribunal has discretion to conduct proceedings as it deems appropriate, exempt from the Civil Procedure Code, 1908, and the Evidence Act, 1872.



If arbitration is administered by an institution, its procedural rules apply, displacing default provisions in the law unless mandated by law. However, certain provisions like Section 28(1)(a) of the 1996 Arbitration Act, being mandatory, cannot be overridden by institutional rules or party agreements.

 
 

Choice of Seat and Lex Arbitri


Parties often indirectly determine the applicable laws of arbitration by selecting the arbitral seat, which dictates the lex arbitri. The Model Law suggests that the law governing arbitration is that of the place where the arbitration occurs.



Redfern & Hunter illustrate this concept by likening it to a driver in a foreign country being subject to local traffic laws automatically.



Thus, choosing the seat typically aligns with the jurisdiction's legal framework for arbitration. The Indian Supreme Court, in Dozco India Pvt. Ltd. v. Doosan Infracore Co. Ltd, emphasised that in the absence of an explicit agreement, there's a presumption that the curial law is that of the seat.



Therefore, determining the seat is crucial, as it's closely connected to the arbitration proceedings.


In distinguishing between seat and venue, it's essential to recognize that the venue merely signifies the physical location of arbitration, while the seat carries legal significance.


Using "venue" interchangeably with "seat" can lead to confusion, as the former pertains to logistical aspects, while the latter bears legal implications.


Choice of Seat and Venue


The arbitral seat serves as the legal domicile or juridical home of an arbitration, chosen by parties for reasons of neutrality and convenience, often without a direct connection to themselves or their commercial relationship.


When parties fail to specify the seat in their agreement, the tribunal may determine it, considering various circumstances, including party convenience.



Section 20 of the 1996 Arbitration Act allows parties to agree on the place of arbitration, with the tribunal having discretion if no agreement exists. It also permits the tribunal to meet at any suitable location for consultations, hearings, or inspections.



The distinction between the seat, reflecting legal nexus and applicable law, and the venue for hearings, which may change based on convenience, is crucial. The choice of a foreign seat might only indicate a venue or place, depending on the agreement's construction.



For instance, in the Enercon case, despite selecting London as the venue, the Supreme Court inferred New Delhi as the seat based on the parties' express choice of Indian law for the substantive and governing law.


Similarly, in Eitzen, the Court impliedly recognized London as the seat, indicating the choice of English law as the curial law.



Thus, by expressly choosing a seat, parties may imply a choice of curial law, indicating their intent to exclude Indian courts' supervisory jurisdiction over foreign arbitrations.

 
 

Indian Parties and Choice of Foreign Seat


The Indian judiciary has implicitly acknowledged the autonomy of Indian parties to select a foreign seat for arbitration. In cases like Atlas Exports and Reliance Industries Limited, the Supreme Court upheld arbitral awards resulting from foreign-seated arbitrations involving Indian parties.



The Madhya Pradesh High Court, in Sasan Power Limited, affirmed that two Indian parties could opt for arbitration in a foreign jurisdiction without violating Indian law or public policy.


This decision was upheld by the Supreme Court, indicating that choosing a foreign seat does not nullify the arbitration agreement.



Similarly, the Delhi High Court in Doosan emphasised that an arbitration agreement stands independently of the substantive contract, allowing parties to opt for international arbitration regardless of their contractual rights and obligations.



The court clarified that an award from a non-Indian-seated arbitration between Indian parties would be considered a foreign award under Part II of the 1996 Arbitration Act.



In the case of GMR v. Doosan, the Delhi High Court applied the alter ego doctrine to bind an Indian non-signatory to arbitral proceedings seated in Singapore.



Despite GMR Energy initially seeking an injunction against the arbitration, the court ruled that the matter fell under the jurisdiction of the arbitral tribunal in Singapore, emphasising the significance of the lex arbitri in such cases. Consequently, the court directed the parties to resolve the issue through arbitration.


 
 

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