Daniyal Qureshi | Symbiosis Law School Pune | 8th April 2020
Mankastu Impex Private Limited v. Airvisual Limited The Supreme Court of India MANU/SC/0283/2020
Facts
The petitioner herein entered into an agreement or supply of certain goods with company respondent no. 1 and subsequently signed an MoU. Subsequent to this signing of the MoU, company respondent no. 1 was acquired by company respondent no. 2. Company respondent number 2 is a company incorporated under the laws of Hong Kong.
Subsequently the petitioner sought to invoke the MoU against Respondent 2 and the latter denied their participation and held out that the Respondent has not overtaken any contractual obligations of Respondent 1. However, the respondent 2 was willing to refresh the agreement at new prices and rates.
Thus the petitioner sought to refer the matter to arbitration as per the arbitration clause of the MoU and sought the appointment of arbitrator from the Supreme Court.
Issues.
Whether the arbitration was subject to the laws of India or not.
Judgement.
The petitioner contended that clause 17.1 of the MoU clearly stipulates that the arbitration be according to the laws of India and that Hong King was merely the venue of the arbitration and the courts at new Delhi shall have the jurisdiction over the matter. The petitioner relied on the judgement of the court in Union of India v. Hardy Exploration and Production[1] wherein the court stipulated that the venue only becomes the seat of the arbitration when there is no other condition postulated or when a condition precedent to the term “place”, the said condition must be satisfied to infer that the venue is the seat of the arbitration. And that clause 17.1 clearly reflects agreement of the parties that the arbitration shall be in accordance to the laws of India therefore the jurisdiction shall lie with the courts at New Delhi. The petitioner further contends that under the MoU there is a clear agreement that the laws of India shall be the proper law of contract for the MoU. Further there is absence of any agreement as to the assignment of any curial law. And in absence of such agreement the laws of India be the curial law for the purpose of the agreement.
The Respondent contends that the according to Clause 17.2 the venue of arbitration being Hong Kong the laws of India to arbitration would not apply. In BGS SGS SOMA JV v. NHPC Ltd it was held that the expression “arbitration proceedings” makes clear that the venue is the seat of the arbitration. However, both the judgements of Hardy exploration and BGS soma being by a three judge bench, one does not overrule the other.
On a careful reading of the MoU the Supreme Court observed that the term used “administration” implies the juridical seat of the arbitration proceeding which being Hong Kong, thus the laws of India would not apply.
Petition dismissed.
[1] (2018) 7 SCC 374
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