Dozco India

(Petitioner)

vs. Doosan Infracore

(Respondent)

(2011)6 SCC 179

Issue
Whether Supreme Court have the jurisdiction to appoint an Arbitrator u/s. 11 (6) of the Act even after having Clause 23 in Arbitration Agreement.

Law.
Arbitration and Concilliation Act 1996
11. Appointment of arbitrators. (6) Where, under an appointment procedure agreed upon by the parties,(a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him take the necessary measure, unless the agreement on the appointment

Arbitration Agreement Clauses

"Art. 22. Governing Laws - 22.1 : This agreement shall be governed by and construed in accordance with the laws of The Republic of Korea.
Art. 23. Arbitration - 23.1 : All disputes arising in connection with this Agreement shall be finally settled by arbitration in Seoul, Korea (or such other place as the parties may agree in writing), pursuant to the rules of agreement then in force of the International Chamber of Commerce

Facts
Petitioner entered into distributorship agreement with Respondent.
Petitioner was exclusive distributor for respondent in India and Bhutan for his products The distribution agreement (Article 23) contained an arbitration agreement providing for arbitration under the ICC Arbitration Rules. The seat of arbitration - Seoul, Korea (or such other place as the parties may agree in writing Governing law -Law of the Republic of Korea.

 Disputes arises.
Petitioner sends a notice to the respondent calling on it to appoint an arbitrator in accordance with the arbitration agreement. On the respondents failure to appoint an arbitrator, the petitioner filed an application in the Supreme Court of India for the appointment of an arbitrator under section 11(6) of the Act.

Petitioners Arguments
As per Bhatia International and Indtel case provisions of part 1 applies in case of international arbitration which are held out of India and are governed by foreign law, until and unless the parties by agreement resist it. (Given in para 36 of Case) and therefore we have right to appoint an arbitrator u/s 11(6) as courts do have jurisdiction because of Part 1. Bracketed portion of the arbitration agreement gives parties an option to designate another place of arbitration therefore it was never the intention of the parties to designate Seoul, Korea, as the legal seat of arbitration and hence it can be changed,

Respondents Arguments
Decisions of Bhatia international case wont be applicable because there is a difference between Legal seat of arbitration and geographically location for holding proceedings which are misinterpreted here.
Parties have chosen the proper law of contract as well as the arbitration agreement to be Korean law with a seat of arbitration in Seoul and the arbitration law being conducted in accordance with Rules of the ICC. Referrring to Mustill and Boyd he argued that in case of absence of express agreement, there is a strong prima facie presumption that the parties intend the procedural law to be the law of the 'seat' of the arbitration.

 And referred to common feature of international arbitrations explained in Redfern and Hunter. On page 7 which clearly makes distinction and explain how both works. He pointed out that the bracketed portion is only for the purpose of providing the convenience of holding proceedings of the arbitration else where than Seoul. However, that cannot be allowed to override the main Clause of Art. 23. For the seat of arbitration petitioner also relied on the case of Infowares Ltd. v. Equinox Corporation comparing it with there clause 10.1 and 23 of there own clause but here respondent said that in 23 there is express exclusion of part 1 while in 10.1 its not so here they cannot refer to this at any point of time.

Courts Holding
Referring to Naviera Amozonica Peruna case, court drew a distinction between the legal seat of arbitration and a geographically convenient place of arbitration and held that it was never the intention of the parties to have the legal seat of arbitration as any place other than Seoul, Korea.
Arts. 22 and 23 of the Distributorship Agreement between the parties in this case clearly excluded Part I of the Act and the law laid down in Bhatia International and Equinox Corporation case is not applicable here so no question of applicability of S. 11(6) of the Act and the appointment of Arbitrator in terms of that provision

Thank You

By- Pulkit Mogra