INTERNATIONAL NUT ALLIANCE LLC Vs. BINU JOHN

JUDGEMENT

(1.) This appeal is preferred under Section 37 of the Arbitration and Conciliation Act. 1996 ( hereinafter 'the Act' for short) challenging the order dated 6.7.2017 passed in O.P.(Arb.) No.167/2010 on the files of the IInd Addl. District Court, Kollam. The appeal is preferred by the respondent in the above referred O.P. Relevant facts :

(2.) There was a contract in between the appellant and the respondent for the purchase of Indian cashew nut kernels. The appellant herein purchased cashew nut kernels through a broker namely Agro Trade International and an agreement in this regard was entered into. There arose a dispute regarding the quality of the exported product. In the above referred agreement, there was an arbitration clause. But, in respect of the forum, there was a dispute. Originally, it was entered as CENTA, but it was corrected as AFI by the appellant. Not accepting the objection, arbitration was conducted by Association of Food Industries ( for short AFI) and an award was passed. Thereafter the respondent herein filed an application under Section 34 of the Act before the District Court, Kollam to set aside the said award. It was considered by the IInd Addl. District Court, Kollam and the impugned order was passed by which the foreign award was set aside. The main challenge in this appeal is in respect of the maintainability of the said application.

(3.) The learned counsel for the appellant submitted before us that the dispute is in respect of a foreign award. When it is a foreign award, Part I of the Act is not applicable. In support of the same, it is also submitted that a Constitutional Bench of the Hon'ble Apex Court held in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC 552] ( hereinafter referred to as BALCO case) that Part I of the Act will not be applicable in respect of a foreign award, where the seat of arbitration is outside India. It is also submitted that the said legal position was again reiterated by the Apex Court in Union of India v. Reliance Industries Limited and Ors. [(2015) 10 SCC 213] and in Imax Corporation v. M/s. E-City Entertainment (I) Pvt. Limited ( AIR 2017 SC 1372). It is also submitted before us that even if the dictum laid down by the Apex Court in Bhatia International v. Bulk Trading S.A. and Another [( 2002) 4 SCC 105) is applicable in this particular case, it is categorically stated therein that when there is an agreement, express or implied to exclude Indian law, Part I of Arbitration Act, 1996 will not be applicable. As per Annexure A1 and A2, the intention of the parties was to conduct the arbitration not in India, but in a foreign country. Apparently, it is an implied agreement to exclude Indian curial law. Thus, the principles laid down in Bhatia's case (supra) will also show that Part I will not be applicable in the case in hand.