Judgement Briefs

Alternative Dispute Resolution

M/s Dozco India Pvt. Ltd. v. M/s Doosan Infracore Co. Ltd.

(2011) 6 SCC 179

Citation
(2011) 6 SCC 179
Court
Supreme Court of India
Date
8 October 2010
Bench
V.S. Sirpurkar, J. (designate under Section 11)

Facts

  • Dozco India Pvt. Ltd., an Indian company, entered into a distributorship agreement dated 2 February 2004 with Doosan Infracore Co. Ltd., a South Korean company.
  • Dozco was appointed as an exclusive distributor in India and Bhutan for specified construction equipment manufactured by Doosan.
  • The agreement contained:
  • Article 22, stating that the agreement would be governed by the laws of the Republic of Korea; and
  • Article 23, providing that disputes would be finally settled by arbitration in Seoul, Korea, under the Rules of the International Chamber of Commerce.
  • Article 23 also contained bracketed wording allowing another place if both parties agreed in writing.
  • Doosan subsequently terminated the distributorship arrangement.
  • Dozco alleged that the termination was wrongful and raised claims against Doosan.
  • It issued a notice appointing an arbitrator and then filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Supreme Court of India.
  • Doosan objected that:
  • Seoul was the agreed foreign seat of arbitration;
  • Korean law governed the agreement; and
  • Part I of the Indian Arbitration Act, including Section 11, had been excluded.

Issue

  • Whether Seoul was merely a convenient venue or the juridical seat of arbitration.
  • Whether Part I of the Indian Arbitration and Conciliation Act, 1996 applied.
  • Whether the Chief Justice of India had jurisdiction to appoint an arbitrator under Section 11.

Rule

  • The juridical seat determines the legal home of the arbitration and the courts exercising supervisory jurisdiction.
  • A place specified for arbitration will ordinarily be treated as the seat where:
  • arbitration is required to take place there;
  • the contract is governed by that country’s law; and
  • the institutional rules are consistent with that choice.
  • A clause permitting hearings at another mutually agreed location does not necessarily change the juridical seat.
  • Under the then-applicable rule in Bhatia International, Part I could apply to foreign-seated arbitrations unless expressly or impliedly excluded.
  • Such exclusion could be inferred from the governing law, seat and agreed arbitral framework.

Application

  • The Court examined Articles 22 and 23 together.
  • Article 22 expressly selected Korean law to govern the agreement.
  • Article 23 stated that disputes would be finally settled by arbitration “in Seoul, Korea.”
  • These provisions showed a deliberate connection with Korea rather than a casual choice of hearing location.
  • Dozco argued that the bracketed expression allowing arbitration at another agreed place meant Seoul was only a venue.
  • The Court rejected that interpretation.
  • The main clause fixed Seoul as the legal place of arbitration.
  • The bracketed wording merely allowed the parties to hold hearings elsewhere for convenience if they later agreed in writing.
  • Changing the physical location of a hearing does not automatically change the legal seat.
  • The choice of:
  • Korean substantive law;
  • Seoul as the place of arbitration; and
  • ICC arbitration showed that the parties intended the arbitration to be supervised within the foreign legal framework.
  • Therefore, Part I of the Indian Arbitration Act stood impliedly excluded under the law applicable at that time.
  • Since Section 11 belongs to Part I, the Chief Justice of India could not appoint an arbitrator.
  • The Court respected the parties’ contractual allocation of legal supervision and refused to create Indian jurisdiction merely because one party was incorporated in India.
  • The decision was delivered before BALCO.
  • Under the present territorial approach established in BALCO, Part I ordinarily does not apply to a foreign-seated arbitration where the arbitration agreement was executed after 6 September 2012, subject to limited statutory exceptions.
  • The case nevertheless remains important for distinguishing the juridical seat from a mere hearing venue.

Conclusion

  • The Supreme Court held that Seoul was the juridical seat of arbitration.
  • Korean law governed the agreement, and Part I of the Indian Arbitration Act was excluded.
  • The Section 11 petition filed before the Supreme Court of India was dismissed.
  • Dozco was required to pursue arbitration in accordance with the agreed foreign framework.
  • Use this case for: a fixed foreign seat is not converted into a mere venue merely because hearings may be held elsewhere by mutual agreement.