LexM/S ARIF AZIM CO. LTD. versus M/S MICROMAX INFORMATICS FZE
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[2024] 11 S.C.R. 1142 : 2024 INSC 850 M/s Arif Azim Co. Ltd. v. M/s Micromax Informatics Fze (Arbitration Petition No. 31 of 2023) 07 November 2024 [Dr. Dhananjaya Y. Chandrachud, CJI., J.B. Pardiwala* and Manoj Misra, JJ.] Issue for Consideration (a) Whether the present petition under section 11 of the Arbitration and Conciliation Act, 1996 maintainable in India; (b) whether seat of arbitration designated under the aforesaid Distributorship Agreement is in India; (c) whether the arbitration agreement could be said to be governed by the Indian laws. Headnotes† Arbitration and Conciliation Act, 1996 – Application of Part-I: Held: Part I of the Act, 1996 and the provisions thereunder only applies where the arbitration takes place in India i.e., where either (I) the seat of arbitration is in India OR (II) the law governing the arbitration agreement are the laws of India. [Para 71(i)] Arbitration and Conciliation Act, 1996 – Part-I – Arbitration agreements executed after or prior to 06.09.2012 – Applicability of provisions of the Act: Held: Arbitration agreements executed after 06.09.2012 where the seat of arbitration is outside India, Part I of the Act, 1996 and the provisions thereunder will not be applicable and would fall beyond the jurisdiction of Indian courts – Even those arbitration agreements that have been executed prior to 06.09.2012 Part I of the Act, 1996 will not be applicable, if its application has been excluded by the parties in the arbitration agreement either explicitly by designating the seat of arbitration outside India or implicitly by choosing the law governing the agreement to be any other law other than Indian law. [Paras 71(ii), 71(iii)] * Author [2024] 11 S.C.R. 1143 M/s Arif Azim Co. Ltd. v. M/s Micromax Informatics Fze Arbitration and Conciliation Act, 1996 – Determination of seat – Exclusive jurisdiction clause: Held: The moment ‘seat’ is determined, it would be akin to an exclusive jurisdiction clause whereby only the jurisdictional courts of that seat alone will have the jurisdiction to regulate the arbitral proceedings – The notional doctrine of concurrent jurisdiction has been expressly rejected and overruled by this Court in its subsequent decisions. [Para 71(iv)] Arbitration and Conciliation Act, 1996 – Determination of seat – Closest Connection Test – No longer a viable criterion: Held: The ‘Closest Connection Test’ for determining the seat of arbitration by identifying the law with which the agreement to arbitrate has its closest and most real connection is no longer a viable criterion for determination of the seat or situs of arbitration in view of the Shashoua Principle – The seat of arbitration cannot be determined by formulaic and unpredictable application of choice of law rules based on abstract connecting factors to the underlying contract – Even if the law governing the contract has been expressly stipulated, it does not mean that the law governing the arbitration agreement and by extension the seat of arbitration will be the same as the lex contractus. [Para 71(v)] Arbitration and Conciliation Act, 1996 – Determination of seat of Arbitration – More appropriate criterion: Held: The more appropriate criterion for determining the seat of arbitration in view of the subsequent decisions of this Court is that where in an arbitration agreement there is an express designation of a place of arbitration anchoring the arbitral proceedings to such place, and there being no other significant contrary indicia to show otherwise, such place would be the ‘seat’ of arbitration even if it is designated in the nomenclature of ‘venue’ in the arbitration agreement – Where the curial law of a particular place or supranational body of rules has been stipulated in an arbitration agreement or clause, such stipulation is a positive indicium that the place so designated is actually the ‘seat’, as more often than not the law governing the arbitration agreement and by extension the seat of the arbitration tends to coincide with the curial law. [Para 71(vi), 71(vii)] Arbitration and Conciliation Act, 1996 – Seat of Arbitration – Choices of parties and their intentions in Arbitration agreement: 1144 [2024] 11 S.C.R. Digital Supreme Court Reports Held: Merely because the parties have stipulated a venue without any express choice of a seat, the courts cannot sideline the specific choices made by the parties in the arbitration agreement by imputing the
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