## Facts

- National Thermal Power Corporation (NTPC), an Indian public-sector company, entered into two contracts dated Aug. 17, 1982 in New Delhi with Singer Company and related entities for supply of equipment and erection/commissioning work for projects in India.
- The contracts stated that the laws in force in India applied to the contract and that the courts at Delhi had exclusive jurisdiction in all matters arising under the contract.
- The dispute-resolution provisions contemplated arbitration; where the contractor was foreign, arbitration was to be conducted under the International Chamber of Commerce (ICC) Rules by three arbitrators.
- For ICC arbitration, the clause provided that the arbitration “shall be conducted at such places as the arbitrators may determine,” leaving the place/venue to be fixed within the ICC process.
- Disputes arose between NTPC and a foreign contractor associated with Singer, and the parties proceeded to ICC arbitration.
- Under the ICC process, London, England was fixed as the place of arbitration, and the tribunal issued an interim award in London.
- NTPC applied to the Delhi High Court under the Arbitration Act, 1940 (including provisions for filing and setting aside an award) seeking to set aside the interim award.
- The Delhi High Court declined to entertain the challenge, treating the award as a “foreign award” within the Foreign Awards (Recognition and Enforcement) Act, 1961 and holding that only English courts could set aside an award made in London.
- NTPC appealed to the Supreme Court of India, contending that the arbitration agreement was governed by Indian law and therefore the Arbitration Act, 1940 applied.

## Issues

1. Whether the arbitration agreement (contained in a contract expressly governed by Indian law and conferring exclusive jurisdiction on Delhi courts) was also governed by Indian law, despite the ICC arbitration being held in London.
2. Whether an interim award made in London under the ICC Rules was a “foreign award” under the Foreign Awards (Recognition and Enforcement) Act, 1961, or instead fell under the Arbitration Act, 1940.
3. Whether Indian courts, including the Delhi High Court, had jurisdiction to entertain NTPC’s set-aside application in relation to the London-made interim award.

## Decision

- The Supreme Court allowed NTPC’s appeal and reversed the Delhi High Court’s refusal to proceed.
- The Court held that the proper law of the contract was Indian law by express choice, and that this choice extended to the arbitration agreement as part of the contract.
- The Court rejected the argument that London being the place of arbitration, by itself, made English law the governing law of the arbitration agreement.
- The Court held that English law could govern procedural matters connected with the conduct of the reference in London (the curial/procedural law), while Indian law governed the substantive rights under the contract, including those arising from the arbitration clause.
- On that basis, the Court held the interim award was not to be treated as a “foreign award” for purposes of the 1961 Act in the circumstances presented.
- The Court held that the Delhi High Court had jurisdiction to entertain NTPC’s application under the Arbitration Act, 1940 to challenge the interim award.

## Legal Principles

- An express choice of governing law for the main contract generally governs the arbitration agreement contained in the contract, unless a different choice for the arbitration agreement is clearly shown.
- The law of the place where arbitration is held commonly governs procedure for the conduct of the arbitration, but it does not automatically displace the chosen governing law of the arbitration agreement.
- For classification under the Foreign Awards (Recognition and Enforcement) Act, 1961, the mere fact that an award is made outside India is not, without more, enough; the governing law of the arbitration agreement and the statutory definition matter.
- A clause granting exclusive jurisdiction to Indian courts for matters arising under the contract supports Indian court jurisdiction over applications connected to the arbitration agreement and award challenges where Indian law governs the arbitration agreement.

## Conclusion

The Supreme Court of India held that, because the contracts expressly applied Indian law and gave exclusive jurisdiction to Delhi courts, the arbitration agreement was governed by Indian law even though the ICC arbitration was held in London; accordingly, the interim award was not treated as a foreign award under the 1961 Act, and the Delhi High Court could hear NTPC’s set-aside challenge under the Arbitration Act, 1940.


National Thermal Power Corp. v. Singer Co., 7 Mealey's Int'l Arb. Rep. C1 (1992)