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IMAX Corporation v. M/s E-City Entertainment (I) Pvt. Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3885 of 2017)Decided 10 Mar 2017
Civil Appeal No. 3885 of 2017
Justice S.A. Bobde · Justice Ashok Bhushan

Background

IMAX Corporation and E-City Entertainment, an Indian cinema company, had a contract for large-format projection systems, with a clause providing that disputes would be settled by ICC arbitration, governed by Singapore law. The ICC fixed London as the seat of arbitration, and three awards were passed there in IMAX's favour. E-City later challenged these awards under Section 34 of the Indian Arbitration Act before the Bombay High Court, which held the challenge was maintainable; IMAX appealed to the Supreme Court, arguing Indian courts had no jurisdiction since the seat was London.

Decision Breakdown

The Supreme Court held that because the parties had agreed to arbitrate under ICC Rules (which let the ICC fix the seat) and the ICC had in fact fixed London as the seat with both parties' participation, this amounted to an implied exclusion of Part-I of the Indian Arbitration Act (which includes the Section 34 challenge provision). The Court reasoned that choosing a seat outside India, even indirectly through institutional rules, shows the parties' intent that the law of that seat (here, English law) governs the arbitration and any challenge to its awards. The Bombay High Court's view that the seat alone wasn't decisive was held to be an error. The Court set aside the High Court's order and dismissed E-City's Section 34 petition as not maintainable before an Indian court.

Lesson Learnt

When a contract lets an arbitral institution (like the ICC) choose the seat of arbitration, and that institution picks a seat abroad, Indian courts generally lose jurisdiction to entertain a challenge to the resulting award: parties should understand that agreeing to institutional rules effectively means agreeing in advance to wherever that institution fixes the seat.

Official source (sci.gov.in)View Judgment (PDF)

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