No international arbitration without foreign element between parties, Uttarakhand HC

The Uttarakhand High Court has held that without any ‘foreign element’ between parties, a dispute cannot be referred to an international arbitration and will be treated as a domestic dispute..The terms of the contract between the parties in question (KLA Const. Technologies Pvt Ltd. and Kajima India Pvt Ltd) spoke of an ‘International Arbitration’ and stated that settlement of any dispute would be under the Rules of Arbitration of the International Chamber of Commerce..However, it was the case of the petitioner as well as that of the respondent that the dispute between them cannot be settled by an international arbitration as it is a domestic dispute. The petitioner was represented by Amit George, Ajay Singh Bisht and KK Shukla, whereas the respondent company was represented by Rahul Malhotra and Shobhit Saharia..The Bench of Justice Sudhanshu Dhulia observed,.“The first aspect which must be examined is the very jurisdiction of this Court, which will depend upon the terms of the contract, the arbitration clause and the law of arbitration presently applicable.”.It was further observed that apart from the fact that both the companies are Indian companies and the contract was executed in India, the work was also executed in India. Therefore, the dispute is a ‘domestic dispute’ which calls for a ‘domestic arbitration’ and not international arbitration..The Court noted,.“Both the petitioner as well as the respondent are companies incorporated in India under the Indian Companies Act, no aspect of their management, leave aside central management is controlled or exercised from abroad or from any other country, and lastly none of them is a government of a foreign country..Since there is nothing like a ‘foreign element’ or ‘foreign trade’ or ‘international commercial trade’ between the parties, the matter is solely governed under Part I of the (Arbitration and Conciliation) Act.”.The Court finally held that the reference in the agreement to international arbitration and International Chamber of Commerce seems to be due to an oversight..The single judge then appointed former Chief Justice of India JS Khehar as the sole arbitrator in the matter, which was agreed upon by both the parties..Read the order: