Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. & Anr. 2015 (3) SCALE 295

HARMONY INNOVATION SHIPPING LTD. V. GUPTA COAL INDIA LTD.

Whether Indian courts had jurisdiction over issues from international arbitration agreements involving parties who had completed numerous contracts, some before and some after the landmark decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO)?
Whether the language and circumstances of the arbitration agreement impliedly precluded Indian courts from exercising jurisdiction, specifically whether London was designated as the arbitral seat?

The decision in this case was primarily based on the interpretation of the arbitration agreement and the applicability of Indian arbitration law. The court reviewed the concepts of “express or implied exclusion” of Part I of the Arbitration and Conciliation Act, 1996, as well as the notion of “presumed intention” and the significance of attaining a “fair result.”

The case concerned a convoluted set of agreements between Harmony Innovation Shipping Limited (the Appellant) and Gupta Coal India Limited (the Respondent) concerning coal shipment voyages from Indonesia to India.
Disputes emerged between the parties, and arbitration proceedings were commenced by the agreements’ arbitration clause.
The initial agreement was signed before the BALCO decision, and an addition was signed after BALCO.
The central question was whether Indian courts had jurisdiction over disputes arising from these agreements and if the Part I provisions of the Indian Arbitration Act applied.

The Supreme Court stated unequivocally that Indian courts lack jurisdiction over issues originating from international commercial arbitration agreements when the seat of arbitration is established to be outside of India.
Due to the parties’ determination to have London as the legal seat of arbitration, supported by many elements such as the employment of English law and the London Arbitration Association, the arbitration agreement impliedly excluded the jurisdiction of Indian courts.
It emphasized the significance of interpreting contracts holistically, considering the commercial environment, the parties’ circumstances, and the history preceding the agreement to determine the parties’ supposed intention.
Because the arbitration agreement in dispute was executed before BALCO, the Court used the principles of the Bhatia case, which was determined before BALCO.