Implied Exclusion of Part I of The Arbitration Act IV: The Shashoua Principle

The Shashoua Principle [Roger Shashoua v. Mukesh Sharma, 2009 EWHC 957 (Comm)]

“When there is an express designation of the Arbitration venue as London and no designation of any alternative place as seat, combined with a supranational body of rules [i.e. ICC] governing the Arbitration and no other significant contrary indicia, the inexorable conclusion is, to my mind, that London is the juridical seat and English law the curial law.”

Mr. Chidambaram submitted recently before SC, the Constitution Bench in BALCO has not approved the Judgment in Shashoua and the view expressed by the 2-Judge Bench in Enercon (India) Ltd., (2014) 5 SCC 1 to that effect is per incuriam.

Hon’ble Justice Dipak Misra has dealt with the submission at length in Roger Shashoua v. Mukesh Sharma, [Civil Appeal Nos. 2841-2843 of 2017]:

The various decisions referred to in Enercon, the analysis made and the propositions deduced leads to an indubitable conclusion, The Shashoua Principle has been accepted by Enercon. It is also to be noted, in BALCO, the Constitution Bench has not merely reproduced few paragraphs from Shashoua but has also referred to other decisions on which Shashoua has placed reliance upon. As we notice, there is analysis of earlier Judgments, though it does not specifically state that ‘propositions laid down in Shashoua are accepted’. On a clear reading, the ratio of the decision in BALCO, in the ultimate eventuate, reflects, The Shashoua Principle has been accepted and the 2-Judge Bench in Enercon, after succinctly analyzing it, has stated that the said principles have been accepted by the Constitution Bench. Therefore, we are unable to accept the submission of Mr. Chidambaram that the finding recorded in Enercon that The Shashoua Principle has been accepted in BALCO should be declared as per incuriam.

At this juncture, we think it necessary to dwell upon the issue whether The Shashoua Principle is the ratio decidendi of BALCO and Enercon and we intend to do so for the sake of completeness.

A ratio of a Judgment has the precedential value and it is obligatory on the part of Court to cogitate on the Judgment regard being had to the facts exposited therein and the context in which the questions had arisen and the law has been declared. It is also necessary to read the Judgment in entirety and if any principle has been laid down, it has to be considered keeping in view the questions that arose for consideration in the case. One is not expected to pick up a word or a sentence from a Judgment de hors from the context and understand the ratio decidendi which has the precedential value. That apart, the Court before whom an authority is cited is required to consider what has been decided therein but not what can be deduced by following a syllogistic process.

Tested on the aforesaid principle, we find that question that arose in BALCO and the discussion that has been made by the Larger Bench relating to Shashoua and C v. D, 2007 EWCA Civ 1282 (CA) are squarely in the context of applicability of Part I or Part II of the Act. It will not be erroneous to say, the Constitution Bench has built the propositional pyramid on the basis or foundation of certain Judgments and Shashoua and C v. D are two of them. It will be inappropriate to say, in Enercon, Court has cryptically observed that observations made in Shashoua have been approvingly quoted by Court in BALCO in Paragraph 110. We are inclined to think, as we are obliged to, The Shashoua Principle has been accepted in BALCO as well as Enercon on proper ratiocination and, therefore, the submission advanced on this score by Mr. Chidambaram, Learned Senior Counsel is repelled.”