INTRODUCTION
The Hon’ble Supreme Court of India (“SC”) by its judgment dated July 03, 2013 has dealt with the subject of "Exclusive Jurisdiction Clauses" and held as under:
"As regards construction of the ouster clause when words like 'alone', 'only', 'exclusive' and the like have been used there may be no difficulty. However even without the use of such words in appropriate cases the maxim 'expressio unius est exclusio alterius' - expression of one is the exclusion of another - may be applied".
BRIEF FACTS
a) Indian Oil Corporation (“IOC”) is engaged in the business of storage, distribution, manufacturing and marketing of petroleum products like lubricating oils, grease, fluid and coolants.
b) IOC was interested to promote and augment the sales of its products and was desirous of appointing consignment agents across the country.
c) Swastik Gases Private Limited (“SGPL”), having its registered office at Jaipur deals in the storage, distribution of petroleum products like lubricating oils etc in the state of Rajasthan.
d) A consignment agency agreement (“the agreement”) was entered into between SGPL and IOC on October 13, 2002 whereby SGPL was appointed IOC’s consignment agent for storing and marketing lubricants at Jaipur (Rajasthan).
e) Huge quantities of stock in trade, as supplied by IOC could not be sold by SGPL.
f) SGPL requested IOC to liquidate the stock in trade; or to take back the stock and make payment thereof to SGPL.
g) Both IOC and SGPL met several times but the dispute could not be resolved amicably.
h) Thereafter, on August 25, 2008 a notice invoking the arbitration clause was sent by SGPL to IOC wherein SGPL named a retired Judge of the High Court to be SGPL’s arbitrator.
i) IOC was requested to name their arbitrator within thirty (30) days failing which SGPL would have no option but to proceed under Section 11 of the 1996 Act.
j) IOC did not nominate its arbitrator within thirty (30) days of receipt of the notice dated August 25, 2008 which entitled SGPL to make an application under Section 11 of the 1996 Act in the Rajasthan High Court for the appointment of arbitrator in respect of the disputes arising out of the agreement.
Note: The stand of the parties with respect of the place of signing the agreement was divergent.
RELEVANT CLAUSES OF THE AGREEMENT
Clause 17.0 – Arbitration Clause
If any dispute or difference(s) of any kind whatsoever shall arise between the parties hereto in connection with or arising out of this Agreement, the parties hereto shall in good faith negotiate with a view to arriving at an amicable resolution and settlement.
In the event no settlement is reached within a period of thirty (30) days from the date of arising of the dispute(s) / difference(s), such dispute(s) / difference(s) shall be referred to two (2) Arbitrators, appointed one each by the parties and the Arbitrators, so appointed shall be entitled to appoint a third Arbitrator who shall act as a presiding Arbitrator and the proceedings thereof shall be in accordance with the Arbitration and Conciliation Act, 1996 or any statutory modification or re - enactment thereof in force.
The existence of any dispute(s) / difference(s) or initiation / continuation of arbitration proceedings shall not permit the parties to postpone or delay the performance of or to abstain from performing their obligations pursuant to this Agreement.
Clause 18.0 – Jurisdiction Clause
The Agreement shall be subject to jurisdiction of the courts at Kolkata.
LEGAL ISSUES
While referring to and discussing various judgments cited by the parties the SC answered the following questions –
a) Whether, in view of clause 18 of the agreement dated October 13, 2002, the Calcutta High Court has exclusive jurisdiction in respect of the application made by SGPL under Section 11 of the 1996 Act?
ARGUMENTS ADVANCED
IOC contended that it was apparent from clause 18 of the agreement, that the parties intended to exclude jurisdiction of all courts other than the courts at Kolkata and, therefore, Rajasthan High Court lacks territorial jurisdiction in dealing with the application under Section 11.
SGPL contended that since part cause of action has arisen within the jurisdiction of the courts at Jaipur and clause 18 does not expressly oust the jurisdiction of other courts, Rajasthan High Court had territorial jurisdiction to try and entertain the petition under Section 11 of the 1996 Act.
SGPL contended that clause 18 of the agreement cannot be construed as an ouster clause because the words like 'alone', 'only', 'exclusive' and 'exclusive jurisdiction' have not been used in the clause and even though clause 18 confers jurisdiction on the courts at Kolkata to entertain disputes between the parties, it does not specifically bar jurisdiction of courts at Jaipur, where part cause of action has arisen.
SGPL submitted that except the execution of the agreement, which was done at Kolkata, though it was signed at Jaipur, all other necessary bundle of facts forming cause of action have arisen at Jaipur as:
(i) The regional office of IOC is situate at Jaipur;
(ii) the agreement was signed at Jaipur;
(iii) the consignment agency functioned from Jaipur;
(iv) all stock in trade was delivered by IOC to SGPL at Jaipur;
(v) all sales transactions took place at Jaipur;
(vi) the go-down, showroom and office of SGPL are situated in Jaipur;
(vii) various meetings were held between the parties at Jaipur;
(viii) the company agreed to lift the stock in trade and make payment in lieu thereof at a meeting held at Jaipur; and
(ix) the disputes arose at Jaipur.
DECISION OF THE COURT
Justice R.M Lodha discussed the submissions of the parties and held as under:
It is a fact that whilst providing for jurisdiction clause in the agreement the words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' have not been used but this, in our view, is not decisive and does not make any material difference.
The intention of the parties - by having clause 18 in the agreement is clear and unambiguous that the courts at Kolkata shall have jurisdiction, which means that the courts at Kolkata alone shall have jurisdiction.
It is so because for construction of jurisdiction clause, like clause 18 in the agreement, the maxim "expressio unius est exclusio alterius" comes into play as there is nothing to indicate to the contrary.
This legal maxim means that expression of one is the exclusion of another.
By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of all other courts.
Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts.
A clause like the one quoted above is not hit by or offend Section 23 and 28 of the Contract Act in any manner. Such clause is neither forbidden by law nor is it against the public policy.
The very fact that the ouster clause is included in the agreement between the parties conveys their clear intention to exclude the jurisdiction of Courts other than those mentioned in the concerned clause.
Conversely, if the parties had intended that all Courts where the cause of action or a part thereof had arisen would continue to have jurisdiction over the dispute, the exclusion clause would not have found a place in the agreement between the parties.
The very existence of the exclusion of jurisdiction clause in the agreement would be rendered meaningless if it were not given its natural and plain meaning.
The use of words like 'only', 'exclusively', 'alone' and so on are not necessary to convey the intention of the parties in an exclusion of jurisdiction clause of an agreement.
Therefore, I agree with the conclusion that jurisdiction in the subject matter of the proceedings vested, by agreement, only in the Courts in Kolkata.
Justice Madan B. Lokur delivered a seperate concurring judgment and held as under:
I agree with my learned brother that in the jurisdiction clause of an agreement, the absence of words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' is neither decisive nor does it make any material difference in deciding the jurisdiction of a court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case, only the Courts in Kolkata have jurisdiction to entertain the disputes between the parties.
The SC seems to have affirmed that if the parties to an agreement express their choice to submit to the jurisdiction of any one court (having jurisdiction) by specifically including it in the agreement, then it will be safe to raise a presumption as to a valid ouster of jurisdiction of all other courts, even in the absence of specific exclusionary words like 'only', 'alone', 'exclusive' in the jurisdiction clause.
Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts.
A clause like the one quoted above is not hit by or offend Section 23 and 28 of the Contract Act in any manner. Such clause is neither forbidden by law nor is it against the public policy.
The very fact that the ouster clause is included in the agreement between the parties conveys their clear intention to exclude the jurisdiction of Courts other than those mentioned in the concerned clause.
Conversely, if the parties had intended that all Courts where the cause of action or a part thereof had arisen would continue to have jurisdiction over the dispute, the exclusion clause would not have found a place in the agreement between the parties.
The very existence of the exclusion of jurisdiction clause in the agreement would be rendered meaningless if it were not given its natural and plain meaning.
The use of words like 'only', 'exclusively', 'alone' and so on are not necessary to convey the intention of the parties in an exclusion of jurisdiction clause of an agreement.
Therefore, I agree with the conclusion that jurisdiction in the subject matter of the proceedings vested, by agreement, only in the Courts in Kolkata.
Justice Madan B. Lokur delivered a seperate concurring judgment and held as under:
I agree with my learned brother that in the jurisdiction clause of an agreement, the absence of words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' is neither decisive nor does it make any material difference in deciding the jurisdiction of a court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case, only the Courts in Kolkata have jurisdiction to entertain the disputes between the parties.
CONCLUSION
The SC seems to have affirmed that if the parties to an agreement express their choice to submit to the jurisdiction of any one court (having jurisdiction) by specifically including it in the agreement, then it will be safe to raise a presumption as to a valid ouster of jurisdiction of all other courts, even in the absence of specific exclusionary words like 'only', 'alone', 'exclusive' in the jurisdiction clause.
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