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Indian court says IMAX challenge should be heard in London

14 March 2017

Indian court says IMAX challenge should be heard in London

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The Indian Supreme Court has rejected a challenge to two awards in favour of Canadian cinema company IMAX, ruling that the complaint should have been filed in London. 

In a decision handed down on 10 March, a two-judge bench ruled that Indian cinema chain E-City Entertainment was required to file the challenge in the UK courts, even though the parties had not expressly specified the seat of the arbitration in the underlying contract.

IMAX, a company which specialises in “immersive” viewing experiences, filed for ICC arbitration in 2004 – relying on a clause in an agreement to supply large format projection systems for cinema theatres across India. IMAX said that E-City reneged on the agreement, after it claimed the contract was just a "non-binding term sheet".

The parties did not specify a seat, with the ICC International Court of Arbitration selecting London.

In 2006, a tribunal chaired by the late Arthur Marriott QC issued a partial award declaring that E-City was in breach of the agreement and liable to pay damages. It issued a second partial award a year later, unanimously awarding IMAX US$9.4 million, plus interest and costs. IMAX says the final payable sum may be more than US$11 million.

Marriott's co-arbitrators were Canadian Errol Mendes and Indian Mansingh Bhakta.

In 2008, E-City challenged the award in the Bombay High Court, which accepted jurisdiction over the case.

The Supreme Court said the only question was whether the challenge should have been raised in India, or in London.

It ruled that although the parties had not expressly chosen a seat, they had expressly agreed that the dispute would be resolved under ICC rules. Therefore, when the ICC had elected to hold the arbitration in London, the parties had agreed to this seat “for all practical purposes”, it said.

The court accordingly found that the High Court had committed an error when it ruled that the seat of the arbitration was not a decisive factor when considering set-aside applications under Indian law.

IMAX was represented in the arbitration by Jonathan Cooperman, a partner at Kelley Drye & Warren in New York. Counsel for E-City did not want to be identified by GAR when the arbitration was first reported.

The Indian Supreme Court has issued a number of significant arbitration-related decisions in recent times. Last December, it ruled that arbitrations with an appeal-like procedure are valid and their awards can be enforced, in connection with a 15-year-long battle to enforce an ICC award held by US metals trader Centrotrade.

In August, the court issued a pair of decisions allowing London-seated arbitrations to go-ahead; one upholding a ruling that a clash between McDonald’s and its local joint venture partner should be resolved through LCIA arbitration, and another confirming that a dispute between Indian parties was international in character – allowing its London-seated ICC arbitration to continue.  

IMAX corporation v E-City Entertainment

  • Justices SA Bobde and Ashok Bhushan

In the arbitration

Tribunal

  • Arthur Marriott QC, chair (Britain)
  • Errol Mendes (Canada)
  • Mansingh Bhakta (India)

Counsel to IMAX

  • Kelley Drye & Warren

Partner Jonathan Cooperman in New York

Counsel to E-City

Did not wish to be identified

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