Wednesday, 2 October 2019

Basic concept of habitual residence in International arbitration

V. Factors Considered When Determining "Habitual Residence"

Courts consider a variety of factors when determining a child's habitual residence. The factors can be divided into two broad categories: factors regarding intent and factors regarding acclimatization of the child to the country of residence. A single factor usually is not determinative, and courts often need to weigh conflicting factors. This section will list the factors that have been considered by courts and provide brief commentary about each.

A. Factors Related to Parental Intent

• Parental employment - The employment of one or both parents in a country to which the parents recently moved can be evidence of establishing a new habitual residence. Conversely, leaving one's employment in a country can be evidence of leaving a prior state of habitual residence.

• Purchase of home - Purchase of a home also is evidence of establishing habitual residence. Purchase of a home is more likely to be a basis for such a finding than short-term stays with relatives or in a rental apartment.

• Moving of belongings - The movement of family belonging can establish intent to establish a new habitual residence. However, shipping some belongings while keeping other belongings in the state from which one moved can be evidence of not intending to change habitual residence.

• Location of bank accounts - A parent's decision to maintain bank accounts in a country where the parent had lived, despite spending time in a new country, is evidence of the parent's tie to the original country.

• Obtaining driver's license and professional licenses - Obtaining a driver's license or professional license in a new country (or attempting to obtain such licenses) is evidence of intent establish a new habitual residence.

• Marital instability - If the family is moving at a time of marital instability, that can be viewed as supporting evidence that at least one of the parents did not intend to live at the new location indefinitely, and thus there was not intent to establish a new habitual residence. This is particularly true if the parties agreed the move was for a "trial period."

• Citizenship; immigration status; type of visa - If a parent and child come to a country on a tourist visa and do not seek more permanent residency status, that can lead to a finding that habitual residence in the prior country from which the parent and child came was not abandoned. A court has observed, however, "While an unlawful or precarious immigration status does not preclude one from becoming a habitual resident under the Convention, it prevents one from doing so rapidly."

27. As can be seen from the above decisions, the meaning of the expression 'habitually resident' is similar in meaning to 'ordinary resident'. 

From a reading of all of the above judgments and authorities it is clear that the question of whether a person habitually resides in a country or place may depend on various facts and circumstances. The term 'habitually resides' or similar terms such as 'ordinarily resides' have not been defined and do not have a technical meaning. However, from the above observations there are some factors or tests which are applicable to decide whether a person habitually resides in a particular place or location. Some of the important tests and factors, are as under:

(i) The quality of the residence and not only the duration of the residence.

(ii) The residence must be actual and bona fide and there must be a regular physical presence that must endure for some time. However, the duration of time must be considered in the facts of each case and given the purpose of the residence in a particular place.

(iii) The purpose may be one or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. That is not to say that the propositus intends to stay where he is indefinitely. Indeed his purpose while settled may be for a limited period.

(iv) Education, business or profession, employment, health, family or merely love of the place may be common reasons for a choice of regular abode, and there may be others. All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled.

(v) Some of the specific factors that may be considered are: location of bank accounts; location of movables; purchase of a house; obtaining of licenses and residential status or visa type of the person in that place.

(vi) The residence in that place must be something more than casual or a flying visit to a place. It is not a requirement that the person is at a particular place for dwelling always or on permanent uninterrupted basis.

31. It is relevant to note that in the case of Mother v. Father, supra, the parties had taken an apartment for rent in New York for only 3 months and the daughter had started speech therapy and this was sufficient in that case for the Court to hold that the child 'habitually resided' in New York. In Sandip Shankarlal Kedia, supra, this Court held that the wife habitually resided in Dubai, inter alia, because she was a Director of three companies in Dubai and has businesses in Dubai.
IN THE HIGH COURT OF BOMBAY

Arbitration Application No. 49, 50 and 51 of 2017

Decided On: 22.02.2019

 Aslam Ismail Khan Deshmukh Vs. Asap Fluids Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:
S.J. Kathawalla, J.

Citation: AIR 2019(NOC) 566 Bom


1. These Arbitration Applications all being under Section 11 of the Arbitration and Conciliation Act, 1996 ("the Act") raise a common question of law as regards the meaning and interpretation of Section 2(1)(f)(i) of the Act that defines an "international commercial arbitration" and more particularly the meaning of "… or habitually resident in, any country other than India;…".

2. Arbitration Applications 49, 50 and 51 of 2017 are all connected applications. The Applicant and Respondent No. 1 in all those applications are the same but there are additional Respondents in Application Nos. 50 and 51. The arbitration agreements under which the Applicant has invoked arbitration are part of a Service Agreement dated 18th October 2011 (in Arbitration Application dated 49 of 2017) and a Shareholding Agreement dated 25th July 2011 (in Arbitration Application Nos. 50 and 51 of 2017).

The facts in brief giving rise to the fling of these applications are set out below:

3. In Arbitration Application No. 49 of 2017 the Applicant has stated:

(i) that he is a Non-Resident Indian residing and working in Dubai, UAE; the Respondent is a company incorporated in Mumbai and governed by the provisions of the Companies Act, 2013; the Respondent is primarily engaged in the business of providing products and services for drilling fluids, completion fluids and drilling waste management services.

(ii) that considering the Applicant's experience in the oil and gas industry, the Respondent decided to avail the Applicant's services; the Applicant began working for the Respondent since March 2011 for a remuneration fixed at USD 15000/- per month.

(iii) that the terms of his employment were formalised and an agreement styled as a 'Service Agreement' was entered into on 18th October 2011 between the Applicant and the Respondent.

(iv) that despite several reminders, the Respondent has not paid to the Applicant, the balance remuneration for approximately 19 months i.e. USD 2,83,292.21/-.

(v) that he was then constrained to invoke the arbitration clause contained in the Service Agreement. Accordingly, by his Advocate's letter dated 23rd January 2017, he invoked the arbitration clause and sought reference of the disputes to arbitration in accordance with the terms of the Service Agreement.

(vi) that the Respondent failed to appoint an arbitrator and did not in fact respond to his Advocate's letter dated 23rd January 2017.

(vii) that in this background, he filed the present Application under Section 11 of the Act seeking appointment of an arbitrator to adjudicate the disputes that have arisen between him and the Respondent.

4. In Arbitration Application No. 50 of 2017, the Applicant is the same as in Arbitration Application 49 of 2017 and in the application the Applicant is again described as a Non-Resident Indian residing and working in Dubai, UAE. The Applicant has further stated:

(i) that the Respondent No. 1 is a company incorporated in Mumbai and governed by the provisions of the Companies Act, 2013; the Respondent No. 1 is primarily engaged in the business of providing products and services for drilling fluids, completion fluids and drilling waste management services; the Respondent No. 2 is a company governed by the provisions of the Companies Act, 2013 and is primarily engaged in oil field and mud services.

(ii) that sometime in March 2011, he along with three others, i.e., the Respondent No. 2, one Mr. Robert Wayne Pantermuehl and one Mr. Sunil B. Shitole agreed to participate in the management of the Respondent No. 1; that he executed a Shareholding Agreement dated 25th July 2011 with the Respondent No. 1, Respondent No. 2 and Mr. Robert Wayne Pantermuehl and Mr. Sunil B. Shitole.

(iii) that despite the express stipulation in the Shareholding Agreement dated 25th July 2011, he did not receive the duly stamped, signed share certificates evidencing the allotment in his favour.

(iv) that he was, therefore, constrained to instruct his Advocate who addressed a letter dated 23rd January 2017 to the Respondent No. 1 calling upon the Respondent No. 1 to comply with its obligations under the Shareholding Agreement; by this letter, he through his Advocate also invoked the arbitration clause contained in the said Shareholding Agreement.

(v) that the Respondent No. 1 failed to appoint an arbitrator and neither of the Respondents in fact responded to his Advocate's letter dated 23rd January 2017. In this background, he filed the present Application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to adjudicate the disputes that have arisen between the Applicant and the Respondents.

5. In Arbitration Application No. 51 of 2017, the Applicant is the same as in the above application and is again described in the Application itself as a Non-Resident Indian residing and working in Dubai, UAE. The Applicant has further stated that:

(i) the Respondent No. 1 is a company incorporated in Mumbai and governed by the provisions of the Companies Act, 2013; the Respondent No. 1 is primarily engaged in the business of providing products and services for drilling fluids, completion fluids and drilling waste management services; the Respondent No. 2 is a company governed by the provisions of the Companies Act, 2013 and is primarily engaged in oil field and mud services.

(ii) that sometime in March 2011, he along with three others, i.e., the Respondent No. 2, one Mr. Robert Wayne Pantermuehl and one Mr. Sunil B. Shitole agreed to participate in the management of the Respondent No. 1; that he executed a Shareholding Agreement dated 25th July 2011 with the Respondent No. 1, Respondent No. 2 and Mr. Robert Wayne Pantermuehl and Mr. Sunil B. Shitole.

(iii) that despite the express stipulation in the Shareholding Agreement dated 25th July 2011, he did not receive the duly stamped, signed share certificates evidencing the allotment in his favour.

(iv) that by a letter dated 22nd September 2011, the Respondent No. 2 confirmed that it is holding 2,00,010/- shares in its name which belong to the Applicant; the Respondent No. 2 further confirmed that these shares would not be pledged, sold or at any time be alienated without the consent of the Applicant; that the Respondent No. 2 agreed that when the shares of the Respondent No. 1 would be sold, the value of the same would be paid to the Applicant; that despite that despite this understanding contained in the letter dated 22nd September 2011, the Respondent No. 2 did not transfer the shares in the name of the Applicant nor did the Respondent No. 1 issue share certificates evidencing allotment in the name of the Applicant.

(v) that he was therefore, constrained to instruct his Advocate who addressed a letter dated 23rd January 2017 to the Respondents calling upon them to comply with its obligations; by this letter, the Applicant invoked the arbitration clause contained in the said Shareholding Agreement dated 25th July 2011.

(vi) that the Respondent No. 1 failed to appoint an arbitrator and neither of the Respondents in fact responded to the Applicant's Advocate's letter dated 23rd January 2017; In this background, he filed the present Application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to adjudicate the disputes that have arisen between the Applicant and the Respondents.

6. The principal legal submission or defense raised by the Respondent is that the Applicant is ex facie a person habitually resident in a country other than India and therefore the present arbitration is an international commercial arbitration, and in view of Section 11(12)(a) of the Act, an application under Section 11 of the Act would only lie to the Hon'ble Supreme Court to the Hon'ble Chief Justice of India or a designate of the Hon'ble Chief Justice of India, and not before this Court.

7. Therefore, the main issue that arises for consideration in all the above Applications is: whether the arbitration is an international commercial arbitration by reason of one of the parties, viz. the Applicant, being an individual who is a habitual resident in any country other than India? If the arbitrations in this case are "international commercial arbitrations" then under Section 11(12) of the Act, these Applications under Section 11 of the Act will have to be made to the Hon'ble Supreme Court of India and not in this Court as the jurisdiction to appoint an arbitrator and constitute a tribunal would lie only with the Hon'ble Chief Justice of India or a designate of the Hon'ble Chief Justice of India.

8. It is the submission of the Applicant that the present Application is not an international commercial arbitration because the Applicant is a national of India holding an Indian passport. It is submitted that the Applicant is domiciled in India which is evident from the Applicant having a Ration Card and an Aadhar Card. It is submitted that the Applicant is presently residing in Dubai only for work and comes to India quite frequently to visit his family, which is evident from his passport entries.

9. The Applicant has relied upon the definition of "habitually resident" as defined in the Law Lexicon and sought to contend that in order to decide whether a person is a habitual resident in a particular country, the Court should consider whether such person intends to reside in that country so as to obtain domicile of that country. It is then submitted that the Applicant has his permanent place of residence in India and he has no intention of residing in any other country except India. It is also submitted that the Applicant has to leave his country for his work and travels to various countries for work.

10. In support of his submission based on domicile, the learned Advocate for the Applicant has relied upon the judgment of the Hon'ble Supreme Court in the case of Kedar Pandey v. Narain Bikram Sah reported in MANU/SC/0215/1965 : AIR 1966 SC 160, which explains the concept and meaning of domicile. The learned Advocate has also placed reliance on the Supreme Court judgment in the case of TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd. reported in MANU/SC/2263/2008 : (2008) 14 SCC 271 in support of his submission that if the Applicant is an Indian national the arbitration as between two individuals who are Indian nationals cannot be an international commercial arbitration.

11. On the other hand, Mr. Jagtiani, learned Advocate for the contesting Respondents' in all the Applications has contended that the present arbitration is clearly an international commercial arbitration because the Applicant is habitually resident in a country outside India. On the interpretation of Section 2(1)(f)(i) of the Act, it was submitted that if at least one of the parties to an arbitration is a national of or a habitual resident of any country other than India, the arbitration would be an international commercial arbitration. If any of the conditions of nationality or habitually resident outside India is satisfied in respect of one of the parties, the arbitration would be an international commercial arbitration. Even if parties are Indian nationals but one or both of them are habitually resident in a country other than India, the arbitration would be an international commercial arbitration.

12. The learned Advocate for the Respondents then placed reliance on various judgments and authorities in support of the meaning that has been given by different courts to the expression 'habitually resident' and other allied expressions like 'ordinary resident'.

13. The learned Advocate for the Respondents then distinguished the judgment in TDM Infrastructure Development Pvt. Ltd., supra, on the basis that it dealt with the definition of 'international commercial arbitrations' where the party was a corporation and the issue in that case was in respect of the nationality of corporations. He submitted that the Applicant is completely misreading the judgment to support its contention that where individuals are Indian nationals the arbitration can never be an international commercial arbitration. Alternatively, he submitted that the Hon'ble Supreme Court in the case of TDM Infrastructure Development Pvt. Ltd., supra, was rendered under Section 11 of the Act and in view of the Supreme Court judgment in the case of State of West Bengal v. Associated Contractors reported in MANU/SC/0793/2014 : (2015) 1 SCC 32, that judgment is not of the Hon'ble Supreme Court but of a designate of the Hon'ble Chief Justice of India and hence would not have any precedential value and would not be binding on this Court.

14. The learned Advocate for the Respondents also placed the relevant facts and admissions in pleadings and documents to support the contention that the Applicant is an individual who habitually resides in Dubai, UAE. These are also noted in paragraph VI of the Written Submission on Behalf of the Respondent.

15. Before considering the judgments and other authorities relied upon, it is necessary to consider the language of Section 2(1)(f) of the Act, which reads as follows:

(f) "international commercial arbitration" means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is--

(i) an individual who is a national of, or habitually resident in, any country other than India; or

(ii) a body corporate which is incorporated in any country other than India; or

(iii) an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country;"

16. The relevant provisions of Section 11 read as follows.

"Section 11 - Appointment of arbitrators

(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and--

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court.

(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court.

(6) Where, under an appointment procedure agreed upon by the parties,-

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or subsection (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. …

(12)(a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the "Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "Supreme Court"; and

(b) where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to "the Supreme Court or, as the case may be, the High Court" in those subsections shall be construed as a reference to the "High Court" within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court."

17. As noted above the present issue as to maintainability of the Applicant before this Court arises because of the provisions of sub-section 12 of Section 11, which states that where the arbitration is an international commercial arbitration, an application under sub-sections (4) to (6) would lie to the Hon'ble Supreme Court.

18. At the outset it would be necessary to consider the definition of international commercial arbitration and in particular sub-clause (i). From a plain reading of the definition it is clear that an arbitration will be an international commercial arbitration where at least one of the parties to it is an individual who is a national of, or habitually resident in, any country other than India. It is clear from the definition that the legislature has used two distinct expressions viz. "national" and "habitual resident". These two expressions are separated by the expression "or", which means they have been used disjunctively. Therefore, if even one of the parties to the arbitration satisfies the requirement of being a national of, or habitual resident in, any country other than India, it would be an international commercial arbitration. It is not necessary that party must be both a national of and a habitual resident in any country other than India. Such an interpretation would be contrary to the plain language and meaning of the words used in the definition. Further, it would be clear from the section that even if one of the parties is habitually resident in a country other than India but a national of India, this provision would still be applicable, and it would be an international commercial arbitration.

19. In the case of TDM Infrastructure Development Pvt. Ltd., supra, the Hon'ble Supreme Court was dealing with a situation where the parties were companies registered and incorporated under the Companies Act, 1956, but the Directors and shareholders of the petitioner company were said to be resident of Malaysia and the Board of that company also sits in Malaysia. Hence, it is clear that the Hon'ble Supreme Court was dealing with a case involving companies that is separately provided for in sub-clause (ii) of Section 2(1)(f) of the Act and was not dealing with a case involving individuals that would be governed by a different sub-clause of the definition of "international commercial arbitration" altogether. The Hon'ble Supreme Court, in that context, stated as follows:

"17. A statute which provides for an arbitration between the parties and a taxing statute must be interpreted differently. The term "international commercial arbitration" does not even find place in the UNCITRAL Model Law. It finds place only in the English Arbitration Act which has also not been given effect to.

18. Part II of the 1996 Act deals with enforcement of foreign awards. The 1996 Act keeping in view the scheme of the statute must be read in its entirety. It takes into consideration various situations. Power of this Court to appoint an arbitrator would arise in view of sub-section (12) of Section 11 of the 1996 Act only if it is to be held that the dispute has arisen in relation to an international commercial arbitration.

Whether, thus, an agreement falls within the purview of Section 2(1)(f) of the 1996 Act is the core question. Section 2(1)(f) speaks of legal relationship whether commercial or otherwise under the law in force in India. The relationship has to be between an individual who is a national of or habitually resident in any country other than India as specified in sub-clause (i) of Section 2(1)(f). "Nationality" or being "habitually resident" in respect of a body corporate in any country other than India should, in my view, receive a similar construction.

19. Determination of nationality of the parties plays a crucial role in the matter of appointment of an arbitrator. A company incorporated in India can only have Indian nationality for the purpose of the Act. It cannot be said that a company incorporated in India does not have an Indian nationality. Hence, where both parties have Indian nationalities, then the arbitration between such parties cannot be said to be an international commercial arbitration."

20. I am of the view that the judgment of the Hon'ble Supreme Court does not express any view on the meaning of sub-clause (i) of the definition of "international commercial arbitration" and was concerned with a situation where the party was a company. At the time of the judgment in TDM Infrastructure Development Pvt. Ltd., supra, the language of Section 2(1)(f)(ii) and (iii) was different. A company was covered in sub-clause (iii) of the unamended provision, which is set out in the judgment. In fact, after the judgment, the legislature amended the language of sub-clause (iii) by deleting the reference to a company from it. Thus, making it clear now that a company being a body corporate would be governed by sub-clause (ii). This has been mentioned also in the Written Submissions of the Respondents. There has been no change to the language of sub-clause (i) of the definition of Section 2(1)(f) of the Act.

21. The Applicant cannot read one stray sentence out of context to support its contention that if parties are nationals of India then even if they are habitually resident outside India, the provision would not apply. It is very clear that the last sentence of paragraph 19 also deals with a situation where the parties are companies and the judgment was not dealing with a situation of individuals.

22. As regards the submission of the Respondents that the said judgment being under Section 11 of the Act has no precedential value and not binding on this Court, in view of my findings as stated above it is not necessary to consider this submission. In any event, the said judgment would have persuasive value and hence I have dealt with the same.

23. The Applicant has then relied upon the meaning of domicile and judgments in that regard in support of its submission. I am of the view that this contention is also without any basis and those judgments would be of no assistance to the Applicant. It is very clear that language of sub-clause (i) of Section 2(1)(f) of the Act does not use the expression 'domicile'. It is an expression that the legislature would have been aware of but has consciously chosen to use the expression 'habitually resident'. Further, even the Law Lexicon definition relied upon by the Applicant states that the meaning of "habitually resident" is "a physical presence in a country which must endure for some time; it is equivalent to the residence required to establish domicile without the necessary animus. Habitually Resident also means Place or Country in which a person has his home." Even from this definition it is clear that the animus necessary for domicile is not necessary for satisfying the meaning of 'habitually resident'. It is therefore a lower standard than that of domicile. Therefore, the judgments that deals entirely with the meaning of 'domicile' would not be of any help to the Applicant. Further, the submission of the Applicant that it is the intention to reside in a particular place that makes him a 'habitual resident' would be contrary to the Law Lexicon definition relied upon even by the Applicant, which says that animus is not necessary. For the same reason the alleged intention of the Applicant not to reside in any country other than India, as stated in the Written Submissions, would not be material to the issue of the Applicant being a 'habitual resident' of Dubai.

24. The meaning of 'habitually resident' has been explained in various judgments of English courts that have been relied upon by the Respondents. In Cruse v. Chittum (formerly Cruse) reported in [1974] 2 All ER 940 at 942 and 943, the Court stated as follows:

"The first question which arises in determining whether or not this court should recognise that decree is what is meant by the phrase 'habitually resident in that country'. Counsel for the petitioner submits that habitual residence requires an element of intention, an intention to reside in that country. He further submits that 'habitual' must indicate the quality of residence rather than a period of residence. He argues that as no period of residence is specified in the 1971 Act, this of itself points to the importance of the quality of residence in order to make it habitual. This submission derives support from the fact that in s. 5(2) of the Domicile and Matrimonial Proceedings Act 1973, the same phrase 'habitually resident' appears, but for the purposes of that subsection is required to be one years' duration. Counsel draws a comparison with the wording used in the well-known case of Indyka v. Indyka {((1967) 2 All ER 689 : 1969 1 AC 33}, the effect of which is, of course, superseded by the 1971 Act, and draws a distinction between the wording of the Act and the principles set forth in, for example, Traverse v. Holley {[1953]2 ALL ER 794 : [1953] P 246}. He says further that one may point to characteristics of residence which will not make it habitual but other than habitual. For example the residence must not be temporary or of a secondary nature. He urges that the phrase in the decree of the American court that the residence was 'actual' and 'bona fide' really defines what is meant by 'habitual' in this context, and denotes a regular physical presence which must endure for some time. He further submits that ordinary residence is different from habitual residence in that the latter is something more than the former and is similar to the residence normally required as part of a domicile, although in habitual residence there is no need for the element of animus which is necessary in domicile. I accept those submissions."

25. In Mother v. Father reported in 1989 WL 1683783 at Pages 6 and 7, the Family Division of the High Court of Justice in England was dealing with an application under the Child Abduction Custody Act 1985 giving effect to the 1980 Hague Convention on civil aspects of international child abduction. One of the preliminary issues before the Court was whether the child was a habitual resident of New York at the time of the abduction (at page 4). The relevant discussion of the term 'habitual resident' is set out below:

"For present purposes this case is back, therefore, where it started when it was first opened. I have first to decide the issue of Tatjana's habitual residence, …

The eleventh edition of Dicey and Morris on The Conflict of Laws contains the following helpful passages at page 166 and following, on the topic of habitual residence. I will quote two brief extracts.

""Habitual residence' has long been a favourite expression of the Hague Conference on Private International Law. It appears in many Hague Conventions, and therefore in English statutes giving effect to them, but is increasingly used in statutes not based on international conventions. One of its first uses at The Hague was in the context of the custody of children, largely because of the artificiality of domicile as applied to young children. No definition of 'habitual residence' has ever been included in a Hague Convention. This has been a matter of deliberate policy, the aim being to leave the notion free from technical rules, which can produce rigidity and inconsistencies as between different legal systems." Then a little further on:

"It is greatly to be hoped that the courts will resist the temptation to develop detailed and restrictive rules as to habitual residence, which might make it as technical a term of art as common law domicile. The facts and circumstances of each case should continue to be assessed without resort to presumptions or presuppositions." Although that decision was made in the different context of section 5 of the Domicile and Matrimonial Proceedings Act, 1973, I follow the judgment of Bush J. in Kapur v. Kapur [1984] F.L.R. 920 in holding that there is no real distinction between ordinary residence and habitual residence. The governing principle for ascertaining the elements of habitual residence is contained in the speech of Lord Scarman in R. v. Barnet London Borough Council ex parte Shah MANU/UKWA/0039/1981 : [1983] 2 A.C. 309, where he says, at page 314:

"and there must be a degree of settled purpose. The purpose may be one or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. That is not to say that the propositus intends to stay where he is indefinitely. Indeed his purpose while settled may be for a limited period. Education, business or profession, employment, health, family or merely love of the place spring to mind as common reasons for a choice of regular abode, and there may well be many others. All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled."

When the facts of this case are analysed with those principles in mind, the result, in my judgment, is as follows. The New York apartment was taken on originally as a temporary base for Tatjana while the father was proposing to be in the Far East; it being common ground that the traveling, climate changes and so on would be too unsettling for it to be possible for the child to accompany her father there. The New York plan had acquired a more settled purpose by the time that the parties were in Seattle and Vancouver in the first few days of February, and the father's departure on his Far East tour was immediately imminent. New York had by then become the city in which the mother wanted to stay and in which the father had reluctantly agreed to allow her to stay with Tatjana, at least until the band returned to London in April 1989. The extent to which New York would feature in their lives thereafter would depend very much on the decision which the parents then made about their personal lives, both generally in relation to the future of their marriage and specifically in relation to the problem of reconciling Tatjana's special needs with the demands of the father' working career. In the meantime Tatjana was to receive speech therapy in New York in which the mother would participate.

The residence whose habituality has to be established is that of the child. In the case of a child as young as Tatjana the conduct and the overtly stated intentions and agreements of the parents during the period preceding the act of abduction are bound to be important factors and it would be unrealistic to exclude them. I am satisfied that the arrangements that had been agreed, however acrimoniously, before the abduction date between the two parents for Tatjana's care, accommodation and therapy treatment in New York during the period of three months or so that would be due to elapse before the father's return to London amounted to a purpose with a sufficient degree of continuity to enable it properly to be described as settled. I am satisfied, in short, that Tatjana was habitually resident in New York State at the time of her abduction on 9th February. I am satisfied also that her removal by the nanny was in obvious breach of the mother's rights of parental guardianship (jointly with the father) under New York law, and that accordingly the child's removal by Miss Grant was wrongful within the meaning of article 3." (Emphasis Supplied)

26. The Respondent has then relied upon an article published in the Oklahoma Law Review titled "The Meaning of "Habitual Residence" Under the Hague Convention on the Civil Aspects of International Child Abduction and the Hague Convention on the Protection of Children: Author: Jeff Atkinson: 2011 Oklahoma Law Review Volume 63 Number 4" at Pages 649, 650, 654 and 655. The relevant extracts are as set out below:

"The Hague Abduction Convention does not define "habitual residence." The term is commonly used in international conventions covering a variety of subjects, and the drafters of the conventions deliberately avoided seeking to impose a precise, fixed definition. A 1989 Hague Convention case from the United Kingdom, In Re Bates, frequently cited in the United States, stated: "It is greatly to be hoped that the courts will resist the temptation to develop detailed and restrictive rules as to habitual residence, which might make it as technical a term of art as common law domicile. The facts and circumstances of each case should continue to be assessed without resort to presumptions or pre-suppositions."

Courts in the United States also have noted that the Convention does not provide a definition of "habitual residence." The Ninth Circuit Court of Appeals said the decision to not include a definition of "habitual residence" in the Convention "has helped courts avoid formalistic determinations but also has caused considerable confusion as to how courts should interpret 'habitual residence.'"

III. Need for "Settled Purpose;" General Description of "Habitual Residence"

In In re Bates, the court described "habitual residence" as follows:

[T]here must be a degree of settled purpose. The purpose may be one or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. That is not to say that the propositus intends to stay where he is indefinitely. Indeed his purpose while settled may be for a limited period. Education, business or profession, employment, health, family or merely love of the place spring to mind as common reasons for a choice of regular abode, and there may well be many others. All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled.

It is generally agreed a person can have only one habitual residence at a time, although as the Ninth Circuit has noted, "The exception would be the rare situation where someone consistently splits time more or less evenly between two locations, so as to retain alternating habitual residences in each." Determination of habitual residence "is a fact-specific inquiry that should be made on a case-by-case basis. Moreover, … a parent cannot create a new habitual residence by wrongfully removing and sequestering a child." The issue of "settled intention" does not depend on express declarations alone. "Settled intention" can be "manifest from one's actions; indeed, one's actions may belie any declaration that no abandonment was intended."


V. Factors Considered When Determining "Habitual Residence"

Courts consider a variety of factors when determining a child's habitual residence. The factors can be divided into two broad categories: factors regarding intent and factors regarding acclimatization of the child to the country of residence. A single factor usually is not determinative, and courts often need to weigh conflicting factors. This section will list the factors that have been considered by courts and provide brief commentary about each.

A. Factors Related to Parental Intent

• Parental employment - The employment of one or both parents in a country to which the parents recently moved can be evidence of establishing a new habitual residence. Conversely, leaving one's employment in a country can be evidence of leaving a prior state of habitual residence.

• Purchase of home - Purchase of a home also is evidence of establishing habitual residence. Purchase of a home is more likely to be a basis for such a finding than short-term stays with relatives or in a rental apartment.

• Moving of belongings - The movement of family belonging can establish intent to establish a new habitual residence. However, shipping some belongings while keeping other belongings in the state from which one moved can be evidence of not intending to change habitual residence.

• Location of bank accounts - A parent's decision to maintain bank accounts in a country where the parent had lived, despite spending time in a new country, is evidence of the parent's tie to the original country.

• Obtaining driver's license and professional licenses - Obtaining a driver's license or professional license in a new country (or attempting to obtain such licenses) is evidence of intent establish a new habitual residence.

• Marital instability - If the family is moving at a time of marital instability, that can be viewed as supporting evidence that at least one of the parents did not intend to live at the new location indefinitely, and thus there was not intent to establish a new habitual residence. This is particularly true if the parties agreed the move was for a "trial period."

• Citizenship; immigration status; type of visa - If a parent and child come to a country on a tourist visa and do not seek more permanent residency status, that can lead to a finding that habitual residence in the prior country from which the parent and child came was not abandoned. A court has observed, however, "While an unlawful or precarious immigration status does not preclude one from becoming a habitual resident under the Convention, it prevents one from doing so rapidly."

27. As can be seen from the above decisions, the meaning of the expression 'habitually resident' is similar in meaning to 'ordinary resident'. This has also been noted in a judgment of a Division Bench of this Court in the case of Hasmukh v. Union of India reported in MANU/MH/1263/2010 : 2011 (1) Mh. L.J. 199 at paragraph 7, page 943, where the Court was considering a preliminary objection as to the maintainability of an Appeal under Section 35 of the Foreign Exchange Management Act, 1999. This Court observed as follows:

"… The expression ordinarily carries on business would mean regularly or habitually not casually. It obviously cannot mean "always". The plain and popular meaning of the word "ordinarily" means usually, normally and exceptionally as contrasted with extraordinarily…"

28. In Ruchi Majoo v. Sanjeev Majoo reported in MANU/SC/0621/2011 : (2011) 6 SCC 479 the Hon'ble Supreme Court was considering whether the Court had jurisdiction to entertain a petition under the Guardians and Wards Act, 1890 on the basis that the minor was an 'ordinary resident' of New Delhi. At paragraphs 29 and 30, the Court also considered the meaning of the word 'resident'. In this regard the Court stated as follows:

"29. In Jagir Kaur v. Jaswant Singh [MANU/SC/0242/1963 : AIR 1963 SC 1521 : (1963) 2 Cri LJ 413] this Court was dealing with a case under Section 488 Cr.P.C. and the question of jurisdiction of the court to entertain a petition for maintenance. The Court noticed a near unanimity of opinion as to what is meant by the use of the word "resides" appearing in the provision and held that "resides" implied something more than a flying visit to, or casual stay at a particular place. The legal position was summed up in the following words: (AIR p. 1524, para 8)

"8. … Having regard to the object sought to be achieved, the meaning implicit in the words used, and the construction placed by decided cases thereon, we would define the word 'resides' thus: a person resides in a place if he through choice makes it his abode permanently or even temporarily; whether a person has chosen to make a particular place his abode depends upon the facts of each case."

30. In Kuldip Nayar v. Union of India [MANU/SC/3865/2006 : (2006) 7 SCC 1] the expression "ordinary residence" as used in the Representation of the People Act, 1950 fell for interpretation. This Court observed: (SCC p. 96, paras 243-46)

"243. Lexicon refers to Cicutti v. Suffolk County Council [MANU/UKCH/0023/1980 : (1981) 1 WLR 558 : (1980) 3 All ER 689 (DC)] to denote that the word 'ordinarily' is primarily directed not to duration but to purpose. In this sense the question is not so much where the person is to be found 'ordinarily', in the sense of usually or habitually and with some degree of continuity, but whether the quality of residence is 'ordinary' and general, rather than merely for some special or limited purpose.

244. The words 'ordinarily' and 'resident' have been used together in other statutory provisions as well and as per Law Lexicon they have been construed as not to require that the person should be one who is always resident or carries on business in the particular place.

245. The expression coined by joining the two words has to be interpreted with reference to the point of time requisite for the purposes of the provision, in the case of Section 20 of the RP Act, 1950 it being the date on which a person seeks to be registered as an elector in a particular constituency.

246. Thus, residence is a concept that may also be transitory. Even when qualified by the word 'ordinarily' the word 'resident' would not result in a construction having the effect of a requirement of the person using a particular place for dwelling always or on permanent uninterrupted basis. Thus understood, even the requirement of a person being 'ordinarily resident' at a particular place is incapable of ensuring nexus between him and the place in question."

29. In Sandip Shankarlal Kedia v. Pooja Kedia reported in MANU/MH/0387/2013 : 2013 (4) ALL Mr. 131 at paragraph 16, a Single Judge of this Court held that the wife was habitually resident in Dubai and observed as follows:

"The parties have never resided together in Dubai. It is only upon the wife's residence in Dubai that the petition in Dubai could have been and is filed by the husband. It would otherwise be convenient for the wife to defend in the place or the country where she was then resident. She is indeed habitually resident in Dubai. She has various businesses in Dubai. She is a Director of 3 companies in Dubai. In earlier applications she is shown to have expressed not only pleasure and satisfaction, but convenience of being in that country. It is indeed the country of her choice for her residence, if not for her domicile and nationality. The husband could not have been prevented from suing her for any relief where she resided. Indeed it is one of the principles of jurisdiction of Courts in India to see where the party resides and carries on business to confer jurisdiction upon that Court. This is more pronounced in cases relating to wives in matrimonial matters for which statutory provisions have been made."

30. From a reading of all of the above judgments and authorities it is clear that the question of whether a person habitually resides in a country or place may depend on various facts and circumstances. The term 'habitually resides' or similar terms such as 'ordinarily resides' have not been defined and do not have a technical meaning. However, from the above observations there are some factors or tests which are applicable to decide whether a person habitually resides in a particular place or location. Some of the important tests and factors, are as under:

(i) The quality of the residence and not only the duration of the residence.

(ii) The residence must be actual and bona fide and there must be a regular physical presence that must endure for some time. However, the duration of time must be considered in the facts of each case and given the purpose of the residence in a particular place.

(iii) The purpose may be one or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. That is not to say that the propositus intends to stay where he is indefinitely. Indeed his purpose while settled may be for a limited period.

(iv) Education, business or profession, employment, health, family or merely love of the place may be common reasons for a choice of regular abode, and there may be others. All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled.

(v) Some of the specific factors that may be considered are: location of bank accounts; location of movables; purchase of a house; obtaining of licenses and residential status or visa type of the person in that place.

(vi) The residence in that place must be something more than casual or a flying visit to a place. It is not a requirement that the person is at a particular place for dwelling always or on permanent uninterrupted basis.

31. It is relevant to note that in the case of Mother v. Father, supra, the parties had taken an apartment for rent in New York for only 3 months and the daughter had started speech therapy and this was sufficient in that case for the Court to hold that the child 'habitually resided' in New York. In Sandip Shankarlal Kedia, supra, this Court held that the wife habitually resided in Dubai, inter alia, because she was a Director of three companies in Dubai and has businesses in Dubai.

32. Applying the above tests and factors to the present case, I am of the opinion that the Applicant habitually resides in Dubai. This is clear from the pleadings, documents and the undisputed facts. The Applicants address in the Applications is shown as an address in Dubai. All the Applications expressly states that the Applicant is a Non-Resident Indian, who is currently residing and working in Dubai. The Applicant receives his remuneration in USD in a bank in Dubai. The Agreements under which arbitration has been invoked also disclose that the Applicant is residing in Dubai, and this position is noted as of the Agreement dated 18th October 2011 and is obviously continuing till the fling of the Application in 2017 in view of the statements made in the Application as noted above. The legal notices addressed on behalf of the Applicant on 6th August 2015 and 23rd January 2017 seek damages quantified in Dirhams. Although the Applicant has an Indian passport, he has an official residential status or permit for Dubai.

33. The fact that the Applicants family lives in India does not change the position that even if it is primarily for the reason of the Applicants work or employment, he is and has for quite a few years habitually resided in Dubai. His intention is clearly to be in Dubai, and it cannot be said that his presence there is merely casual or temporary. In the facts of the present case, both the quality of his residence, the purpose of his residence and the duration of residence in Dubai, make it clear that he habitually resides in Dubai.

34. For all of these reasons, I conclude that the proposed arbitral proceedings in the present case would constitute an international commercial arbitration and therefore the Applications under Section 11 of the Act are not maintainable in this Court under the provision of Section 11(12)(a) of the Act.

35. The Applications are accordingly dismissed. There shall be no order as to costs.


Print Page

No comments:

Post a comment