Author: Shreya Lode, Rashtrasanta Tukdoji Maharaj Nagpur University
To the Point
The 2012 landmark decision in Bharat Aluminium Co. Vs. Kaiser Aluminium Technical Services marked a pivotal moment in Indian legal history by declaring that the non applicability of the Part I of Arbitration and Conciliation act, 1996 related to the Arbitral cases outside Jurisdiction of India.2015 Arbitration Amendment Act, 2019 Arbitration Amendment Act, Expansion of Indian support for interim measures for foreign awards (Section 9) through statutory amendments (post-BALCO). This ruling not only overturned the previous Bhatia International Case, but also gave direction to the Indian arbitral intervention in Outside India cases. . This article delves the 2015 Arbitration Amendment Act and 2019 Act
Use of Legal Jargon
Part I of Arbitration and Conciliation Act,1996:
Forms the cornerstone of India’s domestic arbitration framework and governs all arbitrations seated within the territory of India. Encompassing Sections 2 to 43, Part I regulates every stage of the arbitral process—from the validity of arbitration agreements and the appointment of arbitrators to the conduct of proceedings, challenge to awards, and their enforcement. Built on the principles of party autonomy, minimal judicial intervention, and procedural flexibility, Part I aligns Indian arbitration law with the UNCITRAL Model Law while retaining jurisdiction-specific nuances. The evolution of judicial interpretation, particularly through landmark decisions such as Bharat Aluminium Co. v. Kaiser Aluminium Technical Services (BALCO), has significantly shaped the territorial application and scope of Part I. This article examines the structure, objectives, and practical implications of Part I, highlighting its role in strengthening India’s pro-arbitration regime.
Section 9 of the Arbitration and Conciliation Act, 1996 empowers Indian courts to grant interim measures of protection before, during, or after arbitral proceedings but before the enforcement of the final award. Its primary purpose is to preserve the subject matter of the dispute and safeguard the rights of parties so that the arbitration process remains effective. Under Section 9, courts may issue orders such as securing disputed amounts, preserving property, granting injunctions, or appointing a receiver. The provision ensures that parties are not left without immediate remedies in situations where delay may cause irreparable harm or frustrate the arbitration. By offering temporary protection, Section 9 strengthens the arbitration framework and enhances party confidence in the enforceability and fairness of the arbitral process.
The Proof
Party autonomy
The Court emphasized that parties could expressly exclude the application of Part I by agreement.
Short-Term Impact Greatly expanded Indian court intervention in foreign-seated arbitrations.Section 9 became widely used to secure interim measures even when arbitration was abroad.
Criticism: International arbitration practitioners criticized the ruling for making India a “seat-hostile” jurisdiction due to excessive judicial intervention.
Seen as contrary to the global principle that seat determines curial law.
Overruling In 2012, the Supreme Court’s decision in Bharat Aluminium Co. v. Kaiser Aluminium (BALCO) overruled Bhatia International.
BALCO held that Part I does NOT apply to foreign-seated arbitrations.
Abstract
This article, “Bharat Aluminium Co. vs. Kaiser Aluminium Technical Services: A Turning Point in India’s Arbitration Jurisprudence”, examines the transformative impact of the Supreme Court’s 2012 BALCO judgment on India’s arbitration framework. The BALCO decision established that Part I of the Arbitration and Conciliation Act, 1996 does not apply to foreign-seated arbitrations, thereby eliminating Indian judicial intervention in such cases. This ruling overruled the earlier Bhatia International doctrine, which had previously expanded India’s jurisdiction even over arbitrations seated abroad. The article highlights how BALCO restored the territoriality principle, aligning Indian law with the UNCITRAL Model Law, and how subsequent legislative reforms—the 2015 and 2019 Amendment Acts, further refined the scope of interim measures, particularly through Section 9, which now applies to foreign-seated arbitrations unless expressly excluded by the parties.
The article also incorporates key case laws, including Bhatia International (2002) and PASL Wind Solutions (2021), illustrating the evolution of party autonomy and judicial restraint in cross-border arbitration. Through detailed analysis of Part I and Section 9, the article underscores the shift toward a seat-centric, pro-arbitration regime in India. It concludes that BALCO brought much-needed clarity by prospectively excluding Indian court jurisdiction over foreign arbitrations, strengthening certainty, minimizing judicial interference, and modernizing India’s position in international commercial arbitration.
Case Laws
Bhatia International v. Bulk Trading S.A. (2002)
(2002) 4 SCC 105
Bhatia International entered into a commercial contract with Bulk Trading S.A.
The contract contained an arbitration clause providing for international commercial arbitration seated outside India (Paris). Bulk Trading applied to the district court in Indore under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief. It held that,
Even if the seat of arbitration is outside India, Indian courts can grant interim relief under Section 9.
Parties must expressly contract out of Part I if they do not want it to apply.
OverRule to this Case Law:
The BALCO case came and changed this Part I does NOT apply to foreign-seated arbitrations.
PASL Wind Solutions v. GE Power Conversion India (2021) The Supreme Court in PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd. (2021) held that two Indian parties are legally permitted to choose a foreign seat of arbitration, affirming party autonomy as a central principle of the Arbitration and Conciliation Act, 1996. The Court further ruled that an award rendered at such a foreign seat qualifies as a “foreign award” under Part II of the Act, regardless of the parties’ nationalities. Additionally, the Court clarified that Indian courts may grant interim relief under Section 9 even in foreign-seated arbitrations between Indian entities. This judgment resolves long-standing uncertainty, aligns Indian arbitration law with global standards, and reinforces the seat-centric approach to international arbitration.
Conclusion
Emphasizing party autonomy and the distinction between the seat and venue of arbitration, the Court clarified that the choice of a foreign seat excludes the applicability of Part I. To avoid retrospective disruption, the judgment was given prospective effect from 6 September 2012. This ruling firmly aligned Indian arbitration law with the UNCITRAL Model Law and strengthened certainty in international commercial arbitration. The Supreme Court of India in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO, 2012) held that the Arbitration and Conciliation Act, 1996 follows the territoriality principle, meaning Part I of the Act applies exclusively to arbitrations seated in India. Consequently, Indian courts have no jurisdiction to grant interim relief, appoint arbitrators, or set aside awards in foreign-seated arbitrations. The Court overruled the earlier decisions in Bhatia International and Venture Global, which had allowed Part I to apply even to international arbitrations conducted outside India.
FAQS
Does part I of the Arbitration act, 1996 apply to international commercial Arbitration that are seated outside India?
OR
Specifically, can parties to a foreign-seated arbitration seek interim measures under Section 9 before Indian courts?
The applicability of Part I of the Arbitration and Conciliation Act, 1996 to international commercial arbitrations seated outside India. Historically, the Supreme Court in Bhatia International v. Bulk Trading S.A. (2002) held that Part I applied to all arbitrations,domestic or international, unless expressly excluded by the parties, thereby allowing Indian court intervention in foreign-seated arbitrations. This approach created wide judicial reach and uncertainty in cross-border disputes. In 2012, the Supreme Court in Bharat Aluminium Co. v. Kaiser Aluminium (BALCO) overruled Bhatia International prospectively, holding that Part I does not apply to foreign-seated arbitrations and that the seat of arbitration determines the governing procedural law. Subsequent legislative reforms, particularly the 2015 Amendment, permitted limited applicability of interim measures in foreign-seated arbitrations only when parties expressly agree. The current legal position therefore affirms that Part I is inapplicable by default to arbitrations seated outside India, reinforcing the primacy of the arbitration seat and minimizing unwarranted judicial intervention.
Effect of the Landmark BALCO Case in Foreign Arbitration?
BALCO reaffirmed that arbitration is seat-based, restricted Indian court intervention in foreign arbitrations, overruled conflicting precedents, and modernised India’s arbitration jurisprudence.
Do parties need to mention India Intervention in Foreign Seated Arbitration?
Parties do not need to expressly mention Indian intervention for a foreign-seated arbitration. After BALCO, Indian courts have no role by default.
Only after the 2015 amendment, Indian interim relief (Section 9) applies automatically, and parties must explicitly exclude it if they don’t want Indian court intervention.In essence:
Foreign seat = No Indian intervention, except Section 9, which applies unless expressly excluded.
References
https://indiacorplaw.in/2012/09/06/the-supreme-court-overrules-bhatia/
https://lawmin.gov.in/sites/default/files/ArbitrationandConciliation.pdf
