The Supreme Court of India has today handed down its judgment in
a seminal case in Indian arbitral jurisprudence; Bharat
Aluminium Co. v Kaiser Aluminium Technical Service, Inc.
(Civil Appeal No. 7019 of 2005).
In a decision which will be welcomed by international investors
into India, the Constitutional Bench of the Indian Supreme Court
has held that the provisions of Part I of the Indian Arbitration
Act 1996 have no application to international commercial
arbitration proceedings conducted outside of India. In the words of
the Honourable Justice Surinder Singh Nijjar, awards rendered by
international tribunals seated outside of India, "...
would only be subject to the jurisdiction of the Indian courts
when the same are sought to be enforced in India in accordance with
the provisions contained in Part II of the Arbitration Act,
The effect of the 190 page Judgment, from India's highest
court, is that an application for interim relief (in the form of,
for example, an injunction) cannot be brought pursuant to Part I of
the Indian Arbitration Act 1996 in cases where the seat of
arbitration is outside of India.
Thus, where an international investor and an Indian counterparty
agree to refer disputes arising under a contract to international
arbitration seated outside of India, neither party will be able to
use the machinery in the Indian Arbitration Act 1996 to obtain an
injunction from the Indian Courts so as to restrain those
The decision should therefore serve to thwart what many
commentators have seen as the concerning propensity of the Indian
Courts (which arose in material part as a result of the decision in
Bhatia International v Bulk Trading S.A. & Anr (2002)
4SCC 105) to intervene in international arbitration proceedings
Whilst today's judgment is only of prospective effect (and
therefore only applies to arbitration agreements entered into post
the date of the Judgment), it will serve to increase the
international community's confidence in the use of
international arbitration when looking to invest into India.
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