Edited by Hitender Mehta

A Constitutional Bench of the Supreme Court has delivered a landmark judgment on September 6, 2012 in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc superseding the doctrine laid down by it earlier in Bhatia International v Bulk Trading S.A. ("Bhatia International") in the year 2002. In Bhatia International case, the Supreme Court had held that Part I of the [Indian] Arbitration and Conciliation Act, 1996 ("Arbitration Act"), dealing with the power of a court to grant interim relief, could be applied to arbitration having a foreign seat unless the parties specifically opted out of such an arrangement.

Now, the Court has held that Part I of the Arbitration Act would have no application to international commercial arbitration held outside India. Therefore, such awards 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 provisions contained in Arbitration Act make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act.

The Court further held that the provision contained in Section 2(2) of the Arbitration Act is not in conflict with any of the provisions of either Part I or Part II of the Arbitration Act. In an international commercial arbitration having foreign seat, no application for interim relief would be maintainable under Section 9 or any other provision, as applicability of Part I of the Arbitration Act is limited to all arbitrations which take place in India. Similarly, no suit for interim injunction simplicitor would be maintainable in India, on the basis of an international commercial arbitration having seat outside India.

Therefore, the Part I of the Arbitration Act is applicable only to all the arbitrations which take place within the territory of India. The Supreme Court has also held that the doctrine laid down in this case shall apply prospectively and the doctrine laid down in Bhatia International shall hold good for the arbitration agreements entered prior to this ruling.

Editorial Team: Bomi F. Daruwala, Gautam Chopra, Hemant Puthran, Rupesh Jain and Shilpi Shivangi

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