India: Choice Of Seat Of Arbitration Akin To Exclusive Jurisdiction Clause- Pre-BALCO Arbitrations

The question of applicability of the provisions of Part I of the Arbitration and Conciliation Act 1996 (hereinafter referred as 1996 Act) to the international commercial arbitrations held outside India has time and again come up before the Supreme Court of India ("Supreme Court") and various High Courts. The Bhatia International1had initially settled the question of applicability of the provisions of Part I of the 1996 Act to International Commercial Arbitrations held outside India, by holding that the 1996 Act shall be applicable to all arbitrations, including those arbitrations which are held outside India, unless the parties expressly or impliedly exclude the applicability of all or any of its provisions. The Bhatia International judgment was eventually overruled by a constitution bench judgment in Balco v. Kaiser2, but only prospectively i.e. was made applicable only for disputes arising out of agreements which were entered after 6th September 2012. This meant that the Bhatia International judgment is still applicable to all arbitrations agreements entered prior to 6th September 2012.

The Supreme Court and various High Courts have considered a variety of foreign factors including procedural rules of a foreign arbitral institution3, law governing the arbitration agreement4 which along with the foreign seat could exclude the application of Part I of the 1996 Act.

In all the disputes arising out of Pre-Balco arbitration agreements, the Courts have been consistently holding that the 'foreign seat' is not akin to exclusive jurisdiction clause, i.e. mere choosing of a foreign seat does not confer exclusive jurisdiction to the said venue and will not exclude the applicability of Part I of the 1996 Act.

However, in a course correction, the Supreme Court in the case of Eitzen Bulk A/S v.Ashapura Minechem Ltd. &Anr.5, has observed that the mere choosing of juridical seat of arbitration attracts the law applicable to such location and that it would not be necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure.

Factual Background

Eitzen Bulk A/S of Denmark (hereinafter referred to as `Eitzen') entered into the contract with Ashapura Minechem Limited of Mumbai (hereinafter referred to as `Ashapura') as charterers for shipment of bauxite from India to China. The Charter Party contained an Arbitration Clause having London as seat of arbitration and made the English law to apply to arbitration. Disputes having arisen between the parties, the matter was referred to Arbitration by a sole Arbitrator. The Arbitration was held in London according to English Law. The Arbitral Tribunal published the Award dated 26.05.2009 thereby holding that Ashapura was liable and directed it to pay a sum of US$ 36,306,104 together with compound interest at the rate of 3.75 % per annum, besides other reliefs to Eitzen.

Having failed to stall the arbitration and then having failed in arbitral proceedings, Ashapura filed a petition under Section 34 of the 1996 Act challenging the award passed in London and seeking a restraint on the enforcement of the award before the District Court, Jamnagar. After a series of proceedings, the Division Bench of Gujarat High Court held that Ashapura is entitled to challenge the foreign award under Section 34 of the 1996 Act. Simultaneously, Eitzen proceeded before the Bombay High Court for enforcement of the foreign award on the basis that Part I of the 1996 Act has no application to a foreign award made in London under English Law. The learned Single Judge of the Bombay High Court allowed the petition for enforcing the foreign award holding that since the parties had agreed that juridical seat as London and made the English law to apply, there was an express and in any case an implied exclusion of Part I of the 1996 Act.

The current judgment arose out of the appeals against the decision of the Gujarat High Court holding that a Court in India has jurisdiction under Section 34 to decide objections raised in respect of a Foreign Award because Part I of the Arbitration Act is not excluded from operation in respect of a Foreign Award and also the decision of the Bombay High Court holding that Part I is excluded from operation in case of a Foreign Award and thereupon directing enforcement of the Award.


The main question before the Supreme Court was whether Part I of the Arbitration Act is excluded from its operation in case of a Foreign Award where the Arbitration is not held in India and is governed by foreign law. The Supreme Court went on to hold that since the arbitration clause clearly stipulates that the dispute shall be settled in London and English law would apply to the arbitration, the intention of the parties is manifestly clear to exclude the applicability of Part I of the 1996 Act and thus, the conduct of the arbitration as well as any objections relating thereto including the award shall be governed by English law. It further held that in this case two factors exclude the operation of Part I of the 1996 Act, first, the seat of arbitration which is in London and second, the clause that English law would apply.

The Supreme Court referred the judgment of Reliance Industries Limited and Anr. v. Union of India6 which in turn relied upon Sulamerica v. Enesa, High Court of Justice (England) which says that seat of the arbitration is an important factor in determining proper law of the arbitration agreement. The Supreme Court held that it has been settled for quite some time now that Part I of the 1996 Act is excluded where the parties choose that the seat of arbitration is outside India and the arbitration is governed by the law of a foreign country.Quoting the famous passage from Redfern and Hunter on International Arbitration7, the Supreme Court parting with the judgment made an interesting observation that "as a matter of fact the mere choosing of juridical seat of arbitration attracts the law applicable to such location and that it would not be necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure (emphasis supplied)."

In view of the above, the Court held that the foreign award passed in London cannot be interfered with under Section 34, which occurs in Part I of the 1996 Act and hence, dismissed the proceedings under Section 34 before the Gujarat High Court as untenable and upheld the judgment of the Bombay High Court enforcing the Foreign Award under Part II of the 1996 Act.


Prior to this judgment, as of now, the cases dealing with implied exclusion held that a mere designation of foreign seat will not exclude Part I of the 1996 Act and implicitly rejected the principle that choice of the seat of arbitration is akin to an exclusive jurisdiction clause ( for all Pre-Balco Agreements).8However, by this judgment Supreme Court holds that a mere choice of foreign seat would attract the law applicable to such location and would suffice to exclude the applicability of Part I of the 1996 Act.

It appears the Hon'ble Supreme Court has applied the principles enunciated by Balco to a Pre-Balco arbitration, also harmonizing itself with the standard international practice, giving importance to the seat of an arbitration to the extent that it amounts to conferring exclusive jurisdiction to the chosen location.


1. Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105.

2. Bharat Aluminum and Co. vs. Kaiser Aluminium and Co. (2012) 9 SCC 552

3. Yograj Infrastructure Ltd. vs. Ssangyong Engineering Construction Co. Ltd, AIR 2011 SC 3517;

4. Videocon Industries Ltd. v. Union of India, (2011) 6 SCC 161; Reliance Industries v. Union of India, 2014 (4) CTC 75; Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd, (2015) 9 SCC 172; Max India Ltd. v. General Binding Corporation, 2009(3) ARBLR162(Delhi); Union of India v. Reliance Industries Ltd., MANU/SC/1064/2015

5. CA No. 5131-5133 of 2016; CA No. 5134-5135 of 2016; CA No. 5136 of 2016; Decided on 13 May 2016; 2016(3) Arb LR Vol.121.

6. Reliance Industries v. Union of India, 2014 (4) CTC 75

7. "It is also sometimes said that parties have selected the procedural law that will govern their arbitration, by providing for arbitration in a particular country. This is too elliptical and, as an English court itself held more recently in Breas of Doune Wind Farm it does not always hold true. What the parties have done is to choose a place of arbitration in a particular country. That choice brings with it submission to the laws of that country, including any mandatory provisions of its law on arbitration. To say that the parties have 'chosen' that particular law to govern the arbitration is rather like saying that an English woman who takes her car to France has 'chosen' French traffic law, which will oblige her to drive on the right-hand side of the road, to give priority to vehicles approaching from the right, and generally to obey traffic laws to which she may not be accustomed. But it would be an odd use of language to say this notional motorist had opted for 'French traffic law'. What she has done is to choose to go to France. The applicability of French law then follows automatically. It is not a matter of choice. Parties may well choose a particular place of arbitration precisely because its lexarbitri is one which they find attractive. Nevertheless, once a place of arbitration has been chosen, it brings with it its own law. If that law contains provisions that are mandatory so far as arbitration are concerned, those provisions must be obeyed. It is not a matter of choice any more than the notional motorist is free to choose which local traffic laws to obey and which to disregard."

8. As Balco laid down the seat centricity principle and held that choice of seat of arbitration is akin to an exclusive jurisdiction clause.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

R. V. Prabhat
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.