India: Indian Supreme Court Paves The Way To Challenge Foreign Arbitration Awards In India On Broad Public Policy Grounds

Originally published February 14, 2008

KeywordsIndia, Indian Supreme Court, Venture Global Engineering, VGE, Satyam Computer Services, Ltd, foreign arbitration awards, Arbitration and Conciliation Act 1996, LCIA, Foreign Exchange Management Act, Bhatia International, Bulk Trading

On January 10, 2008, the Supreme Court of India issued an important decision in the case Venture Global Engineering v. Satyam Computer Services, Ltd. regarding the enforcement in India of foreign arbitration awards. The decision has implications both for companies doing business involving India and for companies with substantial assets located in India. Specifically, the Supreme Court upheld a challenge in India to a foreign arbitration award on the grounds that the relief contained in the award violated certain Indian statutes and was therefore contrary to Indian public policy pursuant to Part I of India’s Arbitration and Conciliation Act, 1996 (the "Arbitration Act"). In reaching its decision, the Supreme Court in Venture Global for the first time ruled that broadly interpreted public policy considerations that were previously only grounds for challenging domestic arbitration awards are now appropriate grounds for challenging foreign arbitration awards.

The case arose from a challenge in India by a US company, Venture Global Engineering (VGE), to set aside an award rendered against it in an arbitration proceeding in London under the rules of the LCIA. The relief in the award implicated VGE’s interests in India and called for the transfer of certain shares that VGE owned in an Indian joint venture. VGE’s challenge asserted that the relief in the award violated certain Indian corporate and foreign investment statutes, specifically the Foreign Exchange Management Act, 1999, and therefore constituted a "conflict with the public policy of India" pursuant to the general provisions contained in Section 34 of Part I of the Arbitration Act.

The general provisions of Part I of the Arbitration Act set forth certain grounds on which arbitration awards may be challenged, including a violation of Indian public policy. In 2002, the Indian Supreme Court held, in Bhatia International v. Bulk Trading, that interim relief was available to parties under these general provisions with respect to the enforcement of a foreign arbitration award in India. In 2003, the Court issued its opinion in ONGC v. Saw Pipes, which broadly interpreted the definition of "public policy" under the general provisions in Part I to permit challenges to an arbitration award if the relief in the award violates Indian statutes.

Now, with Venture Global, the Indian Supreme Court has concluded that all of the general provisions of Part I of the Arbitration Act, including the expansive interpretation of those provisions under its Saw Pipes decision, do apply to foreign arbitration awards. Notably, the Court’s ruling was notwithstanding the fact that Part II of the Arbitration Act contains provisions that specifically address the enforcement in India of foreign arbitral awards, including specific public policy considerations that conform to the New York Convention, of which India is a member, and that have been more narrowly interpreted than the general provisions in Part I.

Importantly, however, the Supreme Court further held in its Venture Global decision that Part I of the Arbitration Act, in its entirety or partially, may be either expressly or impliedly excluded by contract parties in international commercial arbitration so that Part I, or that portion excluded, may not be a basis for challenging an arbitration award arising from a dispute involving that contract.

The Decision’s Relevance for Companies with Business Interests in India

The Indian Supreme Court’s Venture Global decision paves the way to challenge foreign arbitration awards in an Indian court based on broad public policy grounds pursuant to Part I of the Arbitration Act. The decision has important implications for any company that may find itself involved in an arbitration proceeding involving business interests in India. It also has implications for those companies that have assets located in India that might be the future subject of an enforcement proceeding.

The decision is particularly relevant for the offshore outsourcing industry because of India’s prominence in this space. India is one of the top offshore destinations for companies in the United States that outsource information technology and business processes. For many reasons, arbitration is the vastly preferred method of dispute resolution in most commercial contracts involving India. However, as a result of the Venture Global decision, new risks exist with respect to the impact of Part I of India’s Arbitration Act on contract parties’ rights and expectations in agreements involving India and that contain arbitration clauses. The Supreme Court’s decision did recognize, however, the right of contract parties to address the application, in whole or in part, of Part I of the Arbitration Act in their contracts. Accordingly, these new risks arising from the Supreme Court’s decision may be addressed and minimized by analysis of Indian law concerning the rights and interests involved in a particular transaction and by carefully drafted provisions in the underlying contract that expressly address the issues raised by the Supreme Court’s holding.

Learn more about our Business & Technology Sourcing practice.

Learn more about our International Arbitration practice.

Copyright 2008. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved. This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Mayer Brown is a combination of two limited liability partnerships: one named Mayer Brown LLP, established in Illinois, USA; and one named Mayer Brown International LLP, incorporated in England.

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.

In association with
Related Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions