India: Enforceability Of Foreign Arbitration Awards In India: Diminishing The Gap Between Pre BALCO And Post BALCO Regime?

Last Updated: 26 April 2017
Article by Rajesh Begur and Priyesh Sharma

Supreme Court recently in the case of I-Max Vs E-City1 has removed the judicial anomaly in relation to enforcement of foreign arbitral awards in India. The Apex Court in this case, overruling the popular Bhatia Judgment in relation to the agreements entered prior to BALCO Regime, held that the choice of ICC Rules and the consequent choice of London as the seat by the ICC operated as an exclusion of Part I of the Indian Arbitration and Conciliation Act 1996, thereby ousting the jurisdiction of Indian courts to maintain and entertain a challenge to the foreign award.

The question of significance of arbitration as an alternate dispute resolution mechanism for disputes arising in M &A deals and other commercial arrangements is irrefutable and the same is fairly evident by the confidence which the market players across the globe have shown in this mechanism for resolving their commercial disputes. One of the major reasons behind the popularity of arbitration is the "institutionalization" of arbitral mechanism, which has contributed significantly towards ensuring the goal of providing fair, impartial and formalized system of resolution of disputes without causing unnecessary delay or expense and at the same time providing the flexibility to the parties to exercise their freedom to agree upon the manner in which their disputes should be resolved, subject only to safeguards imposed in public interest. There are several international institutions with well defined set of rules, which have succeeded in gaining the confidence of market players and are prominently preferred over the ad-hoc arbitrations.

One by-product of institutionalization of arbitration mechanism (which mainly involved foreign institutions and rules) is the issue of "enforceability of foreign awards in India". The said issue has been a subject matter of controversy and differential views since decades now. It is said that, under the Indian judicial system, a lot of times securing an arbitral award may only be half the battle won! Needless to say, such a proposition will certainly have the parasitic effect on the efficacy and reliability of the entire mechanism. The inconsistency in the judicial behavior on the subject has catalyzed this alarming concern. Even after the pro arbitration verdict by the Apex court in the BALCO case2, the prospective effect of the same somehow divided the entire issue into two uneven segments of pre-BALCO and post-BALCO regimes.

Pre-BALCO regime (prior to September, 2012): Position exiting Hitherto!

The BALCO judgment has been considered as a huge step till date by Indian judiciary towards ensuring the enforceability of foreign awards in India by overruling the prevailing verdict of Bhatia International v Bulk Trading3. The ratio of the BALCO case can be set out as:

"Part I of the Arbitration and Conciliation Act, 1996 ("Act") shall apply to all arbitrations which take place within India and the foreign 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 Act. Similarly, no suit for interim injunction would be maintainable in India with a seat outside India. Bhatia International and Venture Global Engineering4 and judgments following the interpretation are therefore over-ruled."

Having said this, somehow the applicability and significance of this judgment got restricted in its scope due to prospective effect of the binding judgment. Set out below is the relevant extract from the judgment for ready reference:

"The judgment in Bhatia International was rendered by this Court on 13th March, 2002. Since then, the aforesaid judgment has been followed by all the High Courts as well as by this Court (i.e. Supreme Court) on numerous occasions. In fact, the judgment in Venture Global Engineering has been rendered on 10th January, 2008 in terms of the ratio of the decision in Bhatia International. Thus, in order to do complete justice, we hereby order, that the law now declared by this Court shall apply prospectively, to all the arbitration agreements executed hereafter."

Accordingly, post BALCO (i.e. after September, 2012), there is no requirement of any specific exclusion of Part I of the Act and the Apex Court has unequivocally overruled Bhatia and Venture Global on the basis that Part I of the 1996 Act does not apply to foreign-seated arbitrations. However the same was not made applicable to the arbitrations agreement entered prior to September 2012.

I-Max v E-City: a pro arbitration move?

Finally, in the recent case of I-Max Corporation  v E-City Entertainment Private Limited5, the Apex Court considered whether to maintain a petition challenging a foreign award under Section 34 of the Act in India, under the pre-BALCO regime, which permits challenges to foreign awards in India unless the parties have expressly or impliedly excluded the operation of Part I of the Act and in its judgment while setting aside the position taken by the Bombay High Court, has significantly blurred this categorization and the position which stands out as on date can be summarized as:

"The choice of institutional arbitral rules (ICC Rules in this case) and the consequent choice of seat by the arbitral institution (London) operated as exclusion of Part I of the Arbitration and Conciliation Act, 1996, thereby ousting the jurisdiction of Indian Courts to maintain and entertain a challenge to the foreign award.."

Setting aside Bombay High Court's view:  The Bombay High Court recognized that there was no express exclusion of Part I of the Act in the arbitration agreement and it did not delve into the possibility of an implied exclusion by choice of the ICC Rules or the choice of London by the ICC Court of Arbitration as the seat of arbitration. Instead, it held that Part I of the Act was applicable to the Contract since there was no express exclusion.6

The Apex Court's verdict essentially brings out the following altered facets on table:

  1. An arbitral institution's choice of seat, made in consultation with parties, was upheld as a valid and binding choice of seat in the absence of an express choice of seat.
  2. This was recognized as exclusion of Part-I of the Act, for arbitration agreements entered into prior to the judgment of the Supreme Court in BALCO v. Kaiser Aluminum7.
  3. Absence of pre agreed foreign "Seat" from the arbitration agreement:   The Apex Court relied on specific procedures under the applicable ICC Rules[8]which permitted the ICC Court of Arbitration to fix the seat of arbitration unless agreed upon by the parties, after consultation with the parties. The court recognized the fairly unarguable presumption that the parties were aware that the ICC Rules contained provisions to fix a seat of arbitration. Thus, the choice of a foreign seat by the tribunal demonstrates the willingness of the parties to choose a seat outside India and thereby excluding Part I of the Act, consequently ousting the jurisdiction of Indian courts.
  4. The distinction between pre-BALCO and post-BALCO is no more relevant and the progressive view of the Apex Court in BALCO judgment will hold good even in a pre-BALCO regime wherein the choice of seat remained absent in the underlying arbitration agreement, while the chosen arbitral institution still provides for designating the seat of arbitration.  The disputing parties in such a case will be in a position to exclude the operation of Part I of the Act where foreign seat is chosen by the arbitral institution.

Way Forward..

The judgment is clearly a pro arbitration position by the Apex Court while removing all the inconsistencies and judicial anomaly in the views taken by the courts till date. For the agreements executed prior to the BALCO regime, the parties will not have to face the uncertainty of foreign awards getting amenable to challenge before the Indian courts in the light of Bhatia judgment which was applicable hitherto. It can be certainly said that with this judgment, the Indian judiciary has moved significantly towards the progressive arbitration regime from the existing regressive positions on the agreements entered in the pre BALCO era. However, only the time will tell whether the position can be maintained as the final position or given the history of overruling judicial precedents, this one will also get surpassed by some contrary ruling!


1. 2017 SCC Online SC 239

2. Bharat Aluminium Co. v. Kaiser Aluminium Technical Service (2012) 9 SCC 552

3. (2002) 4 SCC 105

4. Venture Global Engineering Case v. Satyam Computer Services Ltd, (2008) 4 SCC 190

5. Supra f.n. 1

6. Note that in addition to the question on choice of seat, Bombay High Court also held that Indian law will only be applicable law by "close nexus" principal irrespective of the contractually agreed "Singapore Law" as the governing law under the agreement. However Supreme Court on the other hand clearly upheld the express choice made by two parties in choosing an unconnected law, i.e. Singapore Law, to govern the contract. The said issue was not debated much in the judgment and has not been specifically elaborated for the purpose of this Case comment.

7. Supra f.n 2

8. Refer to Article 14 of the ICC Rules

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
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