The autonomy of Indian Companies to Choose a Foreign Seat
Indian enterprises are allowed to select a foreign or impartial seat beyond Indian borders as an arbitral seat. This type of arrangement would not breach Indian public policy, the Gujarat HC pronounced in Tuesday order. The order puts an end to a divisive international seat problem and the implementation of its award for a variety of agreements.
Witnessing the arbitration proceedings lodged by GE Power Conversion India Pvt Ltd against PASL Wind Solutions Pvt Ltd, based in Ahmedabad, concerning a dispute over the purchasing of power electronic converters, the High Court noted that the requests were made in the light of an international award handed down by the Arbitral Tribunal, based in Zurich, Switzerland, on 18.04.2019. In the arbitration clause of the substantive contract, the parties involved claimed that, in the absence of arbitration by mediation, all disagreements, conflicts, or discrepancies shall be referred to and eventually decided by Arbitral hearings in Zurich in compliance with the ICC Principles of Mediation and Arbitration.
The applicant was compensated by the international arbitrator, i.e. GE Power Conversion India Pvt Ltd, $40,000 or Rs. 2.97 crore in litigation fees and costs from the recipient with accrued interest. The lawyer appearing for respondents opposed to the award also suggested that “ Indian parties could not designate a seat beyond India underneath the Indian Contract Act. l It's not really possible for 2 Indian entities to obtain a benefit merely by classifying a seat elsewhere in an arbitral hearing that does not already have an international aspect.
The applicant had filed a tentative motion opposing the arbitrator's competence on the basis that, because the parties involved were Indian entities, they should not use an arbitral seat abroad. The participant objected to the change, i.e. Wind Solutions PASL. Justice Biren Vaishnav ruled that an arbitration judgment is a foreign award and can be applied pursuant to the Arbitration and Conciliation Act, Section II.
In order to decide if the foreign award is binding in India, Justice Vaishnav claimed that now the citizenship of the entities is not significant in deciding the validity of the foreign award pursuant to Part II of the 1996 Act. The defendant's lawyer had presented a national policy defense opposing the validity of such an agreement and claimed that it was against India's public policy.
The court ruled, however, that the international award in dispute is not contrary to India's policy, and is therefore binding in India. The court also ruled that, under Section 9, an entity possessing a foreign award is not required to seek temporary relief (as Part I of the Act does not apply). "A pro-arbitration ruling was issued by the Gujarat High Court holding that two Indian parties are entitled to choose a foreign seat of arbitration, a vexatious issue that has plagued a number of contracts and the independence of the party that is the fundamental basis of arbitration."
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.