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BALCO foreign awards cannot be challenged under Section 34 of the Arbitration and Conciliation Act, 1996.
Noy Vallesina Engineering Spa v. Jindal Drugs Limited[1] dealt with whether a foreign award rendered in the pre-BALCO era could be challenged under Section 34 of the Arbitration and Conciliation Act.
The facts, in brief, were that the respondent and another company, ‘Enco’, had signed an agreement to set up a plant in India. Subsequently, with the respondent’s consent Enco had handed over the agreement to the appellant company. Later on, a dispute arose, and arbitration proceedings took place under ICC in London. A partial award (and after a final award) was given, which was challenged by the Indian company (the respondents) in the Bombay High Court. A single bench of the Bombay High Court rejected the challenge under Section 34; however, a division bench allowed the same.
The appellant, an Italian company, challenged the order of the division bench of Bombay High Court, stating that the Supreme Court has already overruled its earlier judgments, Bhatia International v. Bulk Trading S. A (Bhatia International) and Venture Global Engineering v. Satyam Computers Services Ltd (Venture Global) through the case of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc (BALCO) and therefore a foreign award, cannot be challenged under Part I of the Act. The appellant further submitted that since the seat is not in India (as the parties had chosen ICC, London for the arbitral proceedings) and the arbitration law is not Indian law, the parties would be bound by BALCO.
The respondents claimed that since the arbitration agreements were entered into, and awards too were rendered during the prevalence of Bhatia International and Venture Global judgments, the decision in any subsequent judgment would not apply to them. They further submitted that though the arbitration agreement stipulated that arbitration would be under ICC in London, but governing law was stipulated to be Indian law.
The Court relied upon recent judgments of MAX Corporation v. E-City Entertainment (India) Pvt. Ltd. (“IMAX”), wherein the award under consideration was also a pre-BALCO award, the court had held that since arbitral proceedings were held in ICC, London hence it was held to be the seat of arbitration and no seat was explicitly chosen. Similarly, in the case of Government of India v. Vedanta Ltd, the seat of arbitration was Kuala Lumpur but the law governing the arbitration agreement was English Law. The Court held Malaysian Law would be the curial law, i.e. the law governing the challenge to the award.
In conclusion, the Court held that challenge to a pre-BALCO foreign award is not maintainable under Section 34 of the Act. Even if contract and award are pre-BALCO, the law governing the challenge to the award will be the law of the seat of arbitration.
[1] 2020 SCC OnLine SC 957.
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. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise.
- BALCO awards issue
- Section 34 of the Arbitration and Conciliation Act, 1996
- seat of arbitration and the governing law
