Introduction

• This case involved a dispute between BALCO, an Indian company, and Kaiser Aluminium Technical Service, Inc., a United States-based company.
• The dispute arose in the context of an agreement between the parties that contained an arbitration clause.

Facts

• The parties had a written agreement that included an arbitration clause. The agreement specified London as the venue for arbitration, and the governing law was English law.
• A dispute arose between the parties, and BALCO initiated arbitration proceedings in London.
• However, there was a disagreement over the appointment of arbitrators, leading BALCO to file an application before the Delhi High Court seeking the appointment of arbitrators.
• BALCO argued that since one of the parties was an Indian company, the Indian courts had jurisdiction to appoint arbitrators even though the seat of arbitration was designated as London.

Issues Involved

• What is meant by the place of arbitration as found in Sections 2(2) and 20 of the Arbitration & Conciliation Act, 1996 (A&C Act)?
• What is the meaning of the words “under the law of which the award is passed” under Section 48 of the Arbitration Act, 1996 and Article V(1)(e) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards?
• Does Section 2(2) bar the application of Part I of A&C Act to arbitrations where the place is outside India?
• Does Part I apply at all stages of arbitration, that is pre, during and post stages of arbitral proceedings, in respect of all arbitrations, except for the areas specifically falling under Parts II and III of the A&C Act?
• Whether a suit for preservation of assets pending an arbitration proceeding is maintainable?

Observations

• The Supreme Court emphasized that the term "place" or "venue" of arbitration should be treated as the "seat" of arbitration.
  • The determination of the seat is important, as it determines the applicable procedural law and the courts with supervisory jurisdiction over the arbitration proceedings.
• The court highlighted the importance of party autonomy in choosing the seat of arbitration.
• The court clarified that when parties choose a seat outside India, the courts of that place would have exclusive jurisdiction over the arbitration proceedings. Indian courts would not have automatic jurisdiction to interfere in such cases.
• The court said that “Part I of the A&C Act would have no application to International Commercial Arbitration held outside India. Therefore, such 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 A&C Act”.

Conclusion

• The court finally held in a foreign-seated international commercial arbitration, no application for interim relief would be maintainable under Section 9 or any other provision, as the applicability of Part I of A&C Act is limited to all arbitrations which take place in India.
  • Similarly, no suit for interim injunction simplicitor would be maintainable in India, on the basis of an international commercial arbitration with a seat outside India.
• The judgment overruled Bhatia Internation v. Bulk Trading S.A. (2002).

Notes

Section 9 of A&C Act: Interim .easure etc. by court

(1)A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court-

(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure or protection in respect of any of the following matters, namely:-

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

(2) Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.

(3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious.