Two Indian Parties can choose a Foreign Seated Arbitration: SC JUDGEMENT

By Alisha Dargar-

Case: PASL Wind Solutions Private Limited Vs. GE Power Conversion India Private Limited

Bench: Justices RF Nariman, BR Gavai and Hrishikesh Roy

Case No: [CA 1647 OF 2021]


In a recent judgment of the Gujarat High Court GE Power Conversion Pvt Ltd v PASL Wind Solution Pvt Ltd, the court clarified whether two Indian parties could choose a foreign seat for arbitration and if the award rendered therefrom would be enforceable in India. The judgement comes in contradiction to previous cases Addhar Mercantile Pvt. Ltd. v. Shree Jagadamba Agrico Exports and Seven Islands Shipping ltd v. Sah Petroleums ltd. that took a divergent approach.


The proceedings involve two Indian companies involved in a dispute over wind turbines in the contract. The arbitration section of the contract stipulates that the settlement agreement is subject to settlements such as Swiss law and Zurich, but the work is being done in Mumbai.

This award was given to support GE Power Conversion Pvt Ltd. A problem arose when GE attempted to enforce the grant in accordance with Part II of the 1996 Mediation and Settlement Act (now called the "law"), which applies to compulsory foreign rulings.

PASL said the award was given between two Indian parties in the Indian subcontinent and could not be closed in Part II and therefore could not be considered for a foreign award.


The issues which were raised before the Gujarat High Court are as follows:

· Whether the impugned Award can be deemed to be regarded as a Foreign Award?

· Whether the impugned Award being an Award, be enforced within the territorial jurisdiction of India and can it be enforced by the Courts in India?

· Whether a petition filed under the provisions of Section 9 of the Arbitration and Conciliation Act, 1996 is maintainable before the Gujarat High Court?


The Gujarat High Court has ruled that the legal provisions regarding the settlement of domestic disputes and the settlement of international trade are contained in Part 1 of the law, while Part II of the law specifically regulates the "implementation of foreign judgments". We are working with the Principles, The legal framework provides boundaries between Part I and Part II, which are believed to be applicable in different contexts. In addition, Gujarat HC is required to provide an appropriate response to the provisions contained in Article 44 of the Settlement Act. If the 1996 dispute examines the decision and considers it a foreign recommendation. I repeat it. "Printing of foreign currency" and the provisions in Part I have no reason to judge the amount. The Gujarat High Court further stated that the source of the parties to the dispute was invalid in relation to the implementation. In Part II of the Act The Court further ruled that in order for disputes to be resolved regularly and under Article 44 circumstances, the requirements could only be assessed if the place of judgment and enforcement of the New York Agreement conformed to the terms of the Agreement.

Regarding the settlement, Gujarat said in the mediation agreement that it was made clear that if the parties failed to comply with the terms of the mediation agreement, they could refer the matter to the mediation section. It was very well implemented and made it clear that the parties wanted the compromise to be an established compromise abroad to be held in Zurich. The Gujarat High Court, in the case of BGS Soma v, relies on the Supreme Court's ruling. NHPC provides evidence of an understanding of when the Supreme Court's Excellency can consider the site of choice for settlement. As a place of reconciliation. In this case, using the term "arbitration section" or "location" while understanding the location means that all mediation processes are or may be conducted in place. Has been done. However, if the conciliation agreement states that "the court must meet or meet with witnesses, experts or parties elsewhere," it implies that the trial will take place only at the designated place, and so on. If so, this location could not be considered. It will be the headquarters. If a settlement agreement outlines how to reconcile itself, it means that the process has been "done" in a particular place, the settlement process is coordinated in that area, and the choice of location is also the place of settlement. However, the above evidence underscores the fact that there is no "significant significance" to suggest that such a place is considered only as a place, not a place of settlement. "Gujarat HC is of the opinion that the arbitration order that can be considered a settlement is Zurich, but this is not a controversial issue and is disputed by all parties. There is no objection. No, and the information and communication that took place during the trial before the courts and courts, the judge and the parties to the dispute believed that it was a Zurich settlement. Mumbai concluded that it was only her choice as a good "place" for both parties.

The Gujarat High Court was of the assessment that the juridical seat concerning the intervention continuing was indeed, Zurich. The Court likewise illuminated the way that the Central Government had articulated Switzerland as a domain to which the New York Convention applied and the fixings accommodated were listed in Section 44 of the Act. Thusly, the High Court arrived at the resolution that in the current case, the reproved Award was indeed, an unfamiliar Award according to the arrangements of Part II of the Act.

After the Court proved that the said Award was a remote award, the Gujarat supreme court delved into the aspect of enforceability of such a bequest. In order to know the aspects per enforceability, the Court delved into the varied provisions of Section 47 of the Act and checked whether the Award fell within the ambit of Section 47. The Gujarat HC opined that since the assets which were owned by the Respondents, fell within the jurisdiction, the said Award had the jurisdiction to be enforced and therefore the Court also had the ability and also the jurisdiction to listen to such an Enforcement Petition. The Gujarat judicature relied upon the judgement gone by the Supreme Court within the case of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc. (“BALCO” Case).

The Gujarat High Court then examined whether the defendant company offered the reasons for the provisions of Article 48 of the Act for the court to dismiss the decision. The Constitutional Court asserted that the provisions of Article 48 of the Mediation and Mediation Act of 1996 were moderate. The plaintiff's attorney alleges that in a settlement proceeding granting a settlement seat outside the jurisdiction of the Indian subcontinent, the provisions of Article 48 of the Act, which is limited to only two parties to India, will be ignored by regulation. Established under Section 28 read the provisions of Section 23 of the Indian Contract Act of 1872. Defendant's lawyer relies on the TDM Material Code Case providing the fact that such an agreement is highly considerable. It goes against Indian public policy. It is very important to clarify the provisions of Section 28 of the 1872 Indian Charter. Section 28 of the Charter Act governs contracts that limit the legal framework and the performance of such invalid contracts. It is important to note that section 28 examines contracts that restrict the parties from exercising their legal rights because it may be considered ineffective to date. However, the Gujarat High Court noted that Elucidation 1 of the provisions of Article 28 does not take into account the application of many of the provisions of the settlement agreement. Gujarat HC went on to explain the fact that it is clear to the parties to the contract that disputes can be resolved peacefully in a foreign court which can be considered as a “neutral court”. The Court commented that Article 28 of the Charter Act prohibits Indian parties from appointing foreign courts and gives full jurisdiction over the settlement case. The court then ruled that the verdict could be considered a judicial exercise in India.

The key elements raised by this decision relate to Article 9 of the Act which regulates interim measures. The question in court is whether to appeal in court under Article 9 of the Arbitration Act. The court stated that the parties decided to appoint the judge as Zurich and could not further claim that the decision was the result of a domestic settlement provided for in Article 1 of the law. Article 2 (2) of the Law states that the provisions of Article 9 apply to ACI, but certain conditions must be met. That is, is there an agreement between the parties? However, the court ruled that the agreement was invalid, as no part of the dispute currently falls under Indian jurisdiction. The plaintiffs stated that the "international trade arbitration" described in Article 2 (2) of the Act did not lose credibility, and therefore the plaintiffs in the case Tranmo DMCC vs. Nagarjuna fertilizers and chemicals limited The Supreme Court indicated that it acknowledged the Interpretation of the provisions of Article 2 (1) (e) (ii) of the Act and the repetition of the term "global trade settlement". However, although the Gujarat High Court read the provisions of Article 2 (2) in a negative light, it is clear that the provisions of Article 9 of the 1996 Mediation and Reconciliation Act relate to international trade. Adjustment process. The Gujarat High Court disagreed with the plaintiff's view of the use of the term, which stated that "bad business has been resolved." The court ruled that the translation at the time it occurred would not conform to the rules of legal interpretation if the purpose of the law were in the words used in the formulation. The Gujarat High Court has ruled that petitions cannot be accepted under Article 9 of the Act.


In recent years, several Indian High Courts have decided whether the two Indian parties can choose a foreign seat for mediation. There is no consensus in the evaluation and there is uncertainty. This good decision is Sasan Power Limited v. North American Coal Corpn India Pvt Ltd and Atlas Export Industries v. Boxes and companies with similar characteristics. The decision of the Supreme Court is limited, so we have to wait for the Supreme Court to file a full appeal. On the positive side, the ruling promotes self-governing political parties by allowing Indian parties to elect seats in various constituencies while relying on India’s arbitration process. On the contrary, it has raised a lot of controversy over public policies, as many believe that getting out of this step allows the parties to breach Indian law.

Two Indian parties choosing an international seat of arbitration has always been thoroughly deliberated upon, however, in the present case, Gujarat High Court has clarified the matter by following the textual interpretation of the mediation section. Government of India. The video of this decision shows that the two sides in India may choose a different country for the settlement process, but the parties note the fact that they cannot take any action if: it is necessary. It happens. To implement these foreign decisions, and this, in this case, is in line with the views of the Gujarat High Court.

Author-Alisha Dargar

BBA LLB(H), Semester IV

United World School of Law, Karnavati University

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