Court case(2012) 9 SCC 552

BALCO, an Indian company, and Kaiser, a foreign company, had an agreement for the supply and installation of equipment which provided for arbitration in London under English law, with the contract otherwise governed by Indian law. Awards were made in London against BALCO. BALCO applied in India under s. 34 of the 1996 Act to set them aside, relying on Bhatia International (2002), which had held that Part I applies to foreign-seated arbitrations unless excluded. The question was referred to a Constitution Bench.

The Constitution Bench overruled Bhatia International and Venture Global. The 1996 Act adopts the territorial principle: Part I applies only to arbitrations seated in India, and the courts of the seat alone have supervisory jurisdiction. A foreign award can therefore be challenged only at the seat; in India it can only be resisted at the enforcement stage under Part II (s. 48). No application under s. 9 for interim relief, or under s. 34 to set aside, lies in respect of a foreign-seated arbitration, and no suit lies for interim relief either. To avoid disturbing settled transactions the ruling was made prospective, applying to arbitration agreements executed after the date of the judgment.