Background: 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.
1. Why is the recent Gujarat High Court order in GE Power Conversion Pvt. Ltd. v PASL Wind Solutions Pvt. Ltd. being considered a landmark ruling?
The order is being considered a landmark ruling as it has upheld the right of Indian entities to agree under an arbitration agreement to a foreign seat/ jurisdiction to settle disputes arising under the main contract. This judgment has been passed overruling various legal arguments taken by PASL as regards disability under the Indian Contract Act, 1872 in the parties choosing a foreign seat of arbitration. The order now settles the law on the subject that the nationality of the parties is not important to determine the seat and governing law in an arbitration.
2. How does the future of India’s alternative dispute resolution landscape look like, in light of this order? Are there any potential caveats?
The Judgment of the Hon’ble Gujarat High Court may open the flood gates for more and more Indian entities choosing to have their disputes with other Indian entities arbitrated under foreign institutional arbitrations governed by foreign law. That will of-course come with its own set of advantages and disadvantages qua interim reliefs, defence/ challenge to award, and/ or its enforcement.
3. What are the key takeaways from this decision?
The topmost take away from the decision of the Hon’ble Gujarat High Court is that the nationality of the parties to an arbitration agreement is not consequential for determining the seat of the arbitration, i.e., two Indian entities can arbitrate under a foreign law, and the award emanating out of such arbitration will be considered as a foreign award under the Arbitration and Conciliation Act, 1996.
In the same light, it has also been held by the Hon’ble High Court that the factum of Indian entities having a foreign seat of arbitration will not render the award arising out of such arbitration as opposed to public policy of India.
Another important takeaway from the said decision of the Hon’ble Gujarat High Court is that despite the seat of arbitration being foreign, the same does not tantamount to an “International Commercial Arbitration” under section 2(f) of the Arbitration and Conciliation Act, 1996 as both the parties are Indian.
By proceeding further, you the user acknowledge that you of your own accord wish to know more about UKCA and Partners LLP (“UKCA”) for your own information and use. You further acknowledge that there has been no solicitation, invitation or inducement of any sort whatsoever from UKCA or any of its Employees, Associates, Partners or Attorneys to create an Attorney-Client relationship through this website. You further acknowledge having read and understood the terms and conditions as stated below:
This website is a resource for informational purposes only and is intended, but not promised or guaranteed, to be correct, complete, and up-to-date. UKCA does not warrant that the information contained on this webpage is accurate or complete, and hereby disclaims any and all liability to any person for any loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or any other cause.
UKCA further assumes no liability for the interpretation and/ or use of the information contained on this webpage, nor does it offer a warranty of any kind, either expressed or implied. UKCA does not intend links from this site to other internet websites to be referrals to, endorsements of, or affiliations with the linked entities. UKCA is not responsible for, and makes no representations or warranties about the contents of Websites to which links may be provided from this Website.
This website is not intended to be a source of advertising or solicitation and the contents of the website should not be construed as legal advice. The reader should not consider this information to be an invitation for an attorney relationship and should not rely on information provided herein and should always seek the advice of competent counsel licensed to practice in the reader’s country/ state. Transmission, receipt or use of this website does not constitute or create a attorney-client relationship. No recipients of content from this website should act, or refrain from acting, based upon any or all of the contents of this page.
Furthermore, UKCA does not wish to represent anyone desiring representation based solely upon viewing this website or in a country/ state where this website fails to comply with all laws and ethical rules of that country/ state. Finally, the reader is warned that the use of Internet e-mail for confidential or sensitive information is susceptible to risks of lack of confidentiality associated with sending email over the Internet.