ESQ Legal Practice Magazine JUNE 2014 EDITION | Page 18

INDIAN SUPREME
COURT GIVES FURTHER
REASSURANCE ON THE
LIMITS OF ITS JURISDICTION
IN CASES OF ARBITRATION
SEATED OUTSIDE INDIA

I

n a welcome addition to
the recent suite of proarbitration decisions
emanating from India, in
the case of Reliance
Industries Limited & Anr v
Union of India, the Supreme
Court of India overturned the
decision of the Delhi High
Court and confirmed that in
circumstances where an
arbitration is seated outside of
India and the parties have
expressly chosen a foreign law
to govern the arbitration
agreement, notwithstanding

18 I EsQ legal practice

the choice of Indian
substantive law, the Indian
courts do not have jurisdiction
to set aside an arbitral award.
The decision, which is relevant
to all agreements from the preBALCO era, limits the
circumstances when the
Indian courts can intervene in
the context of foreign seated
arbitrations.

Background

ONGC (an Indian state-owned
company), Reliance Industries
Limited (Reliance) and BG
Exploration and Production
India Limited for the
exploration and production of
petroleum. A dispute arose
from the terms of the contract
concerning the payment of
royalties, cess and service tax.
Reliance issued a notice of
arbitration in December 2010
and the arbitral tribunal was
constituted in July 2011.

Two production sharing
The contracts were governed
contracts were entered into by:

by Indian law but contained
arbitration clauses which
stated that they were
governed by the laws of
England. It was agreed that
the seat of arbitration would
be London. The tribunal made
a Partial Final Award in
September 2012 concluding
that Reliance's claims were
arbitrable and rejected Union
of India's arguments to the
contrary. Union of India
challenged this award before
the Delhi High Court
pursuant to the provisions of

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