ESQ Legal Practice Magazine JUNE 2014 EDITION | Page 19

Section 34 of the Indian
interpreted in accordance with
Arbitration Act 1996 (the Act). the laws of India and could
See our previous post here.
not be performed in a manner
which would contravene the
laws of India. Union of India
Law governing Pre-BALCO
argued that, therefore, Indian
Agreements
law (including Part I of the Act
The arbitration agreement that – which provides Indian
was considered in the present courts supervisory jurisdiction
case was executed prior to the over arbitrations) could not
have been excluded by the
Supreme Court's landmark
decision in BALCO i.e. prior to parties. Since Part I of the Act
includes the Indian courts'
6 September 2012. (We have
considered this dual approach power to set aside arbitral
awards, Union of India argued
to pre- and post-BALCO
that the Delhi High Court had
contracts in our earlier blog
jurisdiction to set aside the
post here). In summary, the
ruling of the Supreme Court in Partial Final Award issued by
the tribunal seated in London.
BALCO – which held that
Indian courts do not have
Reliance argued that by
supervisory jurisdiction over choosing English law to
foreign seated arbitrations –
govern their arbitration
does not apply to arbitration
agreement and expressly
agreements executed prior to 6 agreeing that London was to
September 2012. The position be the seat of arbitration, the
in respect of such agreements parties had excluded the
is that Indian courts may
application of Part I of the Act.
exercise supervisory
The Delhi High Court upheld
jurisdiction over all
arbitrations including foreign the contention of Union of
India and held that there was
seated arbitrations with a
no express or implied
nexus to India unless:
exclusion of Part I of the Act. It
 Parties had expressly
held that an award which is
chosen not to vest the
said to be against public
court with such
policy can be challenged in
supervisory jurisdiction
(usually by clarifying that India even though the seat of
arbitration is outside India.
Part I of the Act – which
provides for such
supervisory jurisdiction –
does not apply); or
 It was apparent from all of
the facts and
circumstances of the case
that the parties had
impliedly excluded the
jurisdiction of the Indian
courts.

Decision of the Delhi High
Court
Against this legal and factual
background, Union of India
made reference to the fact that
the relevant contracts
containing the arbitration
agreement were signed and
executed in India, their subject
matter was situated in India,
they were to be governed and

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The court also held that since
the substantive law of the
contract was Indian law, it was
more appropriate for the
Indian courts to have
supervisory jurisdiction over
setting aside proceedings –
even if the courts in London
had supervisory jurisdiction
over the arbitration during the
pendency of the proceedings.

The Decision of the Supreme
Court
The Supreme Court confirmed
that as the decision in BALCO
applied prospectively only, it
was bound by the pre-BALCO
jurisprudence.
However, the Supreme Court
held that as the arbitration
agreement was governed by

English law and since the
parties had agreed that the
juridical seat of the arbitration
was London, the parties did
expressly agree to exclude Part
I of the Act. In arriving at this
conclusion the court also
made reference to the fact that
the arbitration agreement
allowed the Permanent Court
of Arbitration at Hague to be
approached for the
appointment of an arbitrator
instead of the Chief Justice of
I