On 6 September 2012, the Supreme Court of India issued its decision in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc, overruling its earlier controversial decision in Bhatia International v Bulk Trading S, Appeal (civil) 6527 of 2001.

In Bhatia International, the Supreme Court held that Part I of the Indian Arbitration and Conciliation Act 1996 applied to international commercial arbitrations held outside India, unless the parties expressly or impliedly excluded all or any of its provisions. The judgment was highly criticised as it increased judicial interference from the Indian courts in arbitrations held outside India.

A five judge panel of the Supreme Court has now confirmed that Part I of the Act (which confers power on Indian courts to set aside awards and grant interim relief) only applies to arbitrations with their seat in India. Therefore, Indian courts do not have power to set aside foreign awards and may not grant interim relief in respect of arbitrations with their seat outside India.

Furthermore, foreign awards will only be subject to the jurisdiction of the Indian courts when they are sought to be enforced in India in accordance with the provisions contained in Part II of the Act.

The Bharat Aluminium decision applies to arbitration agreements concluded after 6 September 2012.

We will publish a more detailed update on this decision shortly.

Case: Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc, Civil Appeal No. 7019 of 2005