Submitted By

Alisha Shail

Roll - 255

IX B

Bharat Aluminium Company

Vs.

Kaiser Aluminium Technical Services Inc.

Civil Appeal Nos. 7019 of 2005 and 3678 of 2007

DATE OF JUDGEMENT- 6 September 2012

2: JUDGES -
Justice D.K. Jain, Justice Surinder Singh Nijjar, Justice Ranjana Prakash Desai and Justice
Jagdish Singh Khehar

3: FACTS OF THE CASE-

In this case an agreement dated 22 April, 1993 was executed between BALCO (appellant) and
Kaiser (respondent), under which Kaiser was to supply and install a computer based system at
BALCOs premises.

As per the arbitration clause in the Agreement, any dispute under the Agreement would be
settled in accordance with the English Arbitration Law and the venue of the proceedings would
be London. The Agreement further stated that the governing law with respect to the Agreement
was Indian law; however, arbitration proceedings were to be governed and conducted in
accordance with English Law.

A dispute arose between the appellants and the respondents with respect to performance of
agreement and the matter was referred to arbitration. The arbitration proceeding were held in
England and two awards were passed in the proceeding. The Appellants thereafter filed
application under section 34 of Arbitration Act 1996 for setting aside awards. The district court
of Bilaspur and the High Court of Chhattisgarh refused the setting aside of the awards and
appellants filed an appeal against the said order in the Supreme court of India.

4: ARGUMENT:-
The counsel of the appellants relied on previously held judgments of Bhatia International v
Bulk Trading S.A & Anr. And Venture Global Engineering v Satyam Computer Services Ltd &
Anr.and submitted that Part I of the Act is applicable to the arbitration proceeding that were held
in London and the awards by virtue of S. 34 of part 1 could be set aside.

The Supreme Court in Bhatia International v Bulk Trading S.A & Anr held that Part I of the
Arbitration Act 1996 applies to foreign awards passed by international commercial arbitration
proceedings that were held outside India. The Court observed that the section 2 (2) has not been
expressly or impliedly excluded the application of Part I to international Commercial
Arbitrations held outside India and hence Part I shall be applicable to international commercial
arbitration held outside India.

The Apex Court in Venture Global Engineering v Satyam Computer Services Ltd & Anr
passed interim orders under Section 34 of Part I of the Act against the award passed in
International Commercial Arbitration held outside India relying on Bhatia Trading judgment.

5: JUDGEMENT:-
The Supreme Court has held that there can be no overlapping or intermingling of the
provisions contained in Part I of the Act with the provisions contained in Part II.

Part I and Part II are applicable to different fields. Part I is applicable to all domestically
rendered arbitration proceedings that include arbitration proceeding with no foreign party or
arbitration proceedings with both foreign parties but held in India or international commercial
arbitration proceeding that are held in India and Part II of the Act applies only to enforcement of
foreign awards in India.

The territoriality principle of Model law upon which the Indian arbitration act 1996 has been
enacted has been enshrined in the Indian Arbitration act.

The choice of the country as the seat of arbitration inevitably imports an acceptance that the law
of that country shall be applicable to the arbitration proceedings. Seat of arbitration and
place of arbitration are used interchanging but the seat shall remain the place mentioned in the
arbitration agreement. Parties of different nations are involved in international commercial
arbitration and hence the venue for arbitration might change but the seat shall remain the same.

Awards rendered in commercial arbitrations seated outside India 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 Indian courts cannot order interim relief under Section 9 or any other provision of the Act
in support of foreign seated arbitrations. Parties will therefore need to rely on the relief afforded
by the courts of the jurisdiction in which the arbitration is seated. As the choice of seat can have
significant implications for the way an arbitration is conducted, parties should carefully consider
their choice at the drafting stage.

The decision of Bharat Aluminium only applies to arbitration agreements entered into after 6
September 2012.