Bhatia International stands overruled Download Judgment

A Constitutional Bench of the Supreme Court today, delivered a landmark judgment in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc over ruling the doctrine laid down in 2002 by the same Court in Bhatia International v Bulk Trading S.A. (Bhatia International).

A Constitutional Bench of the Supreme Court today, delivered a landmark judgment in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc over ruling the doctrine laid down in 2002 by the same Court in Bhatia International v Bulk Trading S.A. (Bhatia International).

In Bhatia International, the Supreme Court had held that Part I of the Indian Arbitration and Conciliation Act, dealing with the power of a court to grant interim relief, could be applied to arbitration disputes with a foreign seat unless the parties specifically opted out of such an arrangement. Today’s judgment marks the culmination of a hearing which began in January 2012.

The concluding paragraphs of the 190-page judgment have been reproduced below:

"198. …..We are of the considered opinion that Part I of the Arbitration Act, 1996 would have no application to International Commercial Arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996. In our opinion, the provisions contained in Arbitration Act, 1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act, 1996.

199. With utmost respect, we are unable to agree with the conclusions recorded in the judgments of this Court in Bhatia International (supra) and Venture Global Engineering (supra). In our opinion, the provision contained in Section 2(2) of the Arbitration Act, 1996 is not in conflict with any of the provisions either in Part I or in Part II of the Arbitration Act, 1996. In a foreign seated international commercial arbitration, no application for interim relief would be maintainable under Section 9 or any other provision, as applicability of Part I of the Arbitration Act, 1996 is limited to all arbitrations which take place in India. Similarly, no suit for interim injunction simplicitor would be maintainable in India, on the basis of an international commercial arbitration with a seat outside India.

200. We conclude that Part I of the Arbitration Act, 1996 is applicable only to all the arbitrations which take place within the territory of India.

201. The judgment in Bhatia International (supra) was rendered by this Court on 13th March, 2002. Since then, the aforesaid judgment has been followed by all the High Courts as well as by this Court on numerous occasions. In fact, the judgment in Venture Global Engineering (supra) has been rendered on 10th January, 2008 in terms of the ratio of the decision in Bhatia International (supra). Thus, in order to do complete justice, we hereby order, that the law now declared by this Court shall apply prospectively, to all the arbitration agreements executed hereafter."

(Emphasis supplied)

Bharat Aluminium Co v Kaiser Aluminium Technical Service