From Bhatia to Kaiser: Testing the Indian Judiciary’s Self-Restraint

Abstract

The Supreme Court of India pronounced its much-awaited decision in Bharat Aluminium Co v Kaiser Aluminium Technical Services ('Kaiser') on 6 September 2012. The Supreme Court held that Parts I and II of the [Indian] Arbitration & Conciliation Act, 1996 were mutually exclusive and as a consequence, the provisions of Part I could not apply to foreign awards and would only apply to arbitrations taking place in India. By this pronouncement, the Supreme Court has remedied the extant policy of excessive court intervention in arbitration, in particular, exercising jurisdiction to review foreign awards on merits. This paper examines the Indian judiciary's approach to challenges to arbitral awards, in particular, foreign arbitral awards. It seeks to assess reasons for court interference and concludes that the reasons underlying (excessive) court intervention in India cannot extend to international arbitrations. There is no justification for Indian courts to intervene beyond global norms of limited intervention in international arbitration, and such intervention is also contrary to India's obligations under the New York Convention. While this position has been rectified by the decision in Kaiser, it defies logic for this jurisdictional correction to operate only prospectively - to arbitration agreements entered into after the date of pronouncement of the Kaiser decision. In relation to domestic arbitration, Indian courts can be expected to reduce intervention only if they have faith in the quality of domestic arbitration as an alternate dispute resolution mechanism. To this end, India will need to strengthen its 'arbitral infrastructure' by establishing credible institutions to administer arbitrations and encouraging specialist counsel and trained arbitrators.