PASL V. GE: Indian Parties’ Fillip to Foreign-seated Arbitrations, but at What Cost?

Abstract

Can two Indian parties elect a foreign seat of arbitration? This question has been the epicentre of a long-standing divergence in judicial opinions across Indian courts. However, this divergence was put to rest by the Supreme Court of India in PASL Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd. (decision of 20 April 2021), ruling in favour of Indian-parties’ autonomy to elect a foreign-seat of arbitration. Recognizing party autonomy as the “brooding spirit” of arbitration, the Supreme Court overruled two judgments of the Bombay High Court (Seven Islands Shipping Ltd. v. Sah Petroleums Ltd and Addhar Mercantile Pvt. Ltd. v. Shree Jagdamba Agrico Exports Pvt. Ltd.) for not understanding the law (on foreign seated arbitrations between Indian parties) in its correct perspective. Further, it clarified that the term ‘international commercial arbitration’ (in the proviso to section 2(2) of Indian Arbitration and Conciliation Act, 1996) was ‘party-centric’, in the context of section 2(1)(f) of the Indian Arbitration and Conciliation Act, 1996. On the other hand, the same term, when seen in the context of section 44 of the Indian Arbitration and Conciliation Act, 1996, was qualified as ‘place-centric’. This note considers the ramifications of the Supreme Court’s approach in reaching these conclusions, identifying and addressing significant gaps and ambiguities that arise therefrom. Indian Parties, International Commercial Arbitration, Party Autonomy, Foreign Seat of Arbitration (International Chamber of Commerce), Place of Arbitration, Venue of Arbitration, Foreign Substantive Law, Foreign Awards, Enforceability of Foreign Awards, Public Policy, Overruling