GURU GOBIND SINGH INDRAPRASTHA
UNIVERSITY
Delhi Metropolitan Education, Noida
(affiliated to Guru Gobind Singh Indraprastha University, Delhi)
RESEARCH PAPER
ON
FOREIGN SEAT OF ARBITRATION FOR INDIAN
PARTIES: PASL WIND SOLUTION PVT LTD V GE POWE
CONVERSION INDIA PVT
BY:-
SHREYA SINGH
03851103821
BA.LLB (2021-2026)
TABLE OF CONTENT
1. ABSTRACT 2
2. INTRODUCTION 3
3. Context of the Matter 4&5
3.1. OPINION OF THE SUPREME COURT 6
3.2. CONSEQUENCES 7
4. JUDGEMENT 8&9
5. CONCLUSION 10
6. REFERENCE 11
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ABSTRACT
Would two Indian parties determine whichever arbitration abroad site their bodies would like to use?
This particular subject matter is the basis of a recurring dispute in court rulings among Indian courts.
Nevertheless, the Indian Apex Court's verdict in PASL Wind Solutions (P) Ltd. v. GE Power
Conversion (India) (P) Ltd. (the verdict dated April 20, 2021) confirming the parties' potential to
elect a foreign arbitration forum addressed the issue in question. The Bombay State Metropolitan
Council's convictions in Seven Islands Shipping Ltd. v. Sah Petroleums Ltd. and Addhar Mercantile
Pvt. Ltd. v. Shree Jagdamba Agrico Exports Pvt. Ltd. were invalidated by the highest court in the
country, whose acknowledged autonomy between parties as well as the "wallowing character" of
dispute resolution. The laws prohibiting dispute resolution incorporating Indian parties that happen
to take effect offshore were interpreted inadvertent by
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INTRODUCTION
On the thirteenth of April, 2021, a trio of judges of the highest courts of the nation determined the
strongly contested procedural a stir respecting India's arbitration framework with regard to the pro-
arbitration suit PASL Wind Solutions Private Limited v. GE Power Conversion Private Limited. The
Apex Court reaffirmed that empowering Indian parties to opt for a foreign arbitration sight wasn't
going to have a detrimental impact on the general population despite safeguarding the premise of
organization sovereignty. " It indicates definitely obstructions regarding the exercise for each party's
flexibility in establishing an institution of adjudication elsewhere in any part of the world
notwithstanding supposing the disputants occur to be considered eternal Indian citizens," remarked
Justice Nariman. Furthermore, it reaffirmed that defendants can leverage Section 9 to pitch for
interim remedies.
1996 Arbitration and Conciliation Law has four sections. India is in the position of
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Context of the Matter
A conclusion was eventually negotiated amongst PASL Winds Solutions Pvt Ltd ("PASL") as well
as GE Power Conversion Indian Pvt Ltd ("GE India") with regard to a couple of obstacles the fact
that originated through the converter's procurement contractual. The two organizations have official
registration in the nation of India. The company General Electric Power Conversion International
SAS (France), a wholly-owned affiliate of the Commander Edison company (United States), is the
underlying organization of 99 percent of GE India. The binding agreement's provision regarding
arbitration stipulated the hearing ought to take place in Zurich, Switzerland, or adopt ICC Rules.
Additionally, there was originally Indian law supervising the encampment.
Although the compromise accord caused dissatisfaction PASL petitioned sought intervention versus
GE India in 2017. The panel of arbitrators stated during the course of the proceedings whether the
Indian Arbitration and Conciliation
The starting point of PASL's claim was the legal inconsistency having encompasses Indian law
concerning the requirement regarding a foreign seat preference amongst neither of the Indian parties
—a have significance having prompted disagreement in Indian courts. Considering the issue at hand,
a few Indian High Courts maintained a pro-arbitration approach & affirmed the parties' pick to use
an in other countries adjudication forum. The high court in Bombay agreed for illustration,
in Aaddhar the Mercantile Private Company Limited vs. Shree Jagdamba Agrico Exports Private
Ltd.3 the fact that two Indian parties weren't permitted to opt for a foreign seat for the reason "an
element of the unpredictability or diametrically opposed decision-making had been brought about
through the Act's designing." There are in total a pair of sections in the legislation. Any arbitration
alongside an Indian seat is pursuant to the first portion of the legislation, no matter whether
(a) in adhering to an arbitration contract that has been written recognized pursuant to the First
Scheduling Protocol; &
(b) The head of the government can designate a territory as subscribing to either of the
abovementioned Protocols by filing an advertisement in the Gazette of the Republic provided it
becomes ascertained that bilateral stipulations were properly utilized.
The second aspect of the Act's interpretation doesn't make it contingent upon whether or not the
lawsuit exceeds the criteria required to be labeled a "worldwide" affair.
save for some of the provisions in the first part the fact that have been specifically and deliberately
revised by regulations that make them relevant to settlements conducted overseas, all of Part I and
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Part II of the Act are mutually exclusive (which will be addressed in greater length in our beforehand
alert here). Consequently, negotiations handled outside of the nation are void of As Part I's norms,
yet arbitrations involving Indian members qualify for exemption from the second subsection of the
Act's criteria.
II. OPINION OF THE SUPREME COURT
GE Power Conversion India Pvt Ltd v. PASL Wind Solutions Pvt Limited being the very first case
addressed through the Gujarat High Court. Each of the Indian parties therefore therefore liberated to
opt for a foreign administrative forum without contradicting Indian law, hence Zurich was ultimately
selected as the location for the arbitration. Owing within the Act's second section operational
technique, the determination, which was granted during the court process in Zurich, represented a
foreign award. Asserting that solely "internationally professional dispute resolution," as that phrase
has been defined under Section 2(1)(f) in conjunction with Section 2(2) from the Act regarding are
encompassed par Section 9 of the initial part of the Act, the Gujarat High Court disallowed GE
India's are appealing for temporary adjudication. The following prompted the determination whether
Section 9 remained superfluous in reverse
A. Arbitration Seat
pursuant to PASL, sections 47 and 49 of the Act's provisions exclusively were applicable to
"foreign awards," subsequently while the binding arbitration had its headquarters in Bombay
versus Zurich, the provisions of the Act didn't seem essential in the current instance. It
pointed out, hence, that the accolade turned out to be Indian-seated one that wasn't a "foreign
award." nevertheless that the apex court made readily apparent the most intimate relationship
criterion matters only when additionally either party nor the court in question decided on an
arbitral seat. The agreement on arbitration explicitly stated abundantly clear that Zurich
would function as the presiding judge of registry for the matter at issue. The appellate panel
designated Zurich as their headquarters furthermore.11 As a result, the Supreme Court
recognized which that there was not an explanation for invoking the
B. The Act's Definition of "Foreign Awards"
The finding, stated the PASL, was unable to be binding as a "foreign award" pursuant to The
provisions of sections 47 and 49 of the second chapter of the law considering the meetings
were across two Indian parties and were unable to be classified as "worldwide commercially
conducted binding arbitration," a term provided by Section 2(1)(f), even though the arbitral
seat was in Zurich. Regarding PASL, the expression "as long as what the situation elsewhere
requires" within subsection 44 authorizes the terminology of "abroad commercially
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arbitration" from paragraph (f) of section 2 to be translated. Like previously noted, an issue
won't be regarded worthy of "globalization professional arbitration" even though it involves
no fewer than one foreign client.
likewise the Court of Appeals established unambiguously whether a ruling
C. Public Policy, Party Autonomy, and the Indian Contract Act
PASL-
The Court of Appeals said it is readily apparent from the syntax of the sentence that Section 28
creates a clear safeguard for undertakings engaging review. As an outcome, the aforementioned
provision is autonomous to other contractual arbitration elements or the choosing of the appellate
venue.
The Indian Apex Court determined that the authority of Indian respondents to elect a foreign
administrative seat constituted unfettered by the provisions of section 23 of the Contracting Parties
Act of India. The Court of Appeal ruled because empowering Indian parties to opt for a foreign
dispute resolution jurisdiction did not negatively affect the country's public benefit while recognizing
the flexibility of association needed to be considered alongside it.
In addition, PASL advanced a claim according to Section 28(1)(a).
On the other hand, the Supreme Court decided that only internal disputes falling under Indian
jurisdiction
D. Provisional Assistance
the Indian Apex Court dismissed the Gujarat case and determined that GE India's motion for
temporary relief was legitimate.
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III. CONSEQUENCES
With regard to Indian parties' use of foreign seats, the Supreme Court's ruling offers much-needed
clarification. As it describes party as the "brooding and driving spirit of arbitration," the ruling
reaffirms the importance of party autonomy. Thus, in agreements involving other Indian parties, it
grant Indian parties or Indian companies of international corporations the option, if they so want, to
select a foreign arbitral seat. Such cases will not fall within the supervisory jurisdiction of the Indian
courts, and any award made will not be susceptible to an Indian set aside action.
This is a noteworthy progression. Although India is moving in the right direction to becoming a
jurisdiction that is receptive to arbitration, the Act gives parties plenty of chances to contact Indian
courts.
Furthermore, Indian parties (as well as their overseas parents) might feel secure in selecting a foreign
venue for their arbitration knowing that Indian courts are still open and prepared to provide
temporary relief. This is extremely important since the individuals involved, being Indian citizens,
probably have property that is mostly located in India.
The Supreme Court allowed Indian parties to designate, along with to the seat, a non-Indian
jurisdiction to apply to the basic contract. Section 28(1)(a) of the legislation, which stipulates that
arbitrations conducted in India must adhere to Indian law, is limited to domestic proceedings and
does not apply towards "internationally commercial arbitrations" (as well as the term is defined in
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JUDGEMENT
I. Indian parties select a foreign seat
Filing on Part II of the Arbitration Act of India, PASL Wind objected to the
maintainability of the implementation proceedings, arguing that, as Mumbai was the
venue, the seat of arbitration ought to be in Mumbai as well, based on the "closest
connection test." The objection was dismissed by the Apex Court, which held in cases
where the arbitration seat designation is ambiguous, the closest relation test should be
applied. Based on the available facts in this case, it is evident that the arbitration will still
take place in Zurich, even though the location was moved to Mumbai purely for financial
reasons between the parties. Therefore, the Apex Court relied on its ruling the case of
Hindustan Copper Ltd. vs. Centrotrade Minerals and Metals Inc., CA No. 2562/
II. Part I and Part II of the Foreign Award are incompatible with one another.
According to the Arbitration Act, An award is capable of being labelled "foreign"
irrespective of whether solely one of its participants represents a foreign party." The
Arbitration Act only specifies that the parties' disputes must be the subject of the award,
regardless of their nationality, citizenship, or place of residence. The provisions of section
44 of the second component of the Arbitration Act, as amended, govern the process of
arbitration, primarily seat-centric versus party-neutral, subsequently the only thing that
requires attention for figuring out where a ruling is foreign is an examination at the venue
wherever the determination was handed down.
The Apex Court ruled the ruling that Section I is a comprehensive regulation that
addresses all aspects of arbitrations undertaken in India, including the selection of
arbitrators, and the start of the arbitration,
III. Public Policy and the Contract Act
Furthermore to other infringements on the Indian Contract Act, 1872 ("Contract Act"),
PASL Wind contends that two Indian parties establishing a foreign arbitration website
might be against the requirements of the law. Absolutely nothing under the provisions of
the Contract Act, in the words of the Court of Appeals, prevents two Indian parties from
agreeing to have their dispute resolution process with an arbitration venue outside of the
nation of India. The Supreme Court furthermore concluded that proof of an express,
evident, and indisputable injury to the public is required for any breach of public policy
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as defined by the Contract Act. The Court decided that, in this instance, allowing two
Indian parties to choose a neutral forum outside the country to settle their differences
would not be detrimental to the public interest.
IV. The Arbitration Act's entitlement to temporary remedies
The addendum to paragraph (2) of the first subsection of section 2 of the Act on
Arbitration cites section 9 of the first portion of the Act concerning its relevance to
foreign commercial mediation, irrespective of whether the dispute resolution process is
held outside the borders of India. The Court of Appeal argues that this use of the acronym
"internationally commercial binding arbitration" refers exclusively to arbitrations carried
outside of India and, therefore, does not incorporate the definition provided according to
Section 2(1)(f) that necessitates the involvement of a foreign party. Consequently, the
Court of Appeals concluded that support according to subsection (9) of the Arbitration
Act, 1951 would continue to be obtainable in international business arbitrations held
elsewhere than India, as intended by Section 2(2) of the Arbitration Act, notwithstanding
without the inclusion
V. Additional Important Concerns
The court's ruling carries on to assert how it is compatible with the decision that was
handed down by the Court of Appeals in the 2012 9 SCC 552 case of Kaiser Aluminum
Technical Services, Inc. v. Bharat Aluminum Co. The Court of Appeal held that in
scenarios in which dispute resolution is conducted somewhere other than India and a
single or the other parties has commodities situated globally, Indian courts have the
discretion to impose interim orders regulating assets, including the maintenance of them.
Furthermore, the use of the acronym "globalization commercial cremation" designates
that the arbitration is expected to take place outside of India and that the arbitral award
made outside the country will ultimately be recognized and unenforceable under Part II of
the Arbitration Act.
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CONCLUSION
The court's decision esteems the fundamental concepts of binding arbitration, notably respondent
neutrality and contract range of motion, which the authors of this article believe have helped make
India a more arbitrator-friendly nation. These paragraphs' worth of decisions show that the highest
court in the nation has upheld party autonomy over several arbitration-related issues in the past. But
this is the first occasion whereby the Supreme Court has been allowed to determine whether an
organization's freedom of speech under the Arbitration Rules of India is sufficient to permit two
Indian parties to choose a foreign location for arbitration. The ruling can be very important because
the Court of Appeals is currently considering many issues.
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REFERENCE
1. Supreme Court judgement on PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion
(lumierelp.com)
2. PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd: Analysis of Indian
Parties Choosing Foreign Seat of Arbitration (legalbots.in)
3. Important Judgement for CLAT PG: Pasl Wind Solutions Pvt Ltd vs. Ge Power Conversion
India Pvt Ltd (lawctopus.com)
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