Bharat Aluminum Company

Limited (BALCO)
v/s.
Kaiser Aluminum
Technical Service, Inc.
(KAISER)

Group 4 (Section A)

Aditya Chauhan 29NMP05

Ankur Dhariwal 29NMP10
Ashutosh Kr Singh 29NMP18
Harneet 29NMP31
Kanika Dua 29NMP36
Ravi Kanojia 29NMP49

What is Arbitration??
Settlement of a dispute (whether of fact, law, or procedure) between
parties to a contract by a neutral third party (the arbitrator) without
resorting to court action.
Arbitration is usually voluntary but sometimes it is required by law. If both
sides agree to be bound by the arbitrator's decision (the 'award') it becomes
a binding arbitration.
The exact procedure to be followed (if not included in the contract under
dispute) is governed usually by a country's arbitration laws, or by the
arbitration rules prescribed by the International Chamber Of Commerce
(ICC).

Arbitration Process

Arbitration and Conciliation Act 1996

An Act to consolidate and amend the law related to
domestic arbitration and international commercial
arbitration and enforcement of foreign arbitral ward
as also to define the law related to conciliation and
for matter connecting there with or incidental
thereto.

Existing
The facts of the concerned case ofBhatia Internationalare that the
Position
parties to an international contract had recourse to arbitration
according to the ICC rules of arbitration in Paris, with a sole arbitrator.
As the foreign party wanted to ensure the recovery of its claim from
the Indian party in the case of a favourable award, it moved an Indian
court for interim measures securing the property of the Indian party.
The Indian party raised objection to the submitted application on the
ground that the arbitration under consideration was taking place in
Paris, and the New York Convention provides no provision for interim
measure being

granted by a court other than one in which the

arbitration is taking place.

 However, the High Court rejected the argument. Thereafter, the

Indian party approached the Supreme Court, which upheld the
judgment of the High Court.

In crux, it was held by a three judge bench of the Supreme Court

unanimously that Part I of the Arbitration and Conciliation Act, 1996,
which gives effect to the UNCITRAL Model Law and which moreover
bestows power on the Court to grant interim measures apply even
to international commercial arbitrations being held outside India.

Brief Facts-BALCO vs KAISER

An agreement dated 22 April, 1993 (Agreement) was executed
between BALCO and Kaiser, 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.
Disputes arose and were duly referred to arbitration in England. The
arbitral tribunal passed two awards in England which were sought to
be challenged in India u/s. 34 of the Act in the district court at
Bilaspur. Successive orders of the district court and the High Court of

Key Analysis
Supreme Court drew a very clear demarcation between Indian and foreign
seated arbitrations and provided that Part I of the Arbitration and
Conciliation Act, 1996 (Act) would not be applicable to foreign seated
arbitrations.
The judgment affirmed that a foreign award was not amenable to
challenge under Section 34(2)(b) of Part I of the Act.
The SC observed in this Case that the expression Public Policy of India
when used in the context of Enforcement of a Foreign Award i.e. under
Section 48(2)(b) of the Act is to be given a narrower meaning than when it
is used in Section 34 of the Act and thereby creating a contradistinction of
the same expression.

Decision
1. Part I of the Act would have no applicability to International
Commercial Arbitration held outside India.
2. Part I of the Act shall apply to all arbitrations which take place only
within India.
3. There can be no overlapping or intermingling of the provisions
contained in Part I with that in Part II of the Act.
4. In

foreign

seated

international

commercial

arbitration,

no

application for interim relief would be maintainable under any

provision, as applicability of Part I is restricted to all arbitrations
which take place within India only.
5. No suit for interim injunction would be maintainable in India, when
the seat of arbitration is outside India.
6. As Part I would have no applicability to international commercial
arbitration held outside India, the arbitral awards will be subject to
the jurisdiction of Indian courts when the same are sought to be

Implication of the
Judgement
This judgment shall
be applicable prospectively (i.e. to all the
arbitration agreements executed after September 6, 2012).

As a result of this judgment, the seat of arbitration has now gained

paramount
importance for determining the applicability of Part I of the Act.
The judgment also draws a distinction between the seat of
arbitration and the place of arbitration. It therefore contemplates a
situation where even though the parties have provided for a
particular place for arbitration, that some of the proceedings
themselves may be conducted in other territories as may be
convenient to all.

 This judgment also ensures that foreign award (i.e. an award passed
outside India) can no longer be challenged by an Indian entity and
that the party which seeks to resist the enforcement of the award
has to prove one or more rounds set out in section 48 of the Act.

No interim relief would be available where the seat of arbitration is

outside India. As interim orders from foreign courts and arbitration
tribunals are not enforceable in India such a situation would leave
foreign parties remediless.

THANK
YOU