International Arbitration with Seat Outside India

International arbitration outside India is when the arbitration clause in the contract stipulates that the dispute if any shall be resolved in a seat which is not located in India.

The Arbitration and Conciliation Act provides for parties undergoing international commercial arbitration to bypass domestic regulatory mechanisms. If such a scheme was to be envisioned as applicable to two Indian parties as well, then it would result in Part I becoming a penalty for Indian parties for choosing to comply with Indian law. Whether two Indian parties can choose a foreign seat of arbitration has become far too obfuscated with some recent judicial pronouncements. the scheme of Indian Arbitration and Conciliation Act (“Act”) itself does not permit it. Gujarat High Court in 2020 rendered a decision in GE Power Conversion India Private Limited v. PASL Wind Solutions Private Limited where it held that while two Indian parties can choose a foreign seat of arbitration, they would not be entitled to seek interim measures from Indian courts under section 9 of the Arbitration and Conciliation Act 1996.

In an arbitration agreement, parties are free to choose the seat of the arbitration, which is utmost relevance since the curial law governing the arbitration would be that of the seat of arbitration. When one of the parties is not a domestic party, the parties may choose India or any other country as the seat of arbitration. Choice of a foreign seat of arbitration, would consequently oust the applicability of Part I of the Arbitration andd Conciliation Act, 1996 except section 9, 27, and 37 (1) (a) and 37 (3) thereof, subject to any agreement to the contrary.