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An arbitration resulting in foreign award to be enforceable only in a High Court under section 10(1) of CCA and not in district court: Supreme Court of India

An arbitration resulted in a foreign award, as defined under section 44 of the Arbitration Act, would be enforced only in a High Court under section 10(1) of the Commercial Courts Act, and not in a district court under section 10(2) or section 10(3). This honorable judgement was passed by Supreme Court of India in the case of PASL Wind Solutions Private Limited Vs. GE Power Conversion India Private Limited [CIVIL APPEAL NO. 1647 OF 2021] by The Hon’ble Mr. Justice Rohinton Fali Nariman.

The present appeal raised an interesting question as to whether two companies incorporated in India would choose a forum for arbitration outside India and whether an award made at such forum outside India, to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 applies, would be said to be a “foreign award” under Part II of the Arbitration and Conciliation Act, 1996 and be enforceable as such. The appellant company incorporated under the Companies Act, 1956 with its registered office at Ahmedabad, Gujarat. The respondent was a company registered office at Chennai, Tamil Nadu, and is a 99% subsidiary of General Electric Conversion International SAS, France, which in turn was a subsidiary of the General Electric Company, United States. In 2010, the appellant issued three purchase orders to the respondent for supply of certain converters. Pursuant to these purchased orders, the respondent supplied six converters to the appellant. Disputes arose between the parties in relation to the expiry of the warranty of the said converters. The respondent filed a preliminary application challenging the jurisdiction of the arbitrator on the ground that two Indian parties could not have chosen a foreign seat of arbitration.

The court opinioned that, “Thus construed, there is no clash at all between section 10 of the Commercial Courts Act and the explanation to section 47 of the Arbitration Act, as an arbitration resulting in a foreign award, as defined under section 44 of the Arbitration Act, will be enforceable only in a High Court under section 10(1) of the Commercial Courts Act, and not in a district court under section 10(2) or section 10(3).”

The court disposed off the case stating that, “the section 9 application that was made by the respondent was not maintainable by reason of the expression “international commercial arbitration” appearing in the proviso to section 2(2) having the meaning to be ascribed by section 2(1)(f) of the Arbitration Act. We have already held in paragraph 14 above that this view of the law is incorrect. Consequently, this part of the judgment is set aside, it being held that the application made by the respondent under section 9 would be maintainable.”

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