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India Dispute Might be Arbitrated Outside of the Country

Saturday, September, 10, 2016

India’s Supreme Court recently upheld a Madhya Pradesh High Court decision to allow two Indian firms, including North American Coal Corporation India Pvt Ltd and Sasan Power Ltd to conduct arbitration hearings outside of India and under a foreign law.


According to the court, there is no reason to interfere with the decision from the high court, which in turn dismisses the appeal.


The dispute is over certain clauses of agreement between the two companies. Sasan Power Ltd moved the apex court challenging the High Court verdict, stating that when parties agree to resolve disputes through arbitration they should not be allowed to avoid arbitration proceedings.


The court determined that arbitration proceedings between the companies cannot be seated in a foreign country because the Arbitration Act clearly stated where domestic arbitrations can occur. The court finally determined the firms can take the proceedings to London and resolve the matter through arbitration under the English law.


According to the ruling, it is settled law that arbitration is independent and self-contained when it is part of an agreement between two parties. A written agreement could form part of another agreement, which means parties create various contractual rights and obligations – which means all of those rights and obligations arise from the contract – but the arbitration agreement is an independent agreement.


Now, the parties must decide whether or not to move forward outside of the country and resolve their matter – something experts familiar with the case believe will happen quickly now that there are guidelines and protections for doing so in place.