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Effort to Avoid International Arbitration Rejected

Friday, October, 23, 2015

A district court’s order to dismiss Sasan Power’s plea for an injunction against arbitration was recently upheld by the Madhya Pradesh High Court. The request was to not arbitrate the dispute Sasan Power’s has with US-based North American Coal Corporation. Sasan Power believed the dispute should be decided within the Indian judicial system and not in London’s arbitral tribunal. North American Coal Corporation argued that was exactly where the dispute should be settled.


After hearing both sides, the two justices determined arbitration would be the best option because in the past, when parties agreed to resolve disputes through arbitration they aren’t later allowed to choose another option.


An email sent to Sasan Power to ask for a reaction to the ruling resulted in a “no comment” response. The company was incorporated to set up 3,960 MW ultra-mega project near Sasan in Madhya Pradesh in the city’s Singrauli district.


In the spring of 2011, North American Coal Corporation assigned its rights, liabilities, and other obligations under the agreement to its subsidiary in India. This was why Sasan Power wanted the dispute settled in India – it believed the matter was between two Indian companies and not international.


When disputes began between the parties and North American Coal Corporation’s India unit, a letter was issued for termination of the associate agreement and requesting arbitration in anticipation of problems.


The request was challenged and Sasan Power filed a petition in the district court which was later dismissed. The company then filed an appeal before the division bench. The dispute will now proceed to arbitration.