Bhatia International v. Bulk Trading S.A. & Anr.

Facts

Bhatia International, an Indian party, had an arbitration agreement with Bulk Trading providing for ICC arbitration with the place outside India. Bulk Trading sought interim measures under Section 9 of the 1996 Act before an Indian court. Bhatia objected that Part I (including Section 9) could not apply to a foreign-seated arbitration.

Issues

• Whether Part I of the 1996 Act applies to arbitrations held outside India
• Whether an Indian court can grant interim relief under Section 9 in aid of a foreign-seated arbitration

Arguments

Bhatia argued that the Act is territorial and Part I applies only to India-seated arbitrations, so Section 9 was unavailable. Bulk Trading argued that the absence of an express exclusion meant Part I continued to apply, leaving Indian parties without interim protection otherwise.

Held

The Court held that Part I applies to all arbitrations, including those seated outside India, unless the parties by agreement expressly or impliedly exclude all or any of its provisions. To hold otherwise would, it reasoned, leave a lacuna leaving parties to foreign-seated arbitrations without interim relief from Indian courts. This created concurrent jurisdiction of Indian courts over foreign-seated arbitrations.

Ratio decidendi

Part I of the 1996 Act applies by default to foreign-seated arbitrations unless its application is expressly or impliedly excluded by the parties' agreement.

Significance

Highly influential but ultimately discredited; it ushered in a decade of expansive Indian judicial intervention in foreign-seated arbitrations (followed in Venture Global). It was overruled prospectively by the Constitution Bench in BALCO (2012), which restored the territoriality principle. It remains relevant because agreements pre-dating 6 September 2012 are still governed by the Bhatia regime.

Related