Bharat Aluminium Co. (BALCO) v Kaiser Aluminium Technical Services Inc.

Facts

• BALCO (Indian PSU) entered into agreements with Kaiser Aluminium (US company) for technology transfer
• Disputes arose; arbitration clause provided for arbitration under ICC Rules
• The seat of arbitration was outside India
• BALCO filed applications under S.9 (interim measures) and S.34 (setting aside) in Indian courts
• The question was whether Indian courts had jurisdiction under Part I for foreign-seated arbitrations

Issue

1. Whether Part I of the Arbitration and Conciliation Act, 1996 (which includes S.9 interim measures and S.34 setting aside) applies to international commercial arbitrations where the seat is outside India.

Held

• Seat Theory: The seat (place) of arbitration determines the applicable curial law (law governing the arbitration procedure and court supervision). Part I applies ONLY where the seat of arbitration is in India.
• No Indian court jurisdiction for foreign seats: Indian courts cannot entertain applications under S.9 (interim measures) or S.34 (setting aside) in arbitrations seated outside India.
• Overruled Bhatia International: The earlier decision in Bhatia International v Bulk Trading (2002) which held that Part I applied to all arbitrations (even foreign-seated) was overruled.
• Prospective application: The ruling applies prospectively to arbitration agreements executed after 06.09.2012.

Ratio Decidendi

The juridical seat of arbitration is the centre of gravity of the arbitration. It determines which country's courts have supervisory jurisdiction (for setting aside, interim measures, and other curial support). Part I of the Indian Act applies exclusively to India-seated arbitrations.