HIGH COURT OF GUJARAT FINDS THAT TWO INDIAN PARTIES CAN CHOOSE A FOREIGN SEAT OF ARBITRATION BUT CANNOT OBTAIN INTERIM RELIEF IN INDIAN COURTS

The Gujarat High Court (the “Court”) recently handed down a significant decision in GE Power Conversion India Private Limited v. PASL Wind Solutions Private Limited, Arbitration Petition No. 131 and 134 of 2019, confirming that two Indian parties are permitted to choose a foreign seat of arbitration, and that the award from such an arbitration may then be enforced in India as a foreign award. However, the Court held that Indian parties who had chosen a non-Indian seat would not be entitled to interim relief from the Indian courts in support of the arbitration under s9 of the Arbitration and Conciliation Act 1996 (the “Act”).

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INDIA INTRODUCES KEY AMENDMENTS TO ARBITRATION AND CONCILIATION ACT 1996

After the Arbitration and Conciliation Bill, 2019 (the “Bill“) was passed by both houses of the Indian Parliament, the President of India on 9 August 2019 gave his assent.  The new Arbitration and Conciliation (Amendment) Act, 2019 (the “2019 Act“) will amend the Indian Arbitration and Conciliation Act, 1996 (the “1996 Act“), implementing the recommendations of the High Level Committee Report issued in 2017 under the chairmanship of Justice BN Srikrishna. The changes proposed in the Bill were previously discussed here.

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Arbitrability of fraud in India

The decision of the Indian Supreme Court in Swiss Timing Limited v Organising Committee, 2010 Olympic Games, Delhi[1] ("Swiss Timing") last year seemingly settled the legal position on whether claims involving allegations of fraud are arbitrable in India. The Supreme Court in Swiss Timing overruled the previous leading Supreme Court authority, N Radhakrishnan v Maestro Engineering[2] ("Radhakrishnan"), to hold that fraud allegations are capable of being adjudicated by arbitral tribunals. However, a number of recent Indian High Court decisions have taken apparently conflicting approaches to the issue and have raised questions on the authority of Swiss Timing to effectively overrule Radhakrishnan. The vexed question of arbitrability of fraud has thus been brought back to the forefront of Indian arbitration law.

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Amendments to the Indian Arbitration Act now effective

The Indian Government has taken steps to implement long awaited arbitration reforms by promulgating an ordinance, the Arbitration and Conciliation (Amendment) Ordinance, 2015 (the “Ordinance“), amending the Arbitration and Conciliation Act 1996 (the “Act“). These amendments have been on the cards for almost a year and the Government was earlier contemplating following the usual route of obtaining legislative approval for amending the Act. However, in light of the Modi Government’s agenda to improve the ease of doing business in India, it is not surprising that the Government has opted for introducing an ordinance. Although the Ordinance is effective immediately, it will need Parliamentary approval in the upcoming session.  The Ordinance largely follows the proposals set forth in a report of the Law Commission of India published last year.

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