Indian Parties Can Arbitrate Outside India: PASL Wind Solutions Pvt Ltd V GE Power Conversion India Pvt Ltd*

The Supreme Court has recently ruled that two Indian parties can arbitrate outside India and the resulting award will be valid and enforceable in India.

Brief Facts

Disputes arose between the parties under an agreement for the purchase of convertors. A settlement agreement was executed which provided for ICC arbitration with Zurich as the seat of arbitration. Since no governing law was specified, the parties were governed by the law of the seat, ie Swiss law.

The Tribunal's jurisdiction was challenged on the ground that Indian parties could not choose foreign law. The Tribunal held that there was no bar. The arbitration was held at Mumbai to save costs.

The Tribunal ruled in favour of the Respondent, who then sought to enforce the award. Enforcement was resisted on the basis that it was against public policy for two Indian parties to choose a foreign seat and law.