Supreme Court bench of Justice Indira Banerjee and Justice S Ravindra Bhat while hearing the case of NOY VALLESINA ENGINEERING Spa vs. JINDAL DRUGS LIMITED & ORS observed that the proceedings U/s-34 of Arbitration 7 Conciliation Act is not maintainable against a Foreign Award.
The case filed by Jindal Drugs Limited at Bombay HC for challenging the partial award was dismissed by single bench. The division bench while hearing referred to the decision of SC in the case of Bhatia International v. Bulk Trading S. A. & Anr. and Venture Global Engineering v. Satyam Computer Services Ltd. & Anr. and said proceedings under section-34 can be validly maintained to challenge the foreign award.
When the matter went in appeal to apex court the case made followings observations- “In view of the above discussion, we are of the considered opinion that the Arbitration Act, 1996 has accepted the territoriality principle which has been adopted in the UNCITRAL Model Law. Section 2(2) makes a declaration that Part I of the Arbitration Act, 1996 shall apply to all arbitrations which take place within India. We are of the considered opinion that Part I of the Arbitration Act, 1996 would have no application to international commercial arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996. In our opinion, the provisions contained in the Arbitration Act, 1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provision contained in Part II of the Arbitration Act, 1996.”
And thus the bench set aside the High Court’s order.