Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.  (BALCO) — (2012) 9 SCC 552 

Why does this case matter?

Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.  (BALCO) — (2012) 9 SCC 552- is significant because it clarified the territorial scope of the Arbitration and Conciliation Act 1996, in relation to international commercial arbitration. The constitutional bench rejected the broader approach adopted in Bharat Aluminium and held that Part I of the 1996 Act applies to arbitrations seated in India. Consequently, when parties choose a foreign seat, Indian courts cannot ordinarily exercise powers under Part I, including granting interim measures under Section 9. The decision is important for understanding the seat of arbitration, the territoriality principle, and party autonomy in Indian arbitration law. By treating the arbitral seat as central to determining the procedural law governing an arbitration, BALCO brought Indian arbitration jurisprudence closer to the framework reflected in the UNCITRAL Model Law. The judgment also assessed the practical difficulties that could arise from simultaneous court proceedings in India and the jurisdiction of a foreign-seat arbitration. A particularly important aspect of BALCO was its prospective application. The court limited the new position to arbitration agreements executed after the date of judgment, thereby preserving the legal position applicable to earlier judgments. Also for students, lawyers, and researchers, BALCO remains useful for understanding the relation between:

• the seat of arbitration
• court jurisdiction
• Section 2(2)
• Section 9
• Part I of the 1996 Act
• the development of Indian international arbitration jurisprudence

Citation: (2012) 9 SCC 552

Petitioner: Bharat Aluminium Co.

Respondent: Kaiser Aluminium Technical Services Inc.

Date of Judgment: 06/09/2012

Bench: Jagdish Singh Khehar, Ranjana Prakash Desai, D.K.Jain, S.H.Kapadia

FACTS AND BACKGROUND OF THE CASE

The American corporation Kaiser Aluminium Technical Services Inc. and the Indian enterprise  Bharat Aluminium Corporation (BALCO) were at odds. A formal agreement with an arbitration clause was signed by the parties. The contract stipulated: English law governs arbitration, with  London serving as the venue and seat. Arbitration procedures were started in London when disagreements developed between the parties. Disagreements, however, arose over the  selection of arbitrators. BALCO requested the appointment of arbitrators from the Delhi High  Court, claiming that Indian courts had jurisdiction because one of the parties was an Indian  firm. The question of whether Indian courts might use their authority under Part I of the  Arbitration and Conciliation Act, 1996 with regard to arbitrations held outside of India became  more significant and fundamental as a result. A two-judge Supreme Court bench had doubts on  Bhatia's accuracy in BALCO. The case was referred to a three-judge bench and then a five judge Constitution Bench due to the significance of the subject. In recognition of the decision's  broader implications for India's arbitration system, the Court also solicited amicus curiae  arguments from prominent Indian arbitral institutions.