Two companies incorporated in India can choose forum for arbitration outside :SC

·1-min read

New Delhi, Apr 20 (PTI) The Supreme Court Tuesday held that two companies incorporated in India can choose a forum for arbitration outside India.

A three-judge bench headed by Justice R F Nariman said party autonomy has been held to be the brooding and guiding spirit of arbitration.

“Nothing stands in the way of party autonomy in designating a seat of arbitration outside India even when both parties happen to be Indian nationals,” the bench, also comprising Justices B R Gavai and Hrishikesh Roy, said.

The top court refused to agree with the submission of the petitioners that two Indian parties cannot designate a seat of arbitration outside India as doing so would be contrary to section 23 of the Indian Contract Act, 1872.

The bench also did not agree with the submission that by designating a seat outside India, it is open to two Indian parties to opt out of the substantive law of India which itself would be contrary to the public policy of India.

“Even in the absence of any designation of which rules will apply to the substance of the dispute, which dispute pertains to transactions concluded in India and breach thereof, the substantive law of India will be applied by the arbitrator in accordance with the conflict of law rules of the country in which the arbitration takes place,” the bench said. PTI PKS RKS RKS