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Supreme Court of India limits reach of judiciary into international arbitrations

Landmark decision could provide comfort to foreign investors

In a move that should make India significantly more attractive to foreign investors, a five-judge bench of the Supreme Court of India has reversed precedent the court set in a 2002 decision that conflicted with commonly held principles of international arbitration by effectively giving Indian courts jurisdiction over arbitration proceedings set in other countries.

At best, the 2002 ruling threw a shadow of uncertainty over arbitration agreements and internationally seated arbitrations with Indian counterparties; at worst, it painted India as an arbitration-hostile, interventionist jurisdiction.

Crystal Clear

Bharat Aluminium reverses the effects of Bhatia International by stating clearly that Part I of the Arbitration Act of 1996 “would have no application to International Commercial Arbitration held outside India” and “is applicable only to all the arbitrations which take place within the territory of India.”

Associate Editor

Melissa Maleske

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