The Supreme Court in ait recent judgement has observed that the proceedings under Section 34 of the Arbitration and Conciliation Act are invalid against a foreign award.
In the said case, Jindal Drugs Limited had filed a petition before the High Court of Bombay under Section 34 of the Arbitration and Conciliation Act and challenged the partially given foreign award. Although the plea was dismissed by the single judge bench, the division bench which referred to the Supreme Court verdicts in Bhatia International v. Bulk Trading S.A. & Anr and Venture Global Engineering v. Satyam Computer Services Ltd. & Anr, in which the Apex Court observed that proceedings under Section 34 of the Act could be recognised as valid against a foreign award.
In the Civil Appeal, the Supreme Court stated that in Bhatia and later in Venture Global it was observed that subject to remedies given in Part I of the said Act which can be made with regard to foreign awards, despite the difference in the validation between domestic awards ( covered by Part I) and foreign awards ( covered by Part II) . The division bench observed that this concept was revised in Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc, in which it was held that:
“We have an opinion that the Arbitration Act, 1996 has accepted the territoriality principle which has been mentioned in the UNCITRAL Model Law. Section 2(2) states that Part I of the Arbitration Act, 1996 should apply to all arbitrations which are made in India. We consider that Part I of the Arbitration Act, 1996 would not be applied to international commercial arbitration which took place outside India. So, these awards would only be valid to the jurisdiction of the Indian Courts when they are to be enforced in India according to the provisions given in Part II of the Arbitration Act, 1996. It is clear that provisions of Part I cannot be overlapped with that of Part II.”
Holding such, the Supreme Court quashed the orders of the High Court.