Can a foreign award be challenged in Indian courts under Section 34?

No. If the seat of arbitration is outside India, a substantive challenge lies only before the court at the seat, not under Section 34 in India.

What role does the seat of arbitration play?

The seat anchors supervisory jurisdiction. The courts at the seat control challenges to the award.

How did BALCO influence this case?

The Court endorsed the seat-centric approach noted in BALCO—Part II governs foreign awards and Indian courts cannot use Section 34 for such challenges.

Where was the seat in this case?

London. Therefore, only UK courts could hear a substantive challenge to the award.

What should parties keep in mind while drafting arbitration clauses?

Choose the seat carefully. The seat’s courts will supervise the arbitration and hear any challenges.

Noy Vallesina Engineering SpA v. Jindal Drugs Limited

Supreme Court of India 2006 Foreign Awards 2006 (3) ARBLR 510 (Bom) Arbitration 7 min read

Author: Gulzar Hashmi

Location: India

Slug: noy-vallesina-engineering-spa-v-jindal-drugs-limited

Published: 2025-11-02

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PRIMARY_KEYWORDS: foreign award; Section 34; seat of arbitration; BALCO; Part II SECONDARY_KEYWORDS: London seat; ICA; Bombay High Court; enforcement; New York Convention

Quick Summary

Two companies agreed to set up a plant. Disputes went to international arbitration. The tribunal gave awards. One party tried to challenge the award in India under Section 34.

Held: You cannot use Section 34 in India to attack a foreign award when the seat is outside India. Only the court at the seat—here, London—can hear a substantive challenge.

Issues

Can a foreign award be challenged before Indian courts under Section 34 of the Arbitration and Conciliation Act, 1996?
Does the “seat of arbitration” decide which court controls challenges?

Rules

Seat Principle: The court at the seat has supervisory control over the arbitration.
Part II (Foreign Awards): Indian courts deal with recognition/enforcement, not Section 34-type merits challenges.
Section 34 (Part I): Used for domestic or India-seated arbitrations—not for foreign awards.

Gavel with globe symbolizing international arbitration

Facts (Timeline)

Contract Signed

Jindal and NV Engineering signed a contract to set up a plant, with international arbitration agreed.

Dispute & Reference (1996)

After termination and a damages claim, the dispute went to the International Court of Arbitration.

Partial Award (2000)

The tribunal made a partial award; Jindal moved the Bombay High Court; the tribunal later issued the final award.

Challenge in India

A Section 34 petition was filed. Single Judge dismissed it as not maintainable for a foreign award. Division Bench reversed. Appeal went further.

Final Word

The Supreme Court held a substantive challenge to a foreign award is not maintainable in India; only the seat court (London) can hear it.

Timeline graphic of contract, arbitration, court challenge, and final holding

Arguments

Appellant

Seat is London; only seat court can hear challenges.
Section 34 (Part I) is inapplicable to foreign awards.
Indian court can only handle enforcement under Part II.

Respondent

Bombay High Court could review the award under Section 34.
Procedural fairness and Indian public policy concerns.
Contract timing and pre-BALCO position supported review.

Judgment

The Supreme Court set aside the view that Section 34 applies. The Court affirmed the seat-based approach: only the court at the seat can hear a substantive challenge to a foreign award.

Result: Challenge in India was not maintainable. Enforcement questions are separate and governed by Part II.

Ratio Decidendi

The seat decides supervisory jurisdiction over the arbitration.
Section 34 is confined to India-seated arbitrations.
Foreign awards fall under Part II; Indian courts cannot conduct a merits review under Section 34.

Why It Matters

Parties must pick the seat with care. The seat’s courts will control challenges. Indian courts will not re-open the merits of a foreign award under Section 34.

Key Takeaways

Seat is king: It fixes which court hears challenges.
No Section 34: For foreign awards, use the seat court.
Enforce, don’t review: In India, foreign awards are for enforcement scrutiny under Part II.
Draft wisely: State the seat clearly in the clause.

Mnemonic + 3-Step Hook

Mnemonic: “ SEAT SAYS SO”

SEAT — Seat court controls challenges.
SAYS — Section 34 says no for foreign awards.
SO — So, go to the seat’s court.

Check the seat in the clause.
Route your challenge to that court.
Use Part II in India only for enforcement defenses.

IRAC Outline

Issue

Can Indian courts entertain a Section 34 challenge to a foreign award?

Rule

Seat principle; Part II for foreign awards; Section 34 for India-seated cases only.

Application

Seat was London; thus only UK courts could hear a substantive challenge.

Conclusion

Challenge in India under Section 34 was not maintainable.

Glossary

Seat of Arbitration: The legal home of the arbitration; its courts supervise the process.
Foreign Award: An award made in an arbitration seated outside India.
Section 34: Provision to set aside awards from arbitrations seated in India.