Can two Indian companies choose a foreign arbitral seat?

Yes. The Supreme Court said Indian parties may choose a foreign seat like Zurich, London, Singapore or Hong Kong.

What are the four conditions for a foreign award?

Commercial dispute; written arbitration agreement; dispute between persons (nationality irrelevant); arbitration in a New York Convention country.

Can Indian courts grant interim relief in such cases?

Yes. Indian courts can give interim measures even when the seat is outside India.

Does Indian law still matter if the seat is foreign?

Yes. Parties can apply Indian substantive law while the seat’s law governs the arbitration procedure.

PASL WIND SOLUTIONS PRIVATE LIMITED v. GE POWER CONVERSION INDIA PRIVATE LIMITED

Q: Is a foreign-seated award between Indian parties enforceable in India?

Yes, if it qualifies as a “foreign award” under Part II of the Arbitration and Conciliation Act, 1996.

Quick Summary

In PASL Wind v GE Power, the Supreme Court of India said two Indian companies can pick a foreign seat for arbitration. The award from that seat can be enforced in India if it meets the test of a “foreign award” under Part II of the Arbitration and Conciliation Act, 1996. Indian courts can also grant interim relief even when the seat is abroad.

Issues

Can two Indian-incorporated parties choose a foreign arbitral seat?
If they do, is the award enforceable in India as a foreign award?

Rules

Part II, Arbitration & Conciliation Act, 1996: governs enforcement of foreign awards in India.
A “foreign award” must meet four conditions: (1) commercial dispute under Indian law; (2) written arbitration agreement; (3) dispute between “persons” (nationality and residence irrelevant); (4) arbitration held in a New York Convention country.

Facts (Timeline)

Timeline graphic for PASL Wind v GE Power

Parties: PASL Wind Solutions Pvt. Ltd. and GE Power Conversion India Pvt. Ltd.—both Indian companies. GE India is part of the GE global group.

Settlement clause: ICC arbitration in Zurich; Indian substantive law to apply.

Dispute: Sale and warranty issues regarding specific converters. PASL filed an ICC request.

Award: Tribunal issued award. GE sought enforcement in Gujarat.

Gujarat High Court: Held enforcement maintainable despite both parties being Indian; said interim relief not available.

Supreme Court (2021): Heard appeal and settled the position on foreign seat + Indian parties.

Arguments

Appellant

Two Indian parties should not be able to “export” disputes out of India.
Such awards should not be treated as foreign for enforcement in India.
Interim measures from Indian courts should be unavailable if the seat is abroad.

Respondent

Party autonomy allows choosing a foreign seat even for Indian parties.
The ICC Zurich award fits Part II’s definition of a foreign award.
Courts in India should assist with interim relief to protect the arbitral process.

Judgment

Appeal dismissed in effect. The Supreme Court held that two Indian parties can choose a foreign seat. Awards from such arbitrations are enforceable in India as foreign awards if Part II’s four conditions are met. Indian courts may also grant interim relief to support these arbitrations.

Ratio Decidendi

Party autonomy: Indian parties are free to pick a foreign seat.
Part II applies: Enforcement turns on the New York Convention framework and the four-factor test.
Interim relief: Indian courts can aid foreign-seated arbitrations involving Indian parties.

Why It Matters

This ruling increases flexibility for Indian businesses. It supports picking efficient foreign seats while keeping a clear path to enforcement in India. It reduces uncertainty and aligns practice with global arbitration norms.

Key Takeaways

Two Indian parties may choose a foreign seat.
Awards are enforceable in India if Part II’s four conditions are satisfied.
Interim measures from Indian courts are available.
Draft clearly: seat, substantive law, and enforcement plan.

Mnemonic & 3-Step Hook

Mnemonic: “P-FIT”

Party autonomy, Foreign seat allowed, Interim relief in India, Test of four conditions.

3-Step Hook

Confirm foreign seat and Convention country.
Check the four Part II conditions.
Seek interim relief in India if needed.

IRAC Outline

Issue

Can Indian parties choose a foreign seat and enforce the award in India?

Rule

Part II applies; award must satisfy the four New York Convention conditions.

Application

Zurich seat; written ICC clause; commercial dispute; parties are “persons”; Convention country—so enforceable.

Conclusion

Foreign seat valid; award enforceable in India; interim relief is available.

Glossary

Foreign Seat: Legal home of arbitration outside India; its law governs the arbitral procedure.
Foreign Award: An award made in a New York Convention country that meets Part II conditions for enforcement in India.
Interim Relief: Temporary orders from courts to protect rights while arbitration is ongoing.
New York Convention: Global treaty that supports recognition and enforcement of arbitral awards.