Two Indian Parties Can Pick A Foreign Seat: But What About Substantive Law?

By Mr. Ajar Rab, Partner at Rab & Rab Associates LLP and Ms. Kirpen Dhaliwal, LL.M Candidate at NALSAR Hyderabad and research assistant to Mr. Ajar Rab

The recent judgment of a three-judge bench of the Supreme Court in PASL Wind Solutions Private Ltd.. v. GE Power Conversion India Private Ltd. (“PASL”) is a monumental victory for party autonomy in Indian arbitration. The Supreme Court has upheld the freedom of Indian parties to elect a seat of arbitration outside India, settling the much-debated law on this issue. Permitting two Indian parties to choose a foreign seat is a positive development as it effectively brings the Indian Arbitration and Conciliation Act, 1996 (“Arbitration Act”) in conformity with Article 1(3)(b) of the UNCITRAL Model Law, 1985 (“Model Law”). Article 1(3)(b) of the Model Law adopts a place-centric approach to define ‘international arbitration’. It recognizes the freedom of the parties to determine a place of arbitration outside of the State in which their place of business is situated.

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