PASL WIND SOLUTIONS PRIVATE LIMITED versus GE POWER CONVERSION INDIA PRIVATE LIMITED

Citation: [2021] 4 S.C.R. 532 · Decided: 20-04-2021 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Disposed off

cites 24 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
532
SUPREME COURT REPORTS
[2021] 4 S.C.R.
   [2021] 4 S.C.R. 532
532
PASL WIND SOLUTIONS PRIVATE LIMITED
v.
GE POWER CONVERSION INDIA PRIVATE LIMITED
(Civil Appeal No. 1647 of 2021)
APRIL 20, 2021
[ROHINTON FALI NARIMAN, B.R. GAVAI AND
HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996:
ss. 44, 2(1)(f), 2(2), 49 – Enforcement of foreign award –
Dispute between appellant and respondent, two Indian companies,
wherein the respondent company, subsidiary of a French company
– Execution of settlement agreement by the parties which provided
for arbitration in Zurich in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce – Parties
agreeing to resolve the dispute by sole arbitrator appointed by the
ICC and the substantive law would be Indian law – Respondent
challenged the jurisdiction on the ground that two Indian parties
could not have chosen a foreign seat – However, the arbitrator
held that the arbitration clause in the Settlement agreement as valid
and governing law to be Swiss law because the seat of arbitration
was Zurich, Switzerland, though Mumbai was designated as the
venue – Final award passed in favour of respondent – Respondent
filed enforcement proceedings before the High Court while appellant
challenged the final award – High Court upheld the enforcement of
the arbitral award – On appeal, held: Seat of the arbitration remains
Zurich, Switzerland and venue of the hearing would be Mumbai,
India – Closest connection test not applicable as seat was designated
by the parties and by the tribunal – Part I and Part II of the Act are
mutually exclusive – It cannot be said that proviso to s. 2(2) is a
bridge that joined Part II to Part I – Furthermore, disputes are
between two persons-two Indian companies, and the arbitration is
conducted at the seat designated by the parties, i.e. Zurich, being
in Switzerland, a signatory to the New York Convention – Context
of s. 44 is party-neutral, having reference to the place at which the
award is made – Elusive expression “public policy” appearing in s.
23 of the Contract Act is a relative concept capable of modification
A
B
C
D
E
F
G
H
533
– There is nothing in either s. 23 or s. 28 which interdicts two Indian
parties from getting their disputes arbitrated at a neutral forum
outside India – Effect is to be given to the party autonomy, being
the brooding and guiding spirit of arbitration – Plea that s. 10 of
the Commercial Courts Act would apply, and thus, impugned
judgment is to be set aside, as it was without jurisdiction, cannot be
accepted – Thus, two Indian parties can choose a foreign seat of
arbitration to which New York Convention applies and the award
passed by such forum is enforceable in India – Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 1958 –
Contract Act, 1872 – ss. 23 and 28 – Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Act,
2015 – s. 10.
s. 44 – Foreign award – Meaning of – Necessary ingredients
– Explained.
s. 2(1)(f) – Expression “international commercial arbitration”
– Definition of.
s. 28(1)(a) – Rules applicable to substance of dispute –
Interpretation of s. 28(1)(a) – Held: s. 28(1)(a) makes no reference
to an arbitration being conducted between two Indian parties in a
country other than India – It cannot be held to interdict two Indian
parties from resolving their disputes at a neutral forum in a country
other than India.
Disposing of the appeal, the Court
HELD: 1.1 Clause 6 of the settlement agreement would
show that arbitration is to be resolved “in Zurich” in accordance
with the Rules of Conciliation and Arbitration of the ICC. As per
this clause, Zurich was therefore, determined to be the juridical
seat of arbitration between the parties. At the Case Management
Conference, the arbitrator specifically decided that the venue of
the hearing shall be Mumbai, India and the seat of the arbitration
of course remains Zurich, Switzerland. This arrangement has been
accepted by both parties. [Paras 7, 8][561-E-F; 562-C-E, F-G]
1.2 The closest connection test would only apply if it is
unclear that a seat has been designated either by the parties or
PASL WIND SOLUTIONS PVT. LTD. v. GE POWER
CONVERSION INDIA PVT. LTD.
A
B
C
D
E
F
G
H
534
SUPREME COURT REPORTS
[2021] 4 S.C.R.
by the tribunal. In this case, the seat has clearly been designated
both by the parties and by the tribunal, and has been accepted by
both the parties.

Excerpt shown. Read the full judgment & AI analysis in Lexace.