A Discussion on the Supreme Court' Ruling in PASL Wind Solutions Private Ltd.V. G.E Power Conversion

Saptaparni Raha
Aug 26, 2022
2 min read

July 28, 2022

Introduction:

Recently the Gujarat High Court clarified whether two Indian parties can choose a foreign seat for arbitration and if the arbitral award from such a matter is enforceable in India or not. The judgment of the PASL Wind Solutions Private Ltd. v. GE Power Conversion contradicts the judgment of previous cases such as Addhar Mercantile Pvt. Ltd.v. Shree Jagdamba Agrico Exports Pvt. Ltd., and Seven Island shipping Ltd. v. Sath Petroleums Ltd.

Statues involved: The Arbitration and Conciliation Act, 1996

The Indian Contract Act, 1872

Facts:

Two Indian Companies, PASL Wind Private Limited (hereinafter PASL) and GE Power Conversion (hereinafter GE), were involved in a dispute related to wind turbines.
The arbitration clause of the contract specified that the arbitration agreement would be governed by Swiss law and the Seat of Arbitration would be in Zurich.
The proceedings were held in Mumbai.
G.E Power Conversion Pvt. Ltd. received the award in their favour, but the issue arose when the G.E approached the Gujarat High court to enforce the arbitral award under Part II of the Arbitration and Conciliation Act,1996.

The decision of the Honorable Supreme Court in the matter was as follows:

G.E India's request was rejected by the Gujarat High Court for interim relief based on Section 9, contained in Part I of the said Act, as it is only applicable for International Commercial Arbitration. A special leave petition was filed before the supreme court to set aside the Gujarat High court's judgment.

There were Three Points raised by PASL in this regard:

1) The Seat for the Arbitration was in Mumbai;

2) only an award issued in International Commercial Arbitration can be considered a foreign award; and

3) It would contradict Section 23 and Section 28 of the Indian Contract Act, 1872, as the two Indian parties designated a Foreign Arbitral Seat.

After hearing both the parties, the Honorable Supreme Court rejected PASL's appeal and each of its arguments cross-questioning whether two Indian parties could choose a foreign arbitral seat.