Bhatia International v. Bulk Trading SA (2002) 2 SCC 395

BHATIA INTERNATIONAL V. BULK TRADING SA

Whether Indian courts have the authority to give interim relief in international commercial arbitrations if the seat of arbitration is in a foreign country and the arbitration agreement does not expressly exclude Indian court jurisdiction?
Whether interpreting the Indian Arbitration and Conciliation Act, 1996 allows Indian courts to exercise authority and intervene in foreign-seated arbitrations, and whether such intervention affects the enforceability of arbitration agreements and awards in international commercial contracts involving Indian parties?

Indian courts can award temporary relief and intervene in international commercial arbitration matters, provided the parties’ arbitration agreement does not expressly or tacitly preclude such jurisdiction. The Bhatia International case allowed Indian courts to exercise jurisdiction in concerns about international commercial arbitration proceedings outside India to provide interim protection measures. In this case, Indian courts modified the circumstances under which they can intervene in disputes involving foreign parties.

Bhatia International, an Indian company, signed a contract to sell and purchase items with Bulk Trading SA, a Swiss corporation.
The two parties’ contract included an arbitration clause stating that any issues arising from the contract would be addressed through arbitration by the International Chamber of Commerce (ICC) norms, with the arbitration taking place in Paris, France.
When the parties disagreed, Bhatia International started arbitration procedures in India, seeking the appointment of an arbitrator and temporary relief from the Indian courts.
Bulk Trading SA challenged the Indian court’s jurisdiction, stating that the parties had agreed to hold the arbitration in Paris and that Indian courts should not meddle.

In its decision, the Supreme Court of India addressed whether Indian courts had jurisdiction in matters of international commercial arbitration where the seat of arbitration was located outside of India.
The Court determined that Indian courts had the power to intervene and award interim relief in such situations, even if the seat of arbitration was in another country. The interpretation of the Indian Arbitration and Conciliation Act 1996 was used to make this judgment.
The Court concluded that Indian courts had the authority to grant interim measures of protection to support and facilitate the arbitration process, even though the seat of arbitration was located outside of India.
This judgment sought to balance the interests of parties involved in international commercial transactions while ensuring the efficacy of arbitration processes.
However, it is crucial to note that the Indian Supreme Court partially reversed this ruling in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services (2012) 9 SCC 552, which clarified the law on this subject
According to the Bharat Aluminium decision, Indian courts would only have the authority to intervene in arbitrations outside India if the parties agreed directly or implicitly.