PASL Wind Solutions Private Limited v. GE Power Conversion India Private Limited (2021) 7 SCC 1

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

Whether two companies incorporated in India choose a forum for arbitration outside India?
Whether an award made at such a forum outside India can be enforceable?

Part II of the Indian Arbitration and Conciliation Act 1996 (the “Arbitration Act”) applies to the enforcement of foreign awards in India
There are four criteria for an award to be considered a foreign award: (i) the dispute must be considered to be a commercial dispute under the law in force in India, (ii) it must be made under a written arbitration agreement, (iii) the dispute must arise between “persons” (without regard to their nationality, residence, or domicile), and (iv) the arbitration must be conducted in a New York Convention country.

The dispute arose between two Indian parties, PASL Wind Solutions Pvt. Ltd., the appellant, and GE Power Conversion India Pvt. Ltd., the Respondent, are both firms incorporated under the Indian Companies Act 1956, about the sale and warranties of specific converters.
Further, GE is a 99% subsidiary of General Electric Conversion International SAS, France, which in turn is a subsidiary of the General Electric Company, United States.
The settlement agreement’s arbitration clause said that the hearing would follow the ICC Rules and be held in Zurich but in terms of the settlement agreement, Indian law applied.
According to Claim 6 of the settlement agreement, when issues occurred between the parties, PASL sent an arbitration request to the International Chamber of Commerce.
The Tribunal issued an award and GE Power applied to enforce it in Gujarat. The Gujarat High Court ruled that the judgment was upholdable even though the two Indian parties had selected a foreign venue, but it also ruled that parties to such arbitration would not be eligible for preliminary injunctive relief in Indian courts.
The Supreme Court heard an appeal from PASL Wind Solutions.

The Apex Court held that two Indian parties can choose a foreign arbitral seat and that parties to such foreign seated arbitrations will be able to obtain interim relief from the Indian courts.
The Court further observed that entities can now choose foreign arbitral seats – like London, Dubai, Singapore, and Hong Kong – in their arbitration agreements, even if the subject matter of their contracts and counterparties are entirely situated within India.
The Court gave four-factor criteria: (i) the dispute must be considered to be a commercial dispute under the law in force in India, (ii) it must be made under a written arbitration agreement, (iii) the dispute must arise between “persons” (without regard to their nationality, residence, or domicile), and (iv) the arbitration must be conducted in a New York Convention country and these criteria were met by the award in question