Explore the intricacies of international commercial arbitration under the Arbitration and Conciliation Act, 1996, including its definition, elements, and key case laws like Bhatia International v. Bulk Trading and Bharat Aluminium v. Kaiser Aluminium. Understand the role of UNCITRAL and the applicability of Part-I provisions to foreign arbitrations.

The Arbitration and Conciliation Act 1996 provides for certain aspects of international commercial arbitration. The term "international commercial arbitration" has been defined in Section (2)(1)(f) of the Arbitration and Conciliation Act, 1996 as follows:

International commercial arbitration" means an arbitration relating to disputes arising out of legal relationships, whether contractual not, considered as commercial under the law in force in India and here at least one of the parties is:

International Commercial Arbitration

1. an individual who is a national of, or habitually resident in, any country other than India; or
2. a body corporate which is incorporated in any country other than India; or
3. a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
4. the Government of a foreign country

For an arbitration to be considered as international arbitration within the meaning of this definition, it is necessary that:

• the dispute must arise out of a legal relationship which is commercial, irrespective of the fact whether such relationship is contractual or not, and
• at least one of the parties to the dispute is a foreign national, a company registered in a foreign country, or a company management and control of which is exercised from a foreign country or the Government of a foreign country.

International Commercial Arbitration and UNCITRAL

According to Article 1(3) of UNCITRAL Model Law on International Commercial Arbitration, an arbitration is international in character if:

1. The parties to an arbitration have, at the time of the conclusion of the agreement, their places of business in different states; or
2. One of the following places is situated outside the State in which the parties have their places of business:
   • The place of arbitration if determined in or pursuant to the arbitration agreement;
   • Any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or
3. The parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.

Elements of International Arbitration

The term 'international commercial arbitration' has three elements:

• First, there is an arbitration agreement;
• Second, the arbitration is international as opposed to domestic in character; and
• Third, it relates to commercial matters.

Case Laws:
Bhatia International v. Bulk Trading
(AIR 2002 SC 1432)

Facts:
There was a Contract between the appellant and 1st respondent The contract contained an arbitration clause, which provided that arbitration clause was to be as per the rules of the International Chamber of Commerce (ICC). On 23 Oct 1997 the 1st respondent filed a request for arbitration with ICC. Both the parties agreed that the arbitration be held in Paris, France.

ICC appointed a sole arbitrator, 1st respondent filed an application under Section 9 of the 1996 Act before the District Judge, Indore (MP sought the appellant and the 2nd sought was an order of injunction restraining the appellant and the respondent from alienating, transferring and/or creating third party right, disposing of. dealing with and for selling their business assets and properties.

The appellant contended that part-1 of the said Act would not apply to arbitrators where the place of arbitration is not in India and hence the application is not maintainable. The District Judge held that the Court at Indore had Jurisdiction and the application was maintainable. The appellant then filed a writ petition before the High Court of Madhya Pradesh. The High Court dismissed the writ petition and hence the appeal before the supreme Court.

Issue:

• Whether the provisions of Part-I of the Act apply to arbitrations where the place of arbitration is not in India?

Decision:
Supreme Court held that the provisions of Part I of the Act would apply to all arbitrations and to all proceedings relating thereto .It was further held that where such arbitration is held in India, the provisions of Part I would compulsorily apply and parties are free to deviate only to the extent permitted by derogable provisions of Part I. In case of International Commercial Arbitrations held out of India, the provisions of Part I would apply unless the parties by agreement express or implied, exclude all or any of its provisions.

Bharat Aluminium Company (Appellant) v. Kaiser Aluminium Technical Service, Inc. (Respondent)

In this case, Supreme Court overruled "Bhatia International Case and Venture Global Engineering Case.

Court held that arbitration decision by an Arbitration panel situated in a foreign jurisdiction cannot be challenged in Indian Courts and no petition seeking to set aside foreign arbitration awards or questioning procedural lapses in arbitration taking place outside the country would be entertained by domestic courts.

Further in this case Court outlined the scope and powers that can be exercised by a court in India under the Arbitration and Conciliation Act to deal with arbitral proceedings held outside India.

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