The Global Litigator | India’s Supreme Court and International Arbitration

Indian Supreme Court rulings reshape global perspectives on arbitration

As international arbitration continues to consolidate its status as the preferred mode of cross-border dispute resolution, courts around the world are grappling with increasingly complex issues. While India’s arbitration jurisprudence has traditionally been seen as domestic in its focus, recent decisions of the Indian Supreme Court resonate beyond India’s borders — offering insights on enforcement, arbitral bias, interim relief, and non-signatory participation that are globally relevant.

In this edition of The Global Litigator, we explore judicial trends emerging from the Indian Supreme Court that could influence cross-border arbitration practices worldwide.

Recent key developments 

Enforcement standards for foreign awards (Avitel Post Studioz Limited & Ors. V. HSBC PI Holdings (Mauritius) Ltd.) 

Part II of the Indian Arbitration and Conciliation Act, 1996 (Indian Arbitration Act) governs the enforcement of foreign arbitral awards, with Section 48, permitting courts to refuse enforcement only on limited grounds.

A key question before the Supreme Court was whether allegations of bias could justify resisting enforcement under Section 48. The court emphasised that international standards – not domestic standards – must be applied in assessing arbitral bias, and held that only in exceptional circumstances should enforcement be refused on this ground.

Our key takeaway

Indian courts apply a high threshold to claims of bias in foreign awards, signalling strong support for enforcement. Parties seeking to resist enforcement on such grounds face an uphill task – a stance consistent with global pro-enforcement trends.

Limitation on applications for arbitrator appointment (M/S Arif Azim Co. Ltd. V. M/a Aptech Ltd.)

The court considered whether applications for appointment of arbitrators under Section 11(6) of the Indian Arbitration Act could be barred by limitation.

Answering in the affirmative, the court clarified that although Section 11 does not specify a time limit, Section 43 of the Indian Arbitration Act mandates the application of the Limitation Act, 1963 to arbitration proceedings in the same manner as it applies to court proceedings. Under Section 137 of the Limitation Act – the residual provision – the period of limitation is three years from when the “right to apply accrues.”

The court held that this right accrues once a party issues a notice invoking arbitration, and the other party subsequently fails to act.

Interestingly, the court acknowledged that a three-year limitation period might undermine arbitration’s objective of speedy dispute resolution and urged parliament to consider legislative reform.

Our key takeaway:

Parties must remain vigilant as applications for appointment of arbitrators may be dismissed if filed beyond the limitation period. However, there is growing judicial pressure to shorten the timeline for such applications to better align with arbitration’s emphasis on efficiency.

Foreign currency awards: practical enforcement issues (DLF Ltd. & Anr v. Koncar Generators and Motors Ltd.)

Practical challenges often arise when foreign arbitral awards expressed in a foreign currency are enforced by domestic courts, as fluctuations in exchange rates can create uncertainty for judgment debtors.

In this case, the Supreme Court addressed two issues:

1. 1. What is relevant date for conversion when the award is expressed in a foreign currency and the judgment debtor chooses to pay in Indian Rupees?
   2. What is the relevant date for conversion when the judgment debtor deposits money with the court pending a challenge to enforcement?

The court ruled:

• For voluntary payments, the relevant date is when the award becomes enforceable (i.e., final).
• For deposits with the court, the date of deposit determines the applicable exchange rate.

Our key takeaway

These clear principles enhance certainty and fairness, preventing award-holders from manipulating exchange rates by delaying withdrawal.

Jurisdiction over foreign-seated arbitrations (M/s Arif Azim Co. Ltd. V. M/s Micromax Informatics FZE )

To what extent can Indian courts intervene in foreign-seated arbitrations? The Supreme Court clarified the boundaries in this decision.

The parties had entered into a distributorship agreement governed by UAE law, with jurisdiction conferred on Dubai courts. The agreement contained an arbitration clause specifying Dubai as the seat of arbitration, governed by UAE arbitration and conciliation rules.

The key question was whether Indian courts could entertain an application for appointment of an arbitrator under Section 11 of the Indian Arbitration Act, despite the foreign seat.

The Supreme Court held that Part I of the Indian Arbitration Act – governing court intervention in arbitrations – only applies where the seat of arbitration is in India. If the seat is outside of India, Indian courts generally have no jurisdiction to entertain Section 11 applications, unless specific statutory exceptions apply.

Our key takeaway

The decision reinforces the growing ‘seat-centric’ approach under Indian law. Where the seat of arbitration is outside India, Indian courts will not interfere, whether by appointing arbitrators or granting interim measures, unless specifically permitted by the Arbitration Act or an exception applies. This approach enhances certainty and upholds party autonomy in cross-border arbitration.

Referral of non-signatories to arbitration (Ajay Madhusudan Patel v. Jyotindra S. Patel)

Can non-signatories to an arbitration agreement be referred to arbitration by the courts while hearing an application for appointment of arbitrators under Section 11 of the Indian Arbitration Act?

The Indian Supreme Court has reiterated its position that it is sufficient for an arbitration agreement to exist for the court to refer parties to arbitration, and the court may undertake a prima facie examination to determine whether a non-signatory can be treated as a party to the arbitration. However, if a more detailed or complex inquiry is required, such questions must be left to the arbitral tribunal for determination.

Our key takeaway

Courts are unlikely to conclusively determine whether a non-signatory is bound unless it is prima facie evident. This reflects the limited role of courts under Section 11, focusing on facilitating, not adjudicating, arbitration.

What do these developments mean for international litigation?

Across these rulings, a clear trend emerges: the Indian Supreme Court is pursuing a pro-arbitration, minimal-interference philosophy aligned with global best practices. Whether addressing enforceability of foreign awards, timing for procedural applications, or the role of courts in foreign-seated arbitrations, India’s approach strengthens international confidence in arbitration conducted with an Indian nexus.

These developments are not just of regional significance – they matter to global practitioners and businesses navigating cross-border contracts with Indian counterparties or assets.