Citation: (2012) 9 SCC 552 | Court: Supreme Court of India (five-judge Constitution Bench) | Decided: 6 September 2012 | Status: Good law -- the controlling precedent on Indian courts' role in foreign-seated arbitration, applied prospectively.
In Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), a five-judge Constitution Bench held that Part I of the Arbitration and Conciliation Act, 1996 -- including an Indian court's power to grant interim relief or hear a challenge to the award -- does not apply to arbitrations seated outside India, overruling the earlier Bhatia International (2002) position, but only prospectively for arbitration agreements entered into after 6 September 2012.
Case background and the legal question
BALCO and Kaiser Aluminium had a supply contract with an arbitration clause providing for arbitration in
London under English procedural law. A dispute arose, and the question was whether Indian courts -- under
Part I of the Arbitration and Conciliation Act, 1996, which governs domestic arbitration and, per the
earlier Bhatia International v. Bulk Trading (2002) ruling, had also been extended to foreign-seated
arbitrations by default unless the parties expressly excluded it -- could grant interim relief or entertain
a challenge to an award from a London-seated arbitration. This had become a major uncertainty for
international commercial contracts involving an Indian party, since it meant Indian courts could intervene
in a foreign arbitration even where the parties had chosen a foreign seat specifically to avoid that.
What the Supreme Court held
The Constitution Bench overruled Bhatia International, holding that Part I of the Act applies only to
arbitrations seated in India; where the parties have chosen a seat outside India, Part I -- including
Section 9 (interim relief) and Section 34 (challenge to an award) -- has no application, regardless of
whether the parties expressly excluded it. Only Part II of the Act (recognition and enforcement of foreign
awards under the New York Convention) applies to foreign-seated arbitrations. Because this represented a
genuine change from settled practice under Bhatia, the Court made the ruling prospective: it applies only to
arbitration agreements executed on or after 6 September 2012, leaving pre-2012 agreements to be governed by
the Bhatia position they were entered into under.
Why this matters for NRIs, and the case's status today
BALCO is essential reading for any NRI entrepreneur or investor negotiating a cross-border commercial
contract with an arbitration clause -- it confirms that choosing a foreign seat (London, Singapore, Dubai,
or elsewhere) genuinely keeps Indian courts out of interim relief and award-challenge proceedings for
agreements made after September 2012, which is exactly the predictability international commercial parties
look for when selecting a seat. Conversely, NRIs relying on an older, pre-2012 arbitration agreement should
check which regime (Bhatia or BALCO) governs their specific contract, since the practical exposure to Indian
court intervention differs. The judgment remains the controlling precedent on this question and has been
consistently applied since 2012.
If my contract has a London-seated arbitration clause, can Indian courts still grant interim relief?
Generally no, for agreements entered into after 6 September 2012 -- BALCO held that Part I of the
Arbitration and Conciliation Act, including the interim-relief power under Section 9, does not apply to
foreign-seated arbitrations. Indian courts' role is then limited to recognizing and enforcing the eventual
award under Part II.
Does BALCO apply to arbitration agreements signed before 2012?
No -- the Supreme Court made the ruling prospective, so arbitration agreements executed before 6 September
2012 continue to be governed by the earlier Bhatia International position, under which Part I could still
apply to a foreign-seated arbitration unless expressly excluded.
Can Indian courts still enforce a foreign arbitration award after BALCO?
Yes -- BALCO only removed Part I's application (interim relief, award-challenge) to foreign-seated
arbitrations. Part II of the Act, which implements the New York Convention for recognizing and enforcing
foreign awards in India, is unaffected and continues to apply.
