By LE Desk

New Delhi, April 21: The Supreme Court has held that two Indian companies can choose a foreign jurisdiction to arbitrate their disputes, and that such an agreement will not adversely impact either parties’ ability to seek interim relief before Indian courts.

The apex court’s ruling on Tuesday partially re-enforced and partially overturned the Gujarat High Court’s November order in favour of GE Power Conversion India against PASL Wind Solutions Pvt. Ltd, BloombergQuint reported.

After GE Power won an award from an arbitral tribunal in Zurich, it had approached the Gujarat High Court to enforce the directions against PASL Wind Solutions. The dispute related to purchase of converters by GE Power from PASL and warranty conditions. The arbitral tribunal had ruled in favour of GE Power and directed PASL to pay over Rs 3 crore.

PASL had contested this award saying an agreement with an object to contract out of the full extent of Indian judicial scrutiny by designating a foreign seat is in violation of the country’s public policy. And that courts can refuse enforcement if an award is contrary to India’s public policy.

The high court had dismissed this argument pointing to provisions under contract law which permit parties to arbitrate disputes.

The apex court’s ruling on Tuesday has now cemented the high court’s conclusion.

The Supreme Court pointed to the provision under contract law which makes an agreement void if a party’s legal right to approach Indian courts is curtailed. But, this provision makes an exception for arbitration proceedings, the apex court noted. The provision, it explained, specifically saves the arbitration of disputes between two persons without reference to the nationality of persons who may resort to arbitration.

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