Foreign-Seated Arbitration and Indian Interim Support

Introduction : When parties choose to have their dispute handled in a foreign location, they frequently assume that Indian courts lack jurisdiction. This is only partially accurate, and when it is incorrect, implementing a judgment or arbitral award may have disastrous repercussions if assets are stolen, evidence is concealed or destroyed, or the counterparty reorganizes its Indian presence before an award is rendered. Although it needs careful formulation to invoke, the Arbitration and Conciliation Act, 1996 as modified in 2015 retains a limited but definite jurisdiction for Indian courts to give interim measures in support of arbitration taking place outside of India.

Any party to a commercial dispute with assets in India, an Indian counterparty or Indian statutory framework, or someone who wants to have their dispute handled outside of India but yet needs some sort of temporary protection in order to enforce a final award should be concerned about this issue. This blog examines the threshold issues pertaining to Indian courts' jurisdiction to grant interim relief in support of offshore arbitration, the asset-based tests that Indian courts employ, the problems that come up when requesting interim relief and enforcement simultaneously, and the ways in which drafting mistakes can cause this important form of protection to be lost.

Legal Provisions

A. Arbitration and Conciliation Act, 1996

By definition, arbitrations held in India are covered by Part I of the Act, which includes Section 9 (interim measures by court). However, unless the parties agree otherwise, the proviso introduced to Section 2(2) by the Arbitration and Conciliation (Amendment) Act, 2015 renders Part I, Sections 9, 27, 37(1)(a), and 37(3) applicable to international commercial arbitrations held outside of India. This particular clause allows arbitrations with foreign seats to be heard in Indian courts.

Section 2(1)(f) defines "international commercial arbitration" as arbitration pertaining to disputes resulting from commercial disputes in which the contract is regulated by the law of a foreign nation or in which the parties have their domicile or habitual residence.

Applications may only be filed in the High Court exercising original civil jurisdiction or exercising appeals from any court under its jurisdiction, according to Section 2(1)(e)(ii), which was added by the 2015 amendment. This concentrates such matters in the High Courts rather than the lower courts.

The reliefs that the court may grant are covered in Section 9. These include securing the amount owed, granting interim injunctions, appointing a receiver, preserving, custody, or selling goods related to the dispute, and any other relief that the court may find appropriate and practical.

The Arbitration Act's Part II Chapter I (Sections 44–49) addresses the New York Convention-governed recognition and enforcement of foreign awards. Section 44 expressly limits the recognition of awards under this section to those made in a region designated as a reciprocating state by the Central Government.

B. International Framework

Since 1960, India has ratified the New York Convention. The Convention's Article II(3) mandates that the courts of the signatory states refer the parties to arbitration if an arbitration agreement is in place. Article V outlines the grounds on which local courts may refuse to recognize and enforce the awards; these grounds are essentially mirrored in Section 48. The UNCITRAL Model Law, which served as the foundation for India's arbitration laws, further stipulates that any interim measures mandated by the court must not interfere with or undermine the parties' arbitration agreement.

Legal Analysis

A. From Bhatia International to BALCO: The Doctrinal Swing

In Bhatia International v. Bulk Trading S.A., the Supreme Court ruled that Indian courts have broad supervisory and interim measures jurisdiction over overseas proceedings and that Part I of the Act will apply to arbitration processes with foreign seats unless the parties expressly or tacitly exclude it. Although Bhatia International's approach to interim measures was correct, it caused legal confusion regarding the precise application of Part I of the Arbitration Act, 1996, especially with regard to the extent of implicit exclusion. Courts had started to disagree on whether the selection of a foreign law or arbitration seat implicitly excluded Part I of the Arbitration Act, 1996.

In Bharat Aluminum Co. v. Kaiser Aluminum Technical Service Inc. (BALCO), a five-judge Supreme Court panel unanimously overturned the Bhatia International decision, holding that Part I of the Arbitration Act, 1996 only applies to arbitrations held in India. Since the Indian Arbitration Act, 1996 does not provide parties to foreign-seated arbitration with an alternate mechanism for requesting temporary measures from Indian courts, the ruling, which was clearly prospective, has left a legal vacuum.

B. The 2015 Proviso as Legislative Correction

By adding the aforementioned proviso to Section 2(2) in the 2015 amendment, Parliament has filled this gap. Therefore, if a foreign-seated arbitration meets the criteria of the legislative definition of a "international commercial arbitration" as stated in Section 2(1)(f), Indian courts may issue interim measures under Section 9. There are two significant restrictions on this clause. First off, the statutory definition of international business arbitration is unlikely to be met by an arbitration between two Indian companies that is held outside of India.

Second, and perhaps more significantly, the parties to the arbitration may agree to exclude Section 9's applicability, which might put a party in a situation where it has given up its rights under the default rule of Section 9.

C. Party Autonomy and the ‘Unless Otherwise Agreed’ Trap

In order to escape the Bhatia legacy, standard-form provisions created before to or without consideration for the 2015 change frequently omit "Part I of the Arbitration and Conciliation Act, 1996" in its entirety. However, if this article were taken literally, it would exclude even Section 9, depriving the parties of the advantages of interim measures in India—even in cases when India serves as the arbitration's seat. According to the Delhi and Bombay High Courts, in order for a foreign-seated arbitration to be overturned, the parties must expressly exclude Section 9 (or Part I). The pro-arbitration policy of the Indian statute, which enshrines the court's supportive role in any arbitration, local or international, cannot be overridden by merely referring to a foreign seat, foreign procedural law, or Part I in full without particularly referring to Section 9. The key takeaway is that the statute to which the parties submit should expressly omit Section 9 if Indian courts are to be excluded from the arbitration tribunal's jurisdiction.

D. The Asset-Based Jurisdictional Test

Even if Section 9 is theoretically available, the Indian court's capacity to provide meaningful relief depends on how closely the dispute's subject matter is related to India. The Indian courts will consider whether the respondent has assets, property, or receivables in India or has a subsidiary in India over which the receiver's jurisdiction can be exercised when addressing applications for interim injunctions, security for the costs, or the appointment of receivers. This is because an order for any of these remedies would be ineffective without such a connection.

If there are no assets in India to which the order could be directed, the mere fact that one of the parties to the contract is an Indian business or that the contract has any connection to India is insufficient for the exercise of jurisdiction under Section 9.

E. The Timing Gap Between Interim Relief and Enforcement

Applications may be made before the arbitral tribunal, throughout the proceedings, and "at any time after the making of the arbitral award but before it is enforced in accordance with section 36" (emphasis added) according to Section 9(1)(a). The final sentence alludes to Part I's Section 36, which governs domestic rewards. In any event, Section 49 governs the enforcement of foreign awards. As a result, the Indian courts have been hesitant to acknowledge that an application for temporary relief may be submitted following the award but before to its enforcement. Nonetheless, High Courts have generally adopted a liberal perspective, noting that they were to consider the evil that was meant to be remedied while interpreting the arbitration legislation.

Therefore, ending the protection provided by Section 2(2) at the time when a dissatisfied party is most likely to dissipate assets would be defeating the whole objective of the law. Nonetheless, there is still much disagreement in the jurisprudence around this matter. A petition for relief filed after the award but prior to its implementation cannot, at most, be considered for granted in any given jurisdiction. Therefore, it would be appropriate to consult the local counsel in each instance regarding the availability of such remedies in that specific jurisdiction.

F. Enforcement Planning and the Reciprocating Territory Requirement

Only if the foreign award was made in the area designated by the Central Government as reciprocating under Section 44 may it be enforced in India under Part II. In order to execute international awards under Part II, the Indian Central Government has designated a select nations as reciprocating States. Part II of the Indian Arbitration Act will not apply to awards made outside of these nations, even if they meet all the standards of the New York Convention. When a party wants to enforce a foreign award in India, it is important to first determine if the chosen arbitral seat is recognized as a reciprocating jurisdiction in India. Regardless of the potential merit of the enforcement case, it is doubtful that the foreign award will be enforced before the courts in that seat if it is not notified.

Relevant Case Laws

1. Bharat Aluminium Co. v. Bulk Trading (overruled by BALCO) 2002 (4) SCC 105

A five-judge Constitution Bench held that Part I of the Arbitration and Conciliation Act, 1996, including Section 9, does not apply to arbitrations seated outside India, overturning the Bhatia International line of cases. It observed that the territorial nexus dictated by the very structure of the 1996 Act, read with Section 1(3) of the said Act mandates that for disputes seated outside India, the courts in India have to yield to the exclusive supervisory jurisdiction of the seat. This law, applied prospectively, led to the 2015 amendment noted above. BALCO is the starting point for any discussion on Indian court’s jurisdiction in arbitral proceedings seated outside India. Since it is a prospective decision, disputes agreements entered into before 6 September 2012 may still be governed by the law as existing before BALCO.

2. Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd., 2016 SCC OnLine Del 5521

The Delhi High Court dealt with an application for interim relief pursuant to Section 9 in aid of a Singapore seated arbitration, with the particular focus on the Court’s willingness to grant such relief as an aid to a foreign seated arbitration, as well as the interpretation of the amended proviso to the section. The Court’s willingness to provide the relief is an indication of the asset-based nature of the jurisdiction of the Courts in matters of arbitration, and was widely reported upon as it touches upon the interactions between foreign seated arbitration awards and their enforcement in India.

3. HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd., 2014 SCC OnLine Bom 102

The Bombay High Court granted interim measures including asset freeze in aid of a foreign seated arbitration in which there was an apprehension that the respondent would dissipate assets of Indian origin before the award could be made or enforced. This shows that the Indian courts are not hesitant to exercise their jurisdiction under section 9 of the Arbitration Act if there is a proper basis for coming to that conclusion rather than taking the view that foreign seated arbitration are somehow barred from such measures.

Practical Implications

The potential for Section 9 remedy frequently separates an economically significant arbitration award from a worthless judgment against a judgment-proof counterparty for companies and financial institutions. Therefore, interim-relief planning should be viewed as an essential component of dispute-resolution talks rather than an afterthought to be addressed after the fact by in-house counsel examining cross-border contracts with an Indian connection. In contrast, the intersection of Section 9 with tribunal interim measures necessitates careful consideration for arbitral institutions and practitioners that routinely administer offshore proceedings with Indian connections in order to prevent needless duplication or conflict, especially when an emergency-arbitrator procedure is used to constitute the tribunal. 

Lastly, the ambiguity in the law and the practice of post-award interim measures and their interaction with Section 9 in the case of a domestic-party foreign-seated arbitration presents a chance for regulators and policymakers to clarify the law thru either a formal ruling by the Supreme Court or an amendment to the Act.

Common Errors in Cross-Border Drafting

A party's chances of receiving Indian interim relief are frequently hampered by a number of concerns. 

First, Section 9 and other clauses that the parties may have intended to be controlled by Part II may unintentionally be excluded by broad exclusions in the governing law clause of "Part I of the Arbitration and Conciliation Act, 1996." 

Second, disputes between "venue" and "seat," either by designating a venue without a seat or by using both terms interchangeably when only one is appropriate, result in satellite litigation over which the court has jurisdiction to grant interim measures prior to the main hearing on the merits. Third, even if the award is interim and should be enforceable in India, choosing a seat that India has not designated under Section 44 makes it impossible to recover an award in India.

Fourth, unless the contracting party has the necessary information well before the assets vanish, contracts that do not define in advance the counterparty's assets available for attachment do not allow the contracting party the option to seek relief under Section 9. 

Fifth, selecting a foreign seat for contracts between related Indian corporate groupings frequently ignores the consequences of the PASL Wind Solutions arbitration and the potential of Section 9 remedy.

Court-Support Strategy Map

The following sequence provides a structured approach to assessing and pursuing Indian court support for a foreign-seated arbitration.

Stage	Trigger / Question	Action
1. Threshold check	Is the arbitration an 'international commercial arbitration' under Section 2(1)(f), and have the parties excluded Section 9 by agreement?	Confirm a foreign element on at least one side; review the clause for language excluding Section 9 specifically, not merely a general Part I exclusion.
2. Forum identification	Which High Court has ordinary original civil jurisdiction, or appellate jurisdiction, over the relevant territory under Section 2(1)(e)(ii)?	File before the correct High Court; district courts lack jurisdiction over international commercial arbitration matters.
3. Asset nexus	Does the respondent hold identifiable assets, receivables, bank accounts, or operations in India?	Compile evidence of asset location and dissipation risk before filing; relief without an asset nexus has limited practical value.
4. Timing	Is the application pre-arbitration, during the arbitral proceedings, or post-award but pre-enforcement?	For post-award applications, assess current High Court precedent in the relevant jurisdiction given the unresolved Section 36 cross-reference.
5. Relief selection	Which Section 9 category matches the risk: preservation of goods, security for the amount in dispute, injunction, or receiver?	Tailor the prayer to the specific dissipation or preservation risk identified, supported by particularised evidence.
6. Enforcement alignment	Is the seat located in a jurisdiction India has notified as reciprocating under Section 44?	If not, reassess enforcement strategy; interim protection alone will not secure ultimate recovery on the award.

Conclusion

Indian courts can assist international arbitrations held overseas, but only to a limited extent. The 2015 curative amendment to Section 2(2), which reinstated the interim-relief jurisdiction that BALCO had lost, is contingent upon the arbitration in question meeting the statutory requirements of an international commercial arbitration, the parties' exclusion of the jurisdiction being neither explicit nor clear, and a connection to assets located in India. Legislators and the Supreme Court have not yet addressed issues pertaining to the order of court interventions, including the availability of interim measures in support of an award that has been made but not yet enforced and arbitrations involving only Indian parties seated outside of India.

The focus must be on making sure that the arbitration seat is within the notified list of reciprocating jurisdictions, that the parties evaluate the location of assets likely to be subject to enforcement as soon as possible, that the arbitration agreement clearly specifies the seat and venue, and that any exclusion of the jurisdiction of Indian courts specifically mentions Section 9. Enforcement starts during the negotiation of the arbitration agreement rather than at the conclusion.

Author: Resham Jha in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

References

1. Arbitration and Conciliation Act, 1996, s. 2(2) & proviso (as inserted by Arbitration and Conciliation (Amendment) Act, 2015) (India).

2. Arbitration and Conciliation Act, 1996, s. 2(1)(f) (India).

3. Arbitration and Conciliation Act, 1996, s. 2(1)(e)(ii) (India).

4. Arbitration and Conciliation Act, 1996, s. 9 (India).

5. Arbitration and Conciliation Act, 1996, ss. 44–49 (Part II, Chapter I) (India).

6. Arbitration and Conciliation Act, 1996, s. 48 (India).

7. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention), arts. II(3), V.

8. UNCITRAL Model Law on International Commercial Arbitration, 1985 (as amended 2006), art.

9. Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105 (India).

10. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), (2012) 9 SCC 552 (India).

11. Raffles Design International India Pvt. Ltd. v. Educomp Professional Education Ltd., 2016 SCC OnLine Del 5521 (India).

12. HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz Ltd., 2014 SCC OnLine Bom 102 (India).