Applicability Of Section 34 And Prospective & Retrospective Application Of BALCO Judgement

[Bharat Aluminium Co v. Kaiser Aluminium Technical Services Inc., (2012 9 SCC 522)]

Manish Kumar Patni, Advocate & LLM, Sushant University Gurugram

INTRODUCTION

This is a case study on the Supreme Court's decision in Bharat Aluminium Co v. Kaiser Aluminium Technical Services ('BALCO'). BALCO judgment focusses on shielding the future against previous incorrect and archaic rulings and motivating Indian courts to be arbitration-friendly with reduced participation in the arbitral phase, as per teh spirit of the "New York Convention and also UNCITRAL Model Rule." (3)

BACKGROUND

Before the BALCO judgement the principal of territoriality was taken up in the "Bhatia Intenational v. Bulk Trading S.A,"(hereinafter referred to as “BHATIA CASE”). In "BHATIA CASE" the court upheld the applicability of Part 1 even to arbitration proceedings seated outside India. The Hon’ble Supreme Court held that in matters of arbitration also including International Commercial Arbitration's held in India, Part I of the Act with exception of certain derogable provisions, (which Section 9 is not) parties can mutually decide to derogate from. However for arbitrations seated outside India, Part. II would apply (except the derogable provisions mutually agreed between parties), additionally to provisions of Pt. I, not mutually agreed between parties to derogate from in the arbitration agreement.

Taking reference from the UNRCITRAL Model Law, the provisions analogous to section 2(2) of the Act contains the word ‘only’ in Article 1(2) of the Model Law.