Two Indian firms may conduct arbitration outside country: SC

New Delhi, Aug 25 (PTI) The Supreme Court has upheld aMadhya Pradesh High Court decision holding that two Indianfirms, Sasan Power Ltd and North American Coal CorporationIndia Pvt Ltd, may conduct arbitration outside India and undera foreign law if there was an agreement to that effect. "We see no reason to interfere with the conclusionsrecorded by the courts (HC) below. The appeal is, therefore,dismissed with costs," a bench of Justices J Chelameswar and AM Sapre said while dismissing the plea of Reliance Power-ownedSasan Power Ltd which operates Ultra Mega Power Project (UMPP)at Singrauli district in Madhya Pradesh. The UMPP has a dispute over certain clauses of agreementexecuted between it and the North American Coal CorporationIndia Private Limited (NACCIPL). Sasan Power Ltd had moved the apex court challenging theHigh Court verdict holding that when parties have agreed toresolve all their disputes through arbitration, they cannotbe permitted to avoid arbitration. The UMPP took the stand that the arbitration proceedingsbetween two Indian entities cannot be seated in a foreigncountry and the arbitration Act is quite clear on domesticarbitration between two Indian parties. The apex court did not find fault with the decision ofthe High Court that the arbitration proceedings between thefirms can be undertaken in London and under the English law. "It is settled law that an arbitration agreement is anindependent or ‘self contained’ agreement. In a given case, awritten agreement for arbitration could form part of anotheragreement, described by Lord Diplock as the ‘substantivecontract’ by which parties create contractual rights andobligations. "Notwithstanding the fact that all such rights andobligations arising out of a substantive contract and theagreement to have the disputes (if any, arising out of suchsubstantive contract) settled through the process ofarbitration are contained in the same document, thearbitration agreement is an independent agreement. Arbitrationagreement/clause is not that governs rights and obligationsarising out of the substantive contract…," the apex courtsaid. (More) PTI SJK PKS RKSARC