Court confirms non-applicability of Part I of Indian Arbitration Act to foreign-seated arbitration despite Indian governing law
In a landmark judgment dated December 24, 2025, the Delhi High Court (Division Bench) dismissed an appeal filed by Delhi Airport Metro Express Private Limited (Appellant) against Construcciones Y Auxiliar De Ferrocarriles & Anr. (Respondents), upholding the exclusive jurisdiction of London-seated international arbitration proceedings governed by ICC rules. The Court affirmed that Part I of the Indian Arbitration and Conciliation Act, 1996 ("the Act") does not apply to arbitration seated outside India, even if the substantive contract is governed by Indian law.
The dispute arose from two contracts executed in 2008 between the parties for the Delhi Airport Metro Express Line Project - a Supply Contract and a Maintenance Services Agreement (MSA). While both contracts stipulated Indian substantive law, they designated London as the seat/place of arbitration under ICC Rules. Crucially, the MSA expressly excluded the application of Part I of the Indian Arbitration Act. Following disputes, arbitration proceedings commenced in London, resulting in awards favourable to the Respondents.
The Appellant challenged these awards before the Delhi High Court under Section 34 of the Act, asserting Indian jurisdiction due to the governing law and earlier invocation of Section 9 relief in Indian courts. The Single Judge had dismissed the petition for lack of jurisdiction, holding that Part I is inapplicable due to the foreign seat and express exclusion under the MSA.
On appeal, the Division Bench extensively analyzed the evolving jurisprudence on the territorial application of Part I of the Act, tracing the shift from the "concurrent jurisdiction" doctrine under Bhatia International (2002) to the "seat-centric" approach established in BALCO (2012) and subsequent rulings including Reliance II (2015) and Arif Azim (2024). The Court reiterated that the seat of arbitration determines the lex arbitri and confers exclusive supervisory jurisdiction on courts at that seat, excluding Indian courts where the seat is abroad.
Applying the three-condition test from BGS SGS Soma JV v. NHPC Ltd., the Court held that London is the clear juridical seat, not merely a venue, given the express contractual clause, absence of contrary indicia, and adoption of ICC procedural rules. The MSA’s express exclusion of Part I further reinforced the parties’ intention to exclude Indian court supervision.
The Court rejected the Appellant’s contention that the earlier Section 9 petition in India implied jurisdiction under Section 42, observing that jurisdiction cannot be conferred by consent or conduct, and Section 42 applies only where the court has jurisdiction as per law. It also distinguished the present case from Disortho (2025), where the seat was not expressly designated.
In conclusion, the Delhi High Court upheld the principle of party autonomy in international arbitration, emphasizing that the parties’ deliberate choice of London as the seat and ICC rules manifests their clear intention to exclude Part I of the Indian Arbitration Act. Consequently, Indian courts lack jurisdiction to entertain challenges under Section 34, and the matter must be adjudicated under English law and ICC procedural framework in London.
This decision reinforces India’s commitment to international arbitration norms, providing clarity on the interplay between seat, governing law, and court jurisdiction in cross-border disputes.
Bottom Line:
Part I of the Arbitration and Conciliation Act, 1996 applies only where the seat of arbitration is in India or where the law governing the arbitration agreement is Indian law; designation of a foreign seat excludes the jurisdiction of Indian courts over arbitral proceedings and awards.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Sections 2(f), 2(1)(e), 2(2), 9, 34, 37(1)(c), 42; Commercial Courts Act, 2015 - Section 13; Sale of Goods Act, 1930 - Section 59(1); Consumer Protection Act, 1986 - Section 14
