Firms May Do Arbitration Outside Country: SC

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The Supreme Court has upheld a Madhya Pradesh High Court decision holding that two Indian firms, Sasan Power Ltd and North American Coal Corporation India Pvt Ltd, may conduct arbitration outside India and under a foreign law if there was an agreement to that effect.

“We see no reason to interfere with the conclusions recorded by the courts (HC) below. The appeal is, therefore, dismissed with costs,” a bench of Justices J Chelameswar and A M Sapre said while dismissing the plea of Reliance Power-owned Sasan Power Ltd which operates Ultra Mega Power Project (UMPP) at Singrauli district in Madhya Pradesh.

The UMPP has a dispute over certain clauses of agreement executed between it and the North American Coal Corporation India Private Limited (NACCIPL).

Sasan Power Ltd had moved the apex court challenging the High Court verdict holding that when parties have agreed to resolve all their disputes through arbitration, they cannot be permitted to avoid arbitration.

The UMPP took the stand that the arbitration proceedings between two Indian entities cannot be seated in a foreign country and the arbitration Act is quite clear on domestic arbitration between two Indian parties.

The apex court did not find fault with the decision of the High Court that the arbitration proceedings between the firms can be undertaken in London and under the English law.

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