JUDICIAL ENTRENCHMENT OF THE BHATIA INTERNATIONAL DECISION

Recently, in the case of Tamil Nadu Electricity Board v. Videocon Power Ltd., a two-judge bench of the Madras High Court had occasion to deal with foreign arbitral awards, and the applicability of Part I of the Arbitration Act (which deals with domestic arbitration) to such awards. It may be recalled that in the cases of Bhatia International and Satyam, the Supreme Court had held that Part I of the Arbitration Act could be made applicable even to international arbitrations. This, in turn, meant that domestic law could be used, among other things, to set aside international arbitral awards. These decisions, which go against the worldwide trend favouring autonomy of international commercial transactions, and minimizing domestic interference with international commercial transactions, had caused much concern in the international arbitration community. In the present case, the judgments in Bhatia International and Satyam were approved and applied directly by the Court (although upon the facts of the case, the Court held Part I to be inapplicable to the award in question). The Court was, of course, bound by the apex Court’s judgment in Bhatia International. In this context, it is important to note however, that Satyam is currently up for review. It is to be hoped that this somewhat insular trend, first established by Bhatia International, which is well on its way towards becoming judicially entrenched by decisions such as Videocon, is soon reversed in favour of an interpretation of the Arbitration Act that is more in line with the concerns of the international commercial community.

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