Kiran Raj

The Supreme Court of India, Division Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar, dismissed a plea seeking appointment of an arbitrator in an international commercial arbitration, noting that where the governing law and designated seat under the principal contract lie outside India, Indian courts have no jurisdiction regardless of the nationality of any party. The Court held that the Buyer and Seller Agreement and its Addendum formed the operative framework for the dispute and mandated arbitration in Benin under Benin law. It further found that later Sales Contracts and High Seas Sale Agreements were independent arrangements that did not alter the dispute resolution mechanism. Concluding that the petitioner could not revive issues settled in earlier proceedings, the Court declined to constitute an arbitral tribunal.

The dispute arose from a Buyer and Seller Agreement between the petitioner and the first respondent, executed to govern the manufacture and supply of a commodity. The agreement, later modified through an Addendum, stipulated that arbitration would take place in Benin and that the arrangement would be governed by the laws of Benin. After execution of the agreement, the first respondent assigned portions of its supply obligations to two separate entities, leading the petitioner to enter into Sales Contracts with the second respondent and High Seas Sale Agreements with the third respondent. These subsequent contracts carried their own arbitration clauses referring disputes to arbitration in India.

Also Read: No New Mining Until Aravali Mapping And Ecological Assessment Are Completed: Supreme Court Directs Centre To Prepare Sustainable Mining Plan

Differences emerged regarding the quantity of goods supplied and payments due, resulting in the petitioner issuing a notice to all respondents alleging breach under the primary agreement. The first respondent thereafter initiated arbitration in Benin, appointing a sole arbitrator through local court proceedings. The petitioner disputed the initiation of the foreign arbitration and sent objections, arguing that disputes should instead be adjudicated under Indian law and through the arbitration clauses in the later contracts.

Invoking Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner sought appointment of an arbitrator in India and raised arguments regarding novation, composite transactions, and applicability of arbitration clauses in the subsequent contracts. The respondents maintained that the dispute stemmed solely from the original agreement governed by Benin law, that later contracts were independent, and that the arbitration already commenced in Benin was valid.

The Court examined whether jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, could be invoked when the parties had agreed to a foreign seat and foreign governing law. It recorded that the dispute fell within the scope of international commercial arbitration and stated that “Indian Courts have no jurisdiction to appoint an arbitrator for a foreign-seated arbitration, irrespective of the nationality or domicile of the parties.” The Court referred to Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, BGS SGS SOMA JV v. NHPC Ltd. (2020) 4 SCC 234, and PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd. (2021), noting that Part I applies only to arbitrations seated in India.

The contractual framework was then analysed. The Court held that the Buyer and Seller Agreement, along with the Addendum, governed the core relationship. It recorded that “on the facts as well, the BSA and its Addendum constitute the mother agreement, containing a clear and deliberate choice of Benin as the juridical seat of arbitration and Benin law as the governing and curial law. The subsequent Sales Contracts and HSSAs are merely ancillary, facilitating performance of isolated shipments, and cannot override the dispute resolution framework of the BSA. Thus, both in principle and in the factual circumstances of the case, the arbitration agreement in the BSA prevails. The disputes raised by the petitioner arise squarely from the BSA, and the parties' chosen forum for their adjudication is arbitration in Benin. Accordingly, the invocation of Part I and the present request under Section 11(6) of the 1996 Act is fundamentally misconceived, legally untenable, and contrary to the statutory scheme as well as the autonomy of the parties' contractual design.”

Addressing the petitioner’s reliance on subsequent contracts, the Court stated that “the petitioner's endeavor to confer jurisdiction upon this Court by invoking ancillary contracts of a different genus, executed with different parties, and containing materially different arbitration clauses, is wholly misconceived and contrary to the territorial principle that lies at the heart of the 1996 Act. The petition, therefore, is not merely untenable, it is foreclosed both in law and on account of estoppel arising from the petitioner's own prior litigation conduct.”

Also Read: Trial Within Trial Not Permitted: Calcutta High Court Says ‘Parties’ Under Order VIII Rule 9 Does Not Allow Co-Defendants To Answer Each Other’s Counter-Claims

Considering the plea based on the group of companies doctrine, the Court referred to Cox & Kings Ltd. v. SAP India (P) Ltd., 2023 SCC OnLine SC 1634, and recorded that “the doctrine is applied sparingly and only where there is compelling evidence of mutual intention of all the parties concerned to bind a non-signatory to an arbitration agreement… However, a mere overlap of shareholding, or the fact that entities belong to the same corporate family, is not by itself sufficient.”

The Court ordered: “Arbitration Petition No. 65 of 2023 filed under Section 11(6) read with Section 11(12)(a) of the Act, 1996 is hereby dismissed.” It further directed that “Parties shall bear their own costs.”

Advocates Representing the Parties:

For the Petitioners: Mr. Devadatt Kamat, Sr. Adv. Ms. Shruti Sabharwal, Adv. Mr. Nishant Doshi, Adv. Ms. Soumya Prasad, Adv. Mr. Harsh Pandey, Adv. Mr. Hruday Bajentri, Adv. Mr. S. S. Shroff, AOR

For the Respondents: Mr. Nakul Dewan, Sr. Adv. Mr. Vijayendra Pratap Singh, Adv. Mr. Abhijnan Jha, AOR Ms. Urvashi Misra, Adv. Mr. Arnab Ray, Adv. Ms. Sadhvi Chhabra, Adv. Ms. Shailaja Rawal, Adv. Mr. Susshil Daga, Adv. Mr. Pallav Mongia, AOR Mr. Anurag Kalavatiya, Adv. Mr. Chitransh Mathur, Adv. Ms. Parul Singhal, Adv. Mr. Ashish Sharma, Adv. Mr. Utkarsh Misra, Adv. Mr. Aditya Sharma, Adv. Ms. Pragya Khubani, Adv. Mr. Chetan Verma, Adv. Ms. Shristi Mathur, Adv. Mr. Anubhav Mishra, Adv.

Case Title: Balaji Steel Trade v. Fludor Benin S.A. & Ors.
Neutral Citation: 2025 INSC 1342
Case Number: Arbitration Petition No. 65 of 2023
Bench: Justice Pamidighantam Sri Narasimha, Justice Atul S. Chandurkar