Alternative Dispute Resolution

Reliance Industries Ltd. v. Union of India

(2014) 7 SCC 603

Facts

The Union of India entered into production-sharing contracts with Reliance Industries and foreign companies for petroleum exploration.
The agreements provided:
Indian substantive law;
arbitration seated in London;
and a foreign procedural or curial framework.
Disputes arose over the scope of the tribunal’s jurisdiction and contractual claims.
The tribunal issued a partial award addressing its authority.
The Union challenged the partial award under Section 34 before Indian courts.
It argued that:
Indian law governed the contract;
the agreements pre-dated BALCO;
Part I therefore applied under Bhatia International;
and Indian courts could review the tribunal’s jurisdiction.
Reliance argued that London as the juridical seat impliedly excluded Part I.

Under the pre-BALCO regime, Part I applied to foreign-seated arbitration only unless expressly or impliedly excluded.
Implied exclusion may arise from:
a foreign seat;
foreign curial law;
institutional procedure;
and the agreement’s overall structure.
Substantive law governs contractual rights.
The law of the seat governs:
arbitral procedure;
supervision;
and setting aside.
The seat court has primary annulment jurisdiction.
Choice of Indian substantive law does not itself make India the seat.

The agreements expressly anchored arbitration in London.
The foreign procedural framework demonstrated that English courts would supervise the process.
Indian law was selected to determine:
the meaning of contractual obligations;
substantive rights;
and the merits.
These choices were legally compatible.
The Court rejected the Union’s attempt to collapse substantive and curial law into one.
Permitting a Section 34 challenge in India would create:
dual supervisory jurisdiction;
possible inconsistent decisions;
and uncertainty concerning the legal home of the award.
The Court therefore held that Part I was impliedly excluded even under Bhatia International.
The tribunal’s jurisdictional award could be challenged only through remedies available at the London seat.
Indian courts would become involved later only if enforcement were sought in India under Part II.
The decision anticipated the territorial reasoning later standardised by BALCO.
It remains relevant for:
pre-6 September 2012 agreements;
implied exclusion analysis;
and the distinction among substantive, arbitral and curial laws.
The case also reinforces that a partial award determining jurisdiction may be final on that issue and subject to challenge at the proper seat.

The Supreme Court held that London was the juridical seat and that Part I was impliedly excluded.
The Indian Section 34 challenge to the partial award was not maintainable.
Use this case for: foreign-seat exclusivity despite the contract being governed substantively by Indian law.