Indian Supreme Court continues pro-international arbitration stance

The Indian Supreme Court has recently held that a narrow scope should be applied to the ground of public policy in the context of challenges to foreign arbitration awards and that such a challenge did not permit the Indian courts to revisit the merits of an award. In doing so, the court overruled its previous decision in Phulchand.

The dispute arose in relation to a contract between an Italian buyer and an Indian seller for the supply of a particular type of wheat. The supply contract provided for the condition of the wheat to be tested and certified at the place of loading by SGS. Testing was conducted at the port of loading by SGS India and a certificate was issued to the effect that the wheat complied with the requirements of the contract. However, once the wheat was delivered the buyer requested SGS Geneva to conduct a further test and received a certificate that the wheat was in fact not compliant with the contract requirements. The buyer considered the seller to be in breach of contract and commenced arbitration through GAFTA.

GAFTA eventually ruled in favour of the buyer. The seller took steps against this ruling, including by challenging the jurisdiction of GAFTA under the Delhi High Court, appealing the ruling from GAFTA to its Board of Appeal and further challenging an appeal award from the Board of Appeal in the High Court of London. By this time, the parties to the dispute had changed — Shri Lal Mahal Ltd is the successor in interests of the seller and the appellant in this appeal, while Progetto Grano Spa is the successor in interests of the buyer and the respondent in this appeal…

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