International Commercial Arbitration in India: Law & Process

International commercial arbitration in India is the arbitration of a commercial dispute where at least one party is foreign, as defined by Section 2(1)(f) of the Arbitration and Conciliation Act, 1996. Whether Indian law governs the proceeding turns on the seat: Part I of the Act applies when the seat is in India, while Part II governs the recognition and enforcement of a foreign award. The seat also fixes which courts supervise the arbitration and which procedural law runs the proceedings. For a foreign investor and an Indian counterparty in a single contract, these two choices decide where a dispute is fought and how the eventual award is enforced.

This article sets out how Indian law defines and regulates international commercial arbitration in India, covering the statutory test, the Part I and Part II divide, the effect of a foreign seat, the appointment of arbitrators, the institutional choices, and enforcement.

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The label is not cosmetic. Once an arbitration qualifies as international commercial arbitration, specific consequences follow that do not apply to a purely domestic case: the Supreme Court, rather than a High Court, appoints the arbitrator on default, and the parties gain a freer hand to pick a neutral-nationality tribunal and a foreign seat. The single trigger for all of it is the presence of one foreign party in a commercial relationship.

The concept sits inside a wider arbitration framework that iPleaders covers across a cluster of guides, from the meaning of arbitration to the enforcement of awards. This piece is the international layer of that framework: it assumes the reader knows what arbitration is, and focuses on what changes when a dispute crosses a border. The direction of the law has been to make India a more arbitration-friendly forum, through the 2015 and 2019 amendments and the draft reform Bill of 2024.

How Indian law identifies an international commercial arbitration

Indian law identifies an international commercial arbitration through Section 2(1)(f) of the Arbitration and Conciliation Act, 1996, which turns on a single test: a commercial legal relationship in which at least one party is foreign. The relationship must be one that is treated as commercial under the law in force in India, and the foreign element attaches to a party, not to the subject matter or the seat. A dispute between two Indian companies over an overseas project is not international commercial arbitration, while a dispute between an Indian company and a foreign supplier is, even if the whole contract is performed in India.

That party-based test is worth holding onto, because two other cross-border ideas, the seat of the arbitration and the character of the award, run on separate tracks and are dealt with later in this article. For the wider taxonomy of arbitration types in Indian law, including the domestic and fast-track categories that sit alongside this one, iPleaders has a full explainer on the types of arbitration in India.

Which parties make an arbitration international under Section 2(1)(f)?

The parties that make an arbitration international under Section 2(1)(f) are four, and the presence of any one of them is enough. The first is an individual who is a national of, or habitually resident in, a country other than India. The second is a body corporate incorporated in a country other than India. The third is an association or body of individuals whose central management and control is exercised in a country other than India. The fourth is the government of a foreign country.

The common thread is foreignness attached to a party at the time the arbitration begins. A company incorporated abroad qualifies on the second limb even if it trades mainly in India, and a foreign national qualifies on the first even if resident here, so long as the nationality is foreign. The test asks a factual question about the parties, and the answer does not depend on where the contract was signed or where performance took place.

Why did the 2015 amendment drop “a company” from the definition?

The 2015 amendment dropped the words “a company” from the third limb of Section 2(1)(f) to close a route by which an Indian-incorporated company could be treated as foreign. Before the amendment, the third limb read “a company or an association or a body of individuals whose central management and control is exercised in any country other than India,” which suggested that a company managed and controlled from abroad might count as foreign for this purpose. That reading created uncertainty for companies incorporated in India but run by overseas parents.

After the amendment, effective 23 October 2015, the central-management-and-control test applies only to an association or a body of individuals, not to a company. A company’s nationality now follows its place of incorporation: a company incorporated in India is Indian, whatever the residence of those who control it. The practical effect is that two companies incorporated in India cannot make their arbitration international by pointing to foreign control, though, as explained later, they retain a separate freedom to choose a foreign seat.

Which parts of the Act govern international commercial arbitration in India

The parts of the Act that govern international commercial arbitration in India depend on the seat: Part I applies when the seat is in India, and Part II applies to the enforcement of a foreign award made outside India. The Act is built in two blocks. Part I, running from Section 2 to Section 43, deals with the arbitration itself when it is seated in India. Part II, running from Section 44 to Section 60, deals with recognising and enforcing awards made abroad under the New York Convention and the older Geneva Convention.

This division is the structural key to the whole topic. An international commercial arbitration seated in Mumbai is run under Part I from start to finish, and the award it produces is enforced as a domestic award. An arbitration seated in Singapore between the same parties is run under Singapore law, and its award reaches India only through Part II, as a foreign award to be enforced. A clear step-by-step view of how an Indian-seated arbitration moves from agreement to award is set out in LawSikho’s guide to the arbitration process in India.

What does Part I cover for an India-seated arbitration?

Part I covers everything that happens in an India-seated arbitration, from the agreement through to enforcement of the award. It contains the rules on the arbitration agreement in Section 7, the reference of parties to arbitration in Section 8, interim measures by a court in Section 9 and by the tribunal in Section 17, the appointment of arbitrators in Section 11, the conduct of proceedings, and the challenge to an award in Section 34. When the award survives challenge, Section 36 allows it to be enforced in the same manner as a decree of a court.

For an India-seated international commercial arbitration, Part I applies in full, exactly as it would for a domestic case, subject to the few provisions that treat international cases differently. The clearest of those is the appointment power, which sits with the Supreme Court for international cases, addressed further below.

What does Part II cover for foreign awards?

Part II covers the recognition and enforcement in India of an award made outside India, not the conduct of the arbitration that produced it. Chapter I of Part II, in Sections 44 to 52, gives effect to the New York Convention, and Chapter II, in Sections 53 to 60, gives effect to the Geneva Convention for the smaller set of countries still governed by it. Section 44 defines a foreign award as one made in a commercial dispute, under a written arbitration agreement, in a territory that India has notified as a reciprocating Convention country.

A foreign award does not need a fresh suit to be enforced. The holder applies to the High Court, which enforces the award as a decree unless one of the narrow grounds in Section 48 is made out. iPleaders sets out that enforcement route in detail in its guide to the enforcement of foreign arbitral awards in India, so this article treats it only at the level of the framework.

Does Indian law apply when the seat is outside India?

Indian law applies only in a limited way when the seat is outside India, because Part I is tied to arbitrations seated in India, with a specific set of provisions carved back in by the 2015 amendment. The general position is that a foreign-seated arbitration answers to the law and courts of its seat, and Indian courts stay out of the proceeding itself. The exception, added in 2015, lets a party reach an Indian court for interim relief and certain other support, unless the parties have agreed otherwise.

The rule and its exception both flow from a single landmark ruling and the amendment that followed it.

What did BALCO decide about foreign-seated arbitration?

BALCO decided that Part I of the Arbitration and Conciliation Act, 1996 applies only to arbitrations seated in India, and not to those seated abroad. The five-judge Constitution Bench in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 overruled the earlier position in Bhatia International, which had allowed Part I to follow the parties to a foreign seat. The Court drew a territorial line: the location of the seat, not the nationality of the parties, decides whether Part I applies.

The immediate consequence of BALCO was a gap. Because Part I no longer reached a foreign-seated arbitration, an Indian court could not grant interim relief to protect assets located in India while the arbitration ran abroad. A party whose counterparty was dissipating Indian assets during a Singapore arbitration had no Section 9 remedy, which was a real problem for cross-border commerce.

When can an Indian court grant interim relief for a foreign-seated arbitration?

An Indian court can grant interim relief for a foreign-seated international commercial arbitration under Section 9, because the 2015 amendment added a proviso to Section 2(2) that extends specific Part I provisions to arbitrations seated outside India. The proviso brings Section 9 (interim measures by a court), Section 27 (court assistance in taking evidence), and Section 37(1)(a) and 37(3) (certain appeals) to bear on an international commercial arbitration even when its seat is abroad, unless the parties agree to exclude them.

The effect is to restore the protection that BALCO had removed, but only for international commercial arbitrations and only where the parties have not contracted out. A party to a foreign-seated arbitration can now ask an Indian court to secure assets or evidence located in India, while the arbitration itself continues under the law of its foreign seat. The interplay between court-ordered relief under Section 9 and tribunal-ordered relief under Section 17 is covered in the iPleaders guide to interim relief in arbitration under Section 9 and Section 17.

Who appoints the arbitrator in an international commercial arbitration?

In an international commercial arbitration, the Supreme Court appoints the arbitrator on default, whereas in every other case the power lies with the High Court. Section 11 of the Arbitration and Conciliation Act, 1996 lets the parties agree their own appointment procedure, and only where that procedure fails does a court step in. The distinguishing feature for international cases is the forum: the request goes to the Supreme Court of India, not to a High Court, which keeps appointment in cross-border disputes at the apex level.

That single difference reflects the weight the statute attaches to international matters. The full mechanics of a Section 11 application, including the timelines and the limited scope of the court’s inquiry, are set out in the iPleaders guide to the appointment of arbitrators under Section 11.

Can the arbitrator be of any nationality?

The arbitrator can be of any nationality in an international commercial arbitration, unless the parties agree otherwise. Section 11(1) states that no person is precluded from acting as an arbitrator by reason of nationality, subject to the parties’ own agreement. In a cross-border dispute this matters, because parties often want a presiding arbitrator from a country unconnected to either side, to remove any appearance of home advantage.

Parties commonly build a nationality requirement into the arbitration clause for the third or presiding arbitrator, for example that the chair shall not be a national of either party’s country. Where the parties have not agreed such a term, the appointing authority retains the freedom that Section 11(1) allows.

How does the 2019 amendment route appointments to institutions?

The 2019 amendment routes appointments towards arbitral institutions by allowing the Supreme Court and High Courts to designate institutions to make them. Section 11(3A), introduced by the amendment, empowers the Supreme Court, for international commercial arbitration, and the High Courts, for other cases, to designate graded arbitral institutions that then handle the appointment. The aim is to move appointment out of crowded court dockets and into institutions equipped to run it.

This is the mechanism the statute now provides, though how far it operates in practice depends on the availability of graded institutions in a given jurisdiction. Where no such institution is available, the Chief Justice of the relevant High Court may maintain a panel of arbitrators to discharge the function. The direction of the reform is institutional, and it connects to the wider push toward institutional arbitration discussed below.

Institutional and ad hoc routes for international commercial arbitration in India

International commercial arbitration in India runs through one of two routes: an institution that administers the case under its own rules, or an ad hoc arbitration that the parties and the tribunal run themselves. In an institutional arbitration, a body such as a chosen arbitral centre supplies the rules, a panel of arbitrators, a fee schedule, and case-management support. In an ad hoc arbitration, the parties rely on the Act and any rules they adopt, without an administering body, which can be cheaper but demands more from the parties and the tribunal.

Alongside that choice sits the choice of seat, which is often the more consequential of the two. The seat can be in India or abroad, and it decides the supervisory court and the procedural law, as explained next.

Which institutions do Indian parties commonly use?

Indian parties commonly use both offshore institutions for foreign-seated cases and India-seated institutions for domestic and inbound disputes. Among offshore institutions, the Singapore International Arbitration Centre has been the most used by Indian parties, helped by its proximity and its engagement with the Indian market, and it has maintained a liaison presence in Mumbai since 2012. The International Chamber of Commerce and the London Court of International Arbitration are also common choices for high-value cross-border contracts.

Within India, the Mumbai Centre for International Arbitration, established in 2016, and the Delhi International Arbitration Centre, established in 2009 under the Delhi High Court, are the leading institutions, alongside the Indian Council of Arbitration and the International Arbitration and Mediation Centre in Hyderabad. Selecting the right route and seat has become a distinct professional skill, and practical, cross-border legal training of the kind catalogued on Skill Arbitrage reflects how central drafting and dispute-resolution work has become for lawyers advising international parties.

Why does the seat matter more than the venue?

The seat matters more than the venue because the seat fixes the supervisory court and the procedural law, while the venue is only the physical location of hearings. A tribunal seated in New Delhi can hold hearings in Singapore for convenience without moving the seat, and the Indian courts keep their supervisory role. The distinction decides which country’s courts hear a challenge or an interim application, so it does far more work than its low profile in most clauses suggests.

The Supreme Court has treated the designation of a seat as close to an exclusive jurisdiction clause, giving the courts of the seat control over the arbitration. In BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234, the Court held that where a clause designates a place for the arbitral proceedings and nothing points the other way, that place is the juridical seat. The difference between seat, venue, and the statutory term “place” is worked through in the iPleaders guide to seat versus venue versus place of arbitration.

Can two Indian parties choose a foreign seat of arbitration?

Two Indian parties can choose a foreign seat of arbitration, and the award that results is a foreign award enforceable in India under Part II. The Supreme Court settled the point in PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd., (2021) 7 SCC 1, where two companies incorporated in India had agreed to arbitrate in Zurich under the rules of the International Chamber of Commerce. The Court held that nothing in Indian law prevents two Indian parties from choosing a foreign seat, and that the award made there is a foreign award for the purposes of Part II.

The Court also confirmed that such parties can seek interim relief from Indian courts under Section 9, through the same 2015 proviso discussed earlier. Party autonomy, the Court reasoned, extends to the choice of a neutral foreign seat, and public policy does not bar Indian parties from making it.

Is a two-Indian-party foreign-seated arbitration the same as ICA?

A two-Indian-party foreign-seated arbitration is not an international commercial arbitration, even though it produces a foreign award. This is where the two tracks flagged at the start come apart. International commercial arbitration is a party-based label under Section 2(1)(f), and it requires at least one foreign party, which a case between two Indian companies does not have. The character of the award, by contrast, is seat-based: an award made outside India in a Convention country is a foreign award under Section 44, whatever the nationality of the parties.

So the PASL parties were not in an international commercial arbitration, yet they held a foreign award. Keeping the two axes separate avoids a common error: assuming that “foreign award” and “international commercial arbitration” describe the same thing. One looks at who the parties are, the other at where the award was made.

How is an international commercial arbitration award enforced in India?

An international commercial arbitration award is enforced in India by one of two routes, depending on the seat. An award from an India-seated international commercial arbitration is a domestic award: it can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996, and, once it survives challenge or the challenge period lapses, it is enforced under Section 36 in the same manner as a decree of a civil court. A foreign award, made at a seat outside India, is enforced under Part II on the narrow grounds in Section 48.

The two routes carry different review. The grounds for setting aside a domestic award are set out in the iPleaders guide to Section 34 and the grounds for setting aside an arbitral award, and the mechanics of executing an award as a decree are covered in its guide to the enforcement of arbitral awards in India under Section 36.

What are the limits on refusing a foreign award?

The limits on refusing a foreign award are the closed grounds in Section 48, and a court cannot refuse enforcement merely because it disagrees with the award on the merits. Section 48 lets a court decline enforcement only on defined grounds, such as the invalidity of the arbitration agreement, a denial of a fair opportunity to present a case, the award exceeding the scope of the reference, or a conflict with the public policy of India. The public policy ground has been read narrowly, so that a foreign award is not reopened as if the enforcing court were sitting in appeal.

This pro-enforcement stance is deliberate, and it aligns Indian practice with the New York Convention. A party resisting a foreign award has to bring itself within one of the Section 48 grounds, not simply argue that the tribunal reached the wrong result.

What would the draft 2024 Bill change?

The draft Arbitration and Conciliation (Amendment) Bill, 2024 would, if enacted, give statutory recognition to emergency arbitrators, create an opt-in appellate arbitral tribunal, and replace the term “place” with “seat” throughout the Act. The draft was released for public consultation on 18 October 2024 and has not been enacted or introduced in Parliament, so it is a proposal rather than law. Its themes are a larger role for institutional arbitration, less court intervention, and the clarification of the seat concept that the courts have already been building.

For international parties, the emergency-arbitrator provision and the seat clarification are the most relevant proposals, because both bear on cross-border disputes where speed and jurisdictional certainty matter. The detail of the draft and its current status are set out in the iPleaders analysis of the Arbitration and Conciliation (Amendment) Bill, 2024.

Frequently asked questions

What is international commercial arbitration in India?
International commercial arbitration in India is the arbitration of a commercial dispute in which at least one party is foreign, as defined by Section 2(1)(f) of the Arbitration and Conciliation Act, 1996. The foreign element attaches to a party, such as a foreign national or a company incorporated abroad, and not to the subject matter or the location of the contract. A dispute between two Indian parties is not international commercial arbitration, even if the contract has an overseas connection.

Is an India-seated international commercial arbitration governed by Part I or Part II?
An India-seated international commercial arbitration is governed by Part I of the Arbitration and Conciliation Act, 1996, which runs the arbitration from the agreement through to enforcement of the award as a domestic award. Part II applies only to the recognition and enforcement of a foreign award made outside India. The seat, not the nationality of the parties, decides which Part applies.

Can Indian courts grant interim relief if the arbitration is seated abroad?
Yes, Indian courts can grant interim relief under Section 9 for a foreign-seated international commercial arbitration, because the 2015 amendment added a proviso to Section 2(2) extending Section 9 to such cases, unless the parties agree otherwise. This lets a party protect assets or evidence located in India while the arbitration proceeds abroad. Before the amendment, the ruling in BALCO had removed that protection for foreign-seated cases.

Who appoints the arbitrator in an international commercial arbitration in India?
The Supreme Court of India appoints the arbitrator on default in an international commercial arbitration, under Section 11 of the Arbitration and Conciliation Act, 1996, while the High Court does so in all other cases. The parties can agree their own appointment procedure, and the court steps in only if that procedure fails. The arbitrator may be of any nationality unless the parties have agreed otherwise.

Can two Indian parties arbitrate abroad?
Yes, two Indian parties can choose a foreign seat and arbitrate abroad, as the Supreme Court held in PASL Wind Solutions v. GE Power Conversion India. The award that results is a foreign award enforceable in India under Part II, and the parties can still seek interim relief from Indian courts under Section 9. Such a case is not an international commercial arbitration under Section 2(1)(f), because both parties are Indian, but it does produce a foreign award.

References

Case Law

1. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552
2. BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234
3. PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd., (2021) 7 SCC 1

Statutes

1. Arbitration and Conciliation Act, 1996 (sections cited: 2(1)(f), 2(2), 7, 8, 9, 11, 17, 27, 34, 36, 37, 44, 48)
2. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention), given effect in Part II of the 1996 Act

This article is for informational and educational purposes only and does not constitute legal advice. For advice on a specific cross-border dispute or the drafting of an international arbitration clause, consult a qualified advocate.