Foreign Seat, Indian Counterparty: Why the Arbitration Clause Must Say More Than It Usually Does

From Clause to Court  |  Part I of III

Foreign Seat, Indian Counterparty: Why the Arbitration Clause Must Say More Than It Usually Does

 

Authored by R & D Law Chambers LLP  |  Practice led by Ravish Bhatt — Advocate, Bar Council of Gujarat (Enrolment G/504/2008)  |  Solicitor of the Senior Courts of England and Wales (SRA No. 492 477)  |  ADIT, Chartered Institute of Taxation, London Published: June 2026  |  Last reviewed: July 2026

 

Index of Topics

1. The Architecture of Default
2. Section 9 — The Drafting Solution
3. Section 27 — The Evidence Tool That Practitioners Overlook
4. Seat and Institution — Choosing for Enforcement
5. Procedural Control — What Institutional Rules Leave to the Tribunal
6. The Complete Clause Framework
7. Conclusion
8. Services We Provide

 

 

Note on legislative references: All references to the “Act” are to the Arbitration and Conciliation Act 1996 as amended by the Arbitration and Conciliation (Amendment) Acts of 2015 and 2019. References to Part I, Part II, and individual sections are to the consolidated text. References to the UK Arbitration Act 2025 denote the statute receiving Royal Assent on 24 February 2025, in force from 1 August 2025.

 

Executive Summary

 

The proviso to Section 2(2) produces a result most international practitioners do not anticipate: choosing a foreign seat does not disengage Indian courts. Three provisions apply by default — Section 9 (interim measures), Section 27 (evidence assistance), and Sections 37(1)(a) and 37(3) (finality of appeals). The drafting choices determine ease of constitution of the arbitral tribunal, smoothness of proceedings, predictability, and enforcement outcomes.

 

This article maps those choices across three domains — Indian court intervention, seat selection, and procedural control — and provides specific drafting responses to each, culminating in a seven-element clause framework in Section 6.

1. The Architecture of Default

 

Before 2015, a foreign seat produced a clean separation from Part I following BALCO. The 2015 Amendment reopened three provisions by default. Silence is not a neutral position: the statute fills it.

 

The BALCO Position and the 2015 Amendment

The Supreme Court Constitution Bench in Bharat Aluminium Co v Kaiser Aluminium Technical Services (2012) 9 SCC 552 (BALCO) held that Part I applies only where the seat is in India, overruling the Bhatia International line. For agreements executed on or after 6 September 2012, a foreign seat produced a complete separation from Part I.

The 2015 Amendment reopened the position. The proviso to Section 2(2) provides that, subject to an agreement to the contrary, Sections 9, 27, and 37(1)(a) and 37(3) apply to every foreign-seated international commercial arbitration whose award is enforceable under Part II. A drafter who is silent has not avoided the choice; the statute makes it instead.

Section 9: Interim Relief Over Indian Assets

Section 9 allows either party to apply to an Indian court for interim measures of protection before, during, or after arbitral proceedings. For any party with claims against Indian assets, it is the most reliable mechanism to prevent dissipation. Emergency arbitrator orders and foreign court injunctions do not freeze Indian accounts. Section 9 orders do.

The Bombay High Court confirmed the temporal scope in Osterreichischer Lloyd Seereederei (Cyprus) Ltd v Victore Ships Pvt Ltd (Commercial Arbitration Petition No. 398 of 2025; 2026:BHC-OS:6178, Sundaresan J, 10 March 2026): Section 9 relief remains available to a foreign award-creditor even after an enforcement petition is filed under Sections 47 and 48, until the award becomes a deemed decree under Section 49.

Section 9 is textually mutual. The Delhi High Court in Goodwill Non-Woven (P) Ltd v Xcoal Energy and Resources LLC applied this literally, holding that an Indian party may invoke Section 9 against a foreign party with no Indian assets. That reading is textually available but analytically insupportable. Paragraph 41 of the 246th Law Commission Report (2014) is explicit: the provision was designed to assist a party where the other’s Indian assets risk dissipation. When no Indian assets exist, the efficacy rationale disappears and Indian courts have no coercive reach over foreign parties or foreign assets.

The “subject to an agreement to the contrary” in the proviso enables the drafting solution. Section 2 sets out the analysis; Section 6, Element 3 the clause language.

Section 27: Court Assistance in Taking Evidence

Section 27 allows the arbitral tribunal, or a party with tribunal approval, to apply to an Indian court for assistance in taking evidence — backed by summonses, commissions, and contempt sanctions. It is available by default and almost never addressed in arbitration clauses, not because drafters considered and rejected it, but because they have not considered it. Section 3 explains why this is an avoidable error.

Sections 37(1)(a) and 37(3): Finality of Interim Orders

Section 37(1)(a) provides for a Division Bench appeal against a Section 9 order. Section 37(3) closes the ordinary appeal chain. A Section 9 order that survives Division Bench challenge is for practical purposes final. A blanket Part I exclusion without specific retention of these provisions severs the appeal and finality structure from the Section 9 it serves.

The Implied Exclusion Debate

The enacted proviso dropped “express” from “express agreement to the contrary,” generating the implied exclusion debate. High Courts are divided. Delhi in Ashwani Minda and Another v U-Shin Ltd and Another (OMP (I) (Comm.) No. 90 of 2020) found implied exclusion from seat plus institutional rules; Delhi again in Shanghai Electric Group Co Ltd v Reliance Infrastructure Ltd (OMP (I) (Comm.) 433 of 2022) held the opposite. The Supreme Court has not resolved the conflict. Express language at the contract stage makes the question irrelevant.

Which Indian Court Has Jurisdiction: An Unresolved Question

Sections 9 and 27 each require application to a “competent” Indian court. For India-seated arbitrations, Indus Mobile Distribution Pvt Ltd v Datawind Innovations Pvt Ltd (2017) 7 SCC 678 resolved the question: the seat court has exclusive jurisdiction. That answer is unavailable for foreign-seated arbitrations — where the seat is London or Singapore, no Indian court is the seat court.

No reported decision has directly addressed which Indian court has jurisdiction over Section 9 or Section 27 applications arising from a foreign-seated arbitration. Section 2(1)(e) as amended confines “Court” to the High Court. Among High Courts, territorial competence falls back on ordinary CPC principles: the High Court of the respondent’s registered office or principal place of business; for Section 9, additionally the High Court where the assets in respect of which relief is sought are located; for Section 27, the High Court having territorial jurisdiction over the non-party witness or document-custodian.

The drafting solution is to specify the forum in the clause itself. Party autonomy supports this. Section 6, Element 3 implements it.

2. Section 9 — The Drafting Solution

 

Three drafting positions follow from Section 1. Full exclusion sacrifices the most effective enforcement tool. Full retention leaves the Goodwill Non-Woven problem unaddressed. The recommended position is an asset-based clause available to either party, but only in respect of assets located in India.

 

The Three Positions

Full exclusion: resolves the implied exclusion debate and removes any Goodwill Non-Woven risk. It also forfeits the most reliable asset protection tool in the foreign-seated context: a Section 9 order obtained promptly on the award protects Indian assets until the Section 49 deemed decree. Full exclusion sacrifices this at no corresponding benefit.

Full retention without restriction: “Generally unreceptive” and “excluded” are not the same. Receptive courts exist, and a Section 9 application that fails still produces a record whose observations on breach or the merits may reach the seat proceedings.

Asset-based clause (recommended): Section 9 is available to either party, but only in respect of assets located in India. This reflects the Law Commission’s territorial rationale (paragraph 41, 246th Report), renders Goodwill Non-Woven unavailable for non-Indian assets, and preserves the enforcement window for any party with a legitimate claim against Indian assets. The right follows the asset map, not the party hierarchy.

The clause is untested. No reported decision has considered a Section 9 retention clause in this asset-based form. Its validity rests on the proviso’s “subject to an agreement to the contrary” and paragraph 41 of the 246th Law Commission Report. The complete clause is in Section 6, Element 3.

The Section 9(3) Interaction

Section 9(3) bars court jurisdiction once the tribunal is constituted unless the Section 17 remedy is not efficacious. In a foreign-seated arbitration, Section 17 does not apply: a foreign tribunal’s interim orders are not directly enforceable in India. The Delhi High Court in Shanghai Electric Group Co Ltd v Reliance Infrastructure Ltd confirmed that the Section 9(3) bar extends to foreign-seated arbitrations but that the efficacy exception applies where the tribunal’s measure cannot be enforced in India. The asset-based clause preserves Section 9 access through the efficacy exception after tribunal constitution without requiring express address of Section 9(3) in the clause itself.

3. Section 27 — The Evidence Tool That Practitioners Overlook

 

SIAC, LCIA, and ICC rules can compel parties to produce documents. They cannot compel non-parties. Section 27 reaches Indian-incorporated non-parties — subsidiaries, affiliates, former employees — through Indian court process backed by contempt sanctions. A blanket Part I exclusion eliminates it without most drafters realising.

 

What Section 27 Does and Why It Matters

Section 27 allows the tribunal, or a party with tribunal approval, to apply to an Indian court for assistance in taking evidence. Sub-section (3) empowers the court to order evidence produced directly to the tribunal. Sub-section (4) extends the court’s full process powers: summonses to witnesses, commissions for examination, and document production orders. Sub-section (5) makes non-compliance contempt, carrying the same penalties as default in a civil suit.

The most common evidence problem in cross-border arbitrations with Indian counterparties is precisely this — documents held by Indian-incorporated non-parties whose production the respondent disclaims as outside its control. Section 27 is the answer.

The Executory Character

The party first applies to the tribunal for permission to invoke Section 27. The tribunal determines admissibility, relevance, and materiality. If it approves, the party files before the competent Indian court. The court’s role is then executory: it does not re-examine the tribunal’s assessment. The Bombay High Court in Montana Developers Private Limited v Aditya Developers confirmed the court cannot go into the validity or correctness of the tribunal’s order. The non-party has no avenue to relitigate relevance or materiality before the court. The tribunal controls what is asked for; the court delivers it.

Why Blanket Part I Exclusion Eliminates the Tool

A drafter who excludes all of Part I without expressly preserving Section 27 loses access to this mechanism. A blanket exclusion constitutes an agreement to the contrary as to all three provisions in the proviso — including Section 27. The correct architecture is express Part I exclusion with specific retention of Section 9 (asset-based), Section 27 (symmetric), and Sections 37(1)(a) and 37(3). The clause is in Section 6, Element 3.

4. Seat and Institution — Choosing for Enforcement

 

Seat selection is an enforcement decision. Two threshold requirements apply: the seat must be in a Section 44(b) notified territory, and the governing law of the arbitration agreement must be specified separately from the main contract law. Both are express drafting choices. Neither is a default.

 

First, the seat must be in a territory notified by the Central Government under Section 44(b) of the Act. New York Convention adherence is not sufficient; a separate gazette notification is required. Parties may choose LCIA with London as seat, or SIAC with Singapore as seat — both are Section 44(b) notified territories. For ICC arbitrations, the seat must be specified expressly: ICC is an institution, not a seat, and an unspecified seat is selected by the ICC Court, which may or may not choose a Section 44(b) notified territory. The DIFC seat is not Section 44(b) notified; a DIFC-seated award cannot be directly enforced under Part II.

Second, the governing law of the arbitration agreement should be specified expressly and separately from the main contract’s governing law. After Disortho S.A.S. v Meril Life Sciences Pvt Ltd (2025 INSC 352), Indian courts presume the main contract law governs absent express agreement. After Section 6A of the UK Arbitration Act 2025 (in force 1 August 2025), English courts default to the law of the seat. A contract governed by Indian law with a London seat is construed differently in Delhi and London without express specification. The governing law should match the seat; the clause is in Section 6, Element 2.

5. Procedural Control — What Institutional Rules Leave to the Tribunal

 

All three rule sets vest default procedural control in the tribunal. All three permit party agreement to override it. The arbitration clause is the vehicle for that override. What the clause does not address, the tribunal decides alone.

 

Under LCIA Rules 2020, Article 14.2 preserves the tribunal’s widest discretion unless the parties decide otherwise. Article 20.4 gives the tribunal unqualified power to allow, refuse, or limit oral testimony. Section 34(1) of the UK Arbitration Act 1996 adds the statutory equivalent: the tribunal decides all procedural and evidential matters subject to the right of the parties to agree any matter.

Under SIAC Rules 2025, a hearing is held if either party requests it — but a hearing right is not a cross-examination right. The tribunal may separately refuse witness appearances or limit oral testimony. Rule 34.1 imposes a duty to identify issues in consultation with the parties, but not to adopt their formulation.

Under ICC Rules 2026, mandatory Terms of Reference are abolished. The initial Case Management Conference under Article 24 is the primary procedural milestone, but it does not require the tribunal to commit to a fixed issue framework.

Issue Framing — Timing Is the Problem

The risk is not that the tribunal decides a point neither party argued. The risk is this: the parties file witness statements directed at their own proposed issues; the tribunal identifies a different set of issues only after evidence is complete; the record then contains evidence addressed to the wrong questions. The party whose evidence missed the target had no opportunity to correct it. This is a sequencing failure. No institutional rule currently prevents it.

SIAC Rule 34.1’s consultation duty illustrates the problem. Discharged before witness statements are filed, it manages the risk. Discharged after cross-examination, it is worthless. LCIA 2020 and ICC 2026 have no equivalent obligation at all.

The clause must fix the sequence: issue lists before witness statements, not merely before the hearing. If a new issue arises after witness statements are filed, the tribunal notifies both parties and gives each time to respond before deciding it. The complete clause is in Section 6, Element 4.

Where this protocol is absent and the point is raised at enforcement, the likely outcome is unfavourable. A Singapore, English, or New York court will find that the issues were substantially the same, the evidence touched them, and the tribunal had case management authority. The point is not whether the challenge succeeds. It is that a single clause eliminates the uncertainty at no cost.

Evidence — The Cross-Examination Gap

A right to a hearing is not a right to cross-examine. A tribunal that receives written statements and declines oral examination acts within both LCIA 2020 and SIAC 2025. Cross-examination is how witness reliability is tested: a written statement from a witness who is wrong or selectively remembering looks identical to one from a truthful witness. The right to test the difference is not guaranteed by default.

In practice, tribunals allow cross-examination when requested. The risk is specific: expedited and streamlined procedures — triggered by quantum thresholds or scheduling pressure — create conditions where a sole arbitrator with a six-month deadline approaches witness evidence differently from a three-member tribunal on a full timetable. The author has encountered an expedited timetable that drove case management decisions compressing witness examination in ways neither party anticipated at contracting. Once the procedure is running, the clause is the only agreed framework available. The complete clause is in Section 6, Element 5.

6. The Complete Clause Framework

 

Seven clause elements address, in sequence: seat and institution; governing law of the arbitration agreement; Part I exclusion with targeted retention of Sections 9, 27, and 37; issue-framing protocol; cross-examination rights; emergency arbitrator and confidentiality; and an informed-choice acknowledgment. Each is either an express drafting choice or a silence the statute or tribunal fills by default.

 

Compressing these into a standard one-paragraph institutional clause and leaving the rest to the tribunal is the source of every risk this article has identified.

Element 1 — Seat, Institution, Rules, and Number of Arbitrators

“Any dispute, controversy or claim arising out of or in connection with this agreement, or the breach, termination or validity thereof, shall be finally resolved by arbitration seated in [Singapore / London] and administered by [SIAC / LCIA] in accordance with [SIAC Rules 2025 / LCIA Rules 2020] (or any amendment thereto in force at the date of commencement of the arbitration) by [one / three] arbitrator[s] appointed in accordance with those rules.”

The seat must be specified expressly: it is an enforcement decision. For ICC, an unspecified seat is surrendered to the ICC Court. The rules version is fixed by edition; the parenthetical accepts any revision current at commencement.

Element 2 — Governing Law of the Arbitration Agreement

“The law governing this arbitration agreement, including questions of its existence, validity, scope, and interpretation, shall be the law of [Singapore / England and Wales], regardless of the law governing this agreement as a whole.”

This addresses the Disortho and Section 6A divergence: Indian courts presume the main contract law governs; English courts default to the seat law. Specify to match the seat.

Element 3 — Part I Exclusion with Targeted Retention

“Part I of the Arbitration and Conciliation Act 1996 (India) shall not apply to this arbitration, save as expressly retained in this clause.”

“Section 9 of the Arbitration and Conciliation Act 1996 shall apply to this arbitration solely in respect of assets located within the territory of India. Either party may apply to a competent Indian court for interim measures of protection in respect of such assets before, during, and after the arbitral proceedings and until the award becomes enforceable as a decree under Section 49 of the Act. Section 9 shall not be available to either party in respect of assets located outside India. Section 9 applications under this clause shall be made to the High Court having jurisdiction over the registered office or principal place of business of the party against whom relief is sought, or over the assets in respect of which relief is sought, at the applicant’s election.”

“Section 27 of the Arbitration and Conciliation Act 1996 shall apply to this arbitration. Either party may, with the approval of the arbitral tribunal, apply to a competent Indian court for assistance in taking evidence in connection with these arbitral proceedings, including by way of summons to witnesses and summons for production of documents by persons within Indian territorial jurisdiction. Section 27 applications under this clause shall be made to the High Court having territorial jurisdiction over the non-party from whom evidence is sought.”

“Sections 37(1)(a) and 37(3) of the Arbitration and Conciliation Act 1996 shall apply to any appeal from an order made under Section 9 of the Act in these arbitral proceedings.”

The Part I exclusion forecloses the implied exclusion debate. Section 9 is retained on an asset-based basis, tracking the Law Commission’s territorial rationale and preserving the Section 49 enforcement window. Section 27 is retained symmetrically, limited to Indian territorial jurisdiction. Sections 37(1)(a) and 37(3) repair the gap a blanket exclusion would otherwise create.

Element 4 — Issue Framing Protocol

These procedural rules override any conflicting provision of the applicable institutional rules.

“Within 14 days after pleadings close, each party shall submit its proposed list of issues to the tribunal. Within 14 days of receiving both lists, the tribunal shall issue a consolidated issue list, which binds the proceedings. Witness statements shall be directed to the consolidated issues. If a new issue arises after witness statements are filed, the tribunal shall notify the parties in writing and give each 14 days to file responsive evidence and submissions before deciding it.”

Element 5 — Cross-Examination

“Each party has the right to cross-examine orally any witness whose statement is filed. This right applies regardless of whether expedited, streamlined, or documents-only procedures govern the arbitration. The tribunal may restrict the time or scope of cross-examination only after consulting the parties and issuing a reasoned order.”

Element 6 — Emergency Arbitrator, Bifurcation, and Confidentiality

“The emergency arbitrator provisions of the applicable institutional rules shall apply to this arbitration and are not excluded.”

“The arbitral tribunal may order bifurcation of the proceedings on its own motion or on the application of either party, after consulting both parties. Where an application for bifurcation is declined, the tribunal shall issue a reasoned procedural order identifying its reasons.”

“All information relating to the arbitration, including the existence of proceedings, pleadings, evidence, and any award, shall be kept confidential by the parties, the tribunal, and any persons appointed by the tribunal. Disclosure is permitted to the extent required by law, by a competent regulatory or judicial authority, or for the purpose of challenging or enforcing any award or interim order in legal proceedings in any jurisdiction. For the avoidance of doubt, the filing of enforcement proceedings in India under Part II of the Arbitration and Conciliation Act 1996 and the citation of the award in those proceedings does not constitute a breach of this confidentiality obligation.”

The emergency arbitrator is retained without exclusion: it serves different functions from Section 9, and retaining both preserves pre-tribunal interim relief options at the seat and in third-country jurisdictions. The confidentiality carve-out makes explicit what Section 42A of the Act implies.

Element 7 — The Informed-Choice Clause

“Each party acknowledges that it has received independent legal advice on the effect of this arbitration agreement, including the choice of [Singapore / London] as the seat of arbitration, the choice of [Singapore law / English law] as the law governing this arbitration agreement, and the consequences of those choices for the application of the Arbitration and Conciliation Act 1996 (India). Each party acknowledges that its agreement to a foreign seat represents a free commercial choice, made with full knowledge of the differences between the chosen seat and Indian law applicable to arbitration proceedings, and that any award will be subject to the recognition and enforcement regime under Part II of the Act.”

This clause creates a record that the Indian party was advised on the Section 2(2) proviso and the Section 48 enforcement regime. Its foundation is party autonomy under PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited (Civil Appeal No. 1647 of 2021) and Atlas Export Industries v Kotak and Co (1999) 7 SCC 61. It cannot override a genuine public policy objection; it closes the space for opportunistic challenges. Before execution: confirm that independent legal advice was actually given, and that the governing law and seat match Elements 1 and 2 exactly.

7. Conclusion

 

Three domains of choice — Indian court intervention, seat selection, and procedural control — determine the enforceability of any resulting foreign award in India. Each is an express drafting choice or a silence that the statute or tribunal fills by default. The seven clause elements in Section 6 replace all three defaults with considered positions.

 

Silence is not neutral. The Section 2(2) proviso activates Indian court jurisdiction by default. Institutional rules vest procedural discretion in the tribunal by default. The implied exclusion debate leaves Section 9 uncertain by default.

Part II of this series addresses enforcement strategy after the award is in hand: the multi-stage protocol under Sections 47 to 49 and the tactical response to a seat challenge by the Indian counterparty. The arbitration clause is the foundation; Part II is the structure built on it. Part III completes the series with the last surviving defence: the public policy objection under Section 48(2)(b) and the estoppel doctrine after Nagaraj V. Mylandla. It is the roof.

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This article is for informational purposes only and does not constitute legal or tax advice. The views expressed are those of the author. Specific legal or tax matters should be referred to qualified advisers. Ravish Bhatt is an Advocate (Bar Council of Gujarat, Enrolment G/504/2008) and a non-practising Solicitor of England and Wales (SRA No. 492 477).