PASL Wind Solutions v. GE Power Conversion: party autonomy reaches its furthest point when two Indian parties choose a foreign seat

The question that PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd, (2021) 7 SCC 1, answered had been festering on the lower-court docket for nearly two decades. BALCO v. Kaiser Aluminium, (2012) 9 SCC 552, had installed the territorial seat principle for foreign-seated arbitration; the proviso to Section 2(2) inserted in 2015 had restored a controlled measure of Indian-court interim relief to such arbitrations. But neither BALCO nor the 2015 proviso had directly addressed a narrower and conceptually more troubling question — whether two Indian-incorporated parties, in a domestic transaction with no foreign element other than the chosen seat, could validly contract to arbitrate outside India.

The High Courts had taken sharply opposed positions. The Bombay High Court in Addhar Mercantile Pvt Ltd v. Shree Jagdamba Agrico Exports Pvt Ltd (2015) had refused to enforce a Singapore-seat agreement between two Indian parties, treating the choice as contrary to public policy. The Madhya Pradesh High Court in Sasan Power Ltd v. North American Coal Corporation India Pvt Ltd (Madhya Pradesh High Court, 2015) had taken the contrary view but on facts that involved a foreign affiliate. The Madras High Court in TDM Infrastructure Pvt Ltd v. UE Development India Pvt Ltd, (2008) 14 SCC 271 — strictly an obiter on the foreign-seat question — had also expressed scepticism. The result was an unsettled landscape in which large Indian commercial groups, often part of multinational corporate structures, drafted with one eye on the Bombay view and one on the Madras line.

On 20 April 2021, a three-judge bench of Rohinton Fali Nariman J. (authoring), B.R. Gavai J. and Hrishikesh Roy J. closed the question. Two Indian parties may choose a foreign seat. The award that issues is a foreign award. Section 9 interim relief is available through the 2015 proviso. Party autonomy is the lodestar; objections rooted in Section 23 and Section 28 of the Indian Contract Act 1872 do not displace the choice.

The architecture of the dispute

The parties had executed a 2010 purchase order under which GE Power Conversion India Pvt Ltd (then a Crompton Greaves Ltd. subsidiary) supplied converters to PASL Wind Solutions Pvt Ltd. The arbitration clause specified ICC Rules, with Zurich as the seat. A dispute arose, an arbitration was conducted, and a sole arbitrator delivered an award in 2019 in favour of GE Power Conversion. Both parties were Indian-incorporated; neither was a subsidiary of a foreign entity for the purposes of the Section 2(1)(f) "international commercial arbitration" definition.

GE Power Conversion moved the Gujarat High Court to enforce the Zurich award as a foreign award under Section 47 and Section 48 of Part II of the 1996 Act. PASL Wind Solutions contested enforcement and also filed a Section 9 petition for interim relief. The Gujarat High Court — Bhargav Karia J. — held that the award was enforceable under Part II but that Section 9 was unavailable because Part I (including its proviso) did not apply to arbitrations between Indian parties seated abroad. Both sides carried matters to the Supreme Court.

The factual matrix the Bench worked with

Three features of the underlying facts shaped the Court's analytic path. First, both parties were unambiguously Indian-incorporated; this was not a borderline Section 2(1)(f)(iii) "central management and control" case. Second, the seat designation in the arbitration clause was express and unambiguous (Zurich, ICC Rules). Third, the substantive disputes were ordinary commercial disputes — supply quality, performance, payment — with no element of public interest or sovereign function that might invite an erga omnes objection.

The Bench framed the questions in three layers: (i) is the Indian-parties / foreign-seat choice valid as a matter of contract law under the ICA; (ii) does the resulting award qualify as a "foreign award" under Section 44 of Part II; and (iii) what residual reach does Part I have, in particular Section 9, in such arbitrations.

The reasoning

Party autonomy and Section 28 of the Indian Contract Act

The most fully reasoned section of the judgment addresses the contention that an Indian-parties / foreign-seat agreement violates Section 28 of the Indian Contract Act 1872. Section 28 renders void any agreement that "absolutely restricts" a party from enforcing its rights under any contract by the usual legal proceedings in ordinary tribunals. The provision contains a carve-out for arbitration agreements (Exception 1 and Exception 2).

The Bench held that Section 28 is engaged where an agreement attempts to oust the jurisdiction of all courts; it is not engaged where the parties merely choose one forum over another. A foreign-seated arbitration is not an ouster of jurisdiction; it is a selection of forum. The Court drew on its earlier line in Atlas Export Industries v. Kotak & Co., (1999) 7 SCC 61, which had upheld a foreign-seated arbitration between an Indian party and a foreign party and which the Bench was unwilling to disturb. Atlas Export had reasoned that the Section 28 objection presupposes a complete denial of judicial recourse — a presupposition that a chosen-seat arbitration does not satisfy.

The Section 23 public-policy objection

The second objection rested on Section 23 of the Indian Contract Act 1872 — that an Indian-parties / foreign-seat agreement is opposed to the public policy of India, because it deprives the Indian courts of supervisory jurisdiction and the Indian-law-based merits review that Section 34 would otherwise supply. The Bench rejected the objection on first principles. Public policy under Section 23 is to be invoked with restraint; the fact that two Indian commercial parties have negotiated, with eyes open, for a neutral seat and the procedural law of that seat does not engage the Section 23 threshold. The Court was explicit that party autonomy is itself a settled head of Indian public policy in commercial transactions, and that to read Section 23 as forbidding the foreign-seat choice would be to set party autonomy in opposition to itself.

Section 28(1)(a) of the A&C Act does not apply

The third objection rested on Section 28(1)(a) of the 1996 Act, which provides that where the place of arbitration is in India and the arbitration is not an international commercial arbitration, the arbitral tribunal shall decide the dispute in accordance with the substantive law for the time being in force in India. The argument was that Section 28(1)(a) embodies a legislative requirement that purely Indian disputes (i.e., between Indian parties) be governed by Indian substantive law — and that a foreign-seat choice circumvents the requirement.

The Bench's reading is structural. Section 28(1)(a) applies "where the place of arbitration is in India". Its operation pre-supposes an India-seated arbitration; it does not address what governing law should apply to a foreign-seated arbitration. The provision is, in other words, a positive direction to India-seated tribunals; it is not a negative bar against parties choosing a foreign seat.

The "foreign award" question under Section 44

Having held the underlying arbitration agreement valid, the Bench turned to the characterisation of the resulting award. Section 44 defines a "foreign award" as one made, on or after 11 October 1960, on differences arising out of legal relationships considered as commercial under Indian law, in pursuance of a written arbitration agreement to which the New York Convention applies, and in a territory which the Central Government has notified as a Convention country. The definition does not require that one of the parties be foreign.

The Bench held that the nationality of the parties is not, on the text of Section 44, a condition for an award to qualify as a foreign award. The conditions are commercial subject-matter, written agreement, and seat in a notified Convention country. The Zurich award satisfied all three. It was, accordingly, a foreign award enforceable under Section 47 and Section 48 — not a domestic award.

The Bench also addressed the Section 2(1)(f) "international commercial arbitration" definition, which is not engaged because both parties are Indian-incorporated. The Court held that the Section 2(1)(f) concept is a Part I concept — it governs what arbitrations are international commercial arbitrations for the purposes of Part I (and so for the purposes of, for example, the SC's Section 11 jurisdiction). It is not a gateway test for Part II. The Part II "foreign award" concept stands on its own statutory feet.

Section 9 access through the 2015 proviso

The final analytic move concerns the reach of Section 9. The 2015 amendment had inserted a proviso to Section 2(2) restoring Sections 9, 27, 37(1)(a) and 37(3) to international commercial arbitrations seated outside India, subject to contractual opt-out. The Gujarat High Court had read the proviso as confined to international commercial arbitrations — i.e., arbitrations satisfying the Section 2(1)(f) definition — and so unavailable to two Indian parties.

The Bench took the opposite view. The proviso, read with Section 44, restores Section 9 to arbitrations seated outside India in respect of which the resulting award would be a foreign award. The "international commercial arbitration" phrase in the proviso is to be read in the broader Part II sense — that is, an arbitration that produces a foreign award — and not in the narrow Section 2(1)(f) sense. Two Indian parties who have chosen a foreign seat, and whose award is a foreign award under Section 44, are therefore entitled to Section 9 interim relief, subject to contractual opt-out.

The Court was careful on the contractual-opt-out point. The default is that the proviso applies; parties wishing to exclude Section 9 must do so expressly.

The doctrinal contribution

PASL Wind Solutions makes three contributions to Indian arbitration jurisprudence.

First, it settles the Indian-parties / foreign-seat question that had been unsettled since the early 2000s. The High Court split is closed; the Bombay Addhar Mercantile line is implicitly overruled to the extent it forbade Indian-parties / foreign-seat agreements.

Second, it anchors party autonomy as the dominant doctrinal principle of the 1996 Act, even in transactions with no foreign element other than the chosen seat. The Court's posture is that the ICA objections are to be read narrowly and that the seat-choice is to be respected unless a positive statutory bar engages.

Third, it completes the Part II characterisation analytic by holding that the nationality of the parties is irrelevant to the "foreign award" definition. The decision aligns Indian law with the comparative position in the leading New York Convention jurisdictions, where party-nationality is not a gateway test for Convention enforcement.

What the judgment did not decide

Three questions the Bench did not reach or expressly left open.

First, the Bench did not address whether a contract entirely performed in India between Indian parties — with no commercial-relationship element that would attract a foreign-seat choice as a matter of commercial logic — would attract a different analysis. The judgment is framed in general terms and does not turn on whether the underlying transaction has a foreign-element nexus; but the question of whether a strategically chosen foreign seat in a purely Indian transaction could, in extreme cases, engage Section 23 on a "sham" or "evasion" theory is not foreclosed.

Second, the Bench did not address the question of which substantive law would govern the disputes in such an arbitration. Section 28(1)(a) does not apply (because the arbitration is foreign-seated); the seat may permit free choice of governing law. In an Indian-parties / foreign-seat arbitration, the parties might choose Indian substantive law — but they might also, in principle, choose Swiss, English or Singapore law. The Bench did not draw an outer limit on the choice-of-law question.

Third, the Bench did not address what would happen if the contract was expressly governed by Indian law but the arbitration was foreign-seated and the seat court took a different view on, for example, scope of mandatory law. That sort of conflict-of-laws collision is left for later cases.

The doctrinal arc

PASL Wind Solutions sits at the leading edge of a doctrinal chain that begins with BALCO in 2012 and runs through Indus Mobile (2017) and BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234. BALCO installed the territorial principle for Part I supervision. Indus Mobile operationalised the seat-as-exclusive-jurisdiction premise within the domestic context. PASL Wind Solutions extends party autonomy across the territorial line — even two Indian parties may step outside India for arbitration, with the New York Convention regime taking over.

The decision also re-anchors Atlas Export Industries — which had been treated by some High Courts as confined to mixed-nationality cases — as the general statement of party autonomy in seat selection. Atlas Export is preserved; PASL Wind extends its logic.

On the Section 9 front, PASL Wind Solutions read with the proviso to Section 2(2) generates a coherent post-2015 architecture: Indian parties to a foreign-seated arbitration retain interim-relief access in Indian courts by default, with contractual opt-out available. That architecture is the proviso's intended effect; PASL Wind's reading completes the loop.

The Bombay High Court's recent decision in Osterreichischer Lloyd Seereederei (Cyprus) Ltd. v. Victore Ships Pvt. Ltd. (10 March 2026) operates on the post-PASL premise — the Section 9 gateway for foreign-award holders is open even at the enforcement stage, notwithstanding the textual reference to Section 36 in Section 9(1).

What practitioners take from PASL Wind

For the transactional bar, the decision opens drafting space that had been notionally available but practically risky.

Foreign-seat clauses between Indian parties are now safe. The previously dominant practitioner instinct — to avoid foreign-seat clauses where both parties were Indian, for fear of an Addhar Mercantile challenge — is no longer required. The clause can be drafted for the commercial logic (institutional administration, neutrality, perceived quality of seat-court supervision) without an enforcement worry.

Default seat-availability extends to a broader range of corporate structures. Indian subsidiaries of multinational groups, joint ventures between Indian-incorporated SPVs of foreign parents, and other corporate forms that previously fell awkwardly between the Section 2(1)(f) and pure-Indian categories now have unqualified access to foreign seats.

The Section 9 default is on; opt-out is by clause. Indian-party respondents that would prefer the seat court to be the exclusive interim-relief forum should bargain for an express Section 2(2) proviso opt-out. The default position favours the claimant.

Indian substantive law should be expressly chosen where it is intended to govern. Section 28(1)(a) does not impose Indian law by default in foreign-seated arbitrations. If the parties want Indian substantive law (a common preference where the contract is performed in India), the contract should say so. Silence will trigger the seat's conflict-of-laws rules, which may or may not produce the Indian-law result.

The decision does not weaken Part II enforcement defences. A party that loses a foreign-seated arbitration retains the full Section 48 New York Convention defences — including the public-policy ground — at the enforcement stage. PASL Wind does not collapse the Indian-parties / foreign-seat agreement into an unreviewable instrument; it merely fixes the review at the Section 48 gateway rather than at the agreement-validity stage.

Related editorial pieces

• BALCO v. Kaiser Aluminium: how the Constitution Bench severed Part I from foreign-seated arbitrations
• Indus Mobile v. Datawind: how seat designation became an exclusive jurisdiction clause
• Section 9, Section 47, and the foreign award: Justice Sundaresan's intervention in Osterreichischer Lloyd
• Silence is consent: the Supreme Court's reading of Section 29A waiver in arbitration