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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Bharat Textiles Ltd (incorporated in India) and Kestrel Fabrics GmbH (incorporated in Germany) have a supply contract with an arbitration clause. A dispute over the commercial supply arises. Under the Arbitration and Conciliation Act, 1996, how is the resulting arbitration classified?

It is an international commercial arbitration. The Act defines this as a commercial dispute where at least one party is a body corporate incorporated outside India. Kestrel Fabrics GmbH is incorporated in Germany, so the definition is satisfied regardless of the seat or where the contract was signed.

  1. AInternational commercial arbitration, because one party is a body corporate incorporated outside IndiaCorrect
  2. BDomestic arbitration, because one party is an Indian company
  3. CDomestic arbitration, because the contract was signed in India
  4. DInternational commercial arbitration only if the seat is outside India

Explanation

Section 2(1)(f) covers a commercial dispute where at least one party is a body corporate incorporated in a country other than India. Kestrel is incorporated in Germany, so the test is met. The seat and place of signing are irrelevant to the classification, so the domestic options and the seat-based option are wrong.

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