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CS Professional · Arbitration, Mediation and Conciliation · Conceptual Framework of International Commercial Arbitration

Zenith Textiles Pvt Ltd, a company incorporated in India with its management in Surat, signs a supply contract with Kowloon Traders Ltd, a company incorporated in Hong Kong. A dispute arises and is referred to arbitration. Under the Arbitration and Conciliation Act, 1996, why does this qualify as an international commercial arbitration?

The arbitration is international commercial because Kowloon Traders is a body corporate incorporated outside India. Section 2(1)(f) requires a commercial legal relationship and at least one foreign party of a listed type, including a foreign-incorporated body corporate. Place of signing or institutional administration does not decide the matter.

  1. ABecause the contract was signed in Surat
  2. BBecause at least one party is a body corporate incorporated in a country other than IndiaCorrect
  3. CBecause both parties are companies
  4. DBecause the arbitration is administered by a permanent arbitral institution

Explanation

Section 2(1)(f) makes an arbitration international commercial where the dispute arises from a legal relationship considered commercial under Indian law and at least one party is a body corporate incorporated outside India. Kowloon Traders is incorporated in Hong Kong, so the test is met. Both parties being companies or the use of an institution is irrelevant to this test.

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