By Harsh Singh Dahiya, Advocate, Supreme Court of India | Partner, Sterling & Partners

Arbitration in India has grown significantly as a dispute resolution mechanism, particularly since the sweeping reforms introduced by the Arbitration and Conciliation Act, 1996, and its subsequent amendments in 2015, 2019, and 2021. A fundamental but frequently misunderstood question for parties structuring commercial agreements is whether their dispute will constitute “domestic” arbitration or “international commercial” arbitration, and what that distinction means for procedure, institutional choice, court supervision, and enforcement.

The Statutory Framework: One Act, Two Distinct Regimes

India governs both domestic and international arbitration through the Arbitration and Conciliation Act, 1996 (the “Act”). Part I governs all arbitrations seated in India. Part II governs recognition and enforcement of foreign awards. The Supreme Court decisively confirmed in Bharat Aluminium Co. v. Kaiser Aluminium (BALCO, 2012) that if the seat is outside India, Part I generally does not apply.

Defining “International Commercial Arbitration”

Section 2(1)(f) defines “international commercial arbitration” as arbitration where at least one party is: (i) a national of or habitually resident in a country other than India; (ii) a body corporate incorporated outside India; (iii) a company whose central management and control is exercised outside India; or (iv) a foreign government. All other arbitrations between Indian parties constitute domestic arbitration.

Seat Versus Venue

The “seat” is the juridical home of the arbitration and determines supervisory jurisdiction. The “venue” is merely the physical hearing location. The court at the seat has exclusive supervisory jurisdiction under Sections 9, 11, 34, and 37 of the Act. The 2024 Draft Amendment Bill proposes to codify this distinction explicitly.

Institutional Choices

For domestic arbitrations: DIAC (Delhi High Court-annexed), MCIA (Mumbai), ICA, and NPAC. For international commercial arbitrations: SIAC, ICC, LCIA, and HKIAC. SIAC has historically been the most popular forum for India-related international arbitrations.

Key Procedural Differences

Arbitrator appointments in international commercial arbitrations seated in India fall under the Supreme Court’s jurisdiction, not the High Court. “Patent illegality” under Section 34 is a challenge ground only for domestic awards, not international commercial arbitration awards. Public policy as a challenge ground is interpreted more narrowly for international awards.

Key Takeaways

  • The Act governs both domestic and international commercial arbitration; Part I applies to India-seated arbitrations, Part II to enforcement of foreign awards.
  • “International commercial arbitration” is defined by the nationality, incorporation, or control of at least one party under Section 2(1)(f).
  • The seat determines supervisory jurisdiction; venue is merely the physical hearing location.
  • “Patent illegality” applies only to domestic awards under Section 34.
  • SIAC, ICC, LCIA, and HKIAC are the primary institutions for cross-border India arbitrations.

About Sterling & Partners
Sterling & Partners is a litigation-focused law firm with chambers at the Supreme Court of India, advising clients on domestic and cross-border arbitration strategy. Contact us at sterlingpartners.law.