[The following post is contributed by Gunjan Chhabra who a practising advocate currently with Singhania and Partners. She can be reached at [email protected]]The Arbitration and Conciliation (Amendment) Act, 2016 has brought about various new shifts and changes from the previous law. Amongst the various changes made is a very interesting modification which makes certain provisions regarding interim reliefs under Part I of the Arbitration and Conciliation Act, 1996 (hereinafter called the Act) applicable to foreign seated arbitrations. To be specific, section 9, section 27(1)(a) and section 37(3) have been made applicable to foreign seated arbitrations. The conditions for application of these provisions are as follows:-(i) The arbitration has to be an International Commercial Arbitration.(ii) The place of arbitration has to be outside India.(iii) The arbitral award made in such a place should be enforceable and recognized in India.(iv) There should be no agreement to the contrary.This post aims to discuss two contentious issues in the above mentioned conditions laid down by the provision, the first being an “agreement to the contrary” and the second being the restriction of its application to “International Commercial Arbitration”.“Agreement to the Contrary”: Express or Implied ExclusionThe amendment recently introduced has become a cause for elation to all parties who have opted for a foreign seat in their arbitration agreements. Despite having agreed to a foreign seat, a party can now approach Indian courts for an injunction in respect of assets in India, apprehended to be dissipated.Before the amendment of 2015, the law with regard to the applicability of Part I was governed by the judgment of BALCO. BALCO laid down prospectively (from 06.09.2012), that in a foreign seated arbitration neither Section 9 nor any other provision of Part I would be applicable. Prior to BALCO, the law laid was as laid down in Bhatia International. Bhatia International laid down, that the provisions of Part I would apply even to arbitrations held outside India, unless it was expressly or impliedly excluded by parties. It is pertinent to note, that Bhatia International still continues to govern the law as far as arbitration agreements pre-dating BALCO are concerned.The Amendment of 2015, in effect, nullifies the law laid down in BALCO to some extent and holds that even in an International Commercial Arbitration having a foreign seat, a party can approach Indian courts under Section 9 and get appropriate relief, thus reviving the law of Bhatia International to a limited extent.However in all the euphoria of the amendment, the implied exclusion jurisprudence of Bhatia International, which is now revived, is being conveniently overlooked.The jurisprudence of implied exclusion has been developing Bhatia International onwards, where various factors such as:-(i) Foreign law being the Proper law of the contract (Substantive law);(ii) Foreign law being law governing the arbitration agreement;(iii) A Foreign seat;(iv) Absence of mention of other lawscould lead to an implication of exclusion of Part I. Section 2(2) of the Act, simply makes the proviso subject to “an agreement to the contrary”. It nowhere mentions that such a contrary agreement necessarily has to be an express agreement. In effect, even if a foreign seated arbitration clause does not expressly exclude the Application of Sections 9, 27(1)(a) and 37(3) in so many words, an implied exclusion, being essentially an agreement to the contrary would still prohibit it.As of present, as far as applicability of Part I is concerned, three possible scenarios arise:-(i) Arbitration agreements entered into before 06.09.2012- For these agreements, the implied exclusions criteria would definitely apply in as much as the Bhatia Internationaljurisprudence would hold good.(ii) Arbitration agreements entered into after 06.09.2012 but in respect of which Arbitration proceedings have commenced prior to 23.10.2015. – For these agreements also, there would be no doubt that the amended portion of Section 2(2) would not apply in as much as the Act would be inapplicable.(iii) Arbitration agreements entered into after 06.09.2012 but in respect of which Arbitration proceedings have commenced after 23.10.2015. – This would be the class of agreements in respect of which the whole confusion would arise. The effect of the amendment on the law laid down in BALCO is yet to develop. In the personal opinion of the author, the implied exclusion principles of Bhatia International would apply to this class as well, in as much as the reasoning for non application of Part I was the language of Section 2(2) which has now been amended. In the present scenario an implied exclusion of Part I as a whole could very well be interpreted as an implied exclusion of the particular provisions of Sections 9, 27(1)(a) and 37(3), being “an agreement to the contrary”. Interestingly enough, Bhatia International did not talk only of implied exclusion of Part I as a whole but also talked of impliedly excluding certain provisions of Part I (Para 32). It was observed that Part I would apply to Foreign Seated International Commercial Arbitrations unless some or all of the provisions are impliedly excluded. It was in this light and owing to the rules of ICC expressly allowing parties approaching any competent judicial authority to obtain relief, that implied exclusion of section 9 was not read into the contract.However, in the author’s opinion an exclusion of section 9 specifically might not be necessary for inapplicability if there is an implied/express exclusion of Part I as a whole. This is because the law laid down in Bhatia International provided that all provisions of Part I would apply even to Foreign Seated Arbitrations unless expressly or impliedly excluded. The Amendment of 2015 now provides, that Part I as a whole would not apply to Foreign Seated Arbitrations except sections 9, 7(1)(a) and 37(3). These three provisions can also be excluded by an agreement to the contrary. Thus there is a marked shift in the Amendment of 2015, even from Bhatia International.To conclude this point, three conclusions appear to emerge in the author’s opinion with respect to Foreign Seated Arbitrations:-(i) After the amendment of 2015, implied exclusion of Part I can now be read into the contract to exclude the applicability of Part I.(ii) In case there is an implied exclusion of Part I, Sections 9, 27(1)(a) and 37(3) would be automatically impliedly excluded.(iii) If there is an implied exclusion of Part I, then separate implied/express exclusion of Section 9, 27(1)(a) and 37(3) might not be necessary for inapplicability.The next question, which emerges is, how can parties ensure, that where the Arbitration is otherwise foreign seated, the provisions of Sections 9, 27(1)(a) and 37(3) specifically apply to their arbitration without risking an implied exclusion.“Agreement to the Contrary”: Express InclusionIn view of the preceding discussion, it appears that, in the cases of Foreign Seated arbitrations which impliedly/expressly exclude Part I, Parties should expressly include the application of sections 9, 27(1)(a) and 37(3). In the regime of BALCO this was not a legally tenable proposition. But since, the law now permits it and yet, does not fall back entirely on Bhatia International (which raised a rebuttable presumption in favour of application of Part I to Foreign Seated Arbitrations), express inclusion appears to be the only option available. The effect of such an inclusion would be that Part I, even though otherwise inapplicable, would be made applicable to the extent of these specific provisions.Surprisingly enough, a judgment of the Madras High Court, albeit unreported, had recognized party autonomy in favour of express inclusion of Section 9, even where Part I was otherwise inapplicable. The High Court of Madras had pointed out that the clause pre-dated BALCO and the law of Bhatia International would apply. The terms of the agreement provided for the substantive law of the contract to be Finnish Law, the Rules of Arbitration of the Arbitration Institute of Helsinki Chamber of Commerce to apply and the seat of Arbitration to be in Helsinki. The terms further provided express exclusion of Part I of the Act, but reserved the right of one party to approach Indian Courts under Section 9 of the Act. Today’s scenario provides for an interpretation very similar to the eventuality that had occurred before the Madras High Court on that date. The law, today, expressly provides for certain provisions of Part I to be applicable to Foreign Seated arbitrations and others not applicable (which the agreement provided in the Madras High Court case). It is in light of this that the author opines that when there is an implied exclusion of Part I as a whole express inclusion of the provisions sections 9, 27(1)(a) and 37(3) would be incumbent to make these provisions applicable as the law ensures non-application of the remaining provisions of Part I in any case..Applicability to International Commercial Arbitration: a Class of Foreign Seated ArbitrationsWith the growing jurisprudence of party autonomy for arbitrations, in India, a new class of Foreign Seated Arbitrations is likely to emerge, ie. Foreign Seated Arbitrations which are not International Commercial Arbitrations, meaning that none of the parties to the Arbitration are outside India.The reason for such likelihood is that a most recent judgement of a Division bench of the Madhya Pradesh High Court, recognizes the right of two Indian parties to elect for a foreign seat of Arbitration. The judgment distinguishes TDM Infrastructure as being limited in its application to only issues relating to appointment of arbitrator. TDM infrastructure, it says, had only to see whether the arbitration in issue was an international commercial arbitration or not and thus to see whether 11(6) would apply or not. This court did not succinctly rule upon the issue of whether two Indian parties could opt for a foreign seat or not and thus TDM Infrastructure was said to be inapplicable. The Court further uses the interpretation of Atlas Exports and BALCO to hold that as long as two Indian parties do not exclude the substantive law of the contract by agreement, they are very much free to opt for a foreign Seat. The Sasan Power case is still pending consideration before the Apex Court, but in most likelihood would be upheld. In such a scenario two classes of Foreign Seated Arbitrations exist:-(i) Foreign Seated Arbitrations which are International Commercial Arbitrations(ii) Foreign seated Arbitrations other than International Commercial Arbitrations.However, Section 2(2) of the Act applies only to the first class of Foreign Seated Arbitrations. Why it does not apply to the second class is a question left unanswered by the law makers, especially since both parties to the second class would be Indian. The way forwardThe light of the above discussion, two conclusions are drawn by the author with respect to the issues discussed:-(i) For those arbitrations on which the Amendment Act of 2015 applies, any parties to a foreign seated arbitration which seek to reap the benefit of Sections 9, 27(1)(a) and 37(3) of the Act, must expressly include a savings of these provisions in the arbitration clause.(ii) As far as the second issue is concerned, the Supreme Court is still to settle the issue of whether there can be Foreign Seated Arbitrations in cases other than International Commercial Arbitrations. In case the question is answered in the positive, which in the personal opinion of the author it would, then the law would have to be suitably amended to provide for the contingency of Foreign Seated Arbitrations other than International Commercial Arbitrations.- Gunjan Chhabra Section 2(2) of the Arbitration and Conciliation Act, 1996. Bharat Aluminum and Co. vs. Kaiser Aluminium and Co. (2012) 9 SCC 552. Bhatia International v. Bulk Trading S.A. (2002)4SCC105. The effect of the amendment on BALCO is discussed succinctly, in “The Arbitration and Conciliation Amendment Ordinance, 2015: Impact on Law Laid Down in BALCO”, available at: http://www.mondaq.com/india/x/452032/trials+appeals+compensation/The+Arbitration+And+Conciliation+Amendment+Ordinance+2015+Impact+On+Law+Laid+Down+In+BALCO. Videocon Industries Ltd. v. Union of India, (2011)6 SCC 161; Yograj Infrastructure Ltd. vs. Ssangyong Engineering Construction Co. Ltd.(2012) 12 SCC 359; The rule of implied exclusion has been upheld in arbitration clauses pre-dating BALCO in Reliance Industries v. Union of India, 2014 (4) and CTC 75 Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd., (2015) 9 SCC 172, which have been decided post BALCO. Date of judgment of BALCO, as it applies prospectively. Date of coming into force of the Arbitration and Conciliation (Amendment Act), 2015. Finnish Fund for Industrial Corporation Ltd.(FinnFund) v. VME Precast Pvt. Ltd. & Ors, Decided on 27.04.2015, Madras High Court. Sasan Power Ltd v. North America Coal Corporation India Pvt Ltd., Decided on 11th September, 2015, Madhya Pradesh High Court (Hereinafter called Sasan Power). TDM Infrastructure (P) Ltd. vs. UE Development India (P) Limited (2008) 14 SCC 271. Atlas Exports Industries vs. Kotak & Company (1999) 7 SCC 61.