INDIA BUSINESS WORLD - May 11^th - May 31^st - 2008

DOMESTIC COS CAN’T SEEK ARBITRATION OVERSEAS: SUPREME COURT

The Supreme Court has ruled that two Indian companies locked in a dispute cannot seek international commercial arbitration, as it tantamount to condoning the home country’s law. While dismissing a plea by TDM Infrastructure for international commercial arbitration (ICA), a bench headed by Justice S B Sinha said: “A company incorporated in India can only have Indian nationality... Hence, where both parties have Indian nationalities, then the arbitration between such parties cannot be said to be an ICA.” Stating that determination of nationality of the parties played a crucial role in the appointment of an arbitrator, the court said the chief justice of India or his designate must bear in mind the nationality of an arbitrator.