In the recent case of Venture Global Engineering v Satyam Computer Services Limited, Civil Appeal No. 309 of 2008 (Supreme Court of India, 10 January 2008), the Supreme Court of India held that a foreign award rendered in London under the LCIA Rules and enforced by the District Court of Michigan could be challenged before the Indian courts under the provisions of the Indian Arbitration and Conciliation Act 1996 (the "1996 Act").
Although the District Court of Hyderabad and the High Court dismissed Venture Global Engineering's application to challenge the award in question, the Indian Supreme Court held that a foreign award could be set aside by the Indian courts and ordered a stay of enforcement. It held that that unless agreed otherwise by the parties, Part I of the 1996 Act (which sets out rules governing arbitrations with a seat in India and includes provisions for recourse against such awards) also applies to foreign awards.
This decision is likely to result in an increase to challenges of foreign arbitral awards in India. The problem is exacerbated by recent rulings of the Indian courts, most notably in ONGC v Saw Pipes, which have expanded the scope of judicial review of awards by equating review on 'public policy' grounds to a full fledged 'error of law' review. The decision also raises questions about India's compliance with its New York Convention obligations.
To preclude unwelcome Indian court interference with awards, parties would be well advised to expressly exclude the application of Part I of the 1996 Act in India-related arbitration agreements