Parties Autonomy is Underlying Principle of Arbitration | PASL Ltd V GE Power

Recently in PASL Wind Solutions v. GE Power Conversion India, the question arose as to whether two companies incorporated in India can choose a forum for arbitration outside India. On 20 April 2021, the Indian Supreme Court in this case said that, Indian parties are free to choose a seat of arbitration outside India and that there is no bar under the Arbitration & Conciliation Act 1996 for choosing a foreign law as the procedural law. It further clarified that the award would enforceable as a foreign award in India under Part-II of the Act.

Factual Background and Issues Raised

PASL Wind Solutions Pvt. Ltd. (PASL) is a Gujarat based company under the Companies Act, 1956 and GE Power Conversion India Pvt Ltd (also known as GE India) is a company under the Companies Act, 1956 with its office at Chennai.

“In 2010, GE Power gave purchase orders to PASL Wind Solutions for supplying of six converters. PASL supplied six converters out of the which the respondent decided to keep one in its factory as a prototype and the five remaining converters were all commissioned by July 2, 2014. The warranty clause was similar in all three which was 24 months from the date of commissioning or 30 months from the date of dispatch whichever came earlier. The petitioner contended that the warranty on the converters expired in June 2014 which is 30 months from the date of dispatch which was January 2012.”[i]

“Post commissioning some disputes arose between the parties in respect of the functioning of the converters. The petitioner contended that it had already provided a large number of free services in relation to the converters and the warranty had also expired, whereas, according to the respondent, the warranty on the converters was in continuance. In order to amicably  resolve the said dispute, the parties entered into a settlement agreement, which included any failure to the converters panel would be attended within a period of 7 days”[ii]

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