Introduction
On December 2, 2024, the Hon’ble Delhi High Court pronounced a significant order in the case of Suresh Shah vs. Tata Consultancy Services Limited (TCS), addressing the legal questions surrounding two arbitration awards dated December 16, 2016, and January 14, 2017. A central issue was whether the arbitration in which the awards were passed, constituted as an International Commercial Arbitration (“ICA”), which would limit the grounds for judicial review as compared to domestic arbitration.

Brief Factual Background
The present case was filed by Shah, challenging the awards under Section 34 of the Arbitration and Conciliation Act, 1996 (“1996 Act’”). A pivotal question in this case was whether the arbitration conducted between Shah and TCS qualified as an ICA. Section 2 (1) (f), which provides the definition of ICA reads as follows:

“S. 2(1)(f) “International commercial arbitration”means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is—(i) an individual who is a national of, or habitually resident in, any country other than India;”

It was argued on behalf of Shah that his status as a non-resident Indian with permanent residence in Kenya, established the international nature of the arbitration. Evidence with respect to this was also presented on his behalf , including his address in Kenya documented throughout the arbitration proceedings. Conversely, TCS contended that there was no explicit reference to ICA in their contractual agreements and that the procedure to appoint an arbitrator as is to be followed in an ICA as per Section 11(6) was not followed, suggesting that both parties had implicitly agreed to domestic arbitration procedures.

Key Legal Issues
In its decision the Hon’ble High Court stated and held the following:

1. Derogability of Section 2 of the 1996 Act: The court highlighted that while the principle of party autonomy is fundamental to arbitration, allowing parties to modify certain procedural aspects of their agreements, some provisions are non-derogable and form part of the basic structure of arbitration law. Specifically, the court noted that Section 2(1)(f) is not a derogable provision; thus, parties cannot unilaterally agree to classify an arbitration as domestic when it meets the criteria for ICA. This distinction is critical because it determines the scope of judicial review available under Section 34, where challenges to ICA awards are limited compared to domestic awards. The court referenced previous jurisprudence, including Narayan Prasad Lohia vs. Nikunj Kumar Lohia [(2002) 3 SCC 572] and Hala Kamel Zabal vs. Arya Trading [2024 DHC 6099], to support its position that derogation from statutory definitions cannot be made by mere consent of the parties. Ultimately, the court concluded that since Suresh Shah's arbitration was indeed an ICA, it must be evaluated under the stricter parameters set by Section 34(2A) of the Act, thereby emphasizing the mandatory nature of certain provisions within arbitration law.
2. On the difference between ICA and foreign award: In the context of the present order, the distinction between ICA and foreign awards was discussed to clarify the legal framework governing the arbitration proceedings and the grounds for challenging the arbitral awards. The court emphasized that ICA pertains specifically to arbitration involving parties from different countries, which inherently invokes international legal standards and principles. In contrast, a foreign award refers to an arbitral decision made in a jurisdiction outside India, which may or may not involve ICA. The judgment highlighted that since the present arbitrations were classified as ICA, the grounds for challenging the awards were limited to specific parameters defined under Section 34(2A), which restricts challenges based on patent illegality.

Future Implications & Conclusion
The High Court's order has important implications for future international commercial arbitrations conducted in India. By affirming that certain provisions are non-derogable and clarifying the classification of arbitrations as ICA or domestic, this decision sets important precedents for how similar disputes will be handled. One significant consequence is that parties may be deterred from raising jurisdictional issues post-award unless they are addressed upfront during arbitration proceedings. This could lead to a more rigid interpretation of arbitration agreements with limited recourse for parties who later discover grounds for challenging awards based on jurisdictional concerns. Moreover, this order highlights the importance of clarity in contractual agreements as well as ensuring compliance with the separate provisions/procedures regarding ICA and domestic arbitration.

By - Sayjal Deshpande