Date of Judgment: 21 November 2025
Case: Balaji Steel Trade v. Fludor Benin S.A. & Ors.
Citation: 2025 LiveLaw (SC) 1132
Introduction
In a significant ruling strengthening the principle of party autonomy in international commercial arbitration, the Supreme Court of India has reiterated that Indian courts have no jurisdiction to appoint an arbitrator for a foreign-seated arbitration, even when one of the parties is an Indian entity. This decision reinforces India’s commitment to the territoriality principle under the Arbitration and Conciliation Act, 1996, and further restricts judicial intervention in foreign centered arbitral disputes. The judgment, delivered on 21 November 2025 by a bench comprising Justices P.S. Narasimha and Atul S. Chandurkar, dismissed a plea seeking appointment of an arbitrator under Section 11 of the Arbitration Act.
Background of the Dispute
The matter arose out of the Buyer–Seller Agreement (BSA) dated 06.06.2019, which expressly provided that: The arbitration would take place in Benin, and
The contract would be governed by Beninese law. Despite this clear clause, the petitioner Balaji Steel attempted to invoke Indian jurisdiction by relying on subsequent ancillary contracts, such as Sales Contracts and High Seas Sale Agreements, which carried Indian-seated arbitration clauses. The petitioner also invoked the Group of Companies doctrine (GoC) to argue that these later agreements should pull the dispute into the Indian arbitration framework.
Supreme Court’s Reasoning
1. Principal Contract Determines Jurisdiction
The Court held that the BSA was the principal or “mother agreement”, and all subsequent agreements were merely ancillary, facilitating individual shipments. Since the alleged breaches stemmed from the BSA, Benin remained the juridical seat of arbitration.
“The BSA and its Addendum constitute the mother agreement… Subsequent Sales Contracts and HSSAs are merely ancillary, facilitating performance of isolated shipments, and cannot override the dispute resolution framework of the BSA.”
Thus, invoking Section 11(6) before Indian courts was “fundamentally misconceived”.
2. Indian Courts Have No Jurisdiction in Foreign-Seated Arbitration The bench reinforced that Part I of the Arbitration Act, including Section 11 (appointment of arbitrator), does not apply to foreign-seated arbitrations. Reliance was placed on landmark precedents:
BALCO v. Kaiser Aluminium, (2012) 9 SCC 552
BGS SGS SOMA JV v. NHPC Ltd., (2020) 4 SCC 234
Once a foreign seat is chosen, Indian courts cannot interfere or appoint arbitrators, irrespective of the nationality, domicile, or place of business of the parties.
3. Group of Companies Doctrine: Not Applicable Here
Balaji Steel argued that the GoC doctrine should allow extension of the arbitration clause in later contracts to the dispute under the BSA.
The Court rejected this:
The doctrine is applied sparingly and only where there is compelling evidence of mutual intention… Mere overlap of shareholding or corporate family is not sufficient.”
The bench cited Cox & Kings Ltd. v. SAP India (P) Ltd., 2023 SCC OnLine SC 1634, to emphasise the limited scope of GoC in Indian arbitration law.
4. Attempt to Confer Jurisdiction is Misconceived
The Supreme Court criticised the petitioner for selectively relying on ancillary contracts to invoke Indian jurisdiction:
“The petitioner’s endeavor to confer jurisdiction upon this Court by invoking ancillary contracts… is wholly misconceived and contrary to the territorial principle.”
The plea was therefore dismissed in entirety.
Key Takeaways
Foreign seat means foreign jurisdiction
Indian courts cannot exercise jurisdiction under Section 11 when the arbitration seat is outside India. Principal agreement governs arbitration
Where multiple contracts exist, courts will examine which is the primary agreement governing the transaction. GoC doctrine applied only in exceptional circumstances Merely being part of the same corporate group is insufficient. Reinforces autonomy of parties Parties’ choice of seat and governing law will be strictly upheld.
Impact on International Commercial Arbitration
This decision is significant for cross-border transactions and reinforces legal certainty in: International commercial contracts Maritime and high seas sale agreements Global commodity trading Multinational supply chain frameworks By upholding the territoriality principle, the judgment strengthens India’s pro-arbitration stance and aligns domestic jurisprudence with global standards.
Conclusion
The Supreme Court’s ruling in Balaji Steel Trade v. Fludor Benin S.A. is a strong reaffirmation that party autonomy and contractual choice of a foreign seat cannot be circumvented by relying on ancillary contracts or the Group of Companies doctrine. The decision underscores the importance of carefully drafting arbitration clauses and respecting jurisdictional boundaries in international commerce.
Case Details (For Reference)
Case Title: Balaji Steel Trade v. Fludor Benin S.A. & Ors.
Citation: 2025 LiveLaw (SC) 1132
Bench: Justices P.S. Narasimha & Atul S. Chandurkar
Date: 21 November 2025
Keywords:- Foreign-seated arbitration, Section 11 Arbitration Act, territoriality principle, Group of Companies doctrine, international commercial arbitration, Indian arbitration jurisdiction, Benin arbitration seat, principal contract, ancillary contracts.
