Observing that an arbitration agreement between the parties is an agreement independent of the substantive contract and the parties can choose a different governing law for the arbitration, the Delhi High Court has reiterated that two Indian parties can choose a foreign law as the law governing arbitration.
It also held that the same is true even if by a different clause of the contract the substantive law of the contract was Indian law and the parties had agreed to exclusive jurisdiction of the Courts at Delhi.
The Court rejected the contention of the plaintiff that since the parties were Indian, contract was entered into in India and the performance was also in India, the two Indian parties cannot avoid the Indian law by choosing a foreign seat of arbitration and a specific foreign system of law.
The High Court in the case Dholi Spintex Pvt. Ltd. v. Louis Dreyfus Company India Pvt. Ltd. [Decision dated 24 November 2020] also agreed with the defendant that there was a foreign element to the agreement between the parties since there was a high seas sale agreement.
