International commercial arbitration
Also called: ICA
An arbitration of a dispute arising from a legal relationship considered commercial under Indian law, where at least one party is foreign in nationality, residence, incorporation or control. Section 2(1)(f) of the Arbitration Act.
Explained
Section 2(1)(f) of the Arbitration and Conciliation Act, 1996 defines international commercial arbitration as an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, where at least one of the parties is an individual who is a national of, or habitually resident in, a country other than India; a body corporate incorporated outside India; an association or body of individuals whose central management and control is exercised outside India; or the Government of a foreign country.
Two tests must both be met: the relationship must be commercial, and the foreign element must lie in a party, not in the place of arbitration or the subject matter. The 2015 amendment removed the reference to a company controlled from abroad, so a company incorporated in India is not a foreign party even if managed from outside India. An international commercial arbitration may be seated in India or abroad. The term is not the same as a foreign award: Part I of the Act applies where the place of arbitration is in India (Section 2(2)), while awards made outside India are dealt with under Part II.
The classification changes the rules in several places. Under Section 2(1)(e)(ii) the Court for an international commercial arbitration is the High Court exercising ordinary original civil jurisdiction or the High Court having appellate jurisdiction, not the district court. Under Section 11(9) the Supreme Court or its designate appoints the sole or third arbitrator and may choose a neutral nationality. Under Section 28(1)(b) the tribunal applies the rules of law designated by the parties, not necessarily Indian law. The twelve month time limit in Section 29A(1) is only an endeavour for such arbitrations, and the ground of patent illegality in Section 34(2A) is not available against an award in an international commercial arbitration.
By the proviso to Section 2(2), Sections 9, 27 and 37(1)(a) and (3) apply to an international commercial arbitration seated outside India unless the parties agree otherwise. This reflects BALCO v. Kaiser Aluminium, which confined Part I to arbitrations seated in India. Examiners test the four categories of foreign party and these differences in treatment.
What the law says
(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; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii) *** an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv) the Government of a foreign country;
Section 2(1)(f) defines ICA; 2(1)(e) and 2(2) fix the Court and scope of Part I
[(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.
(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.]
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to [the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision].
Section 11(9): Supreme Court appoints arbitrators in ICA
(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;
(b) in international commercial arbitration,—
(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;
Rules applicable to the substance of the dispute in ICA
[ [(1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:
Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.]
(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.
Time limit for award; only an endeavour in ICA
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if—
(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that]—
Section 34(2A) patent illegality excluded for ICA awards
Example
For example, a Delhi company and a firm incorporated in Singapore arbitrate a supply contract dispute in Mumbai. It is an international commercial arbitration seated in India, so Part I applies and patent illegality is not a ground for setting the award aside.
For the exam
- Defined in Section 2(1)(f): commercial relationship plus at least one foreign party.
- A company incorporated in India is not a foreign party, even if controlled from abroad.
- Court for ICA is the High Court (Section 2(1)(e)(ii)); arbitrator appointed by the Supreme Court (Section 11(9)).
- Patent illegality under Section 34(2A) is not a ground to set aside an ICA award.
- Sections 9, 27 and 37(1)(a) and (3) apply to foreign seated ICA unless excluded (proviso to Section 2(2)).
25 questions in the Law Maker question bank use this term. Practise Arbitration and Conciliation Act, 1996 questions
Judgments
- Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012)The Constitution Bench held that Part I of the Arbitration and Conciliation Act, 1996 applies only to arbitrations seated in India, overruled Bhatia International and Venture Global, and applied this law prospectively to arbitration agreements executed after the judgment.
- Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019)A party, or its official, interested in the outcome of a dispute cannot unilaterally appoint a sole arbitrator; the Court annulled the respondent's appointment and itself appointed a sole arbitrator under Section 11(6).
Related terms
- Arbitration agreementAn agreement by the parties to submit to arbitration all or certain disputes, present or future, arising out of a defined legal relationship (Section 7 of the Arbitration and Conciliation Act, 1996).
- Arbitral awardThe decision of an arbitral tribunal on the dispute referred to it, including an interim award (Section 2(1)(c) of the Arbitration and Conciliation Act, 1996).
- Arbitral tribunalA sole arbitrator or a panel of arbitrators (Section 2(1)(d) of the Arbitration and Conciliation Act, 1996). It decides the dispute and may rule on its own jurisdiction.
- Foreign awardAn award on commercial differences made on or after 11 October 1960 under a written New York Convention agreement, in a territory notified by the Central Government. Section 44, Arbitration Act, 1996.
- Commercial disputeA dispute arising out of any of the transactions listed in Section 2(1)(c) of the Commercial Courts Act, 2015, such as mercantile documents, construction contracts, IP rights and sale of goods.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.