In a significant ruling impacting cross-border commercial disputes, the Supreme Court of India has refused to appoint an arbitrator in a high-stakes conflict between Balaji Steel Trade and Fludor Benin S.A., holding that the parties had contractually chosen Benin as the arbitration seat, thereby ousting the jurisdiction of Indian courts under Part I of the Arbitration and Conciliation Act, 1996.
The judgment—2025 INSC 1342—delivers a major message: Indian businesses cannot invoke domestic arbitration after agreeing to a foreign seat, even if later related contracts carry Indian arbitration clauses.
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🔹 What Triggered the Dispute?
Balaji Steel Trade claimed breach of supply terms under a 5-year Buyer and Seller Agreement (BSA) signed in 2019 with Fludor Benin S.A. The BSA clearly stated:
- Arbitration will take place in Benin, and
- Benin law will govern the agreement.
When supply issues arose, Balaji Steel began executing Sales Contracts with a Dubai entity (Respondent 2) and High Seas Sale Agreements (HSSA) with an Indian company (Respondent 3). These later contracts had Indian arbitration clauses, leading Balaji Steel to argue that the entire commercial relationship should now be adjudicated in India.
🔹 Benin Arbitration Already Completed
Fludor Benin invoked arbitration before CAMEC (Benin) in April 2023.
The Benin Commercial Court appointed a sole arbitrator, and the arbitration concluded with a final award on 21 May 2024—months before the Supreme Court heard the Section 11 plea.
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🔹 Balaji Steel’s Strategy Falls Apart
Balaji Steel tried three angles:
- Composite Transaction Argument: All agreements form one chain.
- Novation Argument: Later contracts with Indian arbitration clauses supersede the BSA.
- Group of Companies Doctrine: Respondents 2 and 3 should be added to arbitration.
The Supreme Court rejected all three.
🔹 Supreme Court’s Key Findings
1. BSA is the “Mother Agreement”
The later Sales Contracts and HSSAs were consignment-specific and did not replace the BSA.
2. Benin is the Juridical Seat
The wording “arbitration will take place in Benin,” combined with Benin governing law, leaves no doubt that Benin was consciously chosen as the seat.
3. Part I of Arbitration Act Doesn’t Apply
Indian courts cannot appoint an arbitrator for a foreign-seated arbitration.
4. Benin Award Already Passed
The dispute has already been adjudicated by the Benin tribunal.
5. Delhi High Court’s Earlier Refusal Binds the Petitioner
The High Court dismissed Balaji Steel’s anti-arbitration suit in 2024; the Supreme Court held that Balaji Steel is now barred by issue estoppel from reopening the same issues.
6. Group of Companies Doctrine Not Applicable
Common ownership is not enough; no intention was shown to bind Respondents 2 and 3 to BSA arbitration.
🔴 Final Verdict: Petition Dismissed
The Supreme Court dismissed Balaji Steel’s Section 11 petition, holding that:
“The petition is fundamentally misconceived, legally untenable, and contrary to the autonomy of the parties’ contractual design.”
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Each party will bear its own costs.
Balaji Steel Trade v. Fludor Benin S.A. & Others, decided on : 21-11-2025