The Supreme Court’s 2025 Ruling in Balaji Steel Trade v. Fludor Benin S.A.
The Supreme Court’s 2025 ruling in Balaji Steel Trade v. Fludor Benin S.A. shuts the door on a familiar tactic: using later, transaction-level contracts with India-seated arbitration clauses to override a foreign seat chosen in an earlier “mother agreement.” This post argues that the judgment reinforces contractual certainty, narrows the space for novation and the group-of-companies doctrine, and warns commercial parties that multi-contract supply chains require deliberate dispute-architecture design.
On 21 November 2025, the Supreme Court of India dismissed Balaji Steel Trade’s Section 11 petition seeking a New Delhi–seated composite arbitration, holding that the parties had already chosen Benin as the juridical seat under their Buyer–Seller Agreement (BSA).
The Dispute Structure
A framework BSA (the “mother agreement”), selecting Benin as the seat and Benin law as the governing/curial law.
Later Sales Contracts and High Seas Sales Agreements (HSSAs) for individual consignments, containing New Delhi arbitration clauses under Indian law.
Balaji Steel attempted to rely on these later India-seated clauses to override the BSA’s foreign seat. The Supreme Court held that this attempt was impermissible: the BSA remained the operative instrument for disputes arising from the long-term relationship.
2. Three Doctrinal Takeaways
A. Seat Determines Curial Supervision
Reaffirming a bedrock principle of arbitration law, the Court held that the juridical seat—not the physical venue, determines the curial law and court supervision.
Because the BSA expressly chose Benin as the seat, Part I of the Indian Arbitration and Conciliation Act, 1996 did not apply, including Section 11 appointment powers.
This ruling eliminates a common tactic: invoking later India-seated transaction-level clauses to pull a foreign-seated dispute under Indian supervisory jurisdiction.
B. Novation Requires Explicit Substitution
Balaji argued that later Sales Contracts and HSSAs “novated” the BSA’s dispute-resolution framework. The Court disagreed.
Finding
Explanation
Limited-purpose instruments
The later contracts governed isolated shipments.
No intention to supersede
Nothing in the text or conduct suggested the BSA was replaced.
The principle is clear: novation cannot be inferred from the existence of later contracts; it must be express or arise from unequivocal conduct. This bright line promotes certainty and reduces litigation over implied novation.
C. Group-of-Companies Doctrine Is Not a Shortcut
Balaji attempted to bring multiple corporate entities into a single Indian arbitration using the group-of-companies doctrine.
The Court rejected this: mere shared ownership or corporate affiliation is not enough.
Mutual intention to arbitrate must be clearly demonstrated.
The message is clear: if parties intend affiliates to be bound, they must say so expressly.
3. The Trade-Off: Autonomy vs. Access to Interim Relief
Respecting the foreign seat carries consequences. Once Benin was accepted as the juridical seat, parties lost access to Indian interim remedies (attachment, preservation orders, protection of goods in transit).
Type of Party
Impact
Large multinationals
Foreign interim mechanisms are manageable.
Smaller suppliers / MSMEs
Indian interim remedies are critical for survival.
The judgment therefore reveals a persistent policy tension:
Party autonomy vs. equity and access to emergency relief.
A Preventive Contractual Solution
Emergency arbitrator provisions (e.g., SIAC or LCIA emergency rules)
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Final-year law student at Symbiosis International University with a deep interest in exploring how diverse facets of law impact society. My areas of focus include Technology Law, International Human Rights Law, Intellectual Property Law, Corporate Law, and Sports Law.
