Bombay HC Restores IMAX's Enforcement Of Foreign Awards Against E-City, Holds Res Judicata Bars Re-Agitation Of Limitation At Later Stage

The court said it cannot revisit an objection of limitation merely because subsequent judgments may have taken a different legal view.

A Division Bench of Justices M.S. Sonak and Advait M. Sethna in an order dated December 30, observed:

“The principle of res judicata applies also as between two stages in the same litigation to the extent that a Court, whether the trial Court or a higher Court having at an earlier stage decided a matter in one way will not allow the parties to re-agitate the matter again at a subsequent stage of the same proceedings.”

On September 28, 2000, IMAX entered into a master agreement with E-City for leasing six IMAX theatre systems for a period of 20 years, with an option to extend for another ten years. When E-City failed to fulfil its contractual obligations in 2003, IMAX initiated arbitration before an International Chamber of Commerce (ICC) arbitral tribunal in London, claiming damages of about Rs. 152 crores.

The arbitral tribunal delivered a partial award on February 9, 2006, holding that the master agreement gave rise to binding obligations and that E-City had violated its commitment to lease all six theatre systems. The tribunal rejected E-City's defence that the agreement was unenforceable and found IMAX entitled to damages. The tribunal's decision was followed by a “quantum award” dated August 24, 2007, directing the respondent to pay IMAX over Rs. 78 crores.

In July 2008, E-City approached the Bombay High Court under Section 34 of the Arbitration Act, challenging the foreign awards. IMAX objected to the petition arguing that Part I of the Act was inapplicable to foreign awards. While a single judge initially held the petition maintainable by an order dated June 10, 2013, the Supreme Court on March 10, 2017 held that such awards could only be tested under Part II of the Act and dismissed the respondent's challenge.

Following this, IMAX filed an enforcement petition before the high court in April 2018, seeking recognition and execution of the ICC awards under Sections 47 to 49 of the Act. E-City objected to the petition arguing it was barred by limitation. A single judge however rejected this argument and held the petition to be within limitation period. E-City challenged this finding in the Supreme Court, but it was rejected on August 16, 2023, giving finality to the limitation ruling.

Despite this, at the final hearing stage, another single bench of the court refused to enforce the awards, observing that the petition was hit by limitation, contrary to public policy and wrongly directed against E-City's group companies.

Allowing IMAX's appeal, the court's division bench observed that the limitation issue had already been decided by the Supreme Court and could not be reopened by the court. It clarified that res judicata applies even between different stages of the same proceedings, and a subsequent change in legal interpretation does not permit a court to revisit a binding earlier order. It said enforcement courts cannot re-examine the merits of a foreign award or expand the scope of “public policy” objection.

The court allowed IMAX Corporation's appeal and set aside the single judge's order, thereby clearing the way for execution of the foreign arbitral awards against E-City group.

Case Title: Imax Corporation vs E-City Entertainment (I) Pvt Ltd & Ors

Case Number: Commercial Arbitration Appeal (CARBA) (L) No. 38267 of 2024

For Appellant: Sr. Advocate Aspi Chinoy with Advocates Shanay Shah, Rahul Mahajan, Amit Surve, Simran Gulabani i/b Fortitude Law Associates

For Respondents: Senior Advocates Vikram Nankani, Navroz Seervai, Sharan Jagtiani with Advocates Sumeet Nankani, Pooja Tidke, Krushi N. Barfiwala, Shlok Bodas, Alisha Mohite, Ishika Lodha, Saket Mone, Gulnar Mistry, Shrey Shah, Shrushti Thorat, Archit Rao, Akshay Doctor, Siddharth Joshi, Avanti Divan, Samriddhi Lodha, i/b Parinam Law Associates, Vidhi Partners

Click Here To Read/Download order