Application for Enforcement of Foreign Award Shall Not Be Dismissed Merely For Non-Production of Requisite Documents ‘At The Time Of Application’: SC [Read Judgment]

“We make it clear that the said interpretation of the word “shall” as “may” is restricted only to the initial stage of the filing of the application and not thereafter”The Supreme Court has held that, at the initial stage of filing of an application for enforcement of a foreign award, non-compliance of the production of the documents mentioned in Section 47 of the Arbitration and Conciliation Act shall not entail in dismissal of the application for enforcement of an award.In P.E.C. Limited vs. Austbulk Shipping SDN BHD, the bench comprising of Justice AM Khanwilkar and Justice L. Nageswara Rao were considering the issue whether an application for enforcement of a foreign award under Section 47 of the Act is liable to be dismissed if it is not accompanied by the original arbitration agreement.Section 47 postulates that the party applying for the enforcement of a foreign award “shall” produce before the Court at the time of application the following: The original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; The original agreement for arbitration or a duly certified copy thereof, and Such evidence as may be necessary to prove that the award is a foreign award.Should not entail in dismissal of the application for enforcement of an awardThe bench observed: “We are of the opinion that the word “shall” appearing in Section 47 of the Act relating to the production of the evidence as specified in the provision at the time of application has to be read as “may”.”The court said that there would be no prejudice caused to the party objecting to the enforcement of the Award by the non-filing of the arbitration agreement at the time of the application for enforcement. Taking note of the procedures followed in New York Convention, the bench said: “Keeping in view the object and purpose of the New York Convention, we are of the view that the word “shall” in Section 47 of the Act has to be read as “may”. The opposite view that it is obligatory for a party to file the arbitration agreement or the original award or the evidence to prove that the award is a foreign award at the time of filing the application would have the effect of stultifying the enforcement proceedings. The object of the New York Convention will be defeated if the filing of the arbitration agreement at the time of filing the application is made compulsory. At the initial stage of filing of an application for enforcement, non-compliance of the production of the documents mentioned in Section 47 should not entail in dismissal of the application for enforcement of an award. The party seeking enforcement can be asked to cure the defect of non-filing of the arbitration agreement. The validity of the agreement is decided only at a later stage of the enforcement proceedings.”Restricted only to the initial stage of the filing of the application and not thereafterHowever, the bench clarified: “Reading the word “shall” in Section 47 of the Act as “may” would only mean that a party applying for enforcement of the award need not necessarily produce before the Court a document mentioned therein “at the time of the application”. We make it clear that the said interpretation of the word “shall” as “may” is restricted only to the initial stage of the filing of the application and not thereafter”The bench also noted that in some other jurisdictions, the courts have held that the application for enforcement of the foreign awards does not warrant rejection for non-filing of the relevant documents including the award and the arbitral agreement. The bench did not adjudicate on this issue as in this case, the arbitration agreement was brought on record by both the parties.Arbitration Agreement can be included in the correspondence between the parties alsoAnother issue considered by the bench was whether there is a valid arbitration agreement between the parties and what is the effect of a party not signing the Charter Party The term “agreement in writing” in Article II is very wide. The court said: “An arbitral clause need not necessarily be found in a contract or an arbitral agreement. It can be included in the correspondence between the parties also. In the present case the arbitration agreement is found in the Charter Party which has been accepted by both the Arbitrator and the High Court.”Read the Judgment Here

Application for Enforcement of Foreign Award Shall Not Be Dismissed Merely For Non-Production of Requisite Documents ‘At The Time Of Application’: SC [Read Judgment]

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