Court Cannot Go Into Merits While Enforcing Foreign Award U/S 48 Of Arbitration Act: Bombay High Court

The Bombay High Court bench of Justice Arif S Doctor has held that jurisdiction of enforcement court under section 48 of the Arbitration is very limited and while enforcing the award the court cannot go into the merits of the case. Brief Facts This petition has been filed seeking enforcement of an award under part II of the Arbitration Act. This award was passed by an International Court Arbitration, London by which the petitioner was awarded a sum of Euro 2.45 million and costs. A consortium agreement was entered into between the petitioner and the respondent on January 30, 2006 by which the responsibilities for construction of power plants in Sudan were undertaken. NEC and the respondent executed two contracts on May 9, 2006 for the design, construction, and commissioning of two thermal power plants, one located in El-Fasher, Sudan and the other in El-Genena, Sudan. The said contracts contained arbitration clause by which the arbitration was to be held in London and law of sudan was to be applicable. On 5th December 2007, NEC and the Petitioner executed an addendum by and under which NEC inter alia assigned to the Petitioner all matters concerning the advance payment made by NEC to the Respondent. NEC was dissolved and STGP was established. On 24th December 2012 STGP and the Petitioner executed a Deed of Assignment whereby STGP assigned in favour of the Petitioner the debt of Euro 2.7 million i.e. the down payment made by NEC to the Respondent and STGP's right against the Respondent arising out of the breaches and/or wrongful repudiation of the said contracts. Arbitration proceedings commenced before the ICC in which a partial award was passed on 21 April, 2015 holding that in fact there existed an arbitration agreement between the parties which conferred jurisdiction on the ICC. A final award came also to be passed by the ICC which was not challenged before the london courts. However it was challenged under section 34 of the Arbitration Act before the Karnataka Court but the petition was withdrawn during the pendency of the present petition. Contentions The petitioner submitted that the Petitioner was the Assignee of the said Contracts and thus stood in the shoes of NEC. He pointed out that vide the Partial Award, the Tribunal had specifically upheld the validity of the said assignment as per the applicable law i.e. Sudanese Law. The partial award was not challenged by the respondent therefore it had attained finality. Reliance was placed on the Supreme Court judgment in McDermott International Inc. vs. Burn Standard Company Ltd. And Others, 2006. That the jurisdiction of the enforcement court is very limited and it cannot go into the merits of the award while enforcing the foreign award. Per contra, the respondent submitted that the enforcement of partial award and final award is being challenged on the ground that it is against public policy of India. It does not matter whether partial or final was challenged or not. Reliance was placed on the Supreme Court judgment in Vijay Karia vs Prysmian Cavi E. Sistemi SRL, 2020 and others wherein it was held that when enforcement of foreign award is opposed on the ground of violation of public policy, the court would have no discretion but to refuse the enforcement. That it was held in partial award that the deed of assignment of was valid as per sudanese law and indian law was not taken into consideration while deciding the issue. The enforcement court is not bound by the opinion of the tribunal instead it has to independently assess whether the tribunal would have jurisdiction to decide the underlying disputes. That the Petitioner's reliance upon the judgement of the Hon'ble Supreme Court in the case of McDermott International Inc. was entirely misconceived as Section 48(2)(b) of the Arbitration Act made it clear that the Court may refuse enforcement of a Foreign Award if the Court finds that the enforcement of the Foreign Award would be contrary to the Public Policy of India. That the unilateral assignment by NEC which resulted in the Respondent being forced to arbitrate with a non-party was thus contrary to the public policy of India.Even assuming the Deed of Assignment was valid, it did not result in an automatic assignment of the arbitration clause in the said contracts. Court's Analysis The court outrightly dismissed the submissions of the respondent on the ground that it had failed to make out a case to refuse the enforcement of the foreign award. The court noted that the tribunal had considered in detail the arguments advanced by the parties and come to the conclusion that an arbitration agreement existed between the parties. This finding had not been challenged by the respondent. Since this award had attained finality for not having challenged, the respondent cannot be allowed to contest the enforcement of the award purely on ...

Court Cannot Go Into Merits While Enforcing Foreign Award U/S 48 Of Arbitration Act: Bombay High Court

Mohd Malik Chauhan

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Court Cannot Go Into Merits While Enforcing Foreign Award U/S 48 Of Arbitration Act: Bombay High Court

Mohd Malik Chauhan

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