Maintainability Of Execution Case To Be Considered Along With Issue Of Enforceability Of Foreign Award: SC [Read Judgment]

Maintainability Of Execution Case To Be Considered Along With Issue Of Enforceability Of Foreign Award: SC [Read Judgment]

“The scope of interference has been consciously constricted by the legislature in relation to the execution of foreign awards.”

The Supreme Court has observed that piecemeal consideration of the issue of maintainability of the execution case concerning the foreign awards, in the first place; and then the issue of enforceability thereof, is not envisaged under the scheme of Section 48 of the Arbitration and Conciliation Act, 1996.

The bench comprising Justice AM Khanwilkar and Justice Ajay Rastogi observed that the Court is expected to consider both these aspects viz. maintainability and enforceability, simultaneously at the threshold.

In LMJ International Ltd. vs. Sleepwell Industries Co. Ltd., the court dealt with the argument that, in earlier round of proceedings, the objections to execution case were limited to the questions of maintainability of the execution case on grounds as were urged at the relevant time and not in reference to the enforceability of the subject foreign awards as such. The High Court had held that the application filed questioning enforceability of the foreign award deserves to be rejected, being barred by constructive res judicata.

The Court said that the grounds urged by the petitioner in the earlier round regarding the maintainability of the execution case could not have been considered in isolation and de hors the issue of enforceability of the subject foreign awards. "For, the same was intrinsically linked to the question of enforceability of the subject foreign awards. In any case, all contentions available to the petitioner in that regard could and ought to have been raised specifically and, if raised, could have been examined by the Court at that stage itself.", the court added.

Upholding the High Court view, the bench held as aforesaid and observed: "Taking any other view would result in encouraging successive and multiple rounds of proceedings for the execution of foreign awards. We cannot countenance such a situation keeping in mind the avowed object of the Arbitration and Conciliation Act, 1996, in particular, while dealing with the enforcement of foreign awards. For, the scope of interference has been consciously constricted by the legislature in relation to the execution of foreign awards. Therefore, the subject application filed by the petitioner deserves to be rejected, being barred by constructive res judicata, as has been justly observed by the High Court in the impugned judgment."

The bench then dismissed SLPs with exemplary costs of Rs.20, 00,000.

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