REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1544  OF 2020 (ARISING OUT OF SLP (CIVIL) NO.8304 OF 2019)

VIJAY KARIA & ORS.    …Appellants

Versus

PRYSMIAN CAVI E SISTEMI SRL & ORS.     …Respondents

WITH CIVIL APPEAL NO.  1545  OF 2020

(ARISING OUT OF SLP (CIVIL) NO.8435 OF 2019)

J U D G M E N T

R.F. Nariman, J.  

1. Leave granted.

2. The present appeals are filed against the judgment of a Single Judge

of  the  Bombay  High  Court  dated  07.01.2019,  by  which  four  final

awards made by a sole arbitrator in London under the London Court of

International  Arbitration Rules (2014)  (hereinafter  referred to  as the

“LCIA Rules”) were held to be enforceable against the Appellants in

India.  

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3. The  brief  facts  of  this  case  are  as  follows.  The  Appellants,  i.e.

Appellant No.1 Shri Vijay Karia, and Appellants No.2 to 39 (who are

represented  by  Appellant  No.1)  are  individual,  non-corporate

shareholders  of  Ravin  Cables  Limited  (hereinafter  referred  to  as

“Ravin”). On 19.01.2010, the Appellants and Ravin entered into a Joint

Venture Agreement (hereinafter referred to as “JVA”) with Respondent

No.1, i.e. Prysmian Cavi E Sistemi SRL – a company registered under

the laws of Italy. By this JVA, Respondent No.1 acquired a majority

shareholding (51%) of Ravin’s share capital. The material clauses of

the JVA are set out hereinbelow:  

“8. Purpose and Objectives

8.1  Purpose  of  the  Company  and  Scope  of  the Agreement

Subsequent to Closing, the Company shall be a joint venture  between  Prysmian  and  the  Existing Shareholders  for  the  purposes  of  undertaking  and conducting the business of the company, or for such other  activities  as  may  be  determined  by  the Shareholders  from  time  to  time,  subject  to  the applicable law. The business of the company shall be conducted in the best interests of the Company, and in accordance with sound professional  and commercial principles.”

“12.6. Chairman and Managing Director

12.6.1 Mr. Karia shall be the Chairman of the Board as well as the Managing Director of the Company until:

(i) Expiry of seven (7) years from the Agreement Date; or

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(ii) The date of which the Existing Shareholders cease to hold in the aggregate at least ten percent (10%) of the share capital of the Company:

Whichever occurs earlier.

It is hereby agreed that Mr. Karia shall not, during such term, be entitled to be removed as a Chairman and Managing  Director  by  the  passing  of  an  ordinary resolution at a general meeting of the Company…”

“12.6.4. Without  prejudice  to  the  aforesaid  clause 12.6.3, the Managing Director shall continue to remain responsible  for  the  day  to  day  management  of  the Company in accordance with the Interim Period Policy adopted by the Board on the Closing Date, until  the appointment  of  the  CEO  of  the  Company  (“Interim Period”)”

“12.6.5 As soon as practicable after the efflux of the Interim Period, a Board shall be convened to resolve upon a new policy, applicable for a period of 6 (six) months thereafter (the  “Integration Period”), for the delegation  of  the  powers  to  the  managers  of  the Company  (the  “Delegation  of  Powers  Policy”)  all powers  not  delegated  to  the  managers  of  the Company  pursuant  to  such  Delegation  of  Powers Policy, shall be delegated jointly to the CEO and the Managing Director…”

“12.6.6 Provided however, that subject to the overall supervision  of  the  Board,  after  the  efflux  of  the Integration  Period,  the  Managing  Director  shall  be directly  responsible  solely  for  managing  the  internal audit  as  well  as  the  strategy  and  business development  of  the  Company  and  present  to  the Board his findings and analysis for final determination by the Board. Accordingly all the powers which are not delegated to the managers of the Company pursuant to  the  Delegation  of  Powers  Policy,  as  may  be amended  by  the  Board  from time  to  time,  shall  be delegated to the Managing Director to the extent such powers fall within his duties as aforesaid.

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12.6.7  After  the  Integration  Period,  the  Managing Director may appoint an internal auditor to assist the Managing  Director  in  his  responsibility  towards  the internal  audit  of  the  company.  This  internal  auditor shall  report  directly  to  the  Managing  Director  and functionally report to the internal audit department of Prysmian S.P.A.”

“12.7 Chief Executive Officer

12.7.1 The  CEO  shall  be  appointed  by  and  shall directly report to the Board.

12.7.2 Without  prejudice  to  the  aforesaid  Clause 12.7.1, the CEO shall from the date of its appointment till the efflux of the Integration Period, be responsible for the day to day management of the Company jointly with the Managing Director.

12.7.3 Provided however,  that  subject  to  the overall supervision  of  the  Board,  after  the  efflux  of  the Integration Period,  the CEO shall  be responsible for the day to day management of the Company excluding solely the internal audit and the strategy and business development of the Company for which the Managing Director  shall  be  responsible.  Accordingly  all  the powers which are not delegated to the managers of the Company pursuant  to  the Delegation of  Powers Policy, as may be amended by the Board from time to time, shall be delegated to the CEO to the extent such powers fall within his duties as aforesaid.”

“17. PROCEDURE FOR FAIR MARKET VALUATION  

17.1  Notwithstanding  anything  contained  in  this Agreement,  all  references  in  this  Agreement  to  Fair Market  Value  shall  be  the  fair  market  value  as determined,  applying  the  definition  of  EBITDA,  Net Financial Indebtedness (NFI) and Net Working Capital (NWC) set forth under Schedule X, by any one of the following four accounting firms settled in India:  

(a) KPMG

(b) Ernst & Young;

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(c) PriceWaterhouseCoopers;

(d) Deloitte  

17.2 The accounting firm shall be chosen from among those indicated under clause 17.1 above by the Party that, according to clauses 23 and 24, is called by the other  Party  to  sell,  in  whole  or  in  part  its  share participation in the Company to the other Party; or by the Party that, according to Clauses 11.5 (iv), 16 and 23, calls the other Party to buy, in whole or in part, its share participation in the Company (in either case the “Exiting Party”). If the Exiting Party fails to choose the accounting firm within thirty (30) calendar days from (i) the receipt of the notice by which the other Party has intimated  it  to  sell,  in  whole  or  in  part,  its  share participation in the Company to the other Party; or (ii) from the serving of notice to the other Party to buy, in whole  or  in  part,  its  share  participation  in  the Company, then the accounting firm shall be chosen by the Party (the “Non-Exiting Party”) that called the other Party to sell, in whole or in part, its share participation in the Company to the other Party or was called by the Exiting Party to buy,  in whole or  in part,  the Exiting Party’s share participation in the Company.”

“20. Mutual Covenants and Undertakings

xxx xxx xxx

20.1.2 The Parties further agree to cooperate and act in  good  faith,  fairness  and  equity  as  between themselves.”

“21. Business in India

21.1 The Parties agree that neither Prysmian nor Mr. Karia, whether directly or through their Affiliates, shall invest, acquire or participate in the Cable Business in India,  save  and  except  through  the  Company  in accordance with this agreement.”

“21.5 Further, it is agreed that, within March 31,2011, the Promoters shall either stop or cease to have any interest  in  any  activity  they  are  currently  or  will  be conducting in India, directly or indirectly through any

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Affiliates, which is in competition with the business of the Company. Such ceased activities shall then not be offered  by  Mr.  Karia  to  the  Company,  pursuant  to Clause 21.2 for a period of three years from the date of such cessation.

For  the sake of  clarity,  it  is  agreed that  this  Clause 21.4 shall apply, without being limited, to the activities carried  out  by  (i)  Vijay  Industrial  Electricals,  a company  incorporated  under  the  laws  of  India  and having its registered office at 302, Akruti Trade Centre, Third  Floor,  Road  n.  7,  MIDC,  Marol,  Andheri(east) Mumbai-400093  (ii)  Special  Cable  Industries,  a company  incorporated  under  the  laws  of  India  and having  its  registered  office  at  A-1/404  GIDC Estate, Ankleshwar 393002.”

“23. Event of Default

23.1  If  any  party(“  Defaulting  Party”)  is  in  material breach  of  any  provisions,  obligations,  covenants, conditions and undertakings under this Agreement , or in  the  event  of  insolvency  or  bankruptcy  of  the Defaulting  Party  or  if  the  substantial  undertaking  or assets of the Defaulting Party  is under receivership or any other equivalent status, it shall be considered as an event of default (“Event of Default”).

23.2 In such an event, the other party (“Non Defaulting Party”) may give notice of the same (“Determination Notice”) to the Defaulting Party.

23.3  The  Defaulting  Party  shall  have  a  period  of 60(sixty)  calendar  days  from  the  receipt  of  the Determination Notice  (or  Such further  period as the Non Defaulting Party may agree in writing) to rectify the  Event  of  Default(“  Rectification  Period”).  It  is hereby clarified that this clause 23.3 is not applicable if the Event of Default is represented by the insolvency or bankruptcy of the defaulting Party in which case the Non  Defaulting  Party  may  forthwith  serve  the  EOD Notice to the Defaulting Party.

23.4  If  upon  expiry  of  the  Rectification  Period,  the Event  of  Default  has  not  been so  rectified  the  Non

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Defaulting Party may require the Defaulting Party by written notice(“EOD Notice”) to either (i) sell to the Non Defaulting  Party  or  such  other  Person  as  may  be nominated by the Non Defaulting Party, all  ,  but not less than all, the Shares held by the Defaulting Party (“Defaulting Party Shares”)  at  the 10% (ten percent) discount to the Fair Market Value(“ Discounted Price”) or (ii)  buy from the Non Defaulting Party all,  but not less than all, the Shares held by the Non Defaulting Party  at  10%  (ten  percent)  over  the  Fair  Market Value(“Premium Price”). The Defaulting Party shall be then under the obligation to either (I) sell all, but not less  than  all,  its  Shares  in  the  Company  within  30 (thirty) calendar days of the EOD Notice or (II) buy all, but not less than all, the Non Defaulting Party Shares in the Company within 30(thirty) calendar days of the EOD Notice, as the case may be.

23.5 It is hereby agreed that:

23.5.1  If  Prysmian  is  the  Defaulting  Party,  then  Mr. Karia only( and not  the Existing Shareholders) will be entitled  to  either(a)  buy  all(but  not  less  than  all) Prysmian Shares at the Discounted Price  or (b) sell to Prysmian all (but not less than all its own shares) and those  of  the  Existing  Shareholders  at  the  Premium Price.

23.5.2 If Mr. Karia or any of the Existing Shareholders is the Defaulting Party, then Prysmian will be entitled to either (a) buy all ( but not less than all) the Shares held  by  Mr.  Karia  and  Existing  Shareholders  at  the Discounted Price or (b) sell to Mr. Karia  all ( but not less than all) its own shares at the Premium Price.

For  sake  of  clarity,  the  Parties  agree  that  for  the purpose of this Clause 23.5 any reference to Mr. Karia Shares,  Prysmian Shares and Existing Shareholders Share  shall  be  deemed  to  include  any  Shares transferred to any or their respective Affiliates pursuant to the provisions of Clause 10.4 above.”

“27. ARBITRATION

27.1 Dispute Resolution

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27.1.1 The Parties agree to use all reasonable efforts to  resolve  any  dispute  under,  or  in  relation  to  this Agreement quickly and amicably to achieve timely and full performance of the terms of this Agreement.

27.1.2 Any dispute, controversy or claim arising out of or  relating  to  or  in  connection  with  this  Agreement including a dispute as to the validity or existence of the Agreement or the arbitration agreement, or any breach or alleged breach thereof, shall be settled exclusively by  arbitration  under  the  Rules  of  Arbitration  of  the London Court  of  International  Arbitration (“LCIA”)  as amended from time to time.

27.1.3 The arbitral tribunal (“Tribunal”) shall consist of one (1) arbitrator,  to be appointed by the LCIA. The arbitrator shall be from a neutral nationality, i.e. from a nationality and origin other than any of the Parties.

27.1.4  The  seat  of  the  arbitration  shall  be  London, United Kingdom.

27.1.5 The language to be used in the arbitration shall be English.

27.1.6  The  law  applicable  and  governing  the arbitration  agreement  (proper  law  of  the  arbitration agreement) and in all respects including the conduct of the proceedings shall be English Law. If the Institution above  named  ceases  to  exist  or  is  unable  for  any reason to administer the arbitration proceedings then the arbitration shall be conducted in accordance with the (English) Arbitration ACT 1996 as amended from time to time or any statute that may replace the said Act.

27.1.7  Parties  expressly  agree  that  Part  I  of  the (Indian)  Arbitration  and  Conciliation  Act,  1996  (as amended  from  time  to  time  and  any  statutory enactment  thereof)  shall  have  no  application  to  the arbitration agreement or the conduct of arbitration or to the setting aside of any award made there under, and the provisions of  Part  I  )  including the provisions of section 9 of the Arbitration and Conciliation Act, 1996 is hereby expressly excluded….

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27.1.9  The  arbitration  award  (the  “Award”)  shall  be final and binding on the Parties.

27.1.10 The courts of London (United Kingdom) shall have  exclusive  jurisdiction  in  respect  of  all  matters arising in connection with the arbitration and Existing Shareholders  submits  to  the  jurisdiction  of  the  said courts.  Provided  however  that  the  Award  may  be enforced  in  any  appropriate  jurisdiction.  If  to  be enforced in India the Award shall be a foreign award to which  the  legislative  provisions  incorporated  in  the applicable Indian Act  to  give effect  to the New York Convention on foreign arbitral awards 1958 ( the New York  Convention)  shall  apply(currently  Part  II  of  the (Indian) Arbitration and Conciliation Act 1996)…”

4. By  a  separate  ‘Control  Premium  Agreement’  of  the  same  date,

Respondent No.1 paid €5 million to the Appellants as ‘control premium’

for the acquisition of the share capital of Ravin.  5. On 10.08.2010,  pursuant  to  clause  12  of  the  JVA -  as  the  interim

period of six months under the JVA had come to an end - one Mr. Luigi

Sarogni was appointed as CEO of Ravin by Respondent No.1. Until

the expiry of the ‘integration period’, Ravin was to be jointly managed

by the said CEO and the Managing Director for another period of six

months. Factually, however, we are informed that the said ‘integration

period’  carried  on  beyond  December  2010  and  continued  until

September 2011.  6. In April 2011, Mr. Giancarlo Esposito was designated by Respondent

No.1  as  the  H.R.  Director  of  Ravin.  On  15.09.2011,  the  Board  of

Directors  of  Ravin  conferred  exclusive  powers  of  the  day  to  day

management  of  the  company  on  the  CEO  so  appointed  by

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Respondent  No.1.  It  is  the  case  of  Respondent  No.1  that  the

appointed CEO was thwarted in jointly managing the company during

this ‘integration period’, as a result of which, in November 2011, one

Ms. Cinzia Farise was appointed as CEO in the place of Mr. Sarogni

by the Board of Directors. Since the Board Resolution of 01.11.2011

conferred on Ms. Farise the power to employ and lay-off permanent

staff, she imposed a temporary freeze and check on new hiring without

her approval,  which was alleged to be breached by the Appellants.

Later, from December 2011 till February 2012, Ms. Farise sought to

convene a board-meeting to finalise one Mr. Brunetti’s appointment as

CFO of Ravin, which was assented to by the Respondent’s Directors,

but not signed by the Appellant’s Directors. Things reached a head on

31.01.2012 when the employees of the company went on a strike at

Ravin’s  Akruti  office.  By  February  2012,  the  Appellants  and

Respondent  No.1  were  at  loggerheads,  as  a  result  of  which

Respondent No.1 issued a request for arbitration in terms of clause 27

of  the  JVA,  claiming  that  the  Appellants  had  committed  ‘material

breaches’ of the JVA, inter alia, by ousting Respondent No.1 from the

control of Ravin altogether. On 26.03.2012, the Appellants responded

to the request for arbitration and included several counter claims. Each

party claimed that the other had committed material breaches, as a

result of which the successful party in the arbitration would be entitled

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under the JVA to buy out the other party at a 10% premium or discount

(as the case may be). Given the fact that the JVA required service of a

‘Determination Notice’ which alleged material  breaches, such notice

was served by Respondent  No.1 on the Appellants  on 26.03.2012.

Sixty days from this date, called a ‘Rectification Period’ under the JVA,

notice  was  given  by  the  Respondent  No.1  to  the  Appellants  to

remedy/rectify  the alleged breaches.  Further  time even beyond the

sixty  days,  i.e.  until  06.07.2012  was  given,  but  according  to

Respondent No.1, none of the breaches were remedied. As a result,

on 06.06.2012, the LCIA appointed a sole arbitrator - one Mr. David

Joseph QC - to adjudicate the dispute between the parties.  7. An early skirmish was contained in a letter dated 07.06.2012, alleging

that the learned arbitrator was conflicted, as he had been engaged as

counsel  by  Respondent’s  advocates,  Bharucha  and  Partners,  in

another unconnected matter. However, on 08.06.2012, Bharucha and

Partners wrote a letter making it clear there was no such conflict. The

sole  arbitrator  also  denied  any  such  conflict.  The  LCIA  Registry

informed the Appellants that they could challenge the appointment of

the  sole  arbitrator  under  the  LCIA Rules  if  they  so  desired.  The

Appellants, however, gave up the right to any such challenge. As a

result, on 04.07.2012, Respondent No.1 filed its Statement of Claim

before the learned sole arbitrator. On 09.09.2012, the Appellants then

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filed their statement of defence and counter claims. On 28.09.2012,

Respondent  No.1  filed  its  rejoinder  and  opposition  to  the  counter

claim.  

8. Meanwhile,  various  procedural  orders  were  passed  by  the  learned

arbitrator for production of documents etc. A hearing then took place in

December 2012 on questions relating to the construction of various

clauses  of  the  JVA and  jurisdictional  issues  raised  by  Respondent

No.1 in respect of certain counter claims of the Appellants. Deciding

these issues, by what was called the ‘First Partial Final Award’ dated

15.02.2013, the sole arbitrator delineated the scope of the first award

stating that it was restricted only to issues of interpretation of the JVA

and questions of jurisdiction, and not to the merits of either the claims

or  counter  claims made.  In  particular,  the  sole  arbitrator  construed

clause 21.1 of the JVA as follows:

“82. This then brings directly into question the scope and meaning of the words used in Clause 21.1 when each of the Claimant and the First Respondent agreed that it would not directly or through its Affiliates “invest, acquire or participate in the Cable Business in India save  through  the  Company  in  accordance  with  this Agreement”.

83. The  Tribunal  concludes  that  these  words themselves do not prohibit  the Claimant from selling cables directly  in  India.  Such direct  sales might  still amount to a breach of Clause 8 or indeed Clause 20 of the JVA, but direct sales as a stand-alone activity is not  an investment,  acquisition or  participation in  the Cable Business in India.

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84. It  seems  to  the  Tribunal  that  each  of  these expressions  connotes  different  forms  of  long  term engagement,  arrangement  or  commitment  involving either an injection or exchange of capital or know how on the part of the investor, acquirer or participator  in the  sphere  of  the  activities  identified  by  the compendious definition of Cable Business in India.

85. A person  who  concludes  a  contract  of  sale  of goods to another counter-party is not  in accordance with  ordinary  parlance  investing,  acquiring  or participating in the Cable Business in India.

86. Therefore,  the Tribunal concludes that  on a true construction of the JVA simply by applying the ordinary meaning  of  the  words  deployed  together  with  the contractual  definition,  the  Respondents  do  not succeed in their  primary submission namely that the conclusion of one or more contracts of sales of cables directly  in  India by the Claimant  itself  or  through its subsidiaries constituted the investment, acquisition or participation in the Cable Business in India contrary to the terms of Clause 21.1 of the JVA.  

xxx xxx xxx

93. In summary therefore contracts of sale for cables within  the  definition  of  Cable  Business  concluded directly by the Claimant or its affiliates and otherwise than through Ravin do not of itself constitute a breach of Clause 21.1.

94. The conclusion of a series of such contracts might, however, depending on the facts, constitute a breach of Clause 8 or Clause 20 of the JVA. Yet further, the Tribunal  does  not  rule  out  the  possibility  of  the Respondents  alleging  and  proving  some  kind  of investment or participation which consist of some kind of  long term contractual  arrangement  itself  involving sale,  export,  import  or  distribution.  Nothing  stated herein, however, in any way decides or considers the materiality of any such allegation or the consequences of any such breach even if proven.”

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9. Insofar  as the parent  company of  Respondent  No.1 (one Prysmian

SA)  had  made  a  global  acquisition  of  the  ‘Draka  Group’  in

February/March 2011, which included - as one out of 60 companies

belonging  to  the  Draka  Group  -  one  ‘Associated  Cables  Private

Limited’  (hereinafter  referred  to  as  “ACPL”),  which  was  an  Indian

Company doing business in India, the learned arbitrator held:

“108.  The  Tribunal  is  once  more  careful  to  make it clear  that  these  pleaded  allegations  have  not  been proved yet. The proof of these allegations is left to be explored  at  the  substantive  merits  hearing. Nevertheless,  on the basis of  the parties’ respective pleaded cases, the Tribunal concludes that on a true construction  of  Clause  21,  the  wider  acquisition  by Prysmian Spa of  Draka,  which in  turn holds a 60% shareholding in ACPL, is capable  of amounting to an acquisition in the Cable Business in India through an Affiliate of the Claimant in circumstances where it  is not  disputed  that  Prysmian  Spa  is  another  person which  Controls  the  Claimant.  Equally,  the  continued carrying  on  of  business  in  India  through  ACPL  is capable of amounting to the participation in the Cable Business in India through an Affiliate of the Claimant; namely through another person, ACPL. Although there has not been any proof of this question, there would at least  appear  to  be  some  evidence  on  which  the Respondents might contend that  ACPL is Controlled by  the  same  person,  namely  Prysmian  Spa,  who directly  or  indirectly  Controls  the  Claimant  so  as  to come within the parameters of  sub-paragraph (c)  of the definition of Affiliate.”

10. The learned arbitrator then construed clause 23, which speaks of

‘material breaches’ by the parties, as follows:

“132. The Tribunal’s conclusions are as follows:

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1) Clauses 23.1 and 23.2 do require the giving of a Determination Notice of an Event of Default by the  Non  Defaulting  Party,  if  indeed  the  Non Defaulting Party wishes to make complaint, and if, ultimately, the Non Defaulting Party wishes to invoke the provisions of Clauses 23.4 and 23.7, even in circumstances where the Non Defaulting Party  contends  that  the  material  breach  is irremediable;

2) Clause  23.3  does  require  the  Non  Defaulting Party to give the Defaulting Party a period of 60 days,  the  Rectification  Period,  to  rectify  the Event of Default even in a case where the Non Defaulting Party alleges that the Event of Default is  irremediable.  The  only  exception  to  this  in Clause  23.3  is  with  respect  to  what  might  be called  events  of  insolvency,  which  amount  to Events of Default;

3) Excluding the cases of insolvency events, which are expressly exempted, the service of a written EOD Notice  pursuant  to  Clause 23.4  must  be upon the expiry of the Rectification Period;

4) Adapting  one  of  the  principal  hypothetical examples given by the Claimant’s counsel in the course  of  its  submissions,  if  a  Non Defaulting Party  gives  a  Determination  Notice  to  the Defaulting Party  identifying material  breach (1) but  the Defaulting Party  has in  fact  concealed material  breach (2)  and in any event does not rectify one or both, then the Non Defaulting Party when it gives its EOD Notice under Clause 23.4 and then subsequently seeks to justify its EOD Notice in arbitration can rely upon both the un- rectified  material  breach  (i)  and/or  material breach (2) if it is subsequently discovered.

This is because a concealed, but subsequently discovered, Event of Default which has not been rectified at the end of the Rectification Period is

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still  an  un-rectified  Event  of  Default  for  the purpose of Clause 23.4;

5) Equally, if a Defaulting Party has not rectified a concealed  Event  of  Default  at  the  end  of  a Rectification  Period,  then,  it  is  a  matter  which can be relied upon by the Non Defaulting Party under  Clause  23.7,  so  to  give  rise  to  the deprivation or alteration of rights set out therein;

6) An  Event  of  Default  is  defined  as  a  material breach of any provisions, obligations, covenants, conditions,  and  undertakings.  The  definition  of an Event of Default is not conditional upon the giving  of  a  Determination  Notice.  The consequences,  however,  under  Clause  23  do depend  upon  the  giving  of  a  Determination Notice and expiry of a Rectification Period;

7) Notwithstanding the provisions of Clause 23 and Clause 23.4, in particular with regard to Events of  Default  and  Determination  Notice,  the  Non Defaulting  Party  in  addition  possesses  all  the rights to damages and performance expressed in Clause 23.6;

8) It remains open for argument, and the Tribunal makes no decisions as to whether a party can give a Determination Notice to the other party, if in fact at the time of the giving of the notice, the party giving the notice is itself in material breach. This question was raised by the Tribunal in the course  of  oral  submissions,  but  has  not  been fully  addressed by the parties,  and,  indeed,  is probably  best  addressed  at  the  full  merits hearing.”  

11. Insofar as the arbitrator’s ruling on jurisdiction was concerned, it was

held that a dispute regarding the right to register the ‘Ravin’ trademark

falls  outside the scope of  the arbitration clause under  the JVA.  He

further  held  that  the  trademark  licence  agreements  contained

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arbitration  clauses  which  provided  for  disputes  to  be  referred  to

arbitration in Milan, Italy under Italian law, and this being the case, any

dispute in relation to these agreements would be outside the ken of

the arbitration clause contained in the JVA.

12.The ‘Second Partial  Final  Award’ dated 19.12.2013 then dealt  with

which of the parties materially breached the terms and conditions of

the JVA. The claims, in this respect, made by Respondent No.1, were

disposed of as follows:

“199.  The  Tribunal’s  findings  and  conclusions  in relation to the particulars of the Claimant’s allegations of  material  breach  are  set  out  below.  The  Tribunal finds that:

1) The Respondents interfered with the proper and effective functioning of  the CEO by refusing to implement  and/or  by  preventing  the implementation  of  the  Board  of  Directors’ resolution  empowering  the  CEO  to  operate Ravin’s bank accounts in material breach of JVA Clauses 12 and/or 8 and/or 20.1.2;

2) in  refusing  to  pass  resolutions,  whether  at  a Board meeting or by circulation, to appoint the Claimant’s  nominee  as  the  CFO of  Ravin  the Respondents were not in material breach of the JVA;

3) the  Respondents  employed  Ms.  Mathure  and created  a  false  record  with  regard  thereto  in material  breach  of  JVA Clauses  12  and  /or  8 and/or 20.1.2;

4) the Respondents denied the HR Director and the CEO full and unconditional access to the HR and payroll data systems of Ravin in material breach of JVA Clauses 12 and/or 8 and/or 20.1.2;

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5) the  Respondents  refused  to  report  to  the  or attend management meetings convened by the CEO  in  material  breach  of  JVA  Clauses  12 and /or 8 and/or 20.1.2;

6) when the incidents of 12 and 13 January 2012 and 4 February 2012 are considered in isolation there  is  insufficient  evidence  to  conclude  that there  has  been  a  material  breach  by  the Respondents.  When  the  incidents  are considered  together  and  set  in  their  proper context  the  Tribunal  concludes  that  they  form part  of  a  pattern  of  the  Respondent’s  conduct which constituted a material breach of the JVA. As such, there is a material breach in relation to the  Claimant’s  combined  allegations  that  the Respondents  incited  staff  to  surround, sequester,  heckle,  humiliate  and  threaten  Mr Esposito and Mr Kamdar on those dates;

7) the  Respondents  encouraged  and  failed  to prevent  Company  employees  from  going  on strike on 31 January 2012 and the Respondents encouraged and incited               indiscipline  and breach of Company policies and procedures by supporting Mr  Dhall  in  his  insubordination and defiance of direct orders of Mr Esposito and Ms Farise  in  material  breach  of  JVA Clauses  12 and/or 8 and/or 20.1.2;

8) see (7) above;

9) the Respondents were not in breach of the JVA by refusing to convene a Board meeting at short notice;

10) Mr  Karia’s  letters  to  the  FRRO  were  hand- delivered  on  29  February  2012  and  therefore cannot  be considered in  relation to the events constituting  material  breach  as  alleged  in  the Request dated 27 February 2012. Nevertheless, the Tribunal finds that the letters to the FRRO are consistent  with Mr Karia’s modus operandi and  support  the  Tribunal’s  other  findings  of material breach.

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(4) Rectification of the Events of Default found to have been committed by the Respondents

200.  The Claimant submits that none of the alleged material breaches were rectifiable and, in any event, by  the  end  of  the  Rectification  Period,  i.e.  27  April 2012,  and  by  the  end  of  the  extended  period  for rectification, i.e. 6 July 2012, the Respondents had not rectified  any of  their  breaches.  On the contrary,  the Claimant submits that  during the period between 28 February  2012  and  6  July  2012,  the  Respondents continued to  breach the JVA by conduct  which was calculated  to  destroy  the  relationship  of  trust  and confidence  between  the  parties  and  completely remove or render redundant any element of Claimant control over Ravin. As stated above, however, these post-Request  breaches  are  not  the  subject  of  this Award (see, inter alia, Claimant’s CS §§730-737).

201. The  Respondents  do  not  contend  that  they rectified any of the alleged breaches of the JVA by 6 July 2012.

202. The  Tribunal  concludes  that,  in  relation  to  the material breaches committed by the Respondents, the Respondents failed to rectify those breaches within the extended period for rectification, i.e. by 6 July 2012.”

13.So far as the counter claims of the Appellants were concerned, the

arbitrator dealt with the effect of Prysmian SA acquiring ACPL, which

was a competing business of Ravin [through Prysmian’s acquisition of

the Draka group, of which ACPL was a subsidiary]. The sole arbitrator

first  dealt  with  the  reaction  of  Shri  Karia  on  the  Draka  takeover

together with Shri Karia’s evidence as follows:

“233.  The  Tribunal  finds  the  many  changes  to  the story of Mr Karia in this regard to be of considerable significance. In truth, Mr Karia did know as long back as July 2009 of the ACPL/Draka connection. When the

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merger between Draka and Prysmian was announced Mr Karia did understand that Prysmian had acquired a controlling stake in ACPL as he fully accepted in cross examination.  Mr  Karia  had  that  knowledge  in November  2010.  Nevertheless,  Mr  Karia  did  not complain  of  any  material  breach  to  the  JVA under Clause 21. The Tribunal further accepts the truth of the evidence given by Ms Farise that first of all when Mr Karia  heard  of  her  appointment  to  the  ACPL Board some time in late 2011 possibly December, Mr Karia did not complain but congratulated  her (§18,EI/5/28). This fits in with his earlier congratulatory email to Mr Battista.  Nevertheless  by  the  time  one  gets  to February 2012 Mr Karia had completely changed his tune and saw Ms Farise’s  appointment to the  ACPL as a device, an excuse, to try to derail her carrying on as  CEO  on  the  Ravin  Board  and  thus  further  his campaign not to cede day to day control of Ravin to the Claimant. The Tribunal accepts the evidence given by  the  Claimant  witnesses  on  this.  Mr  Karia  has changed his tune. The Tribunal rejects the veracity of the story originally being told by Mr Karia as not only inconsistent  with  the  documents  before  the  Tribunal but  also  mutually  inconsistent  with  his  evidence  in cross-examination.

234. The Tribunal has spent some time analysing this material  because  Mr  Karia’s  contemporaneous reaction  is  highly  instructive  in  determining  whether this is really to be analysed as a serious or material breach  with  serious  adverse  effect  or  rather  as  a pretext,  an excuse.  The Tribunal  concludes it  is  the latter  not  the  former.  The  Respondents  somewhat bravely in  their  Closing Submissions assert  that  the Tribunal is not allowed to have regard to this material because  the  Claimant  has  not  pleaded  waiver  or affirmation. This submission is completely rejected. As is clear from the authorities referred to above whether a breach is material or not is determined by reference to all the relevant facts and this will include a parties’ reaction to the events at the time.

xxx xxx xxx

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237. The  Tribunal  ultimately  concluded  that  the Respondent did not adduce any credible evidence of actual serious adverse impact.

238. It is true that there was some evidence (albeit mainly  dating  back  to  2008-2009)  of  occasional instances of both companies tendering for the same business.   Yet  there  was  no  reliable  evidence  that business had been lost from Ravin to ACPL post the Draka acquisition, or that there had been any diversion of business from Ravin to ACPL or that there had been any targeting of Ravin’s business by ACPL or indeed vice versa.  

239. In the end the two companies operate in a very different  space.   ACPL  is  a  small  specialist  cable business with a turnover of € 7-7.5m per annum.  This is approximately 10% of that of Ravin. ACPL operates principally in the area of instrumentation cables.  Ravin operates principally in the area of power and control cables.  Yet further, a large part of the small turnover of ACPL constitutes exports from ACPL to its Omani shareholder.  This  renders  the  notion  of  serious adverse harm by reference to ACPL’s turnover even more remote.  

240. The contemporaneous management documents at Ravin did not show that Ravin considered ACPL as one of its competitors or indeed operating in the same space.  When Mr. Karia was asked about this in cross examination, he said that when a company examines its competitors it does not make a list down to the 50th

or  60th competitor  (Day  9,  p.82).   This  gives  an eloquent  indication  of  how  far  down  the  list  Ravin would have considered ACPL.  

241. Equally,  the fact  that  a  list  of  company names was identified and relied upon by the respondent to show that Ravin and ACPL sell cables to some of the same companies is stretching a point beyond where it can naturally go.   This does not yield an answer of material  breach.   The  evidence  adduced  by  the Respondents is not  of  a quality which would enable

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the  Tribunal  to  conclude  that  a  breach  had  been committed with serious adverse effect.  

242. The  Tribunal  further  makes  mention  of  the assistance it received from two distinguished experts of  long  standing  participation  in  the  market;  Messrs Honavar  and Hargopal.   The Tribunal  did  get  some benefit from this evidence in the clear explanation of different  types  of  cables  together  with  samples  and this explanation was also helpfully provided in part by Mr.  Karia  himself.   Nevertheless,  once  more  this evidence somewhat missed the point.  It is not enough to establish material breach to identify certain types of cables produced and sold by each company.  There was  no  reliable  analysis  advanced  by  the Respondents’  evidence  of  serious  adverse  effect either on Ravin today or likely in the future.  

243. Finally,  the Tribunal  for  completeness makes it clear  that  it  completely  rejects  the  further  allegation that  ACPL had  been  acquired  in  bad  faith  by  the Claimant with a view to destroying value in Ravin or that it has since pursued the operations of ACPL with that aim in view.  

244. There  is  quite  simply  no  credible  evidence  to support such an allegation and indeed the Tribunal is of  the view that  it  is  an allegation which should not have been advanced.”

14.So far as the counter claim dealing with direct sales in India which

competed  with  the  business  of  Ravin,  and  agency/distribution

agreements, the arbitrator held as follows:

“252. Essentially  the  Respondents  have  not established that the Agency Agreements on which they place  reliance,  involved  such  an  arrangement, commitment  or  engagement  as  stated  in  the  First Partial Award. Indeed the Respondents have not even addressed the requirement identified in paragraph 84 of the First Partial Final Award but instead focused on the length or duration of the relationship and whether

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or  not  each  relationship  was  exclusive  or  non- exclusive. This is not sufficient. For the avoidance of doubt  the  Tribunal  concludes  that  there  was  no satisfactory basis on which it could be concluded that these  Agency  Agreements  involved  an  injection  or exchange of capital or know how on the part of the investor,  acquirer  or  participator.  They  are  best analysed  as  classic  sales  distribution/agency agreements  pursuant  to  which  an  agent  receives  a sales  commission  in  return  for  the  promotion  and conclusion of identified types of sales in India.

xxx xxx xxx

273. Making every conceivable allowance in favour of the  Respondents,  the  Tribunal  concludes  that  the Respondents  (perhaps  for  understandable  reasons following the First  Partial  Final  Award)  have tried to alter their case and now advance a case that the fact of  direct  sales  amounts  to  a  material  breach  of Clauses 8 and 20 of the JVA.  That was not advanced in the Determination Notice or in its pleaded case and is not open to the respondents.  

(I) No material breach in any event.  

274. Yet  further,  even ignoring the limitations of  the Determination Notice and pleadings, the Tribunal yet further  concludes that  the Respondents  have not  in any event  succeeded in showing material  breach of Clauses 8 or 20 on the facts of the case.  

275. The  Tribunal  concludes  that  the  Respondents’ analysis  is  too  simplistic  to  be  of  any  real  utility  in analysing the issue.  

276. The  Respondents  start  by  referring  to  a  total 644m of sales which were made directly into India by various Prysmian affiliates.  

277. Those  sales,  however,  were  for  all  practical purposes  made  up  of  sales  of  telecom  cables, industrial  special  cables,  automotive cables,  network and  component  and  services.   Ravin  did  not manufacture those types of cables.  Indeed over 85% of  the  sales  came from two affiliates  manufacturing

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telecom cables, which Ravin did not manufacture and had no experience in selling either. Indeed the Tribunal accepts the evidence of Ms Farise and Mr. Koch and Mr.  Karve  on  this  issue  (see,  inter  alia,  §§5-8, E(I)/10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§18- 32. E(I)/23/184-186, 11 December 2012 hearing, pp. 134-140,  §46,  E(I)/17/92,  Day  2,  pp.  83-86,  §18  of, E(I)/24/189).This  renders  the  whole  argument  of diversion of sales or breach of good faith by virtue of these direct sales somewhat academic.  

278. Indeed  these  figures  illustrate  exactly  why  the Respondents  placed  so  much  emphasis  on  their argument  that  the mere fact  of  sales was a  breach irrespective  of  anything  else.   This  was  once  more how it  was put  by  Mr.  Salve SC in  his  oral  closing argument  (Day  10,  pp.  183-185)  the  Tribunal  has, however, found against the Respondents on this point.

279. The  Tribunal  concludes  that  the  Respondents have not shown any material breach on the part of the Claimant  in  the  development  of  Ravin’s  business in accordance with clause 8 or any breach of the good faith obligations under Clause 20 with respect to direct sales.”

15.So  far  as  the  breach  of  confidentiality  by  Respondent  No.1  was

concerned, the counter claim of the Appellants was rejected thus:

“284. Ms. Farise was quite clear in her First Witness Statement of 20 July 2012 (E(I)/5/29) at paragraph 22 (j) – (I) that she was a non-executive director at ACPL, that she was quite aware of her responsibilities to both companies  and  did  not  at  any  time  pass  on confidential or other information to ACPL from Ravin or from ACPL to Ravin.  

285. The  Respondents  did  not  cross  examine  Ms Farise on this important evidence. It is accepted by the Tribunal.  

286. The  Respondents  instead  in  their  Closing Submissions do not address the question of evidence of actual breach but instead try to build up a case of

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surmise or inference.  The Respondents rely upon the fact that Prysmian referred to ACPL and Ravin as part of “Prysmian India”.  They also rely upon the fact that they  contend  that  the  appointment  of  Ms  Farise  to ACPL was covertly carried out.  The first point leads nowhere.  It is not evidence of breach of the JVA.  The second point is in any event rejected by the Tribunal. As has been referred to above in the context of the analysis  of  the  Claimant’s  allegations  of  material breach, the Tribunal finds that Ms. Farise did inform Mr.  Karia  of  her  appointment  at  ACPL.   In  the  first instance Mr. Karia congratulated her and only objected later as the power struggle grew and this was used as a weapon in order to try to have Ms. Farise excluded from the Ravin Board.”

16.So far  as  multiple  acts  of  alleged mismanagement  by  Respondent

No.1 in breach of clauses 8 and 20 of the JVA were concerned, the

learned sole arbitrator dealt with this as follows:

“290. The  remaining  allegations  can  be  seen  as essentially the flip side of the Claimant’s allegations of material breach directed at the Respondents.  Three examples will suffice for present purposes:

i. the  strike  orchestrated  by  the  Respondents  in response to the suspension of Mr. Dhall;  

ii. the  attendance  or  non-attendance  of  Claimant nominees at the Akruti offices;

iii. the circumstances surrounding the appointment of the CEO and CFO of Ravin.  

291. Given the findings made by the Tribunal in favour of  the  claimant’s  allegations  of  material  breach  it naturally follows that the Respondents do not succeed in these allegations of mismanagement.  

292. The  Respondents  were  themselves  in  material breach with regard to the whole conduct surrounding Mr.  Dhall’s  appointment  of  Ms.  Mathure  and  the  so called authorisation form.   The Claimant  was not  in

25

material breach in suspending Mr. Dhall.  Far from it. The Respondents,  however,  were plainly  in  material breach by their reaction to this suspension effectively leading to a one day strike.  

293. The  question  of  the  attendance  of  Claimant nominees at the Akruti office is another chapter of the saga in which the Respondents do not emerge without serious  criticism.   As  is  clear  from  this  Award  the Respondents engendered a toxic atmosphere at Akruti in January 2012 (even in its  fire stricken state)  and such was the situation at the ground that it  was not really possible for Claimant nominees to attend without fear of their own safety.  

294. Lastly,  the  circumstances  surrounding  the appointment of the CEO and CFO does not give rise to any conceivable material breach on the part of the Claimant.   The  claimant  was  entitled  to  nominate  a CFO and the CEO.  They did so. The Respondents did not  oppose  the  appointment  of  Ms  Farise. Nevertheless they did obstruct her at every turn once she was appointed because it became apparent that she intended pursuant to the JVA to take day to day control of Ravin and the Respondents did not wish this to  happen.   As  regards  Mr.  Brunetti,  the  CFO,  the Respondents did veto his appointment. This was not a material breach on their part as it was their right to do so  under  Schedule  IX  to  the  JVA.   Nevertheless  it cannot  be  said  to  be  a  material  breach  by  the Claimant.  That is unsustainable.”

17.  Holding thus, the learned sole arbitrator concluded that none of the

counter  claims were  made out,  as  a  result  of  which  they  were  all

dismissed.  

18.The Third Partial Final Award was delivered on 14.01.2015. Prior to

this  award,  on  23.06.2014,  the  Karias,  through their  legal  counsel,

informed the tribunal that they would no longer be represented by M/s

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Nishith  Desai  Associates.  This  was the  prelude  to  Shri  Vijay  Karia

writing to the LCIA Court on 28.09.2014, a few days before the hearing

fixed before the arbitrator, seeking revocation of the appointment of

the  arbitrator,  on  the  ground  of  alleged  lack  of  impartiality  or

independence. At the hearing fixed on 1st-2nd October 2014, Shri Vijay

Karia did not appear. On 10.10.2014, the LCIA Court communicated to

the tribunal that it had dismissed the challenge made to the arbitrator

on the ground that the said application was made out of time under the

provisions of  the LCIA Rules.  The award then went  on to  address

some of the written submissions dated 02.06.2014 of Shri Vijay Karia.

The learned arbitrator explained how he was not ‘functus officio’ with

respect to the relief sought. He further went on to state that he could

not  now  review  the  Second  Partial  Final  Award  as  he  had  no

jurisdiction to do so, and made it clear that he did not go beyond the

claims submitted by the claimant to him, or beyond the scope of the

JVA. The award also recorded the fact that the present Appellants did

not take the necessary steps to appoint a valuer, as a result of which

KPMG refused to go ahead with the valuation. As Deloitte was the only

other  valuer,  Deloitte  was  then  requested  to  go  ahead  with  the

valuation. The Third Partial Final Award then declared as follows:

“1. The Respondents are the Defaulting Party under clause 23.7 of the JVA;

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2.  All  rights  of  whatsoever  nature  conferred  on  the Respondents and specifically Mr. Karia under the JVA have ceased to be effective;

3.  Any  reference  in  the  JVA to  any  rights  of  the Respondents and specifically Mr. Karia including the requirement  of  consent  or  approval  of  Respondents and specifically Mr. Karia stand omitted;

4. The Respondents are prohibited from exercising or attempting  to  exercise  any  rights  under  the  JVA including in particular any representation on the Board of the Company;

5.  The  date  for  the  assessment  of  the  Discounted Price  be  30  September  2014 and that  this  date  be substituted for the finding in paragraph 335(4) of the Second Partial Final Award, which date and finding the parties agreed would be remitted back to the Tribunal for further consideration;

6.  The  Tribunal  reserves  the  matters  set  out  in paragraph 31 above, which includes the costs of the arbitration.  

7.  Notwithstanding  paragraph  6  above,  the  Tribunal records the further costs of the arbitration (other than the  legal  or  other  costs  incurred  by  the  parties themselves and other than those costs recorded in the Second  Partial  Final  Award)  up  to  the  date  of  this Award,  which  have  been  determined  by  the  LCIA Court, pursuant to Article 28.1 of the applicable (1998) Rules, to be as follows:

LCIA’S administration charge £6,353.33

Tribunal’s fees £29,800.00

Total further costs of the arbitration £36,153.33

8.  The  Tribunal’s  previous  Procedural  Orders  and Interim Relief as amended by Procedural Order No.12 are to continue in effect until further Order.”  

19.By the Final Award dated 11.04.2017, the learned sole arbitrator dealt

with why and how Deloitte was appointed as the valuer of the shares;

28

why Ravin’s 49% stake in ‘Power Plus’ was excluded for purposes of

valuation as clause 17.1 of the JVA and the formula stated in Schedule

X would have to be strictly followed; and as to what then is the fair

market value of the shares of the Appellants in Ravin that was to be

bought out by the Respondent No. 1.  

20.Ultimately, the final relief granted by the said award was as follows:

“FINDS,  HOLDS,  ORDERS  AND  DECLARES  as follows:

1) The  Respondents  do  transfer  to  the  Claimant 10,252,275 shares held by them to the Claimant the  Discounted  Price  of  INR  63.9  per  share aggregating to INR 655,200,000.

2) The  Third  Respondent,  Mr.  Karia  (who  holds Power  of  Attorney  executed  by  each  Existing shareholder)  do  forthwith  and  without  delay execute the requisite transfer forms for transfer of 10,252,275 shares in favour of the Claimant.  

3) The  Third  Respondent  and  the  Twelfth Respondent, Mr. Piyush Karia, who purport to be and continue to act as director of the Company, do forthwith and without delay:

a) Convene and hold a meeting of the Board of Directors of the Company not later than 21 days after the date of this Final Award limited  to  noting  and  registering  the transfer  of  10,252,275  shares  from  the Respondents in favour of the Claimant;  

b) Table  before  that  meeting  the  executed transfer forms;

c) Vote in favour of the resolution / motion to register  the  transfer  of  the  10,252,275

29

shares in  favour  and in  the name of  the Claimant; and  

d) On registration of the transfer of the shares as aforesaid  to resign from the Board of the Company as Chairman and Managing Director and as Executive Director of  the Company respectively.  

4) Each  of  the  Respondents  and  particularly  the Third  and Twelfth  Respondents,  Mr.  Karia  and Mr.  Piyush  Karia,  are  restrained  from  acting themselves or through servants or agents, from:  

a) Claiming  or  attempting  to  exercise  or exercising any rights whatsoever under the JVA in relation to the Company including but  not  limited  to  representation  on  the Board of the Company or their consent or approval  being  required  in  any  matter relating  to  the  Company  whether  at  the Board of  the Company or at meetings of the shareholders of the Company.  

b) Claiming  or  attempting  to  claim,  or representing  or  attempting  to  represent, the  Company  in  any  matter  and  in  any manner whatsoever.  

c) Using  or  attempting  to  use  any  assets, properties  or  facilities  of  the  Company including but not limited to the Company’s offices and communication facilities.  

5) The  third  and  Twelfth  Respondents,  Mr.  Karia and  Mr.  Piyush  Karia,  themselves  or  through servants or agents are restrained from acting, or claiming  or  holding  themselves  out  to  be  the Chairman  or  Managing  Director  and  as Executive  Director,  respectively,  or  directors  of the Company (except for the limited purpose as set out in (3)(above)).

6) The Respondents jointly and severally do pay to the Claimant the legal and sundry disbursements

30

costs of and relating to this Arbitration in the sum of US$2,317,199.82.

 7) The Respondents are to bear and, insofar as not

already paid, to reimburse the Claimant the total costs  of  the  Arbitration  as  determined  by  the LCIA Court pursuant to Article 28.1 of the LCIA Rules, which are  £ 283,043.71.

8) All  other  claims  of  the  Claimant  and Respondents are dismissed.”

21. It  is important to note that no challenge was made to the aforesaid

award under the English Arbitration Law, though available. It is only

when the aforesaid award was brought to India for  recognition and

enforcement  that  objections  to  the  said  award  were  made  under

Section 48 of  the Arbitration and Conciliation Act,  1996 (hereinafter

referred to as the “Arbitration Act”). 22.The learned single Judge, in the impugned judgment,  recorded the

arguments of both parties, dealt with the allegation of bias against the

arbitrator  and  all  other  objections  raised  by  the  Appellants  to  the

award,  but  finally  found  that  the  award  must  be  recognised  and

enforced  as  the  objections  do  not  fall  within  any  of  the  neat  legal

pigeonholes contained in Section 48 of the Arbitration Act.  23.As Section 50 of the Arbitration Act does not provide an appeal when a

foreign award is recognised and enforced by a judgment of a learned

Single Judge of a High Court, the Appellants have appealed against

the said judgment under Article 136 of the Constitution of India.  

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24.Before referring to the wide ranging arguments on both sides,  it  is

important to emphasise that, unlike Section 37 of the Arbitration Act,

which is contained in Part I of the said Act,  and which provides an

appeal against either setting aside or refusing to set aside a ‘domestic’

arbitration  award,  the  legislative  policy  so  far  as  recognition  and

enforcement of foreign awards is that an appeal is provided against a

judgment refusing to recognise and enforce a foreign award but  not

the  other  way  around  (i.e.  an  order  recognising  and  enforcing  an

award). This is because the policy of the legislature is that there ought

to be only one bite at the cherry in a case where objections are made

to the foreign award on the extremely narrow grounds contained in

Section  48  of  the  Act  and  which  have  been  rejected.  This  is  in

consonance with the fact that India is a signatory to the Convention on

the  Recognition  and  Enforcement  of  Foreign  Arbitral  Awards,  1958

(hereinafter  referred  to  as  “New  York  Convention”)  and  intends  -

through this legislation -  to ensure that  a person who belongs to a

Convention  country,  and  who,  in  most  cases,  has  gone  through  a

challenge procedure to the said award in the country of its origin, must

then be able to get such award recognised and enforced in India as

soon as possible. This is so that such person may enjoy the fruits of an

award  which  has  been  challenged  and  which  challenge  has  been

turned down in the country of its origin, subject to grounds to resist

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enforcement being made out under Section 48 of the Arbitration Act.

Bearing this in mind, it  is important to remember that the Supreme

Court’s jurisdiction under Article 136 should not be used to circumvent

the legislative policy so contained. We are saying this because this

matter has been argued for several days before us as if it was a first

appeal from a judgment recognising and enforcing a foreign award.

Given the restricted parameters of Article 136, it is important to note

that in cases like the present - where no appeal is granted against a

judgment which recognises and enforces a foreign award - this Court

should be very slow in interfering with such judgments,  and should

entertain an appeal only with a view to settle the law if some new or

unique point is raised which has not been answered by the Supreme

Court before, so that the Supreme Court judgment may then be used

to guide the course of future litigation in this regard. Also, it would only

be in a very exceptional case of a blatant disregard of Section 48 of

the  Arbitration  Act  that  the  Supreme  Court  would  interfere  with  a

judgment  which  recognises  and  enforces  a  foreign  award  however

inelegantly drafted the judgment may be. With these prefatory remarks

we may now go on to the submissions of counsel.  25.Dr. Abhishek Manu Singhvi, Senior Advocate, led the charge so far as

the Appellants are concerned. Ably assisted by Shri Nakul Dewan on

the law, the learned Senior Advocates argued a large number of points

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which  they  sought  to  put  into  three  legal  pigeonholes,  namely,  the

pigeonhole contained in Section 48(1)(b)  of  the Arbitration Act,  and

that the foreign award would be contrary to the ‘public policy of India’

[as under Section 48(2)(b) of the Arbitration Act] in two respects: (1)

that it would be in contravention of the fundamental policy of Indian

law; and (2) that in several respects it would violate the most basic

notions of justice.  26.Dr. Singhvi’s arguments were as follows:

(1)That  the  arbitral  tribunal  entirely  failed  to  deal  with  the

Appellants’ counter claim pertaining to the incorporation of one

Jaguar  Communication  Consultancy  Services  Private  Limited

(hereinafter referred to as “Jaguar”), which would show that, in

material breach of the non-compete provisions of the JVA, this

company was set up in India by Respondent No.1 to do business

in the manufacture and sale of cables, in competition with the

joint venture company, i.e. Ravin.   (2)That  the  tribunal  failed  to  make  a  determination  on  the

Appellants’ counter claim that Respondent No.1’s efforts to oust

the  Appellant  No.1  and  his  family  from Ravin  amounted  to  a

breach of the JVA.   (3)That  the  tribunal  failed  to  make  any  determination  on  the

Appellants’  counter  claim  that  Respondent  No.1  made  a

surreptitious attempt to register the Ravin trademark in its own

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name, which would be a breach of the material clauses of the

JVA.  (4)That the tribunal has acted contrary to the admissions made by

expert witnesses of both parties, both of whom stated that ACPL

- a company acquired by the parent of Respondent No.1 - was in

competition with Ravin, and that this would therefore vitiate the

award. In addition, since the most material evidence with regard

to the acquisition of ACPL was ignored by the tribunal, this would

also  vitiate  the  award.  Insofar  as  ACPL  was  concerned,

Respondent No.1’s failure to produce documents that were with

ACPL ought to have led to an adverse inference being drawn

against Respondent No.1, which was not done by the learned

arbitrator.   (5)The tribunal was perverse in considering the issue of material

breach in that it applied the maxim de minimus non curat lex to

ACPL, being a small specialist cable business. (6)That  a  perverse  interpretation  of  the  JVA was  given  by  the

learned arbitrator in the First Partial Final Award of clause 21.1,

stating  that  it  only  prohibited  long-term  arrangements  and

engagements,  which  was  a  condition  added  by  the  arbitrator

himself into the said clause. (7)So  far  as  direct  sales  of  Respondent  No.1  in  India  were

concerned,  the  tribunal  ignored  material  evidence  and

admissions of Respondent No.1.  

35

(8)That the tribunal’s analysis of the contemporaneous conduct of

the  parties  was  both  selective  and  perverse,  that  the

consideration  of  the  evidence  of  key  witnesses  was  also

selective and perverse.  (9)That Deloitte was a conflicted valuer and should not have been

appointed at all.  The valuer adopted a course for valuation that

is  contrary  to  both  parties’  position,  in  that,  Ravin’s  49%

shareholding in Power Plus which had been valued by another

valuer ‘BDO’ at INR 563 crores was completely ignored. What is

very  important  is  that  the  tribunal  had  acted  contrary  to  the

parties’ submissions in arriving at the valuation date, as the said

date should have been the date closest to the date of the actual

sale of shares, instead of which, a 2017 award took a date of

September 2014 which date in any case expired by the end of

December 2014.   (10) That the ruling contained in the First and Second Partial Final

Awards regarding interpretation of  clause 21 of  the JVA were

inconsistent and irreconcilable.  (11) That  a  private  communication  had  been  made  of  the

outcome of the arbitration by the tribunal two months prior to the

award, published through an agent of Respondent No.1, one M/s

Gilbert Tweed Associates, which would show that Respondent

No.1 knew that the Second Partial Final Award would be in its

36

favour.  The mere undertaking to terminate the engagement of

M/s Key2People as the agent, who in turn had employed M/s

Gilbert  Tweed  Associates,  and  an  apology  made  by

Respondent’s  counsel,  ought  not  to  have  been  held  to  have

been  sufficient  to  condone  this  lapse  by  the  learned  sole

arbitrator.  (12) That the award is in contravention of the Foreign Exchange

Management  Act,  1999 (hereinafter  referred to as “FEMA”)  in

that it directed the sale of shares of Ravin at a 10% discount,

which would be in the teeth of rule 21(2)(b)(iii)  of the Foreign

Exchange  Management  (Non-Debt  Instrument)  Rules,  2019

(hereinafter referred to as “the Non-Debt Instrument Rules”).  27.Shri  Nakul  Dewan cited  a  large  number  of  judgments  largely  from

Singapore, Hong Kong and the U.K. to buttress his submission that an

award which fails to deal with or make any determination on the claim

of a party ought to be set aside on the ground contained in Section

48(2)(b) of the Arbitration Act,  as it  would be in breach of the  audi

alteram partem principle, and also on the ground that it would shock

the conscience of the court, being contrary to a basic notion of justice

in this country. He also argued that where an award is directly contrary

to admitted facts, it would be perverse, and hence liable to be set side.

Also, where a party is unable to present its case on account of the

opposite party’s wilful failure to produce documents ordered, and the

37

tribunal’s  failure  to  draw  an  adverse  inference  therefrom,  on  most

material aspects of the case, would render such award unenforceable. 28.He also cited judgments on awards which treat parties unequally in

that they adopt disparate thresholds for determining material breach,

as a result of which an award read as a whole would be vulnerable on

account  of  egregious  bias.  Also,  a  private  communication  of  the

outcome of the arbitration by the tribunal to one party to the exclusion

of another would fatally undermine the independence and impartiality

of  the  arbitration  process,  rendering  the  award  vulnerable  on  the

ground of bias.  29.Both  Dr.  Singhvi  and  Mr.  Nakul  Dewan,  after  setting  out  all  the

aforesaid  grounds  and  case  law  supporting  such  grounds,  have

attacked  the  impugned  High  Court  judgment,  stating  that  a  large

number of these points were not answered by the High Court at all,

and  when  answered  would  show that  even  where  there  was bias,

perversity and breach of natural justice, all these grounds were merely

brushed aside, and therefore no real determination of all  the points

argued before the High Court was at all  undertaken by the learned

Single Judge. As a ‘without prejudice’ argument, Dr. Singhvi exhorted

us to modify the impugned award, in case he were to fail on all other

arguments,  to  state  that  the  valuation date  of  30.09.2014 ought  at

least  to  be  the  date  of  the  judgment  delivered  in  this  case,  as

otherwise the sale of the Karia block of shares in Ravin would be at a

38

tremendous undervalue. This he exhorted us to do under Article 142 of

the Constitution of India.  30.Shri Kapil Sibal, learned senior advocate appearing on behalf of the

Respondent No.1, read to us in copious detail each of the four awards

delivered  by  the  arbitral  tribunal.  He  argued  that  each  and  every

aspect of the matter that was argued on both sides was considered in

detail  in each of the said awards. He stressed the fact that  though

available, no challenge was ever made in the courts in England to the

four awards. He defended the judgment of the learned Single Judge of

the High Court and said that if the awards were read, it would be clear

that the arbitrator adopted an extremely balanced approach, despite

extreme provocation from Shri Vijay Karia, who only started alleging

bias when he realized that the ‘Second Partial Final Award’ relating to

who was in material breach, would be decided against him. Despite

this,  the  learned  arbitrator  dispassionately  considered  every  single

claim and counter-claim made by the parties.  This  being the case,

none of  the grounds mentioned in Section 48 of  the Arbitration Act

would be available in the form of objections to such well-reasoned and

balanced  awards.  In  particular,  Shri  Sibal  stressed  that  since  the

decision of this Court in Renusagar Power Plant Co. Ltd. v. General

Electric Co. (1994) Supp (1) SCC 644, any interference on the merits

of  the decision of  the arbitral  tribunal  would  be outside the ken of

39

Section 48 of the Arbitration Act. Shri Sibal stressed the fact that Dr.

Singhvi had argued this matter as if it was a first appeal on merits, and

that each and every ground taken, if  properly viewed, was really to

invite this Court to interfere on the merits of the awards, which would

be  clearly  outside  the  grounds  contained  in  Section  48  of  the

Arbitration Act. 31.Shri Sibal stressed the fact that the central point of this case was as to

who was in material  breach of the provisions of the JVA. Once the

learned  arbitrator  held  that  it  was  the  Appellants  and  not  the

Respondent No.1 who materially breached the terms of the JVA, in

that post the integration period, the appointed CEO, who was to be in-

charge of the day to day affairs of Ravin, was never allowed to take

over such charge, would make it clear that this most material breach

committed by the Appellants on facts, as held by the learned arbitrator,

could  not  be  interfered  with  given  the  parameters  of  the  Court’s

jurisdiction under Section 48 of the Arbitration Act. Once this was so,

everything else followed, as a result of which it was the Respondent

No.1 who was to buy-out the Appellants’ 49% stake in Ravin at a price

arrived at by a well-known independent valuer, Deloitte, at a date that

was correctly fixed by the arbitral tribunal. This being the heart of the

case, all the contentions of Dr. Singhvi raising objections to the four

awards in question must fall, as every argument, though dressed up

40

as arguments falling within three grounds under Section 48, are really

arguments addressing the merits of the case. Without prejudice to this

central  argument,  Shri  Sibal  took  up  every  single  point  that  was

argued  and  answered  each  point.  So  far  as  the  Jaguar

Communication  Consultancy  Services  Private  Limited  point  was

concerned, Shri Sibal stated that at no point did the Appellant amend

its counter-claim to include such argument, which was in fact raised

orally as an afterthought at the fag end of the proceedings. Secondly,

as Shri Sibal’s case of ouster was accepted by the arbitral tribunal, the

claim of the Appellants that it  was really the other way around was

specifically addressed by the learned arbitrator and dismissed, inter

alia on the ground that ouster was not at all pleaded by the Appellants.

So  far  as  the  Ravin  trademark  is  concerned,  it  is  clear  that  the

Appellant’s own counsel made it clear that he would not be pressing

the point – the point being as to whether it was at all open to go into

registration of trademark of Ravin under separate license agreements

which had separate arbitration clauses for arbitration in Italy. This was

argued by both sides and dealt with by the arbitrator as a jurisdictional

issue  which  was  turned  down  by  the  arbitrator  stating  that  the

registration  of  the  Ravin  trademark  was  an  issue  which  would  be

outside  the  JVA and  hence  not  arbitrable.  So  far  as  ACPL  was

concerned, the learned arbitrator made it clear that Shri  Vijay Karia

41

knew all along that ACPL would come to Respondent No.1 as a result

of the ‘Draka acquisition’ and never objected, but in fact congratulated

the Respondent No.1 on making such acquisition. That ACPL was in a

competing business was taken much later  as  an afterthought,  Shri

Vijay Karia admitting in cross-examination that ACPL’s business was

so  small  that  it  could  be  disregarded  altogether.  Also,  Shri  Sibal

adverted  to  a  Procedural  Order  made  by  the  learned  arbitrator,  in

which it was stated that since ACPL was not a party to the arbitration,

the Appellants could approach the Court in England to get a direction

that ACPL produce the documents asked for by them. This was never

done.  Further, Shri Sibal made it clear that ACPL was not a subsidiary

of  Respondent  No.1,  but  was an indirect  subsidiary  of  Respondent

No.1’s parent company, consequent upon the ‘Draka acquisition’, with

a separate Board of Directors; and being a different person in law and

fact,  who  is  not  a  party  to  the  arbitral  proceedings,  the  learned

arbitrator’s Procedural Order, which was never challenged and never

followed, was a complete answer to the contention that an adverse

inference ought to be drawn. So far as the interpretation of the JVA

was concerned, Shri Sibal made it clear that it was interpreted fairly,

given the fact  that  there was no challenge to  any part  of  the First

Partial  Final  Award,  except  the interpretation given to  Clause 21.1,

which was an interpretation given by the learned arbitrator keeping in

42

mind the commercial  background and commercial  efficacy doctrine.

According to Shri Sibal, not only was it a possible interpretation, it was

also a correct interpretation. So far as the direct sales of Respondent

No.1 in India were concerned, the tribunal took into account all  the

material evidence and dismissed, after a full hearing, the counter-claim

of the Appellants in this behalf.  When it came to the Final Award, Shri

Sibal pointed out that on facts Deloitte was appointed by consent long

after the valuer that was chosen by lots finally stated its inability to

conduct the valuation due to the Appellants dragging their feet in this

behalf.  Secondly,  such  valuation  was  conducted  strictly  as  per  the

formula  contained  in  the  JVA,  which  was  Clause  17.1  read  with

Schedule X of the JVA. He was at pains to point out that though Power

Plus  Company  LLC  (hereinafter  referred  to  as  “Power  Plus”)  was

mentioned specifically in the JVA, yet nothing about Power Plus was

mentioned in the formula for valuation. Shri Sibal also refuted any so

called  inconsistencies  in  the  awards,  stating  that  given  the

interpretation  of  the  JVA by  the  arbitrator  in  the  First  Partial  Final

Award,  all  the  awards  that  followed  were  in  accord  with  the

interpretation so given. He also stated that the arbitrator considered

material  breach  with  an  even  hand  and  arrived  at  the  obvious

conclusion on facts that since the CEO was never allowed to function,

it was the Appellants and not the Respondent No.1 who had materially

43

breached the terms of the JVA. Shri Sibal then went into the bogey

raised  re  M/s  Gilbert  Tweed  Associates.  He  maintained  that  the

Respondent No.1 had no idea as to who M/s Gilbert Tweed Associates

was and came to know that  the agent,  M/s Key2People,  who was

employed by the Respondent No.1, had in turn employed M/s Gilbert

Tweed Associates, who published an advertisement to employ certain

persons. From this, to jump to and try to make out a ground that the

arbitrator was biased is a huge leap not warranted either in fact or law.

Shri  Sibal  then argued that  the award,  in  that  it  directed a  sale of

shares  at  a  10% discount,  did  not  in  any  manner  contravene  the

Foreign Exchange Management Act, 1999 and Rules thereunder. He

took us through the relevant Rules and argued that unlike the Foreign

Exchange Regulation Act,  1973 (hereinafter  referred to as “FERA”),

FEMA did not contain Section 47 of FERA which voided agreements

that were made contrary to FERA. According to him, the FEMA regime

is  a  permissive  regime  and  any  violation  of  the  Rules  could  be

monitored by the Reserve Bank of India by way of a direction of the

sale  of  the  shares  without  the  discount,  if  at  all.  In  any  case,  the

Appellants would be estopped from taking this plea, having entered

into a solemn agreement with the Respondent No.1 which they cannot

go against. In any case, at worst, a violation of the Rules made under

FEMA,  by  which  shares  would  be  sold  not  at  market  price  but  at

44

something lower, contrary to the Rules, would also amount to a mere

violation  of  law,  which  is  far  removed  from  a  violation  of  any

fundamental policy of Indian law, as foreign exchange is coming into

the country and not going out therefrom.  32.Shri K.V. Viswanathan, learned senior advocate appearing on behalf of

the Respondent No. 1, also supported the submissions made by Shri

Sibal.  In particular,  he dealt  with the judgments cited by Shri  Nakul

Dewan and cited judgments of his own to show that the parameters

contained in Section 48 of the Arbitration Act for resisting enforcement

of  foreign  awards  are  extremely  narrow,  and  the  Court  can  in  no

circumstance go into the merits of a foreign award. He was at pains to

point out that as a full hearing had been given and every opportunity

extended by the learned arbitrator to both parties, no ground relatable

to breach of natural justice or any prejudice as a result was made out

on  the  facts.  He  then  made  it  clear  that  public  policy  must  be

understood  in  the  narrow  sense  as  understood  and  exposited  by

Renusagar (supra) and the later decisions of this Court. There was

also nothing in the awards that  would shock the conscience of  the

Court to attract the most basic notions of justice exception contained in

Section 48.

Enforcement of Foreign Awards under Section 48

45

33.Having heard learned counsel on both sides, it is important to first set

out the relevant parts of Section 48 of the Arbitration Act. Section 48

reads as follows:

“48.Conditions for enforcement of foreign awards. —(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that —

xxx xxx xxx

(b) the party against whom the award is invoked was not  given  proper  notice  of  the  appointment  of  the arbitrator  or  of  the  arbitral  proceedings  or  was otherwise unable to present his case;  

xxx xxx xxx

(2)  Enforcement  of  an  arbitral  award  may  also  be refused if the court finds that—  

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or  

(b) the enforcement of the award would be contrary to the public policy of India.  

Explanation 1.—For the avoidance of any doubt, it is clarified  that  an  award  is  in  conflict  with  the  public policy of India, only if,—  

(i) the  making  of  the  award  was  induced  or affected by fraud or corruption or was in violation of section 75 or section 81; or  (ii) it  is  in  contravention  with  the  fundamental policy of Indian law; or  (iii) it  is  in conflict  with the most basic notions of morality or justice.  

Explanation 2.—For the avoidance of doubt, the test as  to  whether  there  is  a  contravention  with  the fundamental  policy  of  Indian  law  shall  not  entail  a review on the merits of the dispute.”

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34.One of the first judgments which construed pari materia provisions in

the  Foreign  Awards  Act,  1961  was  the  celebrated  judgment  in

Renusagar  (supra).  This judgment  was given pride of  place in  the

recent  judgment  of  Ssangyong  Engineering  &  Construction  Co.

Ltd. v. National Highways Authority of India (NHAI) Civil Appeal No.

4779 of 2019, in which this court referred to  Renusagar (supra) as

follows:

“33. In  Renusagar (supra),  this  Court  dealt  with  a challenge to a foreign award under Section 7 of the Foreign  Awards  (Recognition  and  Enforcement)  Act, 1961 [“Foreign Awards Act”]. The Foreign Awards Act has since been repealed by the 1996 Act.  However, considering that Section 7 of the Foreign Awards Act contained grounds which were borrowed from Article V of  the  Convention  on  the  Recognition  and Enforcement of  Foreign Arbitral  Awards,  1958 [“New York Convention”], which is almost in the same terms as  Sections  34  and  48  of  the  1996  Act,  the  said judgment is of great importance in understanding the parameters of judicial review when it comes to either foreign awards or international commercial arbitrations being held in India, the grounds for challenge/refusal of  enforcement  under  Sections  34  and  48, respectively, being the same. After referring to the New York Convention,  this  Court  delineated the scope of enquiry of grounds under Sections 34/48 (equivalent to the grounds under  Section 7 of  the Foreign Awards Act, which was considered by the Court), and held:  

“34. Under the Geneva Convention of 1927, in order to obtain recognition or enforcement of a foreign  arbitral  award,  the  requirements  of clauses (a) to (e) of Article I had to be fulfilled and in Article II, it was prescribed that even if the conditions laid down in Article I were fulfilled recognition  and  enforcement  of  the  award

47

would be refused if the Court was satisfied in respect of matters mentioned in clauses (a), (b) and  (c).  The  principles  which  apply  to recognition and enforcement of foreign awards are in substance, similar to those adopted by the English courts at common law. (See: Dicey & Morris,  The Conflict of Laws, 11th Edn., Vol. I, p. 578). It was, however, felt that the Geneva Convention suffered from certain defects which hampered  the  speedy  settlement  of  disputes through arbitration. The New York Convention seeks to remedy the said defects by providing for a much more simple and effective method of obtaining  recognition  and  enforcement  of foreign  awards.  Under  the  New  York Convention the party against whom the award is  sought  to  be  enforced  can  object  to recognition  and  enforcement  of  the  foreign award on grounds set out in sub-clauses (a) to (e) of clause (1) of Article V and the court can, on  its  own  motion,  refuse  recognition  and enforcement  of  a  foreign  award  for  two additional  reasons  set  out  in  sub-clauses  (a) and (b) of clause (2) of Article V.  None of the grounds set out in sub-clauses ( a ) to ( e) of clause (1) and sub- clauses ( a ) and ( b) of clause (2) of Article V postulates a challenge to the award on merits.  

35. Albert Jan van den Berg in his treatise The New  York  Arbitration  Convention  of  1958  : Towards a Uniform Judicial Interpretation,  has expressed the view:

“It is a generally accepted interpretation of the Convention  that  the  court  before  which  the enforcement of the foreign award is sought may not review the merits of the award. The main reason is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V does not include a mistake in fact or law by the arbitrator.  Furthermore,  under  the  Convention the task of the enforcement judge is a limited one. The control exercised by him is limited to

48

verifying whether an objection of a respondent on the basis of the grounds for refusal of Article V(1) is justified and whether the enforcement of the award would violate the public policy of the law of his country. This limitation must be seen in  the  light  of  the  principle  of  international commercial  arbitration  that  a  national  court should not interfere with the substance of the arbitration.” (p. 269)

36. Similarly  Alan Redfern  and Martin  Hunter have said:

“The New York Convention does not permit any review on the merits of an award to which the Convention  applies  and,  in  this  respect, therefore,  differs from the provisions of  some systems  of  national  law  governing  the challenge of an award, where an appeal to the courts  on  points  of  law  may  be  permitted.” (Redfern  &  Hunter,  Law  and  Practice  of International Commercial Arbitration, 2nd Edn., p. 461.)

37. In our opinion, therefore, in proceedings for enforcement  of  a  foreign  award  under  the Foreign Awards Act, 1961, the scope of enquiry before the court in which award is sought to be enforced  is  limited  to  grounds  mentioned  in Section  7  of  the  Act  and  does  not  enable  a party  to  the said proceedings to impeach the award on merits.  

xxx xxx xxx

65. This would imply that the defence of public policy which is permissible under Section 7(1) (b)(ii)  should  be  construed  narrowly.  In  this context,  it  would  also  be  of  relevance  to mention that  under  Article I(e)  of  the Geneva Convention  Act  of  1927,  it  is  permissible  to raise  objection  to  the  enforcement  of  arbitral award  on  the  ground  that  the  recognition  or enforcement  of  the  award  is  contrary  to  the public policy or to the principles of the law of

49

the country  in  which it  is  sought  to  be relied upon.  To  the  same  effect  is  the  provision  in Section 7(1) of the Protocol & Convention Act of 1837 which requires that the enforcement of the foreign award must not be contrary to the public  policy  or  the  law  of  India.  Since  the expression “public  policy”  covers the field not covered  by  the  words  “and  the  law of  India” which follow the said expression, contravention of  law alone will  not  attract  the bar  of  public policy and something more than contravention of law is required.

66. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii)  of  the Foreign Awards  Act  do  not  postulate  refusal  of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country  of  enforcement  and  the  ground  of challenge  is  confined  to  the  recognition  and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression “public policy” in Article V(2) (b) of the New York Convention and Section 7(1)(b) (ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article I(c) of the Geneva Convention of 1927 and Section 7(1)  of  the  Protocol  and  Convention  Act  of 1937. This would mean that  “public policy”  in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy  the  enforcement  of  the  award  must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign  awards  which  are  governed  by  the principles  of  private  international  law,  the expression “public policy” in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in  the sense the doctrine of  public policy  is  applied  in  the  field  of  private international  law.  Applying  the  said  criteria,  it

50

must be held that the enforcement of a foreign award would be refused on the ground that it is contrary  to  public  policy  if  such  enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.”  

                                                                      (emphasis supplied)

35.The judgment of Shri Lal Mahal Ltd. v. Progetto Grano SPA (2014) 2

SCC 433 is  important  in  that  it  made  it  clear  that  the  Renusagar

(supra) position would continue to apply to cases which arose under

Section 48(2)(b), the wider meaning given “to public policy of India” in

the domestic sphere not being applicable. In doing so it overruled the

judgment in Phulchand Exports Ltd. v. O.O.O Patriot (2011) 10 SCC

300 as follows:

“28. We are not persuaded to accept the submission of Mr  Rohinton  F.  Nariman  that  the  expression  “public policy of India” in Section 48(2)(b) is an expression of wider import than the “public policy” in Section 7(1)(b) (ii) of the Foreign Awards Act. We have no hesitation in holding  that Renusagar [Renusagar  Power  Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] must apply for the purposes of Section 48(2)(b) of the 1996 Act. Insofar as the proceeding for setting aside an  award  under  Section  34  is  concerned,  the principles laid down in Saw Pipes [ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705] would govern the scope of such proceedings.

29. We accordingly  hold  that  enforcement  of  foreign award would be refused under Section 48(2)(b) only if such  enforcement  would  be  contrary  to  (1) fundamental policy of Indian law; or (2) the interests of India;  or  (3)  justice  or  morality.  The  wider  meaning

51

given  to  the  expression  “public  policy  of  India” occurring in Section 34(2)(b)(ii) in Saw Pipes [ONGC Ltd. v. Saw  Pipes  Ltd.,  (2003)  5  SCC  705]  is  not applicable  where  objection  is  raised  to  the enforcement of the foreign award under Section 48(2) (b).

30. It  is  true  that  in Phulchand  Exports [Phulchand Exports  Ltd. v. O.O.O.  Patriot,  (2011)  10 SCC 300 : (2012) 1 SCC (Civ) 131] a two-Judge Bench of this Court  speaking  through  one  of  us  (R.M.  Lodha,  J.) accepted  the  submission  made  on  behalf  of  the appellant  therein  that  the  meaning  given  to  the expression “public policy of India” in Section 34 in Saw Pipes [ONGC  Ltd. v. Saw  Pipes  Ltd.,  (2003)  5  SCC 705] must be applied to the same expression occurring in Section 48(2)(b) of the 1996 Act. However, in what we  have  discussed  above  it  must  be  held  that  the statement in para 16 of the Report that the expression “public policy of India used in Section 48(2)(b) has to be given a wider meaning and the award could be set aside, if it is patently illegal” does not lay down correct law and is overruled.

xxx xxx xxx

45. Moreover, Section 48 of the 1996 Act does not give an opportunity to have a “second look” at the foreign award in the award enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign  award  on  merits.  Procedural  defects  (like taking  into  consideration  inadmissible  evidence  or ignoring/rejecting  the  evidence  which  may  be  of binding nature) in the course of foreign arbitration do not  lead  necessarily  to  excuse  an  award  from enforcement on the ground of public policy.

46. In  what  we have discussed above,  even if  it  be assumed  that  the  Board  of  Appeal  erred  in  relying upon the report  obtained by the buyers from Crepin which was inconsistent  with the terms on which the parties had contracted in the contract dated 12-5-1994 and  wrongly  rejected  the  report  of  the  contractual

52

agency,  in  our  view,  such  errors  would  not  bar  the enforceability  of  the  appeal  awards  passed  by  the Board of Appeal.”

36. In LMJ International Ltd. v. Sleepwell Industries (2019) 5 SCC 302,

an ex-parte award was passed in  London which was sought  to  be

executed  by  the  Respondents  in  the  High  Court  of  Calcutta.  The

learned Single Judge of the High Court passed a common order in the

execution  cases  rejecting  objections  taken  regarding  the

maintainability of the applications. Against this, a review petition was

rejected by the High Court and so were Special Leave Petitions before

this Court. What was argued before this Court was that grounds as to

maintainability had been taken, as a result  of  which grounds under

Section 48 of the Arbitration Act were not actually argued as objections

before the Single Judge. This plea of the appellant was rejected by this

Court, given the object of Section 48 of the Act.  Since the appellant

“might and “ought” to have taken these grounds, before the learned

Single Judge these grounds were barred by an application of doctrine

of constructive res judicata as follows:  

“17. Be  that  as  it  may,  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 dehors 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

53

regard  could  and  ought  to  have  been  raised specifically and, if raised, could have been examined by  the  Court  at  that  stage  itself.  We  are  of  the considered opinion that the scheme of Section 48 of the Act does not envisage 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.  Whereas, keeping  in  mind  the  legislative  intent  of  speedy disposal  of  arbitration  proceedings  and  limited interference  by  the courts,  the  Court  is  expected  to consider  both  these  aspects  simultaneously  at  the threshold.  Taking  any  other  view  would  result  in encouraging  successive  and  multiple  round  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.

xxx xxx xxx

20. Suffice it to observe that the Arbitral Tribunal has considered all aspects of the matter and even if it has committed any error,  the same could,  at  best,  be a matter for correction by way of appeal to be resorted to on grounds as may be permissible under the English law, by which the subject arbitration proceedings are governed.  We  may  not  be  understood  to  have expressed  any  opinion  on  the  correctness  of  those issues.”

37.At this stage it is important to advert to amendments that were made

by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter

referred to as the “2015 Amendment Act”). Section 48 was amended to

54

delete the ground of “contrary to the interest of India”. Also, what was

important was to reiterate the Renusagar (supra) position, that the test

as to whether there is a contravention with the fundamental policy of

Indian law shall not entail a review on the merits of the dispute (vide

Explanation 2 to Section 48(2)).

38. It will be noticed that in the context of challenge to domestic awards,

Section 34 of the Arbitration Act  differentiates between international

commercial  arbitrations  held  in  India  and  other  arbitrations  held  in

India. So far as “the public policy of India” ground is concerned, both

Sections  34  and  48  are  now  identical,  so  that  in  an  international

commercial  arbitration  conducted  in  India,  the  ground of  challenge

relating to “public policy of India” would be the same as the ground of

resisting enforcement of a foreign award in India. Why it is important

to advert to this feature of the 2015 Amendment Act is that all grounds

relating to  patent  illegality  appearing on the face of  the award are

outside  the  scope  of  interference  with  international  commercial

arbitration  awards  made  in  India  and  foreign  awards  whose

enforcement  is  resisted  in  India.  In  this  respect,  it  is  important  to

advert to paragraphs 30 and 43 of Ssangyong (supra) as follows: “30. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate  Builders  (supra),  while  no  longer  being  a ground  for  challenge  under  “public  policy  of  India”, would certainly amount to a patent illegality appearing

55

on the face of the award. Thus, a finding based on no evidence  at  all  or  an  award  which  ignores  vital evidence in arriving at its decision would be perverse and  liable  to  be  set  aside  on  the  ground  of  patent illegality.  Additionally,  a  finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.

xxx xxx xxx

43. We  therefore  hold,  following  the  aforesaid authorities, that in the guise of misinterpretation of the contract,  and consequent “errors of jurisdiction”,  it  is not possible to state that the arbitral award would be beyond  the  scope  of  submission  to  arbitration  if otherwise the aforesaid misinterpretation (which would include going beyond the terms of the contract), could be  said  to  have  been  fairly  comprehended  as “disputes”  within  the arbitration agreement,  or  which were  referred  to  the  decision  of  the  arbitrators  as understood by the authorities above. If an arbitrator is alleged  to  have  wandered  outside  the  contract  and dealt with matters not allotted to him, this would be a jurisdictional  error  which  could  be  corrected  on  the ground of “patent illegality”, which, as we have seen, would  not  apply  to  international  commercial arbitrations that are decided under Part II of the 1996 Act. To bring in by the backdoor grounds relatable to Section 28(3) of the 1996 Act to be matters beyond the scope of submission to arbitration under Section 34(2) (a)(iv) would not be permissible as this ground must be construed narrowly and so construed, must refer only to matters which are beyond the arbitration agreement or beyond the reference to the arbitral tribunal.”

This  statement  of  the  law  applies  equally  to  Section  48  of  the

Arbitration Act.

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39. Indeed, this approach has commended itself in other jurisdictions as

well.  Thus,  in  Sui  Southern  Gas  Co.  Ltd.  v.  Habibullah  Coastal

Power Co. (2010) SGHC 62,  the Singapore High Court, after setting

out  the  legislative  policy  of  the  Model  Law  that  the  ‘public  policy’

exception  is  to  be narrowly  viewed and that  an  arbitral  award  that

shocks the conscience alone would be set aside, went on to hold:  “48. It  is  clear,  therefore,  that  in  order  for  SSGC to have succeeded on the public policy argument, it had to  cross  a  very  high  threshold  and  demonstrate egregious circumstances such as corruption, bribery or fraud, which would violate the most basic notions of morality  and  justice.  Nothing  of  the  sort  had  been pleaded  or  proved  by  SSGC,  and  its  ambiguous contention that the Award was “perverse” or “irrational” could  not,  of  itself,  amount  to  a  breach  of  public policy.”

General  approach  to  enforcement  and  recognition  of  Foreign

Awards

40.The USA was a late signatory to the New York Convention, acceding

to the Convention only in 1970. However, in an early judgment of the

U.S Court of Appeals, Second Circuit, namely Parsons & Whittemore

Overseas Co. v. Societe Generale De L’Industrie Du Papier  508

F.2d 969 (1974), the Court  in a succinct paragraph pointed out the

change made by the New York Convention when compared with the

older Geneva Convention of 1927 as follows:  “In 1958 the Convention was adopted by 26 of the 45 states participating in the United Nations Conference on Commercial Arbitration held in New York. For the signatory state, the New York Convention superseded the Geneva Convention of 1927, 92 League of Nations

57

Treaty  Ser.  302.The  1958  Convention’s  basic  thrust was  to  liberalize  procedures  for  enforcing  foreign arbitral awards: While the Geneva Convention placed the burden of proof on the party seeking enforcement of a foreign arbitral award and did not circumscribe the range of  available  defences to those enumerated in the  convention,  the  1958  Convention  clearly  shifted the  burden  of  proof  to  the  party  defending  against enforcement  and  limited  his  defenses  to  seven  set forth  in  Article  V.  See  Contini,  International Commercial  Arbitration,  8  Am.J.Comp.L.  283,  299 (1959).  Not  a  signatory  to  any  prior  multilateral agreement  on  enforcement  of  arbitral  awards,  the United States declined to sign the 1958 Convention at the outset. The United States ultimately acceded to the Convention, however, in 1970, (1970) 3 U.S.T. 2517, T.I.A.S.  No.  6997, and  implemented  its  accession with 9  U.S.C.  201-208.  Under 9  U.S.C.  208,  the existing Federal Arbitration Act, 9 U.S.C. 1-14, applies to  the  enforcement  of  foreign  awards  except  to  the extent  to  which  the  latter  may  conflict  with  the Convention.  See  generally,  Comment,  International Commercial  Arbitration  under  the  United  Nations Convention  and  the  Amended  Federal  Arbitration Statute, 47 Wash.L.Rev. 441 (1972).”

The Court then went on to hold:

“Perhaps more probative, however, are the inferences to be drawn from the history of the Convention as a whole. The general pro-enforcement bias informing the Convention  and  explaining  its  supersession  of  the Geneva Convention points toward a narrow reading of the public policy defense. An expansive construction of this defense would vitiate the Convention’s basic effort to remove preexisting obstacles to enforcement. See Straus,  Arbitration of  Disputes between Multinational Corporations,  in  New  Strategies  for  Peaceful Resolution of International Business Disputes 114-15 (1971);  Digest  of  Proceedings  of  International Business Disputes Conference, April 14, 1971, in id. at 191  (remarks  of  Professor  W.  Reese).  Additionally,

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considerations  of  reciprocity—  considerations  given express  recognition  in  the  Convention itself   — counsel courts to invoke the public policy defense with caution  lest  foreign  courts  frequently  accept  it  as  a defense to enforcement of arbitral awards rendered in the United States.  

We conclude, therefore, that  the Convention’s public policy  defense  should  be  construed  narrowly. Enforcement of foreign arbitral awards may be denied on this basis only where enforcement would violate the forum  state’s  most  basic  notions  of  morality  and justice.

xxx xxx xxx

Although  the  Convention  recognizes  that  an  award may not be enforced where predicated on a subject matter outside the arbitrator’s jurisdiction, it does not sanction second-guessing the arbitrator’s construction of the parties’ agreement. The appellant’s attempt to invoke this defense, however, calls upon the court to ignore  this  limitation  on  its  decision-making  powers and usurp the arbitrator’s role. The district court took a proper view of its own jurisdiction in refusing to grant relief on this ground.”

     (emphasis supplied)

41.  This judgment was followed in Compagnie des Bauxites de Guinee

v. Hammermills Inc. (1992) WL 122712 where the US District Court,

District of Colombia followed Parsons (supra) as follows:

“The  principal  purpose  of  the  Convention  and  its implementation  by  Congress  was  to  “remove  pre- existing  obstacles  to  enforcement”  of  foreign arbitration awards.  Parsons & Whittemore Overseas Co. v. Societe Generale de L'Industrie du Papier, 508 F.2d 969,  973 (2d Cir.1974).  To facilitate this  policy, which  applies  with  special  force  in  the  field  of

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international commerce,  see Mitsubishi Motors Corp. v.  Soler  Chrysler–Plymouth,  Inc.,  473 U.S.  614,  625 (1985),  the  courts  have  developed  a  “general  pro- enforcement  bias,”  Parsons & Whittemore Overseas Co., 508 F.2d at 973, under which the burden of proof rests on the party  challenging the arbitration award, Dworkin  Cosell  Interair  Courier  Servs.,  Inc.  v. Avraham,  728  F.Supp.  156,  158  (S.D.N.Y.1989); Overseas Private Invest. Corp. v. Anaconda Co., 418 F.Supp. 107, 110 (D.D.C.1976),  and the grounds for refusing  to  recognize  arbitral  awards  are  narrowly construed,  Parsons & Whittemore Overseas Co., 508 F.2d at 976–77.  

xxx xxx xxx

The  few  courts  to  address  this  provision  of  the Convention  have  concluded  that  the  provision “essentially  sanctions  the  application  of  the  forum state's  standards  of  due  process.”  See Parsons  & Whittemore Overseas Co., 508 F.2d at 975;  Geotech Lizenz AG v.  Evergreen Systems,  Inc.,  697  F.Supp. 1248,  1263  (E.D.N.Y.1988)  (citing  Parsons  & Whittemore  Overseas  Co.).  Due  process  requires notice  “reasonably  calculated,  under  all  the circumstances,  to  apprise  interested  persons  of  the pendency of the action and afford them an opportunity to  present  their  objections.”  Mullane  v.  Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).”

42. In  Certain Underwriters at  Lloyd’s London v.  BCS Ins.  Co.  239

F.Supp.2d 812 (2003), the US District Court, N.D Illinois referred to the

Federal Arbitration Act and went on to hold that the review of a panel

decision is “grudgingly narrow”. (See paragraphs 2 and 3).

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43. In  Karaha Bodas Co., L.L.C v. Perusahaan Pertambagan Minyak

364 F.3d 274 (2004),  the United States Court of Appeals for the 5th

Circuit analysed the New York Convention thus:

“The  New  York  Convention  provides  a  carefully structured framework for the review and enforcement of  international  arbitral  awards.  Only  a  court  in  a country with primary jurisdiction over an arbitral award may annul that award. Courts in other countries have secondary  jurisdiction;  a  court  in  a  country  with secondary  jurisdiction  is  limited  to  deciding  whether the  award  may  be  enforced  in  that  country.  The Convention “mandates very different  regimes for  the review of arbitral awards (1) in the countries in which, or under the law of which, the award was made, and (2)  in  other  countries  where  recognition  and enforcement are sought.” Under the Convention, “the country in which, or under the arbitration law of which, an  award  was  made”  is  said  to  have  primary jurisdiction  over  the  arbitration  award.  All  other signatory states are secondary jurisdictions, in which parties  can  only  contest  whether  that  state  should enforce the arbitral award. It  is clear that the district court had secondary jurisdiction and considered only whether to enforce the Award in the United States.  

Article  V  enumerates  specific  grounds  on  which  a court  with  secondary  jurisdiction  may  refuse enforcement.  In  contrast  to  the  limited  authority  of secondary-jurisdiction  courts  to  review  an  arbitral award, courts of primary jurisdiction, usually the courts of the country of the arbitral situs, have much broader discretion  to  set  aside  an  award.  While  courts  of  a primary  jurisdiction  country  may  apply  their  own domestic law in evaluating a request to annul or set aside  an  arbitral  award,  courts  in  countries  of secondary jurisdiction may refuse enforcement only on the grounds specified in Article V.  

The  New  York  Convention  and  the  implementing legislation,  Chapter  2  of  the  Federal  Arbitration  Act (“FAA”),  provide  that  a  secondary  jurisdiction  court

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must enforce an arbitration award unless it finds one of the  grounds for  refusal  or  deferral  of  recognition  or enforcement  specified  in  the  Convention.  The  Court may not refuse to enforce an arbitral award solely on the  ground  that  the  arbitrator  may  have  made  a mistake  of  law  or  fact.  “Absent  extraordinary circumstances, a confirming court is not to reconsider an arbitrator’s findings.”  The party defending against enforcement of the arbitral award bears the burden of proof.  Defences to enforcement under the New York Convention are construed narrowly “to encourage the recognition and enforcement of commercial arbitration agreements in international contracts…””                                                        (emphasis supplied)

44.  Likewise, in  Admart AG v.  Stephen and Mary Birch Foundation

Inc.  457 F.3d 302 (2006), the U.S Court of Appeals, 3rd Circuit, after

setting out Article V of the New York Convention, held as follows:

“To carry out the policy favoring enforcement of foreign arbitral awards, courts have strictly applied the Article V  defenses  and  generally  view  them narrowly.  See China Minmetals,  334 F.3d at  283.  In  Yusuf  Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15  (2d  Cir.1997),  the  court  emphasized  the  limited power  of  review granted to  district  courts  under  the Convention.  The  court  examined  the  distinction between awards rendered in the same nation as the site of the arbitral proceeding and those rendered in a foreign  country.  The  court  concluded  that  more flexibility  was available when the arbitration site and the site of the confirmation proceeding were within the same  jurisdiction.  Id.  at  22–23.  However,  “the [C]onvention is equally clear that when an action for enforcement  is  brought  in  a  foreign  state,  the  state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention.” Id. at 23.

xxx xxx xxx  

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In the same vein, in Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de L'Industrie du Papier (RAKTA),  508  F.2d  969  (2d  Cir.1974),  the  Court  of Appeals reviewed the grounds for refusal contained in the Convention and said that the public policy defense is available “only where enforcement would violate the forum  state's  most  basic  notions  of  morality  and justice.” Id. at 974. Similarly, the court noted that an award  cannot  be  enforced  under  the  Convention where it is “predicated on a subject matter outside the arbitrator's jurisdiction,”  but  the Convention does not “sanction second-guessing the arbitrator's construction of the parties' agreement.” Id. at 977.”

45.The U.S cases show that given the “pro-enforcement bias” of the New

York  Convention,  which  has  been  adopted  in  Section  48  of  the

Arbitration  Act,  1996  -  the  burden  of  proof  on  parties  seeking

enforcement has now been placed on parties objecting to enforcement

and not  the other  way around;  in  the  guise of  public  policy  of  the

country  involved,  foreign  awards  cannot  be  set  aside  by  second

guessing the arbitrator’s interpretation of the agreement of the parties;

the challenge procedure in the primary jurisdiction gives more leeway

to Courts to interfere with an award than the narrow restrictive grounds

contained  in  the  New  York  Convention  when  a  foreign  award’s

enforcement is resisted.

Discretion of the Court to Enforce Foreign Awards

46.Thus far,  it  is clear that enforcement of a foreign award may under

Section 48 of the Arbitration Act be refused only if the party resisting

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enforcement  furnishes  to  the  Court  proof  that  any  of  the  stated

grounds has been made out to resist enforcement. The said grounds

are watertight – no ground outside Section 48 can be looked at. Also,

the expression used in Section 48 is “may”.  Shri  Viswanathan has

argued  that  “may”  would  vest  a  discretion  in  a  Court  enforcing  a

foreign award to enforce such award despite the fact that one or more

grounds  may  have  been  made  out  to  resist  enforcement.  For  this

purpose, he relied upon Sections 45 to 47, which contain the word

“shall”  in  contradistinction  to  the  word  “may”.  He  also  relied  upon

Article V of the New York Convention which also uses the word “may”.

47.Gary Born in International Commercial Arbitration, Vol. II (2009) puts it

thus:

“No  Obligation  under  New  York  Convention  to Deny Recognition of Awards

Nothing  in  the  New  York  Convention  requires a Contracting  State  ever  to  deny  recognition  to  an arbitral  award.  The  Convention  requires  only  that Contracting States recognize awards (and arbitration agreements)  in  specified circumstances.   Nothing in Article V, nor the basic structure and purpose of the Convention,  imposes  the  opposite  obligation  not to recognize an award (or arbitration agreement).

Article  III  of  the  Convention  requires  Contracting States  to  recognize  arbitral  awards  made  abroad, subject to procedural requirements no more onerous than  those  for  domestic  awards,  provided  that  the minimal proof requirements of Article IV are satisfied. Articles V(I) and V(2) then provide exceptions to this affirmative  obligation,  beginning  with  the  prefatory

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statement  that  “[r]ecognition and enforcement  of  the awards may be refused” in certain circumstances.  The most significant aspect of this provision is its structure, which  is  to  establish  an  affirmative  obligation  to recognize  arbitral  awards,  subject  to  specified exceptions  –  but  not  to  establish  an  affirmative obligation  to  deny  recognition.   Critically,  the  Article V(I)  exceptions  are  just  that:  exceptions  to  an affirmative obligation, and not affirmative obligations in their own right.

Although the matter can be debated, the text of Article V  supports  this  structural  conclusion.  The  English language text of Article V is unmistakably permissive, providing  that  Contracting  States  “may”  refuse recognition  of  an  award;  the  Russian  and  Chinese versions of  the Convention are identical  in meaning. The Spanish version of  Article  V also indicates that recognition may be denied,  without  indicating that  it must be.  The only exception is the French text, which has been relied on by some authorities as supposedly establishing  an  obligation  to  deny  recognition  to awards that have been annulled in the arbitral seat.  In fact, the better view appears to be that the French text is ambiguous, assuming that awards falling within one of Article V’s exceptions would not be enforced, but not affirmatively requiring this result.

This  is  also  consistent  with  Article  VII  of  the Convention, which provides that the Convention shall not “deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.”  This  provision  expresses  a  fundamental objective of the Convention – which was to facilitate, not  limit,  the  circumstances  in  which  international arbitral awards could be recognized.  Indeed, there is not a hint in the drafting history of the Convention of any  intention  to  prevent  Contracting  States  from recognizing foreign awards under  provisions of  local law that are more liberal than Article V.”

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48.Redfern and Hunter on International Arbitration, 6th Edn. (2015) states:

“11.59  Fourthly,  even  if  grounds  for  refusal  of recognition and enforcement of an award are proved to exist,  the enforcing court  is  not  obliged  to  refuse enforcement. The opening lines of Article V(1) and (2) of  the  Convention  say  that  enforcement  ‘may’  be refused; they do not say that it ‘must’ be refused. The language is permissive, not mandatory. The same is true of the Model Law.”

49.Likewise,  Albert  Jan  van  den  Berg’s  The  New  York  Arbitration

Convention of 1958 (1981) states:

“It is to be noted that the opening lines of both the first and  the  second  paragraph  of  Article  V  employ  a permissive  rather  than  mandatory  language: enforcement “may be” refused. For the first paragraph it means that even if a party against whom the award is invoked proves the existence of one of the grounds for refusal of enforcement, the court still has a certain discretion  to  overrule  the  defence  and  to  grant  the enforcement of the award. Such overruling would be appropriate,  for  example,  in  the  case  where  the respondent  can  be  deemed  to  be  estopped  from invoking the ground for refusal.”

50.Russel on Arbitration, Sweet & Maxwell (24th Edn., 2015) states:

“8-033  Opposing  enforcement  of  a  New  York Convention Award

As stated above, subject to production of the required documents the court has no discretion but to recognise

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and enforce a New York Convention award unless the party opposing enforcement proves one or more of the grounds specified in s.103 of the Arbitration Act 1996. These grounds of refusal are exhaustive, and if none of the grounds is present the award will be enforced. Much  has  been  written  about  these  grounds  and  a detailed  analysis  of  their  international  application  is beyond the scope of this book but they will be treated summarily  in  this  chapter.  The  onus  of  proving  the existence of a ground rests upon the party opposing enforcement,  but  that  may  not  be  the  end  of  the matter.  There  is  an  important  public  policy  in  the enforcement  of  awards  and  the  courts  should  only refuse  to  enforce  an  award  under  s.103  in  a  clear case.

xxx xxx xxx

8-035 Discretion

The court also has a discretion to allow enforcement even  in  circumstances  where  one  or  more  of  the grounds  are  made  out.  This  discretion  is  not  to  be exercised arbitrarily however because the word “may” in s.103(2) is  intended to refer  to the corresponding word in the New York Convention.  In any event the discretion is a very narrow one. If one or more of the grounds  in  s.103(2)  is  made  out,  the  strong presumption is that the award will not be enforced. The discretion  to  enforce  notwithstanding  will  not  be exercised where the award in question was subject to a fundamental or structural defect. The discretion may however be available where  

“despite the original existence of one or more of the  listed  circumstances,  the  right  to  rely  on them had been lost  by,  for  example,  another agreement or estoppel”,

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Or where there are circumstances

“which  might  on  some  recognisable  legal principles affect the prima facie right to have an award  set  aside  arising  in  cases  listed  in s.103(2).”

51.  An interesting judgment of  the U.K. Supreme Court  is reported as

Dallah Real  Estate and Tourism Holding Co.  v.  The Ministry  of

Religious Affairs, Government of Pakistan (2010) UKSC 46. In this

judgment -  given the resistance to a foreign award in the U.K - the

discretion of a Court to enforce such award, even if grounds to resist

the award have been made out, was set out thus:

“Per Lord Mance:

Discretion

67. Dallah has a fall-back argument, which has also failed in both courts below. It  is  that  s.103(2) of  the 1996 Act and Article V(1) of the New York Convention state that “Recognition and enforcement of the award may be refused” if the person against whom such is sought  proves  (or  furnishes  proof  of)  one  of  the specified matters. So, Miss Heilbron submits, it is open to a court which finds that there was no agreement to arbitrate  to  hold  that  an  award  made  in  purported pursuance  of  the  non-existent  agreement  should nonetheless be enforced. In Dardana Ltd v Yukos Oil Company [2002]  1  All  ER (Comm) 819 I  suggested that  the  word  “may”  could  not  have  a  purely discretionary force and must in this context have been designed  to  enable  the  court  to  consider  other circumstances,  which  might  on  some  recognisable legal  principle  affect  the  prima  facie  right  to  have enforcement or recognition refused (paras 8 and 18). I

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also  suggested  as  possible  examples  of  such circumstances another agreement or estoppel.

68. S.103(2)  and  Article  V  in  fact  cover  a  wide spectrum  of  potential  objections  to  enforcement  or recognition,  in relation to some of  which it  might  be easier  to  invoke  such  discretion  as  the  word  “may” contains  than  it  could  be  in  any  case  where  the objection  is  that  there  was  never  any  applicable arbitration  agreement  between  the  parties  to  the award. Article II of the Convention and ss.100(2) and 102(1) of the 1996 Act serve to underline the (in any event  obviously  fundamental)  requirement  that  there should be a valid and existing arbitration agreement behind an award sought to be enforced or recognised. Absent  some  fresh  circumstance  such  as  another agreement or an estoppel, it  would be a remarkable state of  affairs if  the word “may” enabled a court  to enforce or recognise an award which it found to have been made without jurisdiction, under whatever law it held ought to be recognised and applied to determine that issue.  

69. The factors relied upon by Dallah in support of its suggestion  that  a  discretion  should  be  exercised  to enforce the present award amount for the most part to repetition of Dallah’s arguments for saying that there was  an  arbitration  agreement  binding  on  the Government,  or  that  an  English  court  should  do  no more than consider whether there was a plausible or reasonably  supportable  basis  for  its  case or  for  the tribunal’s conclusion that it had jurisdiction. But Dallah has  lost  on  such  points,  and  it  is  impossible  to  re- deploy  them  here.  The  application  of  s.103(2)  and Article  V(1)  must  be  approached  on  the  basis  that there  was  no  arbitration  agreement  binding  on  the Government  and  that  the  tribunal  acted  without jurisdiction.  General  complaints that  the Government did  not  behave  well,  unrelated  to  any  known  legal principle, are equally unavailing in a context where the Government has proved that it  was not party to any arbitration  agreement.  There  is  here  no  scope  for reliance  upon  any  discretion  to  refuse  enforcement

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which  the  word  “may”  may  perhaps  in  some  other contexts provide.

xxx xxx xxx

Per Lord Collins:  

Discretion  

126. The  court  before  which  recognition  or enforcement is sought has a discretion to recognise or enforce  even  if  the  party  resisting  recognition  or enforcement  has  proved  that  there  was  no  valid arbitration  agreement.  This  is  apparent  from  the difference in wording between the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 and the  New  York  Convention.  The  Geneva  Convention provided  (article  1)  that,  to  obtain  recognition  or enforcement,  it  was  necessary  that  the  award  had been made in pursuance of a submission to arbitration which was valid under the law applicable thereto, and contained  (article  2)  mandatory  grounds  (“shall  be refused”)  for  refusal  of  recognition and enforcement, including  the  ground  that  it  contained  decisions  on matters  beyond  the  scope  of  the  submission  to arbitration. Article V(1)(a) of the New York Convention (and  section  103(2)(b)  of  the  1996  Act)  provides: “Recognition and enforcement  of  the award  may be refused …” See also van den Berg, p 265; Paulsson, May  or  Must  Under  the  New  York  Convention:  An Exercise in Syntax and Linguistics (1998) 14 Arb Int 227.  

127. Since  section  103(2)(b)  gives  effect  to  an international  convention,  the  discretion  should  be applied in a way which gives effect to the principles behind  the  Convention.  One  example  suggested  by van  den  Berg,  op  cit,  p  265,  is  where  the  party resisting  enforcement  is  estopped  from  challenge, which  was adopted by Mance LJ  in  Dardana Ltd  v Yukos Oil Co [2002] 2 Lloyd’s Rep 326, para 8. But, as Mance LJ emphasised at para 18, there is no arbitrary discretion: the use of the word “may” was designed to enable  the  court  to  consider  other  circumstances, which  might  on  some  recognisable  legal  principle

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affect the prima facie right to have an award set aside arising in the cases listed in section 103(2). See also Kanoria v Guinness [2006] 1 Lloyd’s Rep 701, para 25 per Lord Phillips CJ. Another possible example would be  where  there  has  been no  prejudice  to  the  party resisting  enforcement:  China  Agribusiness Development  Corpn v  Balli  Trading [1998]  2  Lloyd’s Rep 76. But it is not easy to see how that could apply to  a  case  where  a  party  had  not  acceded  to  an arbitration agreement.  

128. There may, of course, in theory be cases where the English court would refuse to apply a foreign law which makes the arbitration agreement invalid where the foreign law outrages its sense of justice or decency (Scarman J’s phrase in In the Estate of Fuld, decd (No 3)  [1968]  P  675,  698),  for  example  where  it  is discriminatory  or  arbitrary.  The  application  of  public policy in the New York Convention (article V(2)(b)) and the  1996 Act  (section  103(3))  is  limited  to  the  non- recognition or enforcement of foreign awards. But the combination of (a) the use of public policy to refuse to recognise the application of the foreign law and (b) the discretion to recognise or enforce an award even if the arbitration agreement  is  invalid  under  the applicable law could be used to avoid the application of a foreign law which is contrary to the court’s sense of justice.  

xxx xxx xxx

130. In the United States the courts have refused to enforce awards which have been set aside in the State in which the award was made, on the basis that the award  does  not  exist  to  be  enforced  if  it  has  been lawfully  set  aside  by  a  competent  authority  in  that State: Baker Marine (Nigeria) Ltd v Chevron (Nigeria) Ltd, 191 F 3d 194 (2d Cir 1999); TermoRio SA ESP v Electranta SP,  487 F 3d 928 (DC Cir 2007). But an Egyptian  award  which  had  been  set  aside  by  the Egyptian court was enforced because the parties had agreed  that  the  award  would  not  be  the  subject  of recourse to the local courts: Chromalloy Aeroservices v  Arab  Republic  of  Egypt,  939  F  Supp  907  (DDC 1996). That decision was based both on the discretion

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in the New York Convention, article V(1) and on the power  under  article  VII(1)  (see  Karaha Bodas Co v Perusahaan  Pertambangan  Minyak  Dan  Gas  Bumi Negara,  335  F  3d  357,  367  (5th  Cir  2003))  and whether  it  was  correctly  decided  was  left  open  in TermoRio SA ESP v Electranta SP, ante, at p 937.  

131. The  power  to  enforce  notwithstanding  that  the award has been set aside in the country of origin does not, of course, arise in this case. The only basis which Dallah puts forward for the exercise of discretion in its favour  is  the  Government’s  failure  to  resort  to  the French court to set aside the award. But Moore-Bick LJ was plainly right in the present case (at para 61) to say that the failure by the resisting party to take steps to challenge the jurisdiction of the tribunal in the courts of  the  seat  would  rarely,  if  ever,  be  a  ground  for exercising the discretion in enforcing an award made without  jurisdiction.  There  is  certainly  no  basis  for exercising the discretion in this case.”

52.A learned  single  judge  of  the  Delhi  High  Court  in  Cruz  City  1

Mauritius  Holdings  v.  Unitech  Limited  (2017)  239  DLT  649,

adverted to this issue and held:

“28. Whilst  this court  accepts the contention that  the use  of  the  word  “may”  as  used  in  the  context  of Section  48  of  the  Act  does  not  confer  an  absolute discretion on the courts, it is not possible to accept that the word “may” should be read as “shall” and the court is  compelled  to  refuse  enforcement,  if  any  of  the grounds under Section 48 are established. First of all, the plain meaning of the word “may” is not “shall”; it is used  to  imply  discretion  and  connote  an  option  as opposed to compulsion.

29. In re, Nichols v. Baker: 59 LJ Ch 661, Cotton L.J. observed that ‘“May’ can never mean must, so long as the English language retains its meaning; but it gives a power and then it may be a question, in what cases,

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when any authority or body has a power given it by the word ‘may’, it becomes its duty to exercise that power”.

30. In Official Liquidator v. Dharti Dhan (P) Ltd.: (1977) 2 SCC 166 the Supreme Court had explained that in certain cases where the legal  and factual  context  in which  the  discretionary  power  is  to  be  exercised  is specified, it is also annexed with a duty to exercise it in that manner. Keeping the aforesaid in mind, there can be no cavil that since Section 48 of the Act enables the court  to  refuse  enforcement  of  a  foreign  award  on certain grounds, this court would be required to do so; however, if there are good reasons founded on settled principles  of  law,  the  court  is  not  precluded  from declining the same. The word “may” in Section 48(1) and (2) of  the Act  must be interpreted as used in a sense  so  as  not  to  fetter  the  courts  to  refuse enforcement of a foreign award even if the grounds as set out in Section 48 are established, provided there is sufficient  reason  to  do  so.  Viewed  from  this perspective,  the  considerations  that  this  court  may bear  while  examining  grounds  as  set  out  under Section 48(1) (enacted to give effect to Article V(1) of the New York convention) may be materially different from the consideration that this court may bear while examining  the  issue  of  declining  enforcement  of  a foreign award on the ground of public policy (Section 48(2)  of  the  Act).  Whereas  the  grounds  as  set  out under Section 48(1) essentially concern the structural integrity of the arbitral process and inter party rights therefore  considerations  such  as  the  conduct  of parties,  balancing  of  the inter  se rights  etc  are  of material significance but such considerations may not be of any significant relevance in considering whether enforcing the award contravenes the public policy of India.

31. It is necessary to bear in mind that Section 48 of the Act is a statutory expression of Article V of the New York Convention and is similarly worded. The object of Article V of the New York Convention is to enable the signatory  States  to  retain  the  discretion  to  refuse enforcement of a foreign award on specified grounds and none other; it does not compel the member States

73

to decline enforcement of foreign awards. Article V of the  convention  thus  sets  out  the  maximum  leeway available to member States to refuse enforcement of a foreign award. This view has also been accepted by courts  in  the  United  States.  In Chromalloy Aeroservices. v. The Arab  Republic  of  Egypt:  939  F. Supp. 907 (DDC 1996), an Egyptian award, which was set  aside  by  an  Egyptian  court,  was  enforced notwithstanding  Article  V(1)(e)  of  the  New  York Convention.

32. The  principle  that  courts  may  enforce  a  foreign award  notwithstanding  that  one  or  more  of  the specified  grounds  have  been  established,  is  also accepted  in  the  United  Kingdom.  (See: China Agribusiness  Development  Corporation v. Balli Trading: [1998] 2 Lloyd's Rep 76).  

xxx xxx xxx

37. The grounds as set out in Section 48 of the Act for refusing enforcement of the award encompass a wide spectrum of acts and factors as they are set in broad terms. While in some cases, it may be imperative to refuse  the enforcement  of  the award while  in  some other, it may be manifestly unjust to do so. Section 48 is enacted to give effect to Article V of the New York Convention,  which enables member  States to  retain some sovereign  control  over  enforcement  of  foreign awards in their territory. The ground that enforcement of  an  award  opposed  to  the  national  public  policy would  be  declined  perhaps  provides  the  strongest expression  of  a  Sovereign's  reservation  that  its executive power shall not be used to enforce a foreign award  which  is  in  conflict  with  its  policy.  The  other grounds mainly relate to the structural integrity of the arbitral process with focus on inter party rights.

38. In terms of Sub-section (1) of Section 48 of the Act, the Court can refuse enforcement of a foreign award only  if  the  party  resisting the enforcement  furnishes proof to establish the grounds as set  out  in Section 48(1)  of  the  Act.  However,  the  court  may  refuse enforcement of a foreign award notwithstanding that a party  resisting  the  enforcement  has  not  provided

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any/sufficient proof of contravention of public policy. In such cases, the Court is not precluded from examining the  question  of  public  policy suo  motu and  would refuse to enforce the foreign award that  is  found to offend the public policy of India. The approach of the court while examining whether to refuse enforcement of a foreign award would also depend on the nature of the defence established.

39. Even where public policy considerations are to be weighed, it is not difficult to visualise a situation where both permitting as well as declining enforcement would fall foul of the public policy. Thus, even in cases where it is found that the enforcement of the award may not conform to public policy, the courts may evaluate and strike a balance whether it would be more offensive to public  policy  to  refuse  enforcement  of  the  foreign award - considering that the parties ought to be held bound by the decision of the forum chosen by them and there is finality to the litigation - or to enforce the same;  whether  declining to  enforce a  foreign award would be more debilitating to the cause of justice, than to  enforce  it.  In  such  cases,  the  court  would  be compelled  to  evaluate  the  nature,  extent  and  other nuances  of  the  public  policy  involved  and  adopt  a course which is less pernicious.

xxx xxx xxx

43. Thus, whilst there is no absolute or open discretion to reject the request for declining to enforce a foreign award, it cannot be accepted that it is totally absent. The width of the discretion is narrow and limited, but if sufficient  grounds  are  established,  the  court  is  not precluded  from  rejecting  the  request  for  declining enforcement of a foreign award.”

53.When the grounds for resisting enforcement of a foreign award under

Section  48  are  seen,  they  may  be  classified  into  three  groups  –

grounds  which  affect  the  jurisdiction  of  the  arbitration  proceedings;

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grounds which affect party interest alone; and grounds which go to the

public policy of India, as explained by Explanation 1 to Section 48(2).

Where a ground to resist enforcement is made out, by which the very

jurisdiction  of  the  tribunal  is  questioned  -  such  as  the  arbitration

agreement  itself  not  being valid  under  the law to which the parties

have  subjected  it,  or  where  the  subject  matter  of  difference  is  not

capable of settlement by arbitration under the law of India, it is obvious

that  there can be no discretion in  these matters.  Enforcement  of  a

foreign award made without jurisdiction cannot possibly be weighed in

the scales for a discretion to be exercised to enforce such award if the

scales are tilted in its favour.  

54.On the other hand, where the grounds taken to resist enforcement can

be said to be linked to party interest alone, for example, that a party

has been unable to present its case before the arbitrator, and which

ground is  capable of  waiver  or  abandonment,  or,  the ground being

made out, no prejudice has been caused to the party on such ground

being made out,  a Court may well  enforce a foreign award, even if

such ground is made out. When it comes to the “public policy of India”

ground,  again,  there  would  be  no discretion in  enforcing  an award

which  is  induced  by  fraud  or  corruption,  or  which  violates  the

fundamental policy of Indian law, or is in conflict with the most basic

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notions of morality or justice. It can thus be seen that the expression

“may” in Section 48 can, depending upon the context, mean “shall” or

as connoting that a residual discretion remains in the Court to enforce

a foreign award, despite grounds for its resistance having been made

out. What is clear is that the width of this discretion is limited to the

circumstances pointed out hereinabove, in which case a balancing act

may be performed by the Court enforcing a foreign award.

The Natural Justice Ground under Section 48

55. Shri Sibal has argued that the expression “or was otherwise unable to

present his case” occurring in Section 48(1)(b) of the Act must be read

along with the words preceding it noscitur a sociis, and, given the fact

that the grounds for resistance of enforcement have to be construed

narrowly in the case of ambiguity, this expression cannot possibly go

beyond the hearing before the arbitrator and to the award rendered by

the arbitrator. Shri Nakul Dewan, on the other hand, argued that the

expression “unable to present his case” was co-terminus with breach

of  natural  justice  which  went  to  not  only  the  hearing  before  the

arbitrator, but also to the award, in that, if the arbitrator were not to

give a finding on a material issue or were not to decide a claim or

counter-claim, this would breach the broader requirements of the audi

alteram partem rule of natural justice and would, therefore, be covered

by Section 48(1)(b) of the Act.  

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56.This Court in Ssangyong (supra) has dealt with this aspect of Section

48 as follows:

“37. Under the rubric of a party being otherwise unable to  present  its  case,  the  standard  textbooks  on  the subject  have  stated  that  where  materials  are  taken behind  the  back  of  the  parties  by  the  Tribunal,  on which the parties have had no opportunity to comment, the ground under Section 34(2)(a)(iii) would be made out. In  New York Convention on the Recognition and Enforcement  of  Foreign  Arbitral  Awards  – Commentary, edited by Dr. Reinmar Wolff (C.H. Beck, Hart, Nomos Publishing, 2012), it is stated:  

“4. Right to Comment  

According to the principle of due process, the tribunal must grant the parties an opportunity to comment on all  factual  and  legal  circumstances  that  may  be relevant to the arbitrators’ decision-making.  

a) Right to Comment on Evidence and Arguments Submitted by the Other Party  

As part of their right to comment, the parties must be given  an  opportunity  to  opine  on  the  evidence  and arguments introduced in the proceedings by the other party.  The  right  to  comment  on  the  counterparty’s submissions  is  regarded  as  a  fundamental  tenet  of adversarial proceedings. However, in accordance with the general requirement of causality, the denial of an opportunity  to  comment  on  a  particular  piece  of evidence  or  argument  is  not  prejudicial,  unless  the tribunal relied on this piece of evidence or argument in making its decision.  

In order to ensure that the parties can exercise their right to comment effectively, the arbitral tribunal must grant them access to the evidence and arguments

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submitted by the other side.  Affording a party  the opportunity  to  make submissions or  to  give its  view without also informing it of the opposing side’s claims and arguments typically constitutes a violation of due process,  unless  specific  non-disclosure  rules  apply (e.g.,  such disclosure would constitute a violation of trade secrets or applicable legal privileges).

In  practice,  national  courts  have  afforded  arbitral tribunals considerable leeway in setting and adjusting the  procedures  by  which  parties  respond  to  one another’s  submissions  and  evidence,  reasoning  that there  were  “several  ways  of  conducting  arbitral proceedings.”  Accordingly,  absent  any  specific agreement by the parties, the arbitral tribunal has wide discretion in arranging the parties’ right to comment, permitting or excluding the introduction of new claims, and determining which party may have the final word.  

b)  Right  to  Comment  on  Evidence  Known  to  or Determined by the Tribunal  

The parties’ right to comment also extends to facts that have not been introduced in the proceedings by the parties,  but  that  the tribunal  has raised sua sponte, provided it was entitled to do so. For instance, if the tribunal  gained  “out  of  court  knowledge”  of circumstances (e.g., through its own investigations), it may only rest its decision on those circumstances if it informed both parties in advance and afforded them the opportunity  to  comment  thereon.  The same rule applies to cases where an arbitrator intends to base the  award  on  his  or  her  own  expert  knowledge, unless  the  arbitrator  was  appointed  for  his  or  her special  expertise  or  knowledge  (e.g.,  in  quality arbitration). Similarly, a tribunal must give the parties an  opportunity  to  comment  on  facts  of  common knowledge if it intends to base its decision on those facts, unless the parties should have known that those

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facts could be decisive for the final award.”(emphasis in original)

In  Fouchard,  Gaillard,  Goldman  on  International Commercial  Arbitration (Kluwer  Law  International, 1999) [“Fouchard”] it is stated:

“In some rare cases, recognition or enforcement of an award has been refused on the grounds of a breach of due process.  One example is  the award made in a quality  arbitration  where  the  defendant  was  never informed of the identity of the arbitrators hearing the dispute [Danish buyer v German (F.R.) seller, IV Y.B. Comm. Arb. 258 (1979) (Oberlandesgericht Cologne)]. It  also occurred in a case where various documents were submitted by one party to the arbitral tribunal but not  to the other party [G.W.I.  Kersten & Co. B.V. v. Société  Commerciale  Raoul  Duval  et  Co., XIX  Y.B. Comm.  Arb.  708  (Amsterdam  Court  of  Appeals) (1992)], in another case where the defendant was not given  the  opportunity  to  comment  on  the  report produced  by  the  expert  appointed  by  the  tribunal [Paklito Inv. Ltd. v. Klockner East Asia Ltd.,  XIX Y.B. Comm. Arb. 664, 671 (Supreme Court of Hong Kong) (1994)], and again where the arbitral tribunal criticized a party for having employed a method of presenting evidence which the tribunal itself had suggested [Iran Aircraft  Indus.  v Avco Corp.,  980 F.2d 141 (2nd Cir. 1992)].”(at p. 987)

Gary Born (supra) states:

“German  courts  have  adopted  similar  reasoning, holding that the right to be heard entails two related sets  of  rights:  (a)  a  party  is  entitled  to  present  its position  on  disputed  issues  of  fact  and  law,  to  be informed about the position of the other parties and to a decision based on evidence or materials known to the parties [See,  e.g.,  Judgment  of  5 July  2011,  34

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SCH 09/11, II(5)(c)(bb) (Oberlandesgericht Munchen)]; and (b) a party is entitled to a decision by the arbitral tribunal that takes its position into account insofar as relevant [See, e.g., Judgment of 5 October 2009, 34 Sch  12/09  (Oberlandesgericht  Munchen)].  Other authorities  provide  comparable  formulations  of  the content of the right to be heard [See, e.g.,  Slaney v. Int’l  Amateur Athletic Foundation,  244 F.3d 580, 592 (7th Cir. 2001) (at p. 3225)

Similarly, in Redfern and Hunter (supra):

“11.73. The national court at the place of enforcement thus has a limited role.  Its  function is  not  to  decide whether or not the award is correct, as a matter of fact and law. Its function is simply to decide whether there has been a fair hearing. One mistake in the course of the proceedings may be sufficient to lead the court to conclude  that  there  was  a  denial  of  justice.  For example,  in  a  case  to  which  reference  has  already been made,  a  US corporation,  which had been told that  there was no need to  submit  detailed invoices, had its claim rejected by the Iran-US Claims Tribunal, for failure to submit detailed invoices! The US court, rightly it  is  suggested,  refused to enforce the award against the US company [Iran Aircraft Ind v Avco Corp. 980  F.2d.  141  (2nd  Cir.  1992)].  In  different circumstances,  a  German  court  held  that  an  award that was motivated by arguments that  had not been raised by the parties or the tribunal during the arbitral proceedings,  and thus on which the parties had not had an opportunity to comment, violated due process and  the  right  to  be  heard  [See  the  decision  of  the Stuttgart  Court  of  Appeal  dated  6  October  2001 referred  to  in  Liebscher,  The  Healthy  Award, Challenge  in  International  Commercial  Arbitration (Kluwer  law  International,  2003),  406].  Similarly,  in Kanoria  v  Guinness,  [2006]  EWCA  Civ.  222,  the

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English Court of Appeal decided that the respondent had not been afforded the chance to present its case when  critical  legal  arguments  were  made  by  the claimant  at  the hearing,  which the respondent could not  attend  due  to  a  serious  illness.  In  the circumstances,  the  court  decided  that  ‘this  is  an extreme case of potential injustice’ and resolved not to enforce the arbitral award.  

11.74. Examples  of  unsuccessful  ‘due  process’ defences  to  enforcement  are,  however,  more numerous.  In  Minmetals  Germany  v  Ferco  Steel, [1999] CLC 647, the losing respondent in an arbitration in  China  opposed  enforcement  in  England  on  the grounds that the award was founded on evidence that the  arbitral  tribunal  had  obtained  through  its  own investigation. An English court rejected this defence on the basis that the respondent was eventually given an opportunity  to  ask  for  the  disclosure  of  evidence  at issue and comment on it, but declined to do so. The court  held  that  the  due  process  defence  to enforcement  was  not  intended  to  accommodate circumstances  in  which  a  party  had  failed  to  take advantage of an opportunity duly accorded to it.”

57.  This  Court’s  judgment  in  Sohan  Lal  Gupta  v.  Asha  Devi  Gupta

(2003)  7  SCC 492,  lays  down the  ingredients  of  a  fair  hearing  as

follows:

“23. For  constituting  a  reasonable  opportunity,  the following conditions are required to be observed:

1. Each party must have notice that the hearing is to take place.

2. Each party must have a reasonable opportunity to be present at the hearing, together with his advisers and witnesses.

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3. Each party must have the opportunity to be present throughout the hearing.

4. Each party must have a reasonable opportunity to present evidence and argument in support of his own case.

5. Each party must have a reasonable opportunity to test  his  opponent's  case  by  cross-examining  his witnesses,  presenting  rebutting  evidence  and addressing oral argument.

6. The hearing must, unless the contrary is expressly agreed, be the occasion on which the parties present the whole of their evidence and argument.”

58.A recent Delhi High Court judgment in Glencore International AG v.

Dalmia Cement (Bharat) Limited 2017 SCC OnLine Del 8932 puts it

thus:  

“25. The inability to present a case as contemplated under  section  48(1)(b)  of  the  Act  (which  is pari materia to Article V(I)(b) of the New York Convention) must be such so as to render the proceedings violative of the due process and principles of natural justice. It is rudimentary that for a fair decision each party must have  full  and  equal  opportunity  to  present  their respective  cases  and  this  includes  due  notice  of proceedings.  In  the  event  a  party  opposing  the enforcement  of  a  foreign  award  is  able  to  present sufficient  proof  of  such  infirmity  in  the  arbitral proceedings,  the  courts  may  decline  to  enforce  the foreign award.

26. A clear  distinction  needs  to  be  drawn  between cases  where  a  party  is  unable  to  present  its  case, rendering the arbitral award susceptible to challenge as  falling  foul  of  the  minimal  standards  of  due process/natural  justice  and  cases  where  the  arbitral tribunal does not accept the case sought to be set up by a party. The latter case, obviously, does not give

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rise to a ground as mentioned in section 48(1)(b) of the Act, even if the decision of the arbitral tribunal is erroneous.”

59.The English judgments advocate applying the test of a person being

prevented from presenting its case by matters outside his control. This

was done in Minmetals Germany GmbH v. Ferco Steel Ltd.  (1999)

C.L.C. 647 as follows:

“In  my  judgment,  the  inability  to  present  a  case  to arbitrators within s.103(2)(c) contemplates at least that the enforcee has been prevented from presenting his case by matters outside his control. This will normally cover the case where the procedure adopted has been operated in a manner contrary to the rules of natural justice.  Where,  however,  the  enforcee  has,  due  to matters within his control, not provided himself with the means of taking advantage of an opportunity given to him to present his case, he does not in my judgment, bring  himself  within  that  exception  to  enforcement under the convention. In the present case that is what has happened”

60.Likewise, in  Ajay Kanoria v. Tony Guinness  (2006) EWCA Civ 222

the Court  of  Appeal  in  England referred to  Minmetals  (supra)  with

approval as follows:

“23. There is not  much authority on the meaning of section  103(2)(c)  of  the  1996  Act.  In  Minmetals Germany GmbH v  Ferco  Steel  Ltd  [1999]  1  All  ER (Comm) 315 , 326, Colman J observed:

“In  my  judgment,  the  inability  to  present  a  case  to arbitrators  within  section  103(2)(c)  contemplates  at

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least  that  the  enforcee  has  been  prevented  from presenting  his  case  by  matters  outside  his  control. This will normally cover the case where the procedure adopted has been operated in a manner contrary to the rules of natural justice.””

61.An application of this test is found in Jorf Lasfar Energy Co. v. AMCI

Export Corp.  2008 WL 1228930, where the U.S District Court, W.D.

Pennsylvania decided that if  a party fails to obey procedural orders

given by the arbitrator, it must suffer the consequences. If evidence is

excluded because it is not submitted in accordance with a procedural

order, a party cannot purposefully ignore the procedural directives of

the  decision-making  body  and  then  successfully  claim  that  the

procedures  were  unfair  or  violative  of  due  process.  Likewise,  in

Dongwoo Mann+Hummel Co. Ltd. v. Mann+Hummel GmbH (2008)

SGHC 275, the Singapore High Court held:

“145. A deliberate refusal to comply with a discovery order  is  not  per  se  a  contravention  of  public  policy because  the  adversarial  procedure  in  arbitration admits  of  the  possible  sanction  of  an  adverse inference being drawn against the party that does not produce the document in question in compliance with an order. The tribunal will  of  course consider all  the relevant facts and circumstances, and the submissions by the parties before the tribunal decides whether or not  to  draw  an  adverse  inference  for  the  non- production. Dongwoo also had the liberty to apply to the High Court to compel production of the documents under s 13 and 14 of the IAA, if it was not content with merely arguing on the question of adverse inference and if it desperately needed the production by M+H of

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those  documents  for  its  inspection  so  that  it  could properly  argue  the  point  on  drawing  an  adverse inference. However, Dongwoo chose not to do so.

146. Further, the present case was not one where a party  hides  even  the  existence  of  the  damning document  and  then  dishonestly  denies  its  very existence so that  the opposing party  does not  even have the chance to submit that an adverse inference ought  to  be  drawn  for  non-production.  M+H in  fact disclosed  the  existence  of  the  documents  but  gave reasons  why  it  could  not  disclose  them.  Here, Dongwoo had  the  full  opportunity  to  submit  that  an adverse inference ought to be drawn, but it  failed to persuade the tribunal to draw the adverse inference. The tribunal  examined the  other  evidence  before  it, considered  the  submissions  of  the  parties  and rightfully exercised its fact finding and decision making powers not  to draw the adverse inference as it  was entitled  to  do  so.  It  would  appear  to  me  that  the tribunal  was  doing  nothing  more  than  exercising  its normal fact finding powers to determine whether or not an adverse inference ought to be drawn.”  

62.Other English judgments deal with the expression “unable to present

his case” as a breach of a facet of natural justice at the hearing stage

only. Thus, in Gbangbola v. Smith and Sheriff 1998 3 All ER 730, the

Court held:

“A tribunal does not act fairly and impartially if it does not  give  a  party  an  opportunity  of  dealing  with arguments which have not been advanced by either party.  It  is  not  suggested by the claimant  contractor that  either  of  the  two  points  mentioned  in  the arbitrator's letter was raised by it in the arbitration as being  influential  on  the  overall  burden  and determination of costs. Unless such an opportunity is given there is danger that the final result  will  not be determined  fairly  against  the  party  who  would  be

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ordered to pay the costs. That is indeed the position as regards both the first and second points.”

Likewise, in  Bahman Irvani v. Ali Irvani  1999 WL 1142456,

the Court found:

“181.  …Nor  was  it  satisfactory  that  Mr  Amin's questions were only replied to with the award, instead of  being dealt  with in  advance of  the award so that comment could be advanced.”

63.Another facet of “unable to present his case” was stated in  Van Der

Giessen-De-Noord Shipbuilding Division B.V. v. Imtech Marine &

Offshore B.V. (2008) EWHC 2904 (Comm). The UK Court held:

“In  those  circumstances  it  has  breached  its  duty  of fairness by ignoring the agreed position of the parties that  a claim under  this  head should  not  include the cabling for the HVAC equipment. In “double-counting” in this respect, the Tribunal has awarded Imtech more than  it  asked  for,  or  could  reasonably  ask  for.  GN submits  that  the  double-counting  is  probably  a  very significant  part  of  the  €1,000,000  awarded,  on  the basis that the Tribunal had previously awarded a larger amount  under  the  HVAC  claim  (Claim  1,  VTC  1). Whatever the size of the double-counting may be, it is unlikely to be minimal. I am satisfied that GN has been caused substantial injustice by having, on the face of the Award, to pay more than it  should to Imtech for extra work.”

This finding was given pursuant to Section 68 of the Arbitration Act,

1996 (U.K) by which a “serious irregularity” would lead to the award

being set  aside or  remitted or  being declared to be of  no effect  in

whole or in part.   

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64. In  Malicorp  Limited  v.  Government  of  Arab  Republic  of  Egypt

(2015) EWHC 361 (Comm), the U.K Court held that the Government of

Egypt had no warning of the manner in which the award was made.

The Court held:

“41. In  these  circumstances  I  have  no  doubt whatsoever that the award of damages under article 142 must have been a complete surprise to Egypt. So, too,  must have been the basis upon which such an award was made – apportioning to the Republic 10% responsibility for the relevant mistake, and allowing as the major part of the award a substantial sum for loss of profit. It would have been astonishing, if there had been any suggestion that  this was in contemplation, that Egypt would fail to protest that the tribunal ought to  make  a  finding  on  its  case  on  fraud  rather  than allocate  responsibility  on the footing of  a  good faith mistake on the part of Malicorp. It would similarly have been astonishing,  if  there  had been any suggestion that  damages  in  place  of  reinstatement  were contemplated, that Egypt would fail to protest that such damages could not properly incorporate an element for loss  of  profit.  There  were  undoubtedly  strong arguments  for  Egypt  to  advance  in  these  respects among others. The notion that, in the absence of any mention  of  these  matters,  Egypt  could  and  should have anticipated the basis of  proceeding adopted in the Cairo award, is to my mind manifestly repugnant to elementary principles of fairness.  

42. The failure of the tribunal to ensure that Egypt had warning of these matters can only constitute a serious breach  of  natural  justice.  In  so  far  as  I  have  any discretion to enforce the award despite that breach, I decline to do so: the breach is too serious, and the consequences for Egypt are too grave. It is suggested that  the hearing be reconvened so that  Mr Soliman can give evidence and be cross-examined. I decline to take  this  course:  for  the  reasons  given  above,  Mr Soliman's statement cannot assist Malicorp.”

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65.The judgments from the Singapore Courts are also instructive.  In Soh

Beng Tee & Co. v. Fairmount Development Pte Ltd.  (2007) SGCA

28, the Court  fleshed out  what  was meant by “fair  hearing”  for  the

purposes  of  Section  48(1)(a)(vii)  of  the  Arbitration  Act,  2002

(Singapore) as follows:

“59. These cases must be read in the context of the current  judicial  climate  which  dictates  that  courts should  not  without  good  reason  interfere  with  the arbitral process, whether domestic or international. It is incontrovertible  that  international  practice  has  now radically shifted in favour of respecting and preserving the autonomy of the arbitral process in contrast to the earlier practice of enthusiastic curial intervention: see, for instance, Arbitration Act 1996 ([27] supra) at p 1 on the  English  position;  and  Robert  Morgan,  The Arbitration Ordinance of  Hong Kong: A Commentary (Butterworths  Asia,  1997)  on  the  position  in  Hong Kong,  which  also  essentially  reflects  the  English practice.  As  rightly  observed  in  Weldon Plant  Ltd  v The Commission for the New Towns [2001] 1 All ER (Comm) 264 (“Weldon”) at [22], “[a]n award should be read supportively  … [and]  given  a  reading  which  is likely to uphold it rather than to destroy it”. Similarly, in Vee Networks Ltd v Econet Wireless International Ltd [2005] 1 Lloyd’s Rep 192, the court, at [90], held:  Above all it is not normally appropriate for the court to try  the  material  issue  in  order  to  ascertain  whether substantial injustice has been caused. To do so would be an entirely inappropriate inroad into the autonomy of the arbitral process.

xxx xxx xxx

65. The foregoing survey of case law and principles may  be  further  condensed  into  the  following  core principles:  

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(a) Parties to arbitration have, in general, a right to be heard effectively on every issue that may be relevant to the resolution of a dispute. The overriding concern, as Goff LJ aptly noted in The Vimeira  ([45] supra), is fairness. The best rule of thumb to adopt is to treat the parties  equally  and  allow  them  reasonable opportunities  to  present  their  cases  as  well  as  to respond. An arbitrator should not base his decision(s) on  matters  not  submitted  or  argued  before  him.  In other  words,  an  arbitrator  should  not  make  bricks without straw. Arbitrators who exercise unreasonable initiative without the parties’ involvement  may attract serious and sustainable challenges.  

(b) Fairness, however, is a multidimensional concept and it would also be unfair to the successful party if it were deprived of the fruits of its labour as a result of a dissatisfied party raising a multitude of arid technical challenges after an arbitral award has been made. The courts are not a stage where a dissatisfied party can have a second bite of the cherry.  

(c) Indeed, the latter conception of fairness justifies a policy  of  minimal  curial  intervention,  which  has become common as a matter of international practice. To  elaborate,  minimal  curial  intervention  is underpinned  by  two  principal  considerations.  First, there  is  a  need  to  recognise  the  autonomy  of  the arbitral  process  by  encouraging  finality,  so  that  its advantage as an efficient alternative dispute resolution process is not undermined. Second, having opted for arbitration,  parties  must  be  taken  to  have acknowledged  and  accepted  the  attendant  risks  of having  only  a  very  limited  right  of  recourse  to  the courts. It would be neither appropriate nor consonant for a dissatisfied party to seek the assistance of the court  to  intervene  on  the  basis  that  the  court  is discharging  an  appellate  function,  save  in  the  very limited  circumstances  that  have  been  statutorily condoned.  Generally  speaking,  a  court  will  not intervene merely because it  might have resolved the various controversies in play differently.  

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(d)  The  delicate  balance  between  ensuring  the integrity of the arbitral process and ensuring that the rules of natural justice are complied with in the arbitral process is preserved by strictly adhering to only the narrow  scope  and  basis  for  challenging  an  arbitral award that  has been expressly acknowledged under the Act and the IAA. In so far as the right to be heard is concerned,  the failure of  an arbitrator  to  refer  every point for decision to the parties for submissions is not invariably  a  valid  ground  for  challenge.  Only  in instances  such  as  where  the  impugned  decision reveals a dramatic departure from the submissions, or involves an arbitrator  receiving extraneous evidence, or adopts a view wholly at odds with the established evidence  adduced  by  the  parties,  or  arrives  at  a conclusion  unequivocally  rejected  by  the  parties  as being trivial or irrelevant, might it be appropriate for a court to intervene. In short, there must be a real basis for  alleging  that  the  arbitrator  has  conducted  the arbitral  process  either  irrationally  or  capriciously.  To echo the language employed in Rotoaira ([55] supra), the overriding burden on the applicant is to show that a reasonable  litigant  in  his  shoes  could  not  have foreseen  the  possibility  of  reasoning  of  the  type revealed in the award. It is only in these very limited circumstances that  the arbitrator’s  decision might be considered unfair.  

(e) It is almost invariably the case that parties propose diametrically opposite solutions to resolve a dispute. They may expect the arbitrator to select one of these alternative  positions.  The  arbitrator,  however,  is  not bound to adopt an either/or approach. He is perfectly entitled  to  embrace  a  middle  path  (even  without apprising  the  parties  of  his  provisional  thinking  or analysis)  so long as it  is  based on evidence that  is before him. Similarly, an arbitrator is entitled – indeed, it is his obligation – to come to his own conclusions or inferences from the primary facts placed before him. In this context, he is not expected to inexorably accept the conclusions being urged upon him by the parties. Neither  is he expected to consult  the parties on his thinking process before finalising his award unless it

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involves  a  dramatic  departure  from  what  has  been presented to him.  

(f) Each case should be decided within its own factual matrix. It must always be borne in mind that it is not the  function  of  the  court  to  assiduously  comb  an arbitral  award  microscopically  in  attempting  to determine if there was any blame or fault in the arbitral process; rather, an award should be read generously such  that  only  meaningful  breaches  of  the  rules  of natural justice that have actually caused prejudice are ultimately remedied.”                                                        (emphasis supplied)

66. In  JVL  Agro  Industries  Ltd  v.  Agritrade  International  Pte  Ltd.

(2016)  SGHC 126,  the Court  held that  the natural  justice provision

contained  in  Section  24(b)  of  the  International  Arbitration  Act

(Singapore)  was  breached  when  new  points  are  taken  up  by  the

arbitrator, i.e. points not argued by either party, which formed the basis

of  the  award.  Since  these  new points  were  not  put  to  the  parties,

natural  justice  was  said  to  be  breached  in  the  facts  of  that  case.

Likewise, in G.D. Midea Air Conditioning Equipment Co. v. Tornado

Consumer Goods Ltd. (2017) SGHC 193, the Court found:

“65.  A party  seeking  to  set  aside  an  arbitral  award under Art 34(2)(a)(ii) of the Model Law or s 24(b) of the IAA must establish (a) which rule of natural justice was breached; (b) how that rule was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced the party’s rights:  Soh  Beng  Tee  &  Co  Pte  Ltd  v  Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 (“Soh Beng Tee”) at [29].

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66.  The crux of Midea’s case was that the Tribunal’s finding  on  cl  4.2  breached  the  fair  hearing  rule because  Midea  was  denied  a  full  opportunity  to present its case. As stated earlier (see [62] above), the issue  of  a  breach  of  cl  4.2  did  not  arise  in  the Arbitration;  the  Tribunal  made  its  finding  on  cl  4.2 without  giving  notice  to  the  parties.  The  Tribunal’s breach  was  clearly  connected  to  the  making  of  the Award  as  its  finding  on  cl  4.2  was  the  basis  upon which the impugned findings in the Award (including the finding that Midea was not entitled to terminate the MBA)  were  made.  I  agreed  with  Midea  that  the Tribunal’s finding on cl 4.2 was in breach of the rules of natural justice.”

67.A  Hong  Kong  Judgment  reported  as  Hebei  Import  &  Export

Corporation v. Polytek Engineering Company Ltd.  (1992) 2 HKC

205,  found  that  the  tribunal  in  the  course  of  proceedings  received

communications from only one party, in the absence of the other, the

other party being kept in the dark as to what those communications

were. On this point, therefore it was held:

“On the other hand, we think it is quite clear that the defendant did not have the opportunity of hearing what was presented to the Chief Arbitrator by the plaintiff's employees during the inspection of the equipment and hence was not  able  to  present  its  side of  the  case before the experts prepared their report. This was to some extent mitigated by the provision of a copy of the experts’ report and the chance to comment on it. But neither  the  reply  from  the  Tribunal  or  the  report mentioned what transpired during the briefing session. In  the peculiar  circumstances of  this  case,  we think that  the  Tribunal  should  have  held  further  hearings with regard to the matters which had arisen from the inspection  and  the  experts’  report.  There  was  no request  or  consent  that  an  oral  hearing  could  be omitted.  In  our  view,  the defendant  has a legitimate

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complaint  that  there  was  a  breach  of  Art  32  of  the Arbitration rules and Art 45 of the PRC Arbitration Law. It can be said that the defendant did not have a proper opportunity to present its case to the Tribunal after the inspection and the compilation of the experts’ report.”

68.Shri  Nakul Dewan, however,  relied upon a number of judgments to

buttress his submission that failure to deal with material issues would

fall within Section 48(1)(b) of the Arbitration Act, as a result of which a

foreign award could not be enforced. He cited  Ascot Commodities

NV v. Olam International Ltd. 2001 WL 1560709, for this proposition.

This  judgment  was  delivered  keeping  in  mind  Section  68  of  the

Arbitration Act, 1996 (U.K), which states as follows:

“68. Challenging the award: serious irregularity.

(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging  an  award  in  the  proceedings  on  the ground of serious irregularity affecting the tribunal, the proceedings or the award.

A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).

(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will  cause substantial  injustice to the applicant—

xxx xxx xxx

(d)failure by the tribunal to deal with all the issues that were put to it;”

It was in this context that the Court held:

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“Has the Board dealt with all essential issues? GAFTA findings are habitually brief. Many would regard that as a  virtue.  It  is  certainly  not  an  irregularity.  Nor  is  it incumbent on arbitrators to deal with every argument on  every  point  raised.  But  an  award  should  deal, however concisely, with all essential issues. One of the heads  of  serious  irregularity  recognised  in  section 68(2)(d) is “Failure by the tribunal to deal with all the issues that were put to it”. The central point raised by Ascot on its appeal was that if the bills of lading were pledged  as  security,  as  appears  on  the  face  of  the October  1998  contract,  Olam's  loss  was  not  to  be approached in the same way as if they were beneficial owners of the cargo. The point has, with respect, not been  addressed…Since  the  whole  process  of arbitration is intended as a way of determining points at  issue,  it  is  more  likely  to  be  a  matter  of  serious irregularity if on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding  is  ambiguous,  or  an  important  issue  is  not addressed,  than  if  the  complaints  go  simply  to procedural  matters.  Mr Young submitted that  Ascot's real complaint is that its arguments were not accepted and that this cannot be an irregularity. He noted that there  has  been  no  application  for  permission  to appeal. He also submitted that if the terseness of the Board's findings made it legitimate for Ascot to have requested further reasons, they could have asked for them but have not done so.  

On a fair reading of the award it seems to me that this is not case in which the tribunal has directed itself to, and rejected,  the central  issue argued by Ascot  but has, in truth, missed it…But if an award, as delivered, fails to contain a finding on a central issue, it would be odd  to  ask  for  reasons  for  something  which  is  not there.”

69.Likewise, in  Zebra Industries v. Wah Tong Paper Products Group

Ltd.  (2012)  HKCU  1308,  the  Hong  Kong  Statute,  namely,  Section

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23(2) of Old Arbitration Ordinance (Cap 391), enabled an award to be

set aside on the ground of error of law. In this context, it was held:

“44.  In  light  of  Zebra’s  above  submissions,  the question  of  law that  arises  is  whether  the  arbitrator was wrong in law in failing to take into account of the Venture Capital Clauses in determining Zebra’s claim for damages.

xxx xxx xxx    

47.  In  my  view,  properly  looked  at,  a  claim  on damages for breach of the Agreement based on and by reference to the Venture Capital Clauses had been put forward by Zebra in the SD.  

xxx xxx xxx

49.  In the circumstances, I think the arbitrator has also committed an error  of  law in failing to consider  and address  this  part  of  Zebra’s  claim for  consequential damages, if any, for the loss of chance in securing a venture capital fund investment and the listing of the company.

50.  I would therefore also remit this part of the Award to the arbitrator for his reconsideration. These issues for  reconsideration  are  closely  tied  with  the assessment of the relevant parts of the evidence on the alleged loss of chance, if any, and should best be dealt with by the arbitrator.  In doing so, the arbitrator should  take  into  account  of  the  Venture  Capital Clauses to  consider  and decide this  part  of  Zebra’s claim  for  consequential  damages  as  mentioned  in paragraph 42 above.”

70. In A v. B (2015) 3 HKLRD 586, the Court held:

“33. It  is  fundamental  to  concepts  of  fairness,  due process and justice, as recognized in Hong Kong, that key and material issues raised for determination, either by a court or the arbitral tribunal, should be considered

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and dealt with fairly. An award should be reasoned, to the  extent  of  being  reasonably  sufficient  and understandable by the parties (ie within the confines set out in  R v F [2012] 5 HKLRD 278). Under Article 33(2) of  the Model Law, the award should state the reasons  upon  which  it  is  based.  Having  carefully considered the Award, I have to agree that the parties are entitled to query whether the Limitation Defence had been considered  at  all  by  the  Arbitrator,  and  if rejected by the Arbitrator after due consideration, why it was rejected. The process of arbitration is intended as a way of determining disputes and points at issue, and I agree with the sentiments expressed by the court in  Ascot  Commodities  NV  v  Olam  International  Ltd [2002]  CLC 277  and  in  Van  der  Giessen-de  Noord Shipbuilding  Division  BV  v  Imtech  Marine  and  Off shore BV [2009] 1 Lloyd’s Rep 273 that it is a serious irregularity and a denial of due process which causes substantial injustice and unfairness to the parties, if an important  issue,  which  the  parties  are  entitled  to expect to be addressed, is not in fact addressed.

34. Even if the Arbitrator finds in favor of B on all its claims of A’s inability and failure to deliver the Products in  compliance  with  the  Relevant  Standards  and conforming to  the contractual  specifications,  and A’s failure  to  develop  the  Products  pursuant  to  its contractual  obligations,  B’s  action  against  A and  its claims for  remedies  in  the  Arbitration  will  fail,  if  the Limitation Defence succeeds. The Limitation Defence is  a  material  point  and  issue  which  could  have rendered the Award materially different, and the failure to  consider  it,  or  to  explain  the  dismissal  of  the Limitation Defence, results in unfairness to A, as well as  a  real  risk  of  injustice  and prejudice to  its  case. Based on what  was set  out  in  the Reasons for  the Award and the materials before the Tribunal, it cannot be said  that  it  is  plain  and obvious,  or  beyond any doubt, that the Award would have been the same, if the  Limitation  Defence  had  been  considered (Brunswick  Bowling  &  Billiards  Corp  v  Shanghai Zhonglu Industrial Co Ltd [2011] 1 HKLRD 707; Paklito Investment  Ltd  v  Kolckner  East  Asia  Ltd  [1993]  2

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HKLR  49).  This  is  not  a  case  in  which  different defences  are  raised,  any  one  of  which  would  have defeated the claims made, such that the failure to deal with  any one of  the other  defences would not  have made any difference to the award.  

35. For  the  above reasons,  I  consider  that  there  is sufficient  injustice  arising  out  of  the  Award,  in  its current  form,  which  cannot  be  overlooked  by  the Court’s conscience, and that enforcement of the Award would offend our notions of justice.”

This finding was given under Article 34(2)(b) of the UNCITRAL Model

Law on International  Commercial  Arbitration,  1985 which states as

follows:

“Article  34.  Application  for  setting  aside  as exclusive recourse against arbitral award  2.  An arbitral  award may be set  aside by the court specified in article 6 only if: (b) the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or

(ii) the award is in conflict with the public policy of this State.”

71. Shri  Dewan  strongly  relied  upon  judgments  from  Singapore  in

support of the proposition that non-consideration of material  issues

would amount to a breach of natural justice and, therefore, would fit

within  the  ground  mentioned  in  Section  48(1)(b).  In  Front  Row

Investment Holdings v. Daimler South East Asia (2010) SGHC 80,

the Singapore High Court  decided whether  there was a breach of

natural justice in connection with the making of the award by which

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the rights of any party has been prejudiced under Section 48(1)(a)(vii)

of  the  Arbitration  Act,  2002  (Singapore).  It  referred  to  breach  of

natural  justice if  an award was set  aside on a basis not  raised or

contemplated by the parties since the affected party would have been

deprived of its opportunity to be heard.  It then held that the corollary

of this would be that an arbitral tribunal will be in the breach of natural

justice  if  in  the  course  of  reaching  its  decision  it  disregarded  the

submissions  and  arguments  made  by  the  parties  on  the  issues

without considering the merits thereof. For this, it relied upon three

Australian  cases  and  an  earlier  judgment  which  considered  these

three cases. The Court then concluded:

“53. As I have concluded earlier, an arbitrator’s failure to  consider  material  arguments  or  submissions  is  a breach  of  natural  justice.  In  the  present  case,  the Arbitrator  had  dismissed  Front  Row’s  counterclaim without considering the grounds of its counterclaim in full  because he was under the misapprehension that Front  Row  had  abandoned  its  reliance  on  the Representation. Had he not been mistaken, he would have had to decide whether or not the Representation was  false.  A  decision  that  there  had  been  a misrepresentation  in  regard  thereto  would  have resulted in an award in favour of Front Row, assuming the  other  ingredients  for  a  successful  claim  (viz, “reliance” and “detriment”) were satisfied. It was not for me to  delve further  into  the  question  whether  Front Row’s reliance upon the Representation would have succeeded but for the arbitrator’s misrepresentation. It sufficed that  the Arbitrator  failed to  consider  such a material ground. That alone was sufficient prejudice to Front Row.

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54. In the result, I allowed Front Row’s application and ordered that the part of the Award dealing with Front Row’s counterclaim and with costs of the Arbitration be set aside as a whole. I further ordered that the part of the  Award  so  set  aside  be  tried  afresh  by  a  newly appointed  arbitrator.  Finally,  I  also  ordered  that  the costs of and incidental to Front Row’s application be paid by Daimler to Front Row.”

72. In  TMM Division Maritime SA v. Pacific Richfield Marine Pte

Ltd. (2013) SGHC 186, the Singapore High Court referred to Section

24(b) of the International Arbitration Act (Singapore), which requires

an award to be set aside if the rules of natural justice are breached. In

arriving  at  its  conclusion  under  the  caption  “General  Principles  of

Curial  Scrutiny”,  the  Court  held  “However,  it  does  not  follow,  and

neither do I accept, that this process always entails sifting through the

entire record of the arbitral proceedings with a fine-tooth comb.” (See

paragraph 42). The Court also held, “the Court should not nit-pick at

the award. Infelicities are to be expected and are generally irrelevant

to the merits of any challenges” (See paragraph 45). The Court went

on to hold that the high standard of cogent reasons required by the

judiciary should not be applied to arbitration awards (See paragraph

102).  The Court  then outlined what  standards could  be applied to

arbitral awards as follows:

“103. The  Singapore  Court  of  Appeal’s  decision  in Thong Ah Fat v Public Prosecutor [2012] 1 SLR 676 (“Thong Ah Fat”) which sets out the scope and content

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of the court’s duty to give reasons offers, in my view, an instructive parallel. I note in passing that Professor Jeffrey  Waincymer  suggests  that  it  is  unhelpful  to define the content of arbitrators’ duty to give reasons by reference to judicial standards: Waincymer at para 16.9.3. In support of his view, he referred to the High Court  of  Australia  decision  of  Westport  Insurance Corporation  &  Ors  v  Gordian  Runoff  Limited [2011] HCA 37  where  Kiefel  J  stated  (at  [168]–[169])  that there is nothing in the relevant Australian legislation, the Commercial Arbitration Act 1984, which stipulates that  the  standard for  giving  reasons  in  arbitration should be the same as the judicial standard. The same is true of the IAA but as the court in Thong Ah Fat held (at [19]), the general duty of a judicial body to explain its decision is ineluctably “a function of due process, and  therefore  of  justice”.  While  there  are  structural differences between a court and an arbitral tribunal, it cannot be gainsaid that arbitrations are subject to the same  ideals  of  due  process  and  justice.  It  bears mentioning  that  Kiefel  J  concluded  that  the requirement  to  give  a  reasoned  award  cannot  be devoid of content and for that reason, he was content to  adopt  Donaldson  LJ’s  statement  in  Bremer (see [101] above).

104. Therefore, in my view, the standards applicable to judges  are  assistive  indicia  to  arbitrators.  While  the rules of natural  justice must be applied rigorously in arbitrations as they are in court litigation, the practical realities of the arbitral ecosystem such as promptness and price  are  also important  (see  Soh Beng Tee at [63]). On this note, the following are clear from Thong Ah Fat:  

(a) The standard of explanation required in every case must  correspond  to  the  requirements  of  the  case. Costs  and  delays  are  relevant  factors  to  consider when  determining  the  extent  to  which  reasons  and explanations are to be set out in detail: at [29]–[30].

(b)  In  “very  clear  cases”  with  specific  and straightforward factual or legal issues, the court may even  dispense  with  reasons.  Its  conclusion  will  be

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sufficient because the reasons behind the conclusion are a matter of necessary inference: at [32].  

(c) Decisions or findings which do not bear directly on the  substance  of  the  dispute  or  affect  the  final resolution  of  the  parties’  rights  may  not  require detailed  reasoning.  As  a  rule  of  thumb,  the  more profound the consequences of a specific decision, the greater the necessity for detailed reasoning: at [33].  

(d) There should be a summary of all the key relevant evidence but not all the detailed evidence needs to be referred to: at [34].  

(e)  The  parties’  opposing  stance  and  the  judge’s findings of fact on the material issues should be set out.  However,  the judge does not  have to make an explicit ruling on each and every factual issue: at [35]– [36].  

(f) The decision should demonstrate an examination of the relevant evidence and the facts found with a view to explaining the final outcome on each material issue: at [36].”

73. In  AKN & Anr. v. ALC & Ors.  (2015) SGCA 18, the Singapore High

Court, again in considering the natural justice requirement contained in

Section 24(b) of the International Arbitration Act (Singapore), held as

follows:

“38. In  particular,  there  is  no  right  of  appeal  from arbitral awards. That is not to say that the courts can never  intervene.  However,  the  grounds  for  curial intervention are narrowly circumscribed, and generally concern process failures that are unfair and prejudice the parties or instances where the arbitral tribunal has made  a  decision  that  is  beyond  the  scope  of  the arbitration agreement.  It follows that, from the courts’ perspective, the parties to an arbitration do not have a right  to a “correct”  decision from the arbitral  tribunal

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that can be vindicated by the courts. Instead, they only have a right to a decision that is within the ambit of their consent to have their dispute arbitrated, and that is arrived at following a fair process.”

                                                      (emphasis supplied)

It then dealt with failure to consider important issues as follows:

“46. To  fail  to  consider  an  important  issue  that  has been pleaded in an arbitration is a breach of natural justice because in such a case, the arbitrator  would not  have brought  his  mind to  bear  on an important aspect of the dispute before him. Consideration of the pleaded issues is an essential  feature of  the rule of natural justice that is encapsulated in the Latin adage, audi alteram partem (see also Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86  (“Soh  Beng  Tee”)  at  [43],  citing  Gas  &  Fuel Corporation  of  Victoria  v  Wood Hall  Ltd  &  Leonard Pipeline Contractors Ltd [1978] VR 385 at 386). Front Row is useful in so far as it demonstrates what must be shown to make out a breach of natural justice on the  basis  that  the  arbitrator  failed  to  consider  an important pleaded issue. It will usually be a matter of inference  rather  than  of  explicit  indication  that  the arbitrator  wholly  missed  one  or  more  important pleaded  issues.  However,  the  inference  –  that  the arbitrator  indeed  failed  to  consider  an  important pleaded issue – if  it  is  to  be drawn at  all,  must  be shown to be clear and virtually inescapable. If the facts are also consistent  with  the arbitrator  simply  having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal  with  a  point  pleaded  by  the  aggrieved  party because he  thought  it  unnecessary  (notwithstanding that  this  view  may  have  been  formed  based  on  a misunderstanding of the aggrieved party’s case), then the inference that the arbitrator did not apply his mind at  all  to  the  dispute  before  him (or  to  an  important aspect  of  that  dispute)  and  so  acted  in  breach  of natural justice should not be drawn.

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47. Front Row was recently considered in AQU v AQV [2015] SGHC 26 (“AQU”), where the High Court judge distilled  the  very  principles  which  we  have  just enunciated above (see AQU at [30]–[35]). The judge in AQU also considered the High Court decision of TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (“TMM”), and reiterated the proposition that no party to an arbitration had a right to expect  the  arbitral  tribunal  to  accept  its  arguments, regardless  of  how  strong  and  credible  it  perceived those arguments to be (see AQU at [35], citing TMM at [94]). This principle is important because it points to an important  distinction  between,  on  the  one  hand,  an arbitral  tribunal’s  decision  to  reject  an  argument (whether  implicitly  or  otherwise,  whether  rightly  or wrongly, and whether or not as a result of its failure to comprehend  the  argument  and  so  to  appreciate  its merits), and, on the other hand, the arbitral tribunal’s failure to even consider that argument. Only the latter amounts to a breach of natural justice; the former is an error of law, not a breach of natural justice.

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59. With  respect,  poor  reasoning  on  the  part  of  an arbitral tribunal is not a ground to set aside an arbitral award; even a misunderstanding of the arguments put forward by a party is not such a ground. As noted by this court in BLC at [86], the court “is not required to carry  out  a  hypercritical  or  excessively  syntactical analysis  of  what  the  arbitrator  has  written”  when considering whether an arbitral  award should be set aside for  breach of  natural  justice.  Neither  should  it approach  an  arbitral  award  with  a  “meticulous  legal eye endeavouring to pick holes,  inconsistencies and faults … with the objective of upsetting or frustrating the process of  arbitration”  (likewise at  [86]  of  BLC). Taking these considerations into account, we find no breach  of  natural  justice  as  there  is  no  basis  for concluding  that  the  Tribunal  did  not  consider  the Liquidator’s  Primary  Argument.  Accordingly,  we answer Appeal Issue 1 affirmatively.”

                                                      (emphasis supplied)

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74. In  BAZ v.  BBA & Ors.  (2018)  SGHC 275,  again with reference to

Section 24(b) of the International Arbitration Act (Singapore), the Court

approached the issue of natural justice as follows:

“133. It is well established that to succeed in a claim under  s  24(b)  of  the  IAA,  the  claimant  needs  to establish the following four elements (see  Soh Beng Tee at [29]; AKN v ALC 2015 at [48]): (a) which rule of natural justice was breached; (b) how it was breached; (c)  in  what  way  the  breach  was  connected  to  the making  of  the  award;  and  (d)  how  the  breach prejudiced its rights.

134. The failure  to consider  an important  issue that has  been  pleaded  in  an  arbitration  is  a  breach  of natural justice because in such a case, the arbitrator would  not  have  brought  his  mind  to  bear  on  an important  aspect  of  the  dispute  before  him  (AKN v ALC 2015  at  [46]).  It  will  usually  be  a  matter  of inference  rather  than  of  explicit  indication  that  the arbitrator  wholly  missed  one  or  more  important pleaded  issues.  However,  this  inference  must  be shown to be “clear and virtually inescapable” (AKN v ALC  2015  at  [46]).  The  Court  of  Appeal  cautioned against arguments dressed up to appear as breaches of natural justice: if the facts are also consistent with the  arbitrator  simply  having  misunderstood  the aggrieved party’s case, or having been mistaken as to the  law,  or  having  chosen  not  to  deal  with  a  point pleaded by the aggrieved party because he thought it unnecessary, then the inference that the arbitrator did not apply his mind at all to the dispute before him or to an important  aspect of  that  dispute and so acted in breach of natural justice should not be drawn.

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141.  Although  the  Majority  did  not  comment  on  the legal  basis  for  the  application  of  a  discount  rate,  it does not  mean that  it  did not  consider  the issue.  A tribunal  does  not  have  to  give  responses  on  all

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submissions made (SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 at [60]).

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159. The legal area concerning the enforcement and setting aside of awards is governed by statute, namely the Arbitration Act (Cap 10, 2002 Rev Ed) and the IAA. As such, the conceptual  framework outlined in UKM can be helpful to navigate public policy considerations in arbitration,  even though the subject  matter  of  the public policies that can be raised under Art 34(2)(b)(ii) of  the  Model  Law and  Art  V(2)(b)  of  the  New York Convention may include both socio-economic policies and legal policies. When a challenge on the ground of public policy is brought, the outline draws attention to the  importance  of  conducting  a  forensic  exercise  to identify whether the alleged public policy exists,  and the criteria influencing the identification as explained in UKM  are  applicable.  The  balancing  exercise  in  the context of arbitration is between the policy of enforcing arbitral awards – as encapsulated in s 19B(1) of the IAA which states that awards are “final and binding on the  parties”  and  the  judicial  policy  of  minimal  curial intervention – and the alleged public policy which the award purportedly violates. This balance is generally in favour of the policy of enforcing arbitral awards, and only tilts  in favour of  the countervailing public policy where  the  violation  of  that  policy  would  “shock  the conscience” or would be contrary to “the forum’s most basic  notion  of  morality  and  justice”.  In  determining whether  the  balance  tilts  towards  the  countervailing public  policy,  it  is  important  to  consider  both  the subject  nature  of  the  public  policy,  the  degree  of violation of that public policy and the consequences of the violation.”

75.  In Campos Brothers Farms v. Matru Bhumi Supply Chain Pvt. Ltd.

(2019)  261  DLT  201,  the  Delhi  High  Court  had  to  consider  the

enforcement of a foreign award. The arbitrator in the aforesaid case

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did  not  give  any  finding  on  maintainability  of  the  arbitration

proceedings, which was argued before her. In this fact circumstance,

the Delhi High Court held:

“55. In any case, the respondent nos. 1 and 2 had also made  submissions  on  merit  before  the  Arbitrator. Though  the  learned  counsel  for  the  petitioner submitted  that  the  same were  rightly  excluded from consideration  by  the  Arbitrator  as  the  Arbitrator  had never sought for the same, the Award does not reflect any such reason given by the Arbitrator for excluding them  from  consideration.  The  Arbitrator  does  not record a finding that she has intentionally ignored such submissions  as  they  were  filed  belatedly  or  beyond what was permitted. In fact, as noted above, as per the Arbitrator no submission was filed by the respondents by 13.06.2016, which is factually incorrect.

56. In exercise of powers under Section 48 of the Act, this Court cannot consider the submissions made by the  respondent  nos.  1  and  2  in  their  e-mail  dated 13.06.2016  on  merit  as  if  it  is  a  Court  of  Original Jurisdiction and find out whether such submission of the respondent  nos.  1  and 2  had any  merit  or  not. Once it  is  found that  the  Arbitrator  has  ignored  the submissions of a party in totality, whatever be the merit of the submissions, in my opinion, such Award cannot be  enforced  being  in  violation  of  the  Principles  of Natural  Justice  and  contrary  to  the  public  policy  of India  as  stated  in  sub-Section  2(b)  read  with Explanation 1(iii) of Section 48 of the Act.

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76. It  may  be  correct  that  the  Arbitrator,  upon considering  evidence  led  before  it  by  the  parties, comes  to  a  conclusion  that  in  the  given  facts  the transaction, though under different Contracts, is one or that the corporate veil deserves to be lifted, however, for arriving at such a finding the Arbitrator has to give reasons for  the same. This Court,  in  exercise of  its power  under  Section  48  and  49  of  the  Act,  cannot

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supplant such reasons by considering the claims and defence of the parties on merit. Whether the request of the  respondent  no.  1  to  the  petitioner  to  make shipments  in  the  name  of  respondent  no.  2  under Contracts  that  had  been  executed  between  the petitioner  and  respondent  no.  1,  would  entitle  the petitioner  to  file  a  consolidated  statement  of  claim against respondent nos. 1 and 2 or not, was an issue to  be  determined  by  the  Arbitrator  and  reasons  for such  determination  were  to  be  given  in  the  Award. From  a  reading  of  the  Award  it  seems  that  the Arbitrator was neither alive to the issue whether such claims against different Contracts can be consolidated as one, nor was she alive to the fact  that  joint  and several liability cannot be fastened on respondent nos. 1  and 2  without  lifting  the corporate  veil  and  giving reasons for the same. The Award in question clearly qualifies as a non speaking Award.

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81. In any case, as noted above, if the arbitrator had considered  this  issue  giving  reasons  therefore,  this Court may not have the power under Section 48 of the Act to test the validity of such reasons, however, the present is the case where the arbitrator has not only not given any reasons for her conclusion but infact, the Award indicates that the Arbitrator is not even alive to such an issue.”

Thus,  the  ground on  which  the  award  was set  aside  for  failure  to

consider  a  material  issue  relating  to  maintainability  of  the  arbitral

proceedings was pigeon-holed not under Section 48(1)(b), but under

the “public  policy  of  India”  ground,  stating  that  such  a  thing would

violate the most basic notion of justice.

76.Given  the  fact  that  the  object  of  Section  48  is  to  enforce  foreign

awards  subject  to  certain  well-defined  narrow  exceptions,  the

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expression “was otherwise unable to present his case” occurring in

Section 48(1)(b) cannot be given an expansive meaning and would

have to be read in the context and colour of the words preceding the

said  phrase.  In  short,  this  expression  would  be  a  facet  of  natural

justice, which would be breached only if a fair hearing was not given

by the arbitrator to the parties. Read along with the first part of Section

48(1)(b),  it  is  clear that  this expression would apply at  the hearing

stage and not after the award has been delivered, as has been held in

Ssangyong  (supra). A good working test for determining whether a

party has been unable to present his case is to see whether factors

outside the party’s  control  have combined to deny the party  a  fair

hearing.  Thus,  where  no  opportunity  was  given  to  deal  with  an

argument which goes to the root  of the case or findings based on

evidence which go behind the back of the party and which results in a

denial  of  justice to the prejudice of  the party;  or  additional  or  new

evidence is taken which forms the basis of the award on which a party

has been given no opportunity of rebuttal,  would, on the facts of a

given  case,  render  a  foreign  award  liable  to  be  set  aside  on  the

ground that a party has been unable to present his case. This must, of

course, be with the caveat that such breach be clearly made out on

the  facts  of  a  given  case,  and  that  awards  must  always  be  read

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supportively with an inclination to uphold rather than destroy, given the

minimal interference possible with foreign awards under Section 48.  77.All the cases cited by Mr. Nakul Dewan are judgments based on the

language  of  the  particular  statute  reflected  in  each  of  them  –  for

example, Section 68 of the Arbitration Act, 1996 (U.K), Section 23(2) of

the Hong Kong Old Arbitration Ordinance (Cap 391), Section 24(b) of

the International Arbitration Act (Singapore) and Section 48(1)(a)(vii) of

the  Arbitration  Act,  2002  (Singapore),  all  of  which  are  differently

worded  from  Section  48(1)(b).  Each  of  these  statutes  deal  with  a

breach  of  natural  justice  which,  as  we  have  seen,  is  a  wider

expression than the expression “unable to present his case”. Thus, it is

not possible to hold that failure to consider a material issue would fall

within the rubric of Section 48(1)(b).

78.Having  said  this,  however,  if  a  foreign  award  fails  to  determine  a

material issue which goes to the root of the matter or fails to decide a

claim  or  counter-claim  in  its  entirety,  the  award  may  shock  the

conscience of the Court and may be set aside, as was done by the

Delhi High Court in Campos (supra) on the ground of violation of the

public policy of India, in that it would then offend a most basic notion

of justice in this country1.  It  must always be remembered that poor

1 In Sssangyong (supra), this Court cautioned that this ground would only be attracted with the following caveat:

“48. However, when it comes to the public policy of India argument based upon “most basic  notions  of  justice”,  it  is  clear  that  this  ground  can  be  attracted  only  in  very

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reasoning, by which a material issue or claim is rejected, can never

fall  in this class of  cases.  Also,  issues that  the tribunal considered

essential and has addressed must be given their due weight – it often

happens that the tribunal considers a particular issue as essential and

answers it, which by implication would mean that the other issue or

issues raised have been implicitly rejected. For example, two parties

may both allege that the other is in breach. A finding that one party is

in  breach,  without  expressly  stating  that  the  other  party  is  not  in

breach, would amount to a decision on both a claim and a counter-

claim,  as  to  which  party  is  in  breach.  Similarly,  after  hearing  the

parties, a certain sum may be awarded as damages and an issue as

to interest may not be answered at all. This again may, on the facts of

a given case, amount to an implied rejection of the claim for interest.

The important point to be considered is that the foreign award must be

read as a whole, fairly, and without nit-picking. If read as a whole, the

said award has addressed the basic issues raised by the parties and

has,  in  substance,  decided  the  claims  and  counter-claims  of  the

parties, enforcement must follow.

exceptional circumstances when the conscience of the Court is shocked by infraction of fundamental  notions  or  principles  of  justice… However,  we repeat  that  this  ground is available only in very exceptional circumstances, such as the fact situation in the present case. Under no circumstance can any Court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment.”

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Violation of FEMA Rules

79. It  has  been  argued  by  the  Appellants,  based  on  the  Non-Debt

Instrument Rules,  that a foreign award by which shares have to be

purchased at a discounted value, would violate the aforesaid Rules,

and therefore, would amount to a violation of the fundamental policy of

Indian law. Resultantly,  the  Appellants contended that as a result of

this, the award in the present case would not be enforceable in India.

80.The relevant provisions of the aforesaid rules are set out hereinbelow:

“2. Definitions:

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(ac) “investment” means to subscribe, acquire, hold or transfer  any  security  or  unit  issued  by  a  person resident in India;  

Explanation:-  

(i) Investment shall include to acquire, hold or transfer depository  receipts  issued  outside  India,  the underlying of which is a security issued by a person resident in India;  

(ii)  for  the  purpose  of  LLP,  investment  shall  mean capital contribution or acquisition or  transfer of  profit shares;

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3. Restriction on investment in India by a person resident outside India.- Save as otherwise provided in the Act or rules or regulations made thereunder, no person  resident  outside  India  shall  make  any investment in India :

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Provided that an investment made in accordance with the Act or the rules or the regulations made thereunder and held on the date of commencement of these rules shall be deemed to have been made under these rules and shall accordingly be governed by these rules:  

Provided further  that  the Reserve Bank may,  on an application made to it and for sufficient reasons and in consultation  with  the  Central  Government,  permit  a person resident outside India to make any investment in  India  subject  to  such  conditions  as  may  be considered necessary.  

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9.  Transfer  of  equity  instruments  of  an  Indian company by or to a person resident outside India.-

A  person  resident  outside  India  holding  equity instruments  of  an  Indian  company  or  units  in accordance with these rules or  a person resident in India, may transfer such equity instruments or units so held by him in compliance with the conditions, if any, specified in the Schedules of these rules and subject to the terms and conditions prescribed hereunder:

(3)  A  person  resident  in  India  holding  equity instruments  of  an  Indian  company  or  units,  may transfer the same to a person resident outside India by way of sale, subject to the adherence to entry routes, sectoral  caps or  investment  limits,  pricing guidelines and  other  attendant  conditions  as  applicable  for investment  by  a  person  resident  outside  India  and documentation  and  reporting  requirements  for  such transfers as may be specified by the Reserve Bank in consultation with the Central Government from time to time;

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21. Pricing guidelines –  

(1) The pricing guidelines specified in these rules shall not be applicable for any transfer by way of sale done in accordance with Securities and Exchange Board of

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India  regulations  where  the  pricing  is  specified  by Securities and Exchange Board of India.  

(2)  Unless  otherwise  prescribed  in  these  rules,  the price of equity instruments of an Indian company, -

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(b)  transferred  from a  person  resident  in  India  to  a person resident outside India shall not be less than,-

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(iii) the valuation of equity instruments done as per any internationally  accepted  pricing  methodology  for valuation on an arm’s length basis duly certified by a Chartered Accountant or a Merchant Banker registered with the Securities and Exchange Board of India or a practising  Cost  Accountant,  in  case  of  an  unlisted Indian company.”

81.Based on the aforesaid Rules, the  Appellants have argued that the

transfer of shares from the Karias, who are persons resident in India,

to  the  Respondent  No.1,  who  is  a  person  resident  outside  India,

cannot be less than the valuation of such shares as done by a duly

certified Chartered Accountant, Merchant Banker or Cost Accountant,

and, as the sale of such shares at a discount of 10% would violate

Rule 21(2)(b)(iii), the fundamental policy of Indian law contained in the

aforesaid Rules would be breached; as a result of which the award

cannot be enforced.   

82.Before answering this  question,  it  is  important  to  first  advert  to  the

decision of the Delhi High Court in  Cruz (supra). The learned Single

Judge was faced with a similar problem of a foreign award violating the

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provisions  of  FEMA.  In  an  exhaustive  analysis,  the  learned  Single

Judge referred to Renusagar (supra) and then held:

“97.It  plainly  follows  from  the  above  that  a contravention  of  a  provision  of  law  is  insufficient  to invoke the defence of public policy when it comes to enforcement of a foreign award. Contravention of any provision  of  an  enactment  is  not  synonymous  to contravention of fundamental policy of Indian law. The expression fundamental Policy of Indian law refers to the principles and the legislative policy on which Indian Statutes  and  laws  are  founded.  The  expression “fundamental policy” connotes the basic and substratal rationale,  values  and  principles  which  form  the bedrock of laws in our country.

98. It is necessary to bear in mind that a foreign award may  be  based  on  foreign  law,  which  may  be  at variance with a corresponding Indian statute.  And, if the expression “fundamental  policy  of  Indian law”  is considered as a reference to a provision of the Indian statue,  as  is  sought  to  be  contended  on  behalf  of Unitech,  the  basic  purpose  of  the  New  York Convention  to  enforce  foreign  awards  would  stand frustrated.  One of the principal  objective of  the New York Convention is to ensure enforcement of awards notwithstanding that  the awards are not  rendered in conformity to the national laws. Thus, the objections to enforcement on the ground of  public policy must be such that offend the core values of a member State's national  policy  and  which  it  cannot  be  expected  to compromise.  The  expression  “fundamental  policy  of law” must be interpreted in that perspective and must mean only the fundamental and substratal legislative policy and not a provision of any enactment.

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102. Although,  this  contention  appears  attractive, however, fails to take into account that there has been a  material  change  in  the  fundamental  policy  of exchange control as enacted under FERA and as now contemplated under FEMA. FERA was enacted at the

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time when the India's economy was a closed economy and the accent was to conserve foreign exchange by effectively prohibiting transactions in foreign exchange unless permitted. As pointed out by the Supreme Court in Life  Insurance  Corporation  of  India v. Escorts Ltd. (supra), the object of FERA was to ensure that the nation  does  not  lose  foreign  exchange essential  for economic survival of the nation. With the liberalization and opening of India's economy it was felt that FERA must be repealed. FERA was enacted to replace the Foreign  Exchange  Regulation  Act,  1947  which  was originally  enacted  as  a  temporary  measure.  The Statement of Objects and Reasons of FERA indicate that FERA was enacted as the RBI had suggested and Government  had agreed on the need for  regulating, among other matters, the entry of foreign capital in the form of branches and concerns with substantial non- resident interest in them, the employment of foreigners in India etc.

xxx xxx xxx

110. The  contention  that  enforcement  of  the  Award against Unitech must be refused on the ground that it violates  any  one  or  the  other  provision  of  FEMA, cannot be accepted; but, any remittance of the money recovered from Unitech in enforcement of the Award would  necessarily  require  compliance  of  regulatory provisions and/or permissions.”

83.This  reasoning  commends itself  to  us.  First  and  foremost,  FEMA -

unlike  FERA  -  refers  to  the  nation’s  policy  of  managing foreign

exchange instead of  policing foreign exchange, the policeman being

the Reserve Bank of India under FERA. It is important to remember

that Section 47 of FERA no longer exists in FEMA, so that transactions

that violate FEMA cannot be held to be void. Also, if a particular act

violates  any  provision  of  FEMA or  the  Rules  framed  thereunder,

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permission of the Reserve Bank of India may be obtained post-facto if

such violation can be condoned. Neither the award, nor the agreement

being enforced by the award, can, therefore, be held to be of no effect

in law. This being the case, a rectifiable breach under FEMA can never

be held to be a violation of the fundamental policy of Indian law. Even

assuming that Rule 21 of the Non-Debt Instrument Rules requires that

shares be sold by a resident of India to a non-resident at a sum which

shall not be less than the market value of the shares, and a foreign

award directs that such shares be sold at a sum less than the market

value, the Reserve Bank of India may choose to step in and direct that

the aforesaid shares be sold only at the market value and not at the

discounted value,  or  may choose to condone such breach. Further,

even if the Reserve Bank of India were to take action under FEMA, the

non-enforcement of a foreign award on the ground of violation of a

FEMA Regulation  or  Rule  would  not  arise  as  the  award  does  not

become void on that count. The fundamental policy of Indian law, as

has been held in  Renusagar  (supra),  must  amount  to  a breach of

some legal principle or legislation which is so basic to Indian law that it

is not susceptible of being compromised. “Fundamental Policy” refers

to the core values of India’s public policy as a nation, which may find

expression  not  only  in  statutes  but  also  time-honoured,  hallowed

principles which are followed by the Courts. Judged from this point of

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view, it is clear that resistance to the enforcement of a foreign award

cannot be made on this ground.

84.The  Appellants, however, relied upon certain observations in  Dropti

Devi v. Union of India (2012) 7 SCC 499. In that case, a challenge

was made to the constitutional validity of Section 3 of Conservation of

Foreign Exchange and Prevention of  Smuggling Activities Act,  1974

(hereinafter referred to as “COFEPOSA”), stating that by reason of the

new legal regime articulated in FEMA, in replacement of FERA, the

said provision has become unconstitutional in the changed situation.

This submission was repelled by this Court stating:

“66. It is true that provisions of FERA and FEMA differ in some respects, particularly in respect of penalties. It is  also  true  that  FEMA does not  have  provision  for prosecution and punishment like Section 56 of FERA and  its  enforcement  for  default  is  through  civil imprisonment.  However,  insofar  as  conservation and/or  augmentation  of  foreign  exchange  is concerned, the restrictions in FEMA continue to be as rigorous as they were in FERA. FEMA continues with the regime of rigorous control of foreign exchange and dealing  in  the  foreign  exchange  is  permitted  only through authorised person. While its aim is to promote the orderly development and maintenance of foreign exchange markets in India, the Government's control in matters of foreign exchange has not been diluted. The  conservation  and  augmentation  of  foreign exchange continues to be as important as it was under FERA.  The  restrictions  on  the  dealings  in  foreign exchange continue to be as rigorous in FEMA as they were in FERA and the control of the Government over foreign exchange continues to be as complete and full as it was in FERA.

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67. The  importance  of  foreign  exchange  in  the development of a country needs no emphasis. FEMA regulates the foreign exchange. The conservation and augmentation of foreign exchange continue to be its important  theme.  Although  contravention  of  its provisions is not regarded as a criminal offence, yet it is  an  illegal  activity  jeopardising  the  very  economic fabric of the country. For violation of foreign exchange regulations,  penalty  can  be  levied  and  its  non- compliance  results  in  civil  imprisonment  of  the defaulter.  The  whole  intent  and  idea behind Cofeposa is  to  prevent  violation  of  foreign exchange  regulations  or  smuggling  activities  which have  serious  and  deleterious  effect  on  national economy.”

It  is  important  to note that  this Court  recognized that  FEMA, unlike

FERA, does not have any provision for prosecution and punishment

like  that  contained in  Section 56 of  FERA.  The observations as to

conservation  and/or  augmentation  of  foreign  exchange,  so  far  as

FEMA is concerned, were made in the context of preventive detention

of persons who violate foreign exchange regulations. The Court was

careful to note that any illegal activity which jeopardises the economic

fabric  of  the country,  which includes smuggling activities relating to

foreign exchange,  are a serious menace to the nation and can be

dealt with effectively,  inter alia, through the mechanism of preventive

detention. From this to contend that any violation of any FEMA Rule

would make such violation an illegal activity does not follow. In fact,

even  if  the  reasoning  contained  in  this  judgment  is  torn  out  of  its

specific  context  and  applied  to  this  case,  there  being  no  alleged

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smuggling activity  which involves  depletion of  foreign exchange,  as

against foreign exchange coming into the country as a result of sale of

shares in an Indian company to a foreign company, it does not follow

that  such  violation,  even  if  proved,  would  breach  the  fundamental

policy of Indian law.

Challenge to Enforcement of the Foreign Award in this case on facts

85.Dr. Singhvi and Shri Dewan arguing for the  Appellants have raised

fourteen submissions, all of which fall under Section 48(1)(b) read with

Explanation 1 (ii)  and (iii)  to Section 48(2)(b)  of  the Arbitration Act,

taken  either  cumulatively  as  grounds  of  objection  or  separately,

depending upon the nature of the ground argued. We now deal with

each of these grounds seriatim.

I.  The  Tribunal  failed  to  deal  with  the  Appellants’  counter-claim pertaining  to  the  incorporation  of  Jaguar  Communication Consultancy Services Private Limited.

86.According  to  the  Appellants,  this  ground  of  objection  –  i.e.  the

incorporation  of  Jaguar  -  was  pleaded  by  them  as  a  “concealed

breach”, which became known to them only at a much later stage of

the arbitral proceedings. Despite the tribunal specifically ruling in the

First Partial  Final Award that a non-defaulting party could rely on a

“concealed  breach”  and  treat  the  same as  an  unrectified  event  of

default  under clause 23.4 of the JVA, the submission made by the

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Appellant in this behalf was ignored in its entirety. This was countered

by Respondent No.1 by stating that there was no “concealed breach”

at all, inasmuch as, as early as 05.10.2012, the Appellant had filed a

request  calling  upon the  Respondent  to  produce documents  which

included  the  list  of  clients,  employees  and  disclosure  of  business

activities  of  Jaguar.  These  documents  were  called  for  in  order  to

buttress the case of the Appellant that the Respondent was in breach

of clause 21.1 of the JVA, and to ascertain whether the employees of

Jaguar were passing on Ravin’s confidential information to Jaguar. In

response to this request, on 12.10.2012, the Respondent stated that

no case of breach of clause 21.1 of the JVA had been pleaded; that

Jaguar does not have any business of producing cables; and that it

had been set up for the sole purpose of hiring office premises. The

Memorandum of Association and the Articles of Association of Jaguar

were also handed over to the Appellants. What was stressed is that at

no  time after  12.10.2012 did  the  Appellants  seek  the  leave  of  the

tribunal to amend their counter-claim.  87. It must be remembered that the First Partial Final Award was made

only  on  15.02.2013.  When  the  Respondent  No.1  made  its  oral

submissions and filed written closing submissions on 19.07.2013, the

Appellants did not plead any case of breach due to Jaguar. It was only

at the fag end, i.e. in the Appellants’ Responsive Closing Submissions,

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filed on 20.08.2013, that the tribunal was invited to rule on this breach.

Obviously, by this time, the Respondent did not have any opportunity

to controvert this case put up for the first time by the Appellants. Since

this  case had been put  up for  the first  time at  the fag end of  the

proceedings, before passing of the Second Partial Final Award dated

19.12.2013, the arbitrator cannot be faulted for not dealing with this

case. In the Second Partial Final Award, the tribunal also recorded that

the Appellants’ case on clause 21.1 was limited to the acquisition of

ACPL and direct sales into India. The argument of the Appellant, made

at the fag end of  the proceedings,  that  since the Respondent held

99.99 % shares of  Jaguar,  which is  in  a similar  cable business as

Ravin, as evidenced by the Memorandum and Articles of Association

of Jaguar, is a case that has never been pleaded. This being the case,

it is obvious that the arbitrator was within his jurisdiction not to deal

with this so-called counter-claim at all. This objection, therefore, does

not fall within any of the grounds mentioned in Section 48 and must,

therefore, be rejected.  

II. The Tribunal  failed to make a determination on the Appellants’ counter-claim concerning ouster of the Appellants

88.According  to  the  Appellants,  the  tribunal  failed  to  make  a

determination on the Appellants’ counter-claim that the Respondent’s

efforts to oust Appellant No.1 and his family from Ravin amounted to a

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breach of the JVA. In answer to this submission, the tribunal, in the

Second Partial Final Award, expressly set out the following:

“6. Further, the parties both identify different catalysts for the breakdown of the JVA relationship. In short, the Respondents  submitted  that,  as  far  as  they  were concerned,  during  the  tenure  of  Mr  Sarogni  their relationship  with  the  Claimant  was  good  and  both parties were working together to make Ravin a more successful  company.  The swing point  came and the trouble started brewing when Ms Farise was sent out to head the affairs of Ravin with the single agenda to take  control  of  Ravin  and  oust  the  Karias.  The Respondents' overall case theory therefore focuses on a clash of personalities combined with the acquisition of  ACPL and  the  Claimant's  overriding  intention  to create a situation where the Karias appeared to be in breach  so  that  the  Claimant  could  buy  the Respondents out for a lower price.

7. The Claimant submitted that whilst relations had not been good from the time of the JVA onwards, matters took a turn for  the worse after  15 September 2011, when  the  Integration  Period  came  to  an  end.  The Claimant contends that up until this point Mr Karia had been able to maintain a large degree of control over the Company,  both because of  the arrangements  in the Integration Period and the fact that Mr Sarogni had been absent from India for long periods of time. The end of the Integration Period was followed shortly after by a change of CEO. Pursuant to the Board Resolution of 1 November 2011, Ms Farise was appointed CEO of Ravin  (H16/3381)  and  came  to  India  with  the legitimate intent to actually take over the day to day management of Ravin. Indeed, the Claimant does not shy away from the fact that Ms Farise did intend to take control of Ravin, despite the Respondents'  own particular interpretation of this event and motive. The Claimant's  overall  case theory therefore  focuses not so much on any clash of personalities per se, but on the date when power and control under the terms of the JVA was to shift decisively away from Mr Karia. It

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is  the Claimant’s case that Mr Karia was simply not willing  to  abide  by  such  provisions  and  wished  to remain in day to day control of Ravin and prevent the Claimant from exercising such control. In other words there is a straightforward division between the parties' rival  position.  Neither  party  suggested  that  both versions  could  in  essence  be  correct.  The  Tribunal therefore  has  to  make  findings  as  to  where  the evidence  lies  and  which  version  fits  the  facts  as found.”

This  case  was  answered  in  great  detail,  finding  that  it  was  the

Appellants and not the Respondent No.1 who materially breached the

JVA. Given this position, the tribunal finally held:

“291. Given the findings made by the Tribunal in favour of  the  Claimant's  allegations  of  material  breach  it naturally follows that the Respondents do not succeed in these allegations of mismanagement

292.  The  Respondents  were  themselves  in  material breach with regard to the whole conduct surrounding Mr  Dhall's  appointment  of  Ms  Mathure  and  the  so called  authorisation  form.  The  Claimant  was  not  in material  breach in suspending Mr Dhall.  Far from it. The Respondents,  however,  were plainly  in  material breach by their reaction to this suspension effectively leading to a one day strike.  

293.  The  question  of  the  attendance  of  Claimant nominees at the Akruti office is another chapter of the saga in which the Respondents do not emerge without serious  criticism.  As  is  clear  from  this  Award  the Respondents engendered a toxic atmosphere at Akruti in  January 2012 (even in  its  fire  stricken state)  and such was the situation at the ground that it  was not really possible for Claimant nominees to attend without fear of their own safety.  

294.  Lastly,  the  circumstances  surrounding  the appointment of the CEO and CFO does not give rise to any  conceivable  material  breach  on  the  part  of  the

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Claimant.  The  Claimant  was  entitled  to  nominate  a CFO and the CEO. They did so. The Respondents did not  oppose  the  appointment  of  Ms  Farise. Nevertheless they did obstruct her at every turn once she was appointed because it became apparent that she intended pursuant to the JVA to take day to day control of Ravin and the Respondents did not wish this to  happen.  As  regards  Mr  Brunetti,  the  CFO,  the Respondents did veto his appointment. This was not a material breach on their part as it was their right to do so  under  Schedule  IX  to  the  JVA.  Nevertheless  it cannot  be  said  to  be  a  material  breach  by  the Claimant. That is unsustainable.

CONCLUSION

295.  The  Respondents  have  not  succeeded  in establishing any material breach of the JVA committed by the Claimant.”

89.This being the case, it  would be wholly  incorrect  to state that  the

tribunal  has  failed  to  make  a  determination  on  the  Appellants’

counter-claim that the Respondent’s efforts to oust Appellant No. 1

and his family amounted to a breach of the JVA. While considering

the case of the Appellants and the cross-case of the Respondent, the

tribunal has adverted to pleadings, evidence and has given detailed

findings as to why the Appellants are in material breach of the JVA,

as a result of which the Respondent cannot be said to be in material

breach of the JVA. This being the case, it cannot be said that this

material  issue has not been answered by the Second Partial  Final

Award.  This ground, therefore, also does not fall  within any of  the

stated pigeon-holes under Section 48.

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III. The Tribunal failed to make a determination on the Appellants’ counter-claim concerning registration of the Ravin Trademark

90.Dr.  Singhvi  then  argued  that  the  tribunal  failed  to  make  any

determination on the  Appellants’ counter-claim that  the Respondent

No.1’s surreptitious attempts to register the Ravin trademark in its own

name was a material breach of the JVA. When the First Partial Final

Award is perused, it becomes clear that what was argued before the

arbitrator,  and  therefore  answered  by  the  arbitrator,  is  whether  the

tribunal had jurisdiction to go into the Trademark License Agreement.

The First Partial Final Award records:

“IX. Tribunal's ruling on jurisdiction

134. Finally, there were before the Tribunal three short points on the scope of the jurisdiction of the Tribunal under the arbitration agreement in the JVA.  

135.  Sensibly,  the  parties  only  made  very  brief submissions on these points. At one point, it seemed that the Respondents' accepted that the Tribunal did not  have  the jurisdiction which it  contended for,  but instead was inviting  the Claimant  to  agree  upon an expansion  of  the  Tribunal's  jurisdiction  in  order  to avoid  any  possibility  of  multiplicity  of  proceedings under different agreements.

136. In the end, however, the Respondents'  counsel did invite the Tribunal to rule upon these short points. The three points were as follows:  

1) Whether under Clause 27.1 of the JVA the Tribunal has jurisdiction to decide who has the right to register the Ravin trademark.

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2)  Whether  the  Tribunal  has  jurisdiction  to  decide alleged  breaches  of  the  Trademark  License Agreement.  

3)  Whether  the  Tribunal  has  jurisdiction  to  decide alleged  breaches  of  the  Technical  Assistance Agreement.

137.  The  Tribunal  concludes  that  it  does  not  have jurisdiction in respect of any of these three matters.  

138. The ownership of the Ravin trademark and the right to register the same is not a dispute arising out of, relating to, or in connection with the JVA. There is no provision in the JVA permitting the parties to the JVA to change the name of  Ravin Cables to a new name incorporating the word Prysmian – see Clause 9. There is also a provision for Ravin to enter into a trademark licence agreement in the form of Schedule 5,  but  that  agreement  deals  with  the  licence  by Prysmian and not the Ravin trademark.  

139.  Quite  simply  a  dispute  regarding  the  right  to register the Ravin trademark falls outside of the scope of the arbitration clause.  

140.  This  makes  it  unnecessary  for  the  Tribunal  to consider further the interesting and difficult questions of the arbitrability of such disputes, even if they were held  to  fall  within  the  scope  of  the  arbitration agreement.  The  Tribunal  makes  no  finding  on  this point, it not having been argued, but observes that it is by no means a foregone conclusion that such disputes would under English law be arbitrable.  

141.  Further,  the  disputes  respectively  under  the Trademark  License  Agreement  (in  the  form  of Schedule 5) and the Technical Assistance Agreement (in the form of Schedule 6) fall outside the jurisdiction of the Tribunal.  

142. It is common ground that the parties did enter into a  Trademark  License  Agreement  in  the  form  of Schedule 5 and the Technical Assistance Agreement in the form of Schedule 6.

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143.  Equally,  it  is  common  ground  that  these agreements made provision for disputes to be referred to arbitration in Milan, ltaly under Italian law. There is no warrant to construe the arbitration agreement in the JVA  as  somehow  trespassing  upon  the  arbitration agreement  contained  in  two  agreements,  which  the parties agreed to enter into and, in fact, did enter into with  these  separate  dispute  resolution  provisions. Disputes under or concerning the Trademark License Agreement and Technical Assistance Agreement are to be resolved in accordance with the dispute resolution provisions  under  those  agreements.  The  Tribunal observes  that,  if  there  had  been  a  dispute  under Clause 9 of the JVA as to whether in fact the covenant to enter into those two further agreements had been complied with, then this would be a dispute under the JVA agreement.  Nevertheless,  this  is  not  the  case being advanced by the Respondents in their pleaded case.”

91.We have gone through the transcript of the hearings on both 12 th and

13th December, 2012 before the arbitrator which clearly show that no

argument was ever made by the Appellants before the tribunal that the

Respondent  had  surreptitiously  attempted  to  register  the  Ravin

Trademark  in  its  own  name,  and  therefore  was  in  breach  of  the

competition  clauses  of  the  JVA.  We  are  thus  satisfied  that  this

argument  again  appears  to  be  an  afterthought  which  has  no

foundation in the submissions made before the learned arbitrator. This

submission does not again fall within any of the grounds referred to

under Section 48.  

IV. The Tribunal acted contrary to the Parties’ expert witnesses and ignored critical evidence with regard to the acquisition of ACPL

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92.Dr. Singhvi argued that the tribunal acted contrary to the admissions of

the parties’ expert witnesses and ignored critical evidence with regard

to the acquisition of  ACPL. Further,  since the Respondent failed to

produce the relevant  documents  regarding  the competing  business

carried out by ACPL, an adverse inference ought to be drawn against

the  Respondent  No.1,  which  the  Appellants  allege  the  learned

arbitrator failed to do.  

93.The learned arbitrator  indicated his approach in the Second Partial

Final Award as follows:

“23. Whilst therefore the parties' detailed submissions have set  the parameters for  the Tribunal's decisions and  have  assisted  the  Tribunal  in  reaching  its conclusions  on  the  individual  particulars  of  alleged material breach, it has simply not been possible and nor  is  it  desirable  for  the  Tribunal  to  undertake  an exhaustive analysis  of  each sub-argument and each piece of evidence referred to. Instead, in disposing of this dispute the Tribunal will focus, in large part, on the heart  of  the  rival  contentions  with  respect  to  the dispute as a whole and the individual allegations in the rival Determination Notices. This requires the detailed submissions to be substantially stripped back to reveal the essential complaint being made, which can then be assessed against the terms of the JVA and the rival theories.  

24. In respect of the rival theories, the Tribunal has not lost sight of the broader case theories which frame the disputed events and allegations.  The veracity  of  the individual  and  collective  allegations  arising  from the crucial  period  between  November  2011  and  March 2012 can and indeed must be tested by reference to

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the parties'  rival  theories and should not  necessarily be isolated and examined in the abstract.”

94.The tribunal then went into the acquisition of  ACPL in some detail,

from paragraphs 216 to 244 of the Second Partial Final Award, and

held that Mr. Karia’s contemporaneous reaction to the acquisition of

Draka, which led to an indirect acquisition of 60 subsidiaries, one of

which was ACPL, was that he was very happy that the Respondent

No. 1 had so expanded its business. Several congratulatory emails

are referred to by the arbitrator. Further, the arbitrator found that Mr.

Karia’s  statements  in  cross-examination  showed  that  he  had

knowledge of this acquisition way back in November 2010 but never

complained  of  material  breach  of  the  JVA.  The  arbitrator  also

examined evidence as to serious actual loss or harm, finding no such

credible  evidence,  except  occasional  instances  of  both  companies

tendering for the same business. It was held that there was no reliable

evidence that  the Ravin’s  business  had been lost  post  the ‘Draka

acquisition’ or  that  there had been any  diversion of  business from

Ravin to ACPL or vice versa. The arbitrator then held that ACPL is a

small specialist cable business and operates principally in the area of

instrumentation cables, which is not the area in which Ravin operates.

The learned arbitrator  also  adverted  to  the  evidence  of  the  expert

witnesses in arriving at this conclusion. It also made a reference to Mr.

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Karia’s  cross-examination,  stating that  Mr.  Karia himself  considered

ACPL to be the 50th or 60th competitor given its small business. The

finding,  therefore,  was  that  the  acquisition  of  ACPL did  not  in  any

manner amount to a serious material breach of the JVA.

95. Insofar as the failure to produce documents by Respondent No.1 with

regard to its subsidiary ACPL is concerned, it must be remembered

that ACPL is not a direct subsidiary of Respondent No. 1, being an

indirect subsidiary of Respondent No.1’s parent company consequent

upon  the  acquisition  of  Draka.  It  has  an  independent  Board  of

Directors.  Above  all,  ACPL  was  not  a  party  to  these  arbitral

proceedings.  The  tribunal  therefore  made  Procedural  Order  No.  5

dated 27.11.2012 in which it specifically recorded that if the Appellants

wish to pursue their request for disclosure of further documents  qua

ACPL, they must approach the Courts to do so, as it was not within

the  arbitrator’s  power  to  direct  a  person  who  is  not  party  to  the

proceedings to produce documents. At no stage did the Appellants act

in compliance of this Procedural Order and approach an English Court

to direct ACPL to produce documents within its possession. This being

so, as has been held hereinabove, a party cannot complain of breach

of  natural  justice  when  it  was  within  the  control  of  such  party  to

approach a  U.K Court  for  production  of  such documents.  This  not

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having been done, it is clear that no adverse inference, as has been

argued, could have been drawn by the learned arbitrator. This ground

also, therefore, does not fall within any of the grounds argued before

us under Section 48.

V. Perverse Interpretation of the JVA

96.According to Dr. Singhvi, the tribunal’s interpretation of clause 21 of

the  JVA is  perverse.  As  has  been  held,  referring  to  some  of  the

judgments quoted hereinabove, in particular  Shri Lal Mahal (supra),

the interpretation of an agreement by an arbitrator being perverse is

not  a  ground  that  can  be  made  out  under  any  of  the  grounds

contained in Section 48(1)(b). Without therefore getting into whether

the tribunal’s interpretation is balanced, correct or even plausible, this

ground is rejected.

VI. The Tribunal ignored critical evidence with regard to the issue of agency agreements and Direct Sales

97.Dr.  Singhvi  argued  that  the  tribunal  ignored  admissions  of  the

Respondent  and other  critical  evidence with regard to  the issue of

agency agreements and direct sales. The Second Partial Final Award

deals with this issue and the issue regarding agreements with agents

in great detail from paragraph 245 to paragraph 279. As many as five

reasons are given, after examining the evidence, for rejecting the plea

that agency or distribution agreements were entered into in violation of

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the JVA. Further, so far as direct sales into India were concerned, after

considering the pleadings and the evidence, the tribunal found that the

Appellants  altered  their  case  from  their  pleaded  case  and  now

advanced a case that the fact of direct sales amounts to a material

breach of clauses 8 and 20 of the JVA, contrary to what was stated in

their  determination  notice.  Even  otherwise,  the  tribunal  found  that

there was no material breach for the following reason:

“277.  Those  sales,  however,  were  for  all  practical purposes made up of sales of telecom cables, industrial special  cables,  automotive  cables,  network  and component  and  services.  Ravin  did  not  manufacture those types of  cables.  Indeed over 85% of the sales came from two affiliates manufacturing telecom cables, which  Ravin  did  not  manufacture  and  had  no experience in selling either. Indeed the Tribunal accepts the evidence of Ms Farise and Mr Koch and Mr Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, §23, E(I)/26/206,  §23,  E(I)/26/207,  §§18-  32.  E(I)/23/184- 186,  11  December  2012  hearing,  pp.134-140,  §46, E(I)/17/92, Day 2, pp.83-86, §18 of, E(l)/24/189). This renders  the  whole  argument  of  diversion  of  sales  or breach  of  good  faith  by  virtue  of  these  direct  sales somewhat academic.  

278.  Indeed  these  figures  illustrate  exactly  why  the Respondents  placed  so  much  emphasis  on  their argument  that  the  mere  fact  of  sales  was  a  breach irrespective of anything else. This was once more how it was put by Mr Salve SC in his oral closing argument (Day 10, pp. 183-185) The Tribunal has, however, found against the Respondents on this point.”

98.  Having perused the Award in this behalf, it cannot be said that the

tribunal  has  in  any  manner  ignored  admissions  or  other  critical

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evidence with regard to the issue of direct sales. In any case, if at all,

this  ground goes to  alleged perversity  of  the award,  which as has

been held by us hereinabove, is outside the ken of Section 48.  

VII.  The  Tribunal  adopted  disparate  thresholds  in  determining material breach

99.Dr.  Singhvi  has  then  argued  that  the  tribunal  adopted  disparate

thresholds for determining material breach between the Appellant and

the Respondent. Again, all the allegations made under this ground go

to perversity of the award, which is outside the ken of Section 48. That

apart, the tribunal indicates in paragraphs 104 to 106 of the Second

Partial  Final  Award,  that  no  disparate  thresholds  in  determining

material breach was adopted as follows:  

“(3)  Tribunal's  conclusions  on  the  Events  of Default relied upon by the Claimant  

104.  The  Tribunal  has  in  mind  the  test  for establishment  of  material  breach  as  identified  in paragraphs  37-47  above.  The  Claimant  has particularised  a  number  of  different  aspects  of  the conduct of the Respondents concentrating on the time frame from November 2011 to February 2012. Each of the  Claimant  and  the  Respondents  have  advanced detailed evidence and submissions on each of these particulars  as  addressed  above.  Nevertheless  the breaches cannot be treated in complete isolation.  In many instance the breaches can be seen as forming part of a pattern of alleged conduct involving the same witnesses and questions of their credibility as regards the rival evidence and rival "case theories." This does not mean to say that the allegations all  stand or fall together but a finding in relation to the credibility of the

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story advanced by one side or other in relation to one allegation does impact on the credibility of other parts of the story.

105.  Therefore  before  turning  to  the  individual allegations it is necessary to say something about the chief witnesses on each side and their credibility and demeanour, having reviewed and considered carefully once more the evidence advanced.  

106.  The Tribunal  has no hesitation in  reaching the conclusion  that  the  chief  witnesses  called  by  the Claimant were truthful, honest and whilst faced with a difficult and tense situation in India continued to try to resolve matters in accordance with the provisions of the JVA.”

VIII.  The  Tribunal’s  selective  consideration  of  contemporaneous evidence

100. Dr.  Singhvi  then  argued  that  the  tribunal’s  analysis  of

contemporaneous conduct  is selective and perverse.  Without going

into any further details in this ground, this argument must be rejected

out of hand, as not falling within the parameters of Section 48. Equally,

the  tribunal’s  consideration  of  evidence  of  key  witnesses  being

selective and perverse, must be rejected on the same ground.  

IX. The Tribunal appointed a conflicted valuer  

101.  Dr. Singhvi then contended that the tribunal appointed a conflicted

valuer,  which  prevented  the  Appellants  from  participating  in  the

valuation exercise. This has been dealt with in the Final Award dated

11.04.2017 by the learned arbitrator as follows:

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“II. Deloitte Valuation Report and the Respondents' Challenge to Deloitte

4. It  is important at this stage to record one specific matter  here  which  is  referred  to  and  set  out  in  the Claimant's  submissions  (see  paragraph  24  and Annexure  E  thereto  at  pages  170-172)  and  not contradicted by the Respondents in  its  submissions. On 14 October 2014 (Annexure E p. 171), Mr Karia on behalf  of  the  Respondents  sent  an  email  to  the Claimant in response to the Claimant's request dated 14  October  2014  (Annexure  E  p.170)  that  the Respondents  do  cause  the  Company  in  a  timely fashion to execute the Engagement letter for Deloitte. On 14 October 2014 (Annexure E p.171), Mr Karia for the  Respondents  objected  to  the  engagement  of Deloitte  contending  that  they  were  conflicted  out  of acting  as  Valuer.  This  was  a  remarkable  stance  to take. On 30 April 2013 the Respondents, via an email sent  by  their  solicitors,  had  confirmed  that  the Respondents  were  agreeable  to  Deloitte  or  KPMG acting  as  independent  Valuers  under  the  JVA.  The Tribunal noted and recorded this in the Preamble to Procedural Order No 12, albeit referring to the date as 30 April 2014. There had been no material change in circumstance since April 2013 or Procedural Order No 12,  to  justify  this  change  of  position.  The  Tribunal concludes that the Respondents took this position in an attempt to hinder, delay and frustrate the valuation exercise  and  consequent  transfer  of  shares.  The Respondents  advanced  a  series  of  points  in  their email. Each was answered in the Claimant's solicitors' email dated 15 October 2014 (see Annexure E p.170 to  the  Claimant's  submissions).  In  summary,  the Respondent was not in a position following Procedural Order  No  12  and  its  prior  agreement  to  Deloitte subsequently  to  withhold  its  agreement  to  or  not  to object  to  the  appointment  of  Deloitte.  It  had  been ordered  following  the  Respondents’  indication  of agreement or non-objection to Deloitte.  

5.  The  Respondents  had  not  previously  sought  to identify  any  matters  which  disentitled  Deloitte  from acting but instead had agreed to their name being put

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forward to the Tribunal for appointment. Furthermore, the  matters  identified  did  not  in  any  event  impugn Deloitte's independence or ability to act as Valuer in accordance with the provisions of  the JVA. The fact that  Deloitte  had  been  approached  by  the Respondents to conduct an independent valuation but had declined to act because of the impending role for the Company as Valuer only serves to underline not undermine their independence. Also, the fact that the Respondents  had  asked  Deloitte  earlier  in  the arbitration  to  undertake  some  computer  forensic exercise was not relied upon by the Respondents nor did  it  impugn  their  independence.  Finally,  the Respondents refer to Deloitte having acted as auditor of Power Plus Cable Company LLC ("Power Plus") a company incorporated in the UAE and based in Dubai in which Ravin holds a 49% shareholding, This is not the same entity as the Company, and did not impugn Deloitte's  independence  and  did  not  prohibit  them under the terms of Clause 17.3 of the JVA from being appointed. Clause 17.3 only applied to a prohibition on the statutory auditor of the Parties to the JVA acting as Valuer.  It  is  not  suggested  that  Deloitte  was  the statutory auditor of Ravin. Power Plus was not a Party to the JVA. Further, Clause 17.1 of the JVA expressly identified Deloitte as a suitable independent party to be appointed as Valuer. In any event, Deloitte's role as auditor of Power Plus was known to the Respondents and having agreed not to object to Deloitte in their 30 April  2013  email  it  was  no  longer  open  to  the Respondents  to  advance  this  point.  There  was  no breach of the JVA but even if there had been it was waived by the Respondents.

6. Thus following this exchange, Deloitte were in due course  engaged  albeit  through  the  default mechanisms provided for in Procedural Order No 12.”

We are satisfied that the learned arbitrator has considered this point in

some detail and dismissed it. This objection again does not fall under

any of the grounds mentioned in Section 48.

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X. Valuation ignores Ravin’s stake in Power Plus

102. Dr.  Singhvi  then  argued  that  the  valuation  made  by  Deloitte

ignored a stake of  49% of Ravin in a company called Power Plus,

which stake has been valued by the Appellants’ valuer (one BDO) at

INR  563  crores.  Considering  that  this  aspect  was  not  taken  into

account  by  Deloitte,  the  valuation  report  ought  not  to  have  been

accepted by the learned arbitrator, also being contrary to the position

taken by both parties. This submission was dealt with by the learned

arbitrator  in  great  detail  in  paragraph 19 of  the  Final  Award dated

11.04.2017.  Among  other  things,  the  learned  arbitrator  referred  to

clause 17 of the JVA and stated that the said clause together with the

formula prescribed therein was followed by Deloitte. Since this was

done, Deloitte cannot possibly be faulted and cannot further be asked

to take into account the stake of Ravin in Power Plus, as that would go

outside the JVA. This again is a matter for the arbitrator to determine.

This  again  is  a  ground  wholly  outside  grounds  that  can  attract

challenge to foreign awards under Section 48.

XI. Valuation Date

103. Dr.  Singhvi  then  argued  that  the  tribunal  acted  contrary  to  the

parties’  submissions  in  arriving  at  a  valuation  date  of  30.09.2014,

much later on the date of the Final Award which is 11.04.2017, as the

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parties had agreed that this date ought to be the date closest to the

date of actual sale of share and would be valid only until 31.12.2014.

The learned arbitrator dealt with this objection in the Final Award dated

11.04.2017 as follows:

“D. Valuation date

24.  The  Respondents  also  complain  that  whilst Procedural Order No 12 provided for a valuation date of 30 September 2014, Deloitte instead used data as at  31 July  2014.  Respondents  also complained that since the Report was only issued in November 2015, the valuation was out of date.  

25. The Tribunal is unable to accept the validity of this criticism for the following reasons:  

1)  Deloitte  records that  it  did request  data from the Company up to 30 September 2014, but this data was not provided to Deloite. The Tribunal has earlier in this Award recited the facts from which the Tribunal has reached  the  conclusion  that  the  Company's  lack  of cooperation with Deloitte was effectively controlled and directed by the Respondent.  This  was most  notably the case with regard to the Company's failure to issue the Engagement Letter to Deloitte following Procedural Order No 12. The Tribunal therefore concludes that it is not open to the Respondents to complain of the lack of  further  data  being  proved  to  Deloitte.  It  was  the Respondents who were in control of the provision or non-provision of that data.

2) The Tribunal also concludes that the Respondents are  not  entitled  to  complain  of  the  delay  in  the production of the Deloitte Valuation Report since that delay was materially contributed to by reason of the Respondents'  complaint  with  regard  to  Deloitte's involvement which is made to the LCIA. It is notable that  the  Respondents  have  not  in  their  submission denied that they made such a complaint to the LCIA and have not contradicted the Claimant's submission

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that this complaint materially contributed to the delay in the production of the Deloitte Report.

3)  Furthermore,  the Respondents are not  entitled to complain that Deloitte has used a valuation date of 30 September 2014. This was the valuation date agreed to and requested by the Respondents.  Furthermore, as is recorded in the Recital to Procedural Order No 12 prior to the hearing in October 2014 leading to the making  of  the  order  of  the  valuation  date,  the Respondents expressly accepted that the question of the Valuation date  was a  matter  properly  within  the jurisdiction of and for the determination of the Tribunal. The Tribunal then made an order for the valuation as requested by the Respondents.”

Having found that  the delay in the valuation report  was attributable

largely  to  the  Appellants  and  that  therefore  the  agreed  date  of

30.09.2014 is the correct date, we find nothing in the award which can

be said to even remotely shock our conscience. This ground is also

therefore  rejected.  Dr.  Singhvi’s  fervent  plea to  exercise our  power

under  Article  142  of  the  Constitution  of  India,  so  as  to  shift  the

valuation date from 30.09.2014 to the date of our judgment must also

be rejected given the learned arbitrator’s finding. Quite apart from this,

nothing in Section 48 of the Arbitration Act would permit an enforcing

court to add to or subtract from a foreign award that must either be

enforced or rejected by reason of any of the grounds under Section 48

being  made  out  to  resist  enforcement  of  such  foreign  award.  This

Court’s power under Article 142 ought not to be used to circumvent the

legislative policy contained in Section 48 of the Arbitration Act.

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XII. Inconsistent Awards

104. Dr. Singhvi then argued that the tribunal’s ruling in the First and

Second Partial Final Award, with regard to the interpretation of clause

21, is inconsistent and irreconcilable. Apart from the fact that we do

not find anything in the said two awards with regard to clause 21 being

inconsistent  and  irreconcilable,  this  ground again  does  not,  in  any

manner, shock our conscience and is therefore rejected.

XIII. Violation of FEMA and the Rules thereunder

105. Dr. Singhvi then argued that in ordering the sale of shares at a

10% discount of the fair market value arrived at by Deloitte, FEMA and

the Rules made thereunder would be breached, resulting in the award

being contrary to the public policy of India, in that it would be against

the fundamental policy of the Indian law. As pointed out hereinabove,

for the reasons given in paragraphs 79 to 84 of this judgment, this

ground  again  is  bereft  of  any  merit.  In  fact,  the  learned  arbitrator

awarded INR 63.90 per share as per the Deloitte valuation, which was

contractually binding under clause 17 of the JVA. Therefore, the lower

valuation of INR 16.88 per share as in the M/s Kalyaniwalla & Mistry

valuation report dated 04.03.2016 was not accepted.  

XIV. Bias of the Tribunal

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106. Lastly,  Dr. Singhvi  argued that  the learned arbitrator was clearly

biased in that the outcome of the Second Partial Final Award was clear

to the Respondent No.1, inasmuch as its agent, one M/s Gilbert Tweed

Associates,  sent  out  an  advertisement  for  recruiting  employees  for

Ravin,  two  months  before  the  Second Partial  Final  Award,  thereby

showing  that  this  agent  was  clear  as  to  the  outcome  of  the

proceedings. This was strongly refuted by the Respondent, stating that

at no time had Gilbert Tweed Associates been retained by them. As a

matter  of  fact,  an agency called M/s  Key2People  was engaged by

Respondent  No.1  to  identify  potential  candidates  who  could  be

recruited for  the company in  due course.  M/s  Key2People,  in  turn,

appointed M/s Gilbert Tweed Associates. In any case, the Respondent

undertook  to  terminate  the  engagement  of  M/s  Key2People  by  its

email of 28.10.2013. The allegation of bias thus made was clearly a

desperate  afterthought.  The  contention  that  the  arbitrator  was

otherwise biased was dealt with in the Final Award as follows:

“16. The  Respondents  have  also  made  a  repeated reference  to  an  allegation  that  the  Tribunal  lacked independence  and  that  the  Respondents  have  lost faith  in  the  Tribunal  continuing  to  give  an  impartial determination of the matters which remain in dispute.  

17. These allegations have already been raised by the Respondents  and  rejected  by  the  LCIA  Court. Furthermore,  the  Respondents  have  not  sought  to invoke any procedure in the English Court,  which is the court of the seat with supervisory jurisdiction. If the

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Respondents  wished  to  challenge  the  ruling  of  the LCIA Court and challenge the further involvement of the Tribunal in the process, the Respondents had to bring a challenge within the strict time limits provided for in the English Arbitration Act 1996, but they have not  done  so.  It  is  regretted  that  the  Respondents continued  to  advance  this  unfounded  and unparticularised  allegation.  The  Tribunal  has  in  the past pointed out the distinction between independence and impartiality on the one hand and on the other the role of an arbitrator who has to decide between rival arguments,  diametrically  opposed  and  irreconcilable positions  adopted  before  it  and  direct  clash  of evidence before it and then apply such findings to the disputes before it. It is an inherent and an inevitable part  of  the  arbitral  process  that  where  parties,  as indeed  has  been  the  case  in  this  arbitration,  have taken radically opposing positions on the evidence and the law that multiple decisions will  have to be made that will ultimately disappoint one of the parties. This has been exactly such a dispute. It has, however, been a distinct feature of this process that the Respondents have not only voiced their disappointment but have not complied with the orders of the Tribunal to protect the Parties' rights during the course of the Arbitration and not complied with the terms of the JVA as has been found  and  determined  by  the  Tribunal  in  its  prior Awards. In a dispute such as the present where it has been  necessary  to  render  a  series  of  Awards,  it  is necessary for the Tribunal to apply the prior findings in any subsequent Award.”

107.Having answered each of the submissions of Dr. Singhvi on behalf of

the  Appellants,  we  cannot  help  but  be  left  with  a  feeling  that  the

Appellants are indulging in a speculative litigation with the fond hope

that by flinging mud on a foreign arbitral award, some of the mud so

flung would  stick.  We have no doubt  whatsoever  that  all  the pleas

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taken by the Appellants are, in reality, pleas going to the unfairness of

the conclusions reached by the award, which is plainly a foray into the

merits of the matter, and which is plainly proscribed by Section 48 of

the Arbitration Act read with the New York Convention. We have read,

in detail, the four awards passed by the learned sole arbitrator and are

satisfied that he has exhaustively discussed the evidence and arrived

at detailed findings for each of the issues, claims and counter-claims,

and  finally  accepted  the  Respondent’s  case  and  rejected  the

Appellants’. Given the fact that our jurisdiction under Article 136 of the

Constitution is itself limited, and given the fact that this Court’s time

has unnecessarily been taken by a case which has already been dealt

with by four exhaustive awards on merits and also by the impugned

judgment of the Bombay High Court, we dismiss these appeals with

costs of INR 50 lakhs, to be paid by the Appellant to Respondent No.1

within 4 weeks from today.

.……………………………J.   (R.F. Nariman)

.……………………………J.      (Aniruddha Bose)

……………………………J.  (V. Ramasubramanian)  

New Delhi; 13 February, 2020.

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