TMI Blog2016 (10) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that public policy in the context of foreign award has to be viewed in a narrower sense, and that, in order to attract the bar of public policy qua enforcement of a foreign award, it must invoke something more than just a mere violation of the law of India. In the instant case, the objections articulated clearly do not fall foul of the head, the fundamental policy of India Frankly, given the scope of Section 45, this argument was not available before the learned Arbitrator. However, since, in any event, such a submission was made, the learned Arbitrator, evidently, dealt with the same and held that as the Singaporean law of limitation applied, the agreement, which was otherwise lawful and binding, was neither null and void, nor inoperative or incapable of being performed, within the meaning of Section 45 of the 1996 Act. Thus, no fault can be found with the reasoning of the learned Arbitrator, and therefore, this submission, being misconceived, is also rejected - petition allowed. - Hon'ble Judges Rajiv Shakdher, J. For the Appellant : R. Parthasarathy For the Respondents : K. Harishankar ORDER Rajiv Shakdher, J. 1. This is a petition fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the respondent, defaulted in making payments for, the various services provided by the petitioner, disputes arose between the parties, in or about, December, 2005. 6.1. Consequent thereto, meetings were held between the representatives of the parties on 31.01.2006 and 02.08.2006. In the 1st meeting, an agreement was entered into between the parties, whereby, the petitioner agreed to waive the outstanding amounts, vis- -vis, teleport services, based on a condition that the amounts outstanding towards transponder services and uplink service fees would be liquidated. 6.2. At the 2nd meeting, i.e., on 02.08.2006, once again, an agreement was arrived at between the parties, whereby, the petitioner agreed to waive not only outstanding teleport services fees, but also, agreed to grant the respondent, further fee adjustment to facilitate timely payment of all outstanding dues. 6.3. It appears, that a further agreement was arrived at between the parties, which was, that, teleport services fees would be reduced to US $ 15,800 per month. 7. Apparently, on account of the change in Regulations brought about, in India, in July, 2007, local broadcasters could broadcast their TV c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that, the Arbitrator, in passing the award, had acted beyond his jurisdiction, inasmuch as, a major part of the disputes, which were adjudicated upon by him, were outside the scope of the agreement. 13. Learned counsel for the respondent submitted that the claims were beyond limitation, as prescribed under the Indian Law. It was stated that the agreement between the parties was entered as far back on 10.09.2003, and that, it was mutually terminated on 04.08.2007. The payments required to be made by the respondent were provided for in the agreement. It was stated that, since, payments were being made for the services rendered by the petitioner, the petitioner chose not to exercise its rights given under Clause 5.1 and Clause 13.5.1 of the agreement. 13.1. Based on the aforesaid clauses of the agreement, it was contended, that if, the payments, as prescribed under the agreement, had not been made, the petitioner would have in the ordinary course suspended the transponder services, which was its right under the said clauses of the agreement, qua any payment, which remained unpaid for more than 10 days. 13.2. The argument, thus, was that, the commencement of arbitration vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed under the Indian Law, would apply was an issue, which had been considered by the learned Arbitrator. It was contended that the respondent, for the reasons best known to it, chose not to assail the award in the designated Courts, in Singapore, and therefore, at the stage of enforcement, this Court could not have a re-look at the merits of the award. 14.2. In the context of limitation, learned counsel submitted that the Indian Limitation Act is applicable to only domestic awards and that too, by virtue of Section 43 of the 1996 Act. Since, Section 43 of the 1996 Act fell in Part I, it would apply only to domestic arbitrations. 14.3. Learned counsel submitted that the present award is a foreign award. It was contended that the subject award had emerged out of disputes adjudicated upon in an international commercial arbitration, and therefore, the resultant award could only be governed by Part II of the 1996 Act. 14.4. The argument, in nutshell, was that the Indian Limitation Act was not applicable to an award, which was governed by Part II of the 1996 Act. 14.5. The submission made on behalf of the respondent that the claims made by the petitioner were beyond the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugn the award. REASONS: 15. I have heard the parties and perused the records. What emerges is that there are two broad issues, which need to be dealt with before a conclusion is reached one way or the other: i) First, whether the award, which is based on the application of Singaporean law of limitation, would be unenforceable in India on the ground that it is violative of the public policy in India. ii) Second, whether the Arbitrator had stepped outside his jurisdiction by considering the claims made by the petitioner for teleport and occasional services, as they were, purportedly, not part of the main agreement. 16. Insofar as the first issue is concerned, what is required to be noticed, is that, even according to the respondent, limitation is part of procedural law. Admittedly, under Clauses 19 and 23 of the agreement, parties had agreed that the governing law would be the Singaporean law and that the seat of arbitration would be Singapore. The arbitration, as a matter of fact, was held in Singapore. The Arbitrator, while, considering this objection made the following observations: 39. Procedural issues shall be governed by the law of the seat of arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , closely associated with the place where the action is adjudicated upon, i.e., in this case, the seat of arbitration. Therefore, while limitation is part of procedural law, it would necessarily involve application of that law of limitation which is closest to the seat of arbitration; in this case, the Singaporean law. Therefore, the law of limitation, which would be applicable to the claims lodged by the petitioner would be, in my opinion, the law of limitation as applicable in Singapore. 18. As rightly contended by the learned counsel for the petitioner, a somewhat similar issue came up for consideration in NNR Global Logistics's case cited supra. 18.1. In that case, parties had entered into a memorandum in the area of freight forwarding business. Disputes erupted between them, which led to arbitration being triggered. Parties, via a side letter, had agreed that the Indian law would be the substantive law of the agreement, while, the arbitration agreement, itself, would be governed by the laws of Malaysia. Arbitration was held in Malaysia. The issue which came up for consideration before the Delhi High Court was: whether the claims lodged would be governed by the Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Court while discussing limitation further held that the law of limitation is generally regarded as procedural and its object is not create any right but to prescribe periods within which legal proceedings be instituted for enforcement of rights which exist under substantive law. 19. The Law Commission of India in its 193rd report on 'Transnational Litigation - Conflict of Laws -Law of Limitation' discussed how in the context of expansion of international trade it has become necessary to take notice of the fundamental changes in the law of limitation in all common law countries. While recommending that India should adopt the practice in civil law countries, it was pointed out that as of now the law of limitation was considered in India as part of the procedural law and not the substantive law. 20. In light of the above legal position, this Court rejects the contention of Argus that since the substantive law of the contract between the parties is Indian law, it is the ILA that would apply. The law of limitation being a procedural law would be part of the curial law, which in this case would be the law of seat of arbitration, i.e. the Malaysian law. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal position that emerges from a conspectus of all the decisions, seems to be that the choice of another country as the seat of arbitration inevitably imports an acceptance that the law of that country relating to the conduct and supervision of arbitrations will apply to the proceedings. 26. In the instant case, the conclusion drawn by the learned Arbitrator that it is the MLA which would apply is perfectly plausible and consistent with the internationally accepted legal position which has been reaffirmed by the Constitution Bench of the Supreme Court in Bharat Aluminium Co. At this juncture it is necessary to note that the declaratory part of the decision in Bharat Aluminium Co., regarding the curial law in an international arbitration being that of the seat of arbitration is in line with the internationally accepted legal position which is what has been reiterated in the impugned Award. Therefore, even while Aargus' petition under Section 34 is being considered on merits because of the prospective overruling of Bhatia International in Bharat Aluminium Co. the declaratory part of the latter decision makes it clear that the curial law in an international arbitration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e width and amplitude of the concept: public policy of India , when applied to actions filed under Section 34 of the 1996 Act to set aside a domestic award and, the scope of the said concept, when, applied in context of examination of objections to a foreign award, filed under Section 48 of the 1996 Act. The Court, clearly held that the expression public policy of India , when, applied in the context of Section 48(2)(b) of the 1996 Act, had to be given a narrower meaning, as against a situation, which arises in the context of a challenge to the award under Section 34 of the 1996 Act. 20.5. The rationale advanced, was that, a Section 34 Petition is instituted, at stage, prior to an award, morphing into an executable decree, while, Section 48 objection is preferred, to keep at bay enforcement of a foreign award, which is treated, at par with a decree. 20.6. The Court, in Shri Lal Mahal's case, ultimately, upheld the dicta laid down in its earlier judgment in Renusagar Power Company V. General Electric Company - 1994 Supp(1) SCC 644, which adumbrated that public policy in the context of foreign award has to be viewed in a narrower sense, and that, in order to attract the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ...This would mean that public policy in Section 7(1)(b)(ii) h as 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 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) 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usagar. For all this there is no reason why Renusagar should not apply as regards the scope of inquiry under Section 48(2)(b). Following Renusagar, we think that for the purposes of Section 48(2)(b), the expression public policy of India must be given narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to public policy of India if it is covered by one of the three categories enumerated in Renusagar. Although the same expression ' public policy of India' is used both in Section 34(2(b)(ii) and Section 48(2)(b) and the concept of 'public policy in India' is same in nature in both the Sections but, in our view, its application differs in degree insofar as these two Sections are concerned. The application of 'public policy of India' doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award. (emphasis is mine) 20.8. It must be noted, that the Supreme Court, as a matter of fact, overruled in the said judgment, a view taken by a two Judge Bench of that very Court in Phulchand Exports Ltd. V. O.O.O. Patriot - (2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rean Law of Limitation would apply in the given circumstances. Insofar as the claims made by the petitioner with regard to teleport and occasional services were concerned, it was simply stated by the respondent, in paragraph 5 of its statement of defence, that, all payments had been made, and therefore, nothing more was due and outstanding. There was no assertion made that the demand of payment qua the said services was outside the realm of the agreement obtaining between the parties. 25.2. This aspect is evident, when, one reads the pleadings holistically. 26. The learned Arbitrator in his award in paragraph Nos. 36 and 37, in my view, has correctly taken the same view, which is borne out by the following observations: 36. The Tribunal agrees with the Claimant that the jurisdiction of the Arbitrator was never raised prior to the Respondent's closing submission despite the Tribunal's effort to enquire and confirm their position during the oral hearing. Article 16(2) of the Model Law, is applicable to bar the Respondent's belated jurisdictional challenge, which reads: A plea that the tribunal does not have jurisdiction shall be raised no later than the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a remedy other than the remedy of arbitration contrary to the arbitration agreement obtaining between them. In such an eventuality, the party wishing to enforce the arbitration agreement, approaches the judicial authority, before whom the action is instituted by the opposite party, to refer the parties to arbitration. The party, which intends to continue its action before the concerned judicial authority can avoid being referred to arbitration, only if, it is able to satisfy the judicial authority that the arbitration agreement is either null and void or, inoperative or, incapable of being performed. 28.2. Frankly, given the scope of Section 45, to my mind, this argument was not available before the learned Arbitrator. However, since, in any event, such a submission was made, the learned Arbitrator, evidently, dealt with the same and held that as the Singaporean law of limitation applied, the agreement, which was otherwise lawful and binding, was neither null and void, nor inoperative or incapable of being performed, within the meaning of Section 45 of the 1996 Act. 29. In my view, no fault can be found with the reasoning of the learned Arbitrator, and therefore, this submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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