TMI Blog2020 (2) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, 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 - Appeal dismissed. - CIVIL APPEAL NO. 1544 OF 2020, 1545 Of 2020 (ARISING OUT OF SLP (CIVIL) NO.8304 OF 2019, 8435 OF 2019) - - - Dated:- 13-2-2020 - R.F. Nariman, Aniruddha Bose And V. Ramasubramanian, JJ. JUDGMENT R.F. Nariman, 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. 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 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 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 Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.09.2012, the Appellants then 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raka 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, 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 bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 handdelivered 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. (4) Rectification of the Events of Default found to have been committed by the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ria 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 itclear 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 tosupport 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/56-57, 23, E(I)/26/206, 23, E(I)/26/207, 1832. 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 theRespondents 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 Respondentshave 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial breach by their reaction to this suspension effectively leading to a one day strike. 293. The question of the attendance of Claimantnominees 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 theappointment 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n particular any representation on the Board of the Company; 5. The date for the assessment of the DiscountedPrice 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 inparagraph 31 above, which includes the costs of the arbitration. 7. Notwithstanding paragraph 6 above, the Tribunalrecords 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 andInterim Relief as amended by Procedural Order No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been challenged and which challenge has been turned down in the country of its origin, subject to grounds to resist 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence 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. (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 completel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partial Final Award, except the interpretation given to Clause 21.1, which was an interpretation given by the learned arbitrator keeping in 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 inconsist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn 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 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 par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Conventionof 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 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 arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preexisting 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 international commerce, see Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614, 625 (1985), the courts have developed a general proenforcement 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.Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untries 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 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 enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 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 enforc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistance 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 alsofailed 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 also suggested as possible examples of such circumstances another agreement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 aninternational 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 theaward 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 Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enes 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Section 48(1)(b) of the Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illard, 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. Soci t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second bite of the cherry. (c) Indeed, the latter conception of fairness justifies apolicy 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. (d) The delicate balance between ensuring theintegrity of the arbitral process and ensuring that the rules of natural justice are complied with in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitral 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] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: Has the Board dealt with all essential issues? GAFTA findings are habitually brief. Many would regard that as a virtue. It is certainl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 and dealt with fairly. An award should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35. For the above reasons, I consider that there issufficient 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 ofsettlement by arbitration under the law of this State; or (ii) the award is in conflict with the public policy of thisState. 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 conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34]. (e) The parties opposing stance and the judge sfindings 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 ofthe 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 that can be vindicated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. xxx xxx xxx 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. Neit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 at [60]). xxx xxx xxx 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts 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 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. xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: xxx xxx xxx (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 transferdepository 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 meancapital contribution or acquisition or transfer of profit shares; xxx xxx xxx 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 : 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 rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 fundam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign 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. 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 noncompliance 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 recogniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gards 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. III. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute regarding the right toregister the Ravin trademark falls outside of the scope of the arbitration clause. 140. This makes it unnecessary for the Tribunal toconsider 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 theTrademark 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 intoa Trademark License Agreement in the form of Schedule 5 and the Technical Assistance Agreement in the form of Schedule 6. 143. Equally, it is common ground that theseagreements 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 agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 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 busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 forestablishment 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 story a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able 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 toidentify any matters which disentitled Deloitte from acting but instead had agreed to their name being put forward to the Tribunal for appointme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 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. Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmore, 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 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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