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2020 (2) TMI 628

..... e Appellants in India - HELD THAT:- We cannot help but be left with a feeling that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. We have no doubt whatsoever that all the pleas taken by the Appellants are, in reality, pleas going to the unfairness of the conclusions reached by the award, which is plainly a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention. Given the fact that our jurisdiction under Article 136 of the Constitution is itself limited, and given the fact that this Court’s time has unnecessarily been taken by a case which has already been dealt with by four exhaustive awards on merits and also by the impugned judgment of the Bombay High Court, we dismiss these appeals with costs of INR 50 lakhs, to be paid by the Appellant to Respondent No.1 within 4 weeks from today - Appeal dismissed. - CIVIL APPEAL NO. 1544 OF 2020, 1545 Of 2020 (ARISING OUT OF SLP (CIVIL) NO.8304 OF 2019, 8435 OF 2019) - 13-2-2020 - R.F. Nariman, Aniruddha Bose And V. Ramasubramanian, JJ. J .....

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..... e appointment of the CEO of the Company ( Interim Period ) 12.6.5 As soon as practicable after the efflux of the Interim Period, a Board shall be convened to resolve upon a new policy, applicable for a period of 6 (six) months thereafter (the Integration Period ), for the delegation of the powers to the managers of the Company (the Delegation of Powers Policy ) all powers not delegated to the managers of the Company pursuant to such Delegation of Powers Policy, shall be delegated jointly to the CEO and the Managing Director… 12.6.6 Provided however, that subject to the overall supervision of the Board, after the efflux of the Integration Period, the Managing Director shall be directly responsible solely for managing the internal audit as well as the strategy and business development of the Company and present to the Board his findings and analysis for final determination by the Board. Accordingly all the powers which are not delegated to the managers of the Company pursuant to the Delegation of Powers Policy, as may be amended by the Board from time to time, shall be delegated to the Managing Director to the extent such powers fall within his duties as aforesaid. 12.6.7 Afte .....

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..... its share participation in the Company to the other Party; or (ii) from the serving of notice to the other Party to buy, in whole or in part, its share participation in the Company, then the accounting firm shall be chosen by the Party (the Non-Exiting Party ) that called the other Party to sell, in whole or in part, its share participation in the Company to the other Party or was called by the Exiting Party to buy, in whole or in part, the Exiting Party s share participation in the Company. 20. Mutual Covenants and Undertakings xxx xxx xxx 20.1.2 The Parties further agree to cooperate and act in good faith, fairness and equity as between themselves. 21. Business in India 21.1 The Parties agree that neither Prysmian nor Mr. Karia, whether directly or through their Affiliates, shall invest, acquire or participate in the Cable Business in India, save and except through the Company in accordance with this agreement. 21.5 Further, it is agreed that, within March 31,2011, the Promoters shall either stop or cease to have any interest in any activity they are currently or will be conducting in India, directly or indirectly through any Affiliates, which is in competition with the business .....

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..... Price ). The Defaulting Party shall be then under the obligation to either (I) sell all, but not less than all, its Shares in the Company within 30 (thirty) calendar days of the EOD Notice or (II) buy all, but not less than all, the Non Defaulting Party Shares in the Company within 30(thirty) calendar days of the EOD Notice, as the case may be. 23.5 It is hereby agreed that: 23.5.1 If Prysmian is the Defaulting Party, then Mr. Karia only( and not the Existing Shareholders) will be entitled to either(a) buy all(but not less than all) Prysmian Shares at the Discounted Price or (b) sell to Prysmian all (but not less than all its own shares) and those of the Existing Shareholders at the Premium Price. 23.5.2 If Mr. Karia or any of the Existing Shareholders is the Defaulting Party, then Prysmian will be entitled to either (a) buy all ( but not less than all) the Shares held by Mr. Karia and Existing Shareholders at the Discounted Price or (b) sell to Mr. Karia all ( but not less than all) its own shares at the Premium Price. For sake of clarity, the Parties agree that for the purpose of this Clause 23.5 any reference to Mr. Karia Shares, Prysmian Shares and Existing Shareholders Share .....

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..... s. Provided however that the Award may be enforced in any appropriate jurisdiction. If to be enforced in India the Award shall be a foreign award to which the legislative provisions incorporated in the applicable Indian Act to give effect to the New York Convention on foreign arbitral awards 1958 ( the New York Convention) shall apply(currently Part II of the (Indian) Arbitration and Conciliation Act 1996)… 4.By a separate Control Premium Agreement of the same date, Respondent No.1 paid €5 million to the Appellants as control premium for the acquisition of the share capital of Ravin. 5.On 10.08.2010, pursuant to clause 12 of the JVA - as the interim period of six months under the JVA had come to an end - one Mr. Luigi Sarogni was appointed as CEO of Ravin by Respondent No.1. Until the expiry of the integration period , Ravin was to be jointly managed by the said CEO and the Managing Director for another period of six months. Factually, however, we are informed that the said integration period carried on beyond December 2010 and continued until September 2011. 6.In April 2011, Mr. Giancarlo Esposito was designated by Respondent No.1 as the H.R. Director of Ravin. On 15.0 .....

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..... 12, alleging that the learned arbitrator was conflicted, as he had been engaged as counsel by Respondent s advocates, Bharucha and Partners, in another unconnected matter. However, on 08.06.2012, Bharucha and Partners wrote a letter making it clear there was no such conflict. The sole arbitrator also denied any such conflict. The LCIA Registry informed the Appellants that they could challenge the appointment of the sole arbitrator under the LCIA Rules if they so desired. The Appellants, however, gave up the right to any such challenge. As a result, on 04.07.2012, Respondent No.1 filed its Statement of Claim before the learned sole arbitrator. On 09.09.2012, the Appellants then 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 calle .....

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..... however, depending on the facts, constitute a breach of Clause 8 or Clause 20 of the JVA. Yet further, the Tribunal does not rule out the possibility of the Respondents alleging and proving some kind of investment or participation which consist of some kind of long term contractual arrangement itself involving sale, export, import or distribution. Nothing stated herein, however, in any way decides or considers the materiality of any such allegation or the consequences of any such breach even if proven. 9.Insofar as the parent company of Respondent No.1 (one Prysmian SA) had made a global acquisition of the Draka Group in February/March 2011, which included - as one out of 60 companies belonging to the Draka Group - one Associated Cables Private Limited (hereinafter referred to as ACPL ), which was an Indian Company doing business in India, the learned arbitrator held: 108. The Tribunal is once more careful to make it clear that these pleaded allegations have not been proved yet. The proof of these allegations is left to be explored at the substantive merits hearing. Nevertheless, on the basis of the parties respective pleaded cases, the Tribunal concludes that on a true constructio .....

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..... lting Party when it gives its EOD Notice under Clause 23.4 and then subsequently seeks to justify its EOD Notice in arbitration can rely upon both the unrectified material breach (i) and/or material breach (2) if it is subsequently discovered. This is because a concealed, but subsequently discovered, Event of Default which has not been rectified at the end of the Rectification Period is still an un-rectified Event of Default for the purpose of Clause 23.4; 5) Equally, if a Defaulting Party has not rectified a concealed Event of Default at the end of a Rectification Period, then, it is a matter which can be relied upon by the Non Defaulting Party under Clause 23.7, so to give rise to the deprivation or alteration of rights set out therein; 6) An Event of Default is defined as a material breach of any provisions, obligations, covenants, conditions, and undertakings. The definition of an Event of Default is not conditional upon the giving of a Determination Notice. The consequences, however, under Clause 23 do depend upon the giving of a Determination Notice and expiry of a Rectification Period; 7) Notwithstanding the provisions of Clause 23 and Clause 23.4, in particular with regard .....

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..... t to the or attend management meetings convened by the CEO in material breach of JVA Clauses 12 and /or 8 and/or 20.1.2; 6) when the incidents of 12 and 13 January 2012 and 4 February 2012 are considered in isolation there is insufficient evidence to conclude that there has been a material breach by the Respondents. When the incidents are considered together and set in their proper context the Tribunal concludes that they form part of a pattern of the Respondent s conduct which constituted a material breach of the JVA. As such, there is a material breach in relation to the Claimant s combined allegations that the Respondents incited staff to surround, sequester, heckle, humiliate and threaten Mr Esposito and Mr Kamdar on those dates; 7) the Respondents encouraged and failed to prevent Company employees from going on strike on 31 January 2012 and the Respondents encouraged and incited indiscipline and breach of Company policies and procedures by supporting Mr Dhall in his insubordination and defiance of direct orders of Mr Esposito and Ms Farise in material breach of JVA Clauses 12 and/or 8 and/or 20.1.2; 8) see (7) above; 9) the Respondents were not in breach of the JVA by refusing .....

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..... ia had that knowledge in November 2010. Nevertheless, Mr Karia did not complain of any material breach to the JVA under Clause 21. The Tribunal further accepts the truth of the evidence given by Ms Farise that first of all when Mr Karia heard of her appointment to the ACPL Board some time in late 2011 possibly December, Mr Karia did not complain but congratulated her (§18,EI/5/28). This fits in with his earlier congratulatory email to Mr Battista. Nevertheless by the time one gets to February 2012 Mr Karia had completely changed his tune and saw Ms Farise s appointment to the ACPL as a device, an excuse, to try to derail her carrying on as CEO on the Ravin Board and thus further his campaign not to cede day to day control of Ravin to the Claimant. The Tribunal accepts the evidence given by the Claimant witnesses on this. Mr Karia has changed his tune. The Tribunal rejects the veracity of the story originally being told by Mr Karia as not only inconsistent with the documents before the Tribunal but also mutually inconsistent with his evidence in cross-examination. 234. The Tribunal has spent some time analysing this material because Mr Karia s contemporaneous reaction is highly .....

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..... yond where it can naturally go. This does not yield an answer of material breach. The evidence adduced by the Respondents is not of a quality which would enable the Tribunal to conclude that a breach had been committed with serious adverse effect. 242. The Tribunal further makes mention of theassistance it received from two distinguished experts of long standing participation in the market; Messrs Honavar and Hargopal. The Tribunal did get some benefit from this evidence in the clear explanation of different types of cables together with samples and this explanation was also helpfully provided in part by Mr. Karia himself. Nevertheless, once more this evidence somewhat missed the point. It is not enough to establish material breach to identify certain types of cables produced and sold by each company. There was no reliable analysis advanced by the Respondents evidence of serious adverse effect either on Ravin today or likely in the future. 243. Finally, the Tribunal for completeness makes 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 operati .....

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..... made up of sales of telecom cables, industrial special cables, automotive cables, network and component and services. Ravin did not manufacture those types of cables. Indeed over 85% of the sales came from two affiliates manufacturing telecom cables, which Ravin did not manufacture and had no experience in selling either. Indeed the Tribunal accepts the evidence of Ms Farise and Mr. Koch and Mr. Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§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 a .....

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..... laimant s allegations of material breach it naturally follows that the Respondents do not succeed in these allegations of mismanagement. 292. The Respondents were themselves in materialbreach with regard to the whole conduct surrounding Mr. Dhall s appointment of Ms. Mathure and the so called authorisation form. The Claimant was not in material breach in suspending Mr. Dhall. Far from it. The Respondents, however, were plainly in material breach by their reaction to this suspension effectively leading to a one day strike. 293. The question of the attendance of 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 .....

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..... conferred on theRespondents and specifically Mr. Karia under the JVA have ceased to be effective; 3. Any reference in the JVA to any rights of theRespondents and specifically Mr. Karia including the requirement of consent or approval of Respondents and specifically Mr. Karia stand omitted; 4. The Respondents are prohibited from exercising orattempting to exercise any rights under the JVA including in particular any representation on the Board of the Company; 5. The date for the assessment of the 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 .....

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..... to the Company including but not limited to representation on the Board of the Company or their consent or approval being required in any matter relating to the Company whether at the Board of the Company or at meetings of the shareholders of the Company. b) Claiming or attempting to claim, or representing or attempting to represent, the Company in any matter and in any manner whatsoever. c) Using or attempting to use any assets, properties or facilities of the Company including but not limited to the Company s offices and communication facilities. 5) The third and Twelfth Respondents, Mr. Karia and Mr. Piyush Karia, themselves or through servants or agents are restrained from acting, or claiming or holding themselves out to be the Chairman or Managing Director and as Executive Director, respectively, or directors of the Company (except for the limited purpose as set out in (3)(above)). 6) The Respondents jointly and severally do pay to the Claimant the legal and sundry disbursements 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 .....

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..... the said award in the country of its origin, must then be able to get such award recognised and enforced in India as soon as possible. This is so that such person may enjoy the fruits of an award which has been challenged and which challenge has been turned down in the country of its origin, subject to grounds to resist 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 ma .....

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..... his would also vitiate the award. Insofar as ACPL was concerned, Respondent No.1 s failure to produce documents that were with ACPL ought to have led to an adverse inference being drawn against Respondent No.1, which was not done by the learned arbitrator. (5)The tribunal was perverse in considering the issue of material breach in that it applied the maxim de minimus non curat lex to ACPL, being a small specialist cable business. (6)That a perverse interpretation of the JVA was given by the learned arbitrator in the First Partial Final Award of clause 21.1, stating that it only prohibited long-term arrangements and engagements, which was a condition added by the arbitrator himself into the said clause. (7)So far as direct sales of Respondent No.1 in India were concerned, the tribunal ignored material evidence and admissions of Respondent No.1. (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 t .....

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..... ribunal s failure to draw an adverse inference therefrom, on most material aspects of the case, would render such award unenforceable. 28.He also cited judgments on awards which treat parties unequally in that they adopt disparate thresholds for determining material breach, as a result of which an award read as a whole would be vulnerable on account of egregious bias. Also, a private communication of the outcome of the arbitration by the tribunal to one party to the exclusion of another would fatally undermine the independence and impartiality of the arbitration process, rendering the award vulnerable on the ground of bias. 29.Both Dr. Singhvi and Mr. Nakul Dewan, after setting out all the aforesaid grounds and case law supporting such grounds, have attacked the impugned High Court judgment, stating that a large number of these points were not answered by the High Court at all, and when answered would show that even where there was bias, perversity and breach of natural justice, all these grounds were merely brushed aside, and therefore no real determination of all the points argued before the High Court was at all undertaken by the learned Single Judge. As a without prejudice argu .....

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..... JVA, in that post the integration period, the appointed CEO, who was to be incharge of the day to day affairs of Ravin, was never allowed to take over such charge, would make it clear that this most material breach committed by the Appellants on facts, as held by the learned arbitrator, could not be interfered with given the parameters of the Court s jurisdiction under Section 48 of the Arbitration Act. Once this was so, everything else followed, as a result of which it was the Respondent No.1 who was to buy-out the Appellants 49% stake in Ravin at a price arrived at by a well-known independent valuer, Deloitte, at a date that was correctly fixed by the arbitral tribunal. This being the heart of the case, all the contentions of Dr. Singhvi raising objections to the four awards in question must fall, as every argument, though dressed up 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 t .....

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..... t clear that it was interpreted fairly, given the fact that there was no challenge to any part of the First Partial Final Award, except the interpretation given to Clause 21.1, which was an interpretation given by the learned arbitrator keeping in 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 ab .....

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..... al. In particular, he dealt with the judgments cited by Shri Nakul Dewan and cited judgments of his own to show that the parameters contained in Section 48 of the Arbitration Act for resisting enforcement of foreign awards are extremely narrow, and the Court can in no circumstance go into the merits of a foreign award. He was at pains to point out that as a full hearing had been given and every opportunity extended by the learned arbitrator to both parties, no ground relatable to breach of natural justice or any prejudice as a result was made out on the facts. He then made it clear that public policy must be understood in the narrow sense as understood and exposited by Renusagar (supra) and the later decisions of this Court. There was also nothing in the awards that would shock the conscience of the Court to attract the most basic notions of justice exception contained in Section 48. Enforcement of Foreign Awards under Section 48 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 .....

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..... ent under Sections 34 and 48, respectively, being the same. After referring to the New York Convention, this Court delineated the scope of enquiry of grounds under Sections 34/48 (equivalent to the grounds under Section 7 of the Foreign Awards Act, which was considered by the Court), and held: 34. Under the Geneva Convention of 1927, in order to obtain recognition or enforcement of a foreign arbitral award, the requirements of clauses (a) to (e) of Article I had to be fulfilled and in Article II, it was prescribed that even if the conditions laid down in Article I were fulfilled recognition and enforcement of the award 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 s .....

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..... of the Act and does not enable a party to the said proceedings to impeach the award on merits. xxx xxx xxx 65. This would imply that the defence of public policy which is permissible under Section 7(1) (b)(ii) should be construed narrowly. In this context, it would also be of relevance to mention that under Article I(e) of the Geneva Convention Act of 1927, it is permissible to raise objection to the enforcement of arbitral award on the ground that the recognition or enforcement of the award is contrary to the public policy or to the principles of the law of 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 d .....

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..... 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 expression occurring in Sec .....

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..... on 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, 1996, in particular, while dealing with the .....

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..... iate 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 arbitration agreement, or which were referred to the decision of the arbitrators as un .....

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..... n 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 the extent to which the latter may conflict with the Convention. See generally, Comment, International Commerci .....

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..... 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.Supp. 1248, 1263 (E.D.N.Y.1988) (citing Parsons & Whittemore Overseas Co.). Due process requires notice reasonably calculated, under all the .....

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..... 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 enforcement of foreign arbitral awards, courts have strictly applied the Article V defenses and generally view them narrowly. See China Minmetals, 334 F.3d at 283. In Yusuf Ahmed .....

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..... ted grounds has been made out to resist enforcement. The said grounds are watertight - no ground outside Section 48 can be looked at. Also, the expression used in Section 48 is may . Shri Viswanathan has argued that may would vest a discretion in a Court enforcing a foreign award to enforce such award despite the fact that one or more grounds may have been made out to resist enforcement. For this purpose, he relied upon Sections 45 to 47, which contain the word shall in contradistinction to the word may . He also relied upon Article V of the New York Convention which also uses the word may . 47.Gary Born in International Commercial Arbitration, Vol. II (2009) puts it thus: No Obligation under New York Convention to Deny Recognition of Awards Nothing in the New York Convention requires a Contracting State ever to deny recognition to an arbitral award. The Convention requires only that Contracting States recognize awards (and arbitration agreements) in specified circumstances. Nothing in Article V, nor the basic structure and purpose of the Convention, imposes the opposite obligation not to recognize an award (or arbitration agreement). Article III of the Convention requires Contract .....

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..... ational Arbitration, 6th Edn. (2015) states: 11.59 Fourthly, even if grounds for refusal of recognition and enforcement of an award are proved to exist, the enforcing court is not obliged to refuse enforcement. The opening lines of Article V(1) and (2) of the Convention say that enforcement may be refused; they do not say that it must be refused. The language is permissive, not mandatory. The same is true of the Model Law. 49.Likewise, Albert Jan van den Berg s The New York Arbitration Convention of 1958 (1981) states: It is to be noted that the opening lines of both the first and the second paragraph of Article V employ a permissive rather than mandatory language: enforcement may be refused. For the first paragraph it means that even if a party against whom the award is invoked proves the existence of one of the grounds for refusal of enforcement, the court still has a certain discretion to overrule the defence and to grant the enforcement of the award. Such overruling would be appropriate, for example, in the case where the respondent can be deemed to be estopped from invoking the ground for refusal. 50.Russel on Arbitration, Sweet & Maxwell (24th Edn., 2015) states: 8-033 Op .....

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..... t 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 or estoppel. 68. S.103(2) and Article V in fact cover a widespectrum of potential objections to enforcement or recognition, in relation to some of which it might be easier to invoke such discretion as the word may contains than it could be in any case where the objection is that there w .....

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..... 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] 2 Lloyd s Rep 326, para 8. But, as Mance LJ emphasised at para 18, there is no arbitrary discretion: the use of the word may was designed to enable the court to consider other circumstances, which might on some recognisable legal principle affect the prima facie right to have an award set aside arising in the c .....

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..... does not, of course, arise in this case. The only basis which Dallah puts forward for the exercise of discretion in its favour is the Government s failure to resort to the French court to set aside the award. But Moore-Bick LJ was plainly right in the present case (at para 61) to say that the failure by the resisting party to take steps to challenge the jurisdiction of the tribunal in the courts of the seat would rarely, if ever, be a ground for exercising the discretion in enforcing an award made without jurisdiction. There is certainly no basis for exercising the discretion in this case. 52.A learned single judge of the Delhi High Court in Cruz City 1 Mauritius Holdings v. Unitech Limited (2017) 239 DLT 649, adverted to this issue and held: 28. Whilst this court accepts the contention that the use of the word may as used in the context of Section 48 of the Act does not confer an absolute discretion on the courts, it is not possible to accept that the word may should be read as shall and the court is compelled to refuse enforcement, if any of the grounds under Section 48 are established. First of all, the plain meaning of the word may is not shall ; it is used to imply discretion .....

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..... nd 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 in Section 48 of the Act for refusing enforcement of the award encompass a wide spectrum of acts and factors as they are set in broad terms. While in some cases, it may be imperative to refuse the enforcement of the award while in some other, it may be manifestly unjust to do so. Section 48 is enacted to give effect to Article V of the New York Convention, which enables m .....

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..... 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 of India, it is obvious that there can be no discretion in these matters. Enforcement of a foreign award made without jurisdiction cannot possibly be weighed in the scales for a discretion to be exercised to enforce such award if the scales are tilted in its favour. 54.On the other hand, where the grounds taken to resist enforcement can be said to be linked to party interest alone, for .....

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..... 2)(a)(iii) would be made out. In New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards - Commentary, edited by Dr. Reinmar Wolff (C.H. Beck, Hart, Nomos Publishing, 2012), it is stated: 4. Right to Comment According to the principle of due process, the tribunal must grant the parties an opportunity to comment on all factual and legal circumstances that may be relevant to the arbitrators decision-making. a) Right to Comment on Evidence and Arguments Submitted by the Other Party As part of their right to comment, the parties must be given an opportunity to opine on the evidence and arguments introduced in the proceedings by the other party. The right to comment on the counterparty s submissions is regarded as a fundamental tenet of adversarial proceedings. However, in accordance with the general requirement of causality, the denial of an opportunity to comment on a particular piece of evidence or argument is not prejudicial, unless the tribunal relied on this piece of evidence or argument in making its decision. In order to ensure that the parties can exercise their right to comment effectively, the arbitral tribunal must grant them access to the evidence .....

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..... sgericht Cologne)]. It also occurred in a case where various documents were submitted by one party to the arbitral tribunal but not to the other party [G.W.I. Kersten & Co. B.V. v. Société Commerciale Raoul Duval et Co., XIX Y.B. Comm. Arb. 708 (Amsterdam Court of Appeals) (1992)], in another case where the defendant was not given the opportunity to comment on the report produced by the expert appointed by the tribunal [Paklito Inv. Ltd. v. Klockner East Asia Ltd., XIX Y.B. Comm. Arb. 664, 671 (Supreme Court of Hong Kong) (1994)], and again where the arbitral tribunal criticized a party for having employed a method of presenting evidence which the tribunal itself had suggested [Iran Aircraft Indus. v Avco Corp., 980 F.2d 141 (2nd Cir. 1992)]. (at p. 987) Gary Born (supra) states: German courts have adopted similar reasoning, holding that the right to be heard entails two related sets of rights: (a) a party is entitled to present its position on disputed issues of fact and law, to be informed about the position of the other parties and to a decision based on evidence or materials known to the parties [See, e.g., Judgment of 5 July 2011, 34 SCH 09/11, II(5)(c)(bb) ( .....

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..... pposed enforcement in England on the grounds that the award was founded on evidence that the arbitral tribunal had obtained through its own investigation. An English court rejected this defence on the basis that the respondent was eventually given an opportunity to ask for the disclosure of evidence at issue and comment on it, but declined to do so. The court held that the due process defence to enforcement was not intended to accommodate circumstances in which a party had failed to take advantage of an opportunity duly accorded to it. 57. This Court s judgment in Sohan Lal Gupta v. Asha Devi Gupta (2003) 7 SCC 492, lays down the ingredients of a fair hearing as follows: 23. For constituting a reasonable opportunity, the following conditions are required to be observed: 1. Each party must have notice that the hearing is totake place. 2. Each party must have a reasonable opportunity tobe present at the hearing, together with his advisers and witnesses. 3. Each party must have the opportunity to be presentthroughout the hearing. 4. Each party must have a reasonable opportunity topresent evidence and argument in support of his own case. 5. Each party must have a reasonable opportunity .....

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..... 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 of natural justice. 61.An application of this test is found in Jorf Lasfar Energy Co. v. AMCI Export Corp. 2008 WL 1228930, where the U.S District Court, W.D. Pennsylvania decided that if a party fails to obey procedural orders given by the arbitrator, it must suffer the consequences. If evidence is excluded because it is not submitted in accordance with a procedural order, a party cannot purposefully ignore the procedural directives of the decision-making body and then successfully claim that the procedures were unfair or .....

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..... arty. 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, instead of being dealt with in advance of the award so that comment could be advanced. 63.Another facet of unable to present his case was stated in Van Der Giessen-De-Noord Shipbuilding Division B.V. v. Imtech Marine & Offshore B.V. (2008) EWHC 2904 (Comm). The UK Court held: In those circumstances it has breached its duty of fairness by ignoring the agreed position of the parties that a claim under this head should not include the cabling for the HVAC equipment. In double-counting in this respect, the Tribunal has awarded Imtech more than it aske .....

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..... ous, 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 judicial climate which dictates that courts should not without good reason interfere with the arbitral process, whether domestic or international. It is incontrovertible that international practice has now radically shifted in favour of respecting and preserving the autonomy of the arbitral process in contrast to the earlier practice of enthusiastic curial intervention: see, for instance, Arbitration Act 1996 ([27] supra) at p 1 on the English position; and Robert Morgan, The Arbitration Ordinance of Hong Kong: A Commentary (Butterworths Asia, 1997) on the position in Hong Kon .....

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..... g 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 arbitral process is preserved by strictly adhering to only the narrow scope and basis for challenging an arbitral award that has been expressly acknowledged under the Act and the IAA. In so far as the right to be heard is concerned, the failure of an arbitrator to refer every point for decision to the parties for submissions is not invariably a valid ground for challenge. Only in instances such as where the impugned decision reveals a dramatic departure from the submissions, or involves an arbitrator receiving extraneous evidence, or adopts a view wholly at odds with the established evidence a .....

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..... tural justice was said to be breached in the facts of that case. Likewise, in G.D. Midea Air Conditioning Equipment Co. v. Tornado Consumer Goods Ltd. (2017) SGHC 193, the Court found: 65. A party seeking to set aside an arbitral award under Art 34(2)(a)(ii) of the Model Law or s 24(b) of the IAA must establish (a) which rule of natural justice was breached; (b) how that rule was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced the party s rights: Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 ( Soh Beng Tee ) at [29]. 66. The crux of Midea s case was that the Tribunal s finding on cl 4.2 breached the fair hearing rule because Midea was denied a full opportunity to present its case. As stated earlier (see [62] above), the issue of a breach of cl 4.2 did not arise in the Arbitration; the Tribunal made its finding on cl 4.2 without giving notice to the parties. The Tribunal s breach was clearly connected to the making of the Award as its finding on cl 4.2 was the basis upon which the impugned findings in the Award (including the finding that Midea was not entitled to terminate the MBA) w .....

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..... 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 certainly not an irregularity. Nor is it incumbent on arbitrators to deal with every argument on every point raised. But an award should deal, however concisely, with all essential issues. One of the heads of serious irregularity recognised in section 68(2)(d) is Failure by the tribunal to deal with all the issues that were put to it . The central point raised by Ascot on its appeal was that if the bills of lading were pledged as security, as appears on the face of the October 1998 contract, Olam's loss was not to be approached in the same way as if they were beneficial owners of the cargo. The point has, with respect, not been addressed…Since .....

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..... 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 be reasoned, to the extent of being reasonably sufficient and understandable by the parties (ie within the confines set out in R v F [2012] 5 HKLRD 278). Under Article 33(2) of the Model Law, the award should state the reasons upon which it is based. Having carefully considered the Award, I have to agree that the parties are entitled to query whether the Limitation Defence had been considered at all by the Arbitrator, and if rejected by the Arbitrator after due consideration, why it was rejected. The process of arbitration is intended as a way of determining disputes and points at issue, and I agree with the sentiments expressed by the court in Ascot Commodities NV v .....

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..... 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 connection with the making of the award by which the rights of any party has been prejudiced under Section 48(1)(a)(vii) of the Arbitration Act, 2002 (Singapore). It referred to breach of natural justice if an award was set aside on a basis not raised or contemplated by the parties since the affected party would have been deprived of its opportunity to be heard. It then held that the corollary of this would be that an arbitral tribunal will be in the breach of natural justice if in the course of reaching its decision it disregarded the submissions and arguments made by the parties on the issues without considering the merits thereof. For this, it relied upon three Australian cases and an earlier .....

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..... n 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 standards: Waincymer at para 16.9.3. In support of his view, he referred to the High Court of Australia decision of Westport Insurance Corporation & Ors v Gordian Runoff Limited [2011] HCA 37 where Kiefel J stated (at [168]-[169]) that there is nothing in the relevant Australian legislation, the Commercial Arbitration Act 1984, which stipulates that the standard for giving reasons in arbitration should be the same as the judicial standard. The same is true of the IAA but as the court in Thong Ah Fat held (at [19]), the general duty of a judicial body to explain its decision is ineluctably a function of due process, and therefore of justice . While there are structural differences between a court and an arbitral tri .....

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..... . 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 courts. Instead, they only have a right to a decision that is within the ambit of their consent to have their dispute arbitrated, and that is arrived at following a fair process. (emphasis supplied) It then dealt with failure to consider important issues as follows: 46. To fail to consider an important issue that has been pleaded in an arbitration is a breach of natural justice because in such a case, the arbitrator would not have brought his mind to bear on an important aspect of the dispute before him. Consideration of the pleaded issues is an essential feature of the rule of natural justice that is encapsulated in the Latin adage, audi alteram partem (see also Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 .....

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..... g on the part of an arbitral tribunal is not a ground to set aside an arbitral award; even a misunderstanding of the arguments put forward by a party is not such a ground. As noted by this court in BLC at [86], the court is not required to carry out a hypercritical or excessively syntactical analysis of what the arbitrator has written when considering whether an arbitral award should be set aside for breach of natural justice. Neither should it approach an arbitral award with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults … with the objective of upsetting or frustrating the process of arbitration (likewise at [86] of BLC). Taking these considerations into account, we find no breach of natural justice as there is no basis for concluding that the Tribunal did not consider the Liquidator s Primary Argument. Accordingly, we answer Appeal Issue 1 affirmatively. (emphasis supplied) 74.In BAZ v. BBA & Ors. (2018) SGHC 275, again with reference to Section 24(b) of the International Arbitration Act (Singapore), the Court approached the issue of natural justice as follows: 133. It is well established that to succeed in a claim under s 24(b) of the IA .....

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..... and the criteria influencing the identification as explained in UKM are applicable. The balancing exercise in the context of arbitration is between the policy of enforcing arbitral awards - as encapsulated in s 19B(1) of the IAA which states that awards are final and binding on the parties and the judicial policy of minimal curial intervention - and the alleged public policy which the award purportedly violates. This balance is generally in favour of the policy of enforcing arbitral awards, and only tilts in favour of the countervailing public policy where the violation of that policy would shock the conscience or would be contrary to the forum s most basic notion of morality and justice . In determining whether the balance tilts towards the countervailing public policy, it is important to consider both the subject nature of the public policy, the degree of violation of that public policy and the consequences of the violation. 75. In Campos Brothers Farms v. Matru Bhumi Supply Chain Pvt. Ltd. (2019) 261 DLT 201, the Delhi High Court had to consider the enforcement of a foreign award. The arbitrator in the aforesaid case did not give any finding on maintainability of the arbitratio .....

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..... 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 xxx xxx 81. In any case, as noted above, if the arbitrator had considered this issue giving reasons therefore, this Court may not have the power under Section 48 of the Act to test the validity of such reasons, however, the present is the case where the arbitrator has not only not given any reasons for her conclusion but infact, the Award indicates that the Arbitrator is not even alive to such an issue. Thus, the ground on which the award was set aside for failure to consider a material issue relating to maintainability of the arbitral proceedings was pigeon-holed not under Section 48(1)(b), but under the public policy of India ground, stating that such a thing would violate the most basic notion of justice. 76.Given the fact that the object of Section 48 is to enforce foreign awards subject to c .....

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..... rmine 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 country. (In Sssangyong (supra), this Court cautioned that this ground would only be attracted with the following caveat: 48. However, when it comes to the public policy of India argument based upon most basic notions of justice , it is clear that this ground can be attracted only in very exceptional circumstances when the conscience of the Court is shocked by infraction of fundamental notions or principles of justice… However, we repeat that this ground is available only in very exceptional circumstances, such as the fact situation in the present case. Under no circumstance can any Court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of .....

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..... 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 rules and shall accordingly be governed by these rules: Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons and in consultation with the Central Government, permit a person resident outside India to make any investment in India subject to such conditions as may be considered necessary. xxx xxx xxx 9. Transfer of equity instruments of an Indian company by or to a person resident outside India.- A person resident outside India holding equity instruments of an Indian company or units in accordance with these rules or a person resident in India, may transfer such equity instruments or units so held by him in compliance with the conditions, if any, specified in the Schedules of these rules and subject to the terms and conditions prescribed hereunder: (3) A person resident in India holding equity instruments of an Indian company .....

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..... any provision of an enactment is not synonymous to contravention of fundamental policy of Indian law. The expression fundamental Policy of Indian law refers to the principles and the legislative policy on which Indian Statutes and laws are founded. The expression fundamental policy connotes the basic and substratal rationale, values and principles which form the bedrock of laws in our country. 98. It is necessary to bear in mind that a foreign award may be based on foreign law, which may be at variance with a corresponding Indian statute. And, if the expression fundamental policy of Indian law is considered as a reference to a provision of the Indian statue, as is sought to be contended on behalf of Unitech, the basic purpose of the New York Convention to enforce foreign awards would stand frustrated. One of the principal objective of the New York Convention is to ensure enforcement of awards notwithstanding that the awards are not rendered in conformity to the national laws. Thus, the objections to enforcement on the ground of public policy must be such that offend the core values of a member State's national policy and which it cannot be expected to compromise. The expressio .....

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..... ore, be held to be of no effect in law. This being the case, a rectifiable breach under FEMA can never be held to be a violation of the fundamental policy of Indian law. Even assuming that Rule 21 of the Non-Debt Instrument Rules requires that shares be sold by a resident of India to a non-resident at a sum which shall not be less than the market value of the shares, and a foreign award directs that such shares be sold at a sum less than the market value, the Reserve Bank of India may choose to step in and direct that the aforesaid shares be sold only at the market value and not at the discounted value, or may choose to condone such breach. Further, even if the Reserve Bank of India were to take action under FEMA, the non-enforcement of a foreign award on the ground of violation of a FEMA Regulation or Rule would not arise as the award does not become void on that count. The fundamental policy of Indian law, as has been held in Renusagar (supra), must amount to a breach of some legal principle or legislation which is so basic to Indian law that it is not susceptible of being compromised. Fundamental Policy refers to the core values of India s public policy as a nation, which may fi .....

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..... The whole intent and idea behind Cofeposa is to prevent violation of foreign exchange regulations or smuggling activities which have serious and deleterious effect on national economy. It is important to note that this Court recognized that FEMA, unlike FERA, does not have any provision for prosecution and punishment like that contained in Section 56 of FERA. The observations as to conservation and/or augmentation of foreign exchange, so far as FEMA is concerned, were made in the context of preventive detention of persons who violate foreign exchange regulations. The Court was careful to note that any illegal activity which jeopardises the economic fabric of the country, which includes smuggling activities relating to foreign exchange, are a serious menace to the nation and can be dealt with effectively, inter alia, through the mechanism of preventive detention. From this to contend that any violation of any FEMA Rule would make such violation an illegal activity does not follow. In fact, even if the reasoning contained in this judgment is torn out of its specific context and applied to this case, there being no alleged smuggling activity which involves depletion of foreign exchang .....

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..... l to amend their counter-claim. 87.It must be remembered that the First Partial Final Award was made only on 15.02.2013. When the Respondent No.1 made its oral submissions and filed written closing submissions on 19.07.2013, the Appellants did not plead any case of breach due to Jaguar. It was only at the fag end, i.e. in the Appellants Responsive Closing Submissions, filed on 20.08.2013, that the tribunal was invited to rule on this breach. Obviously, by this time, the Respondent did not have any opportunity to controvert this case put up for the first time by the Appellants. Since this case had been put up for the first time at the fag end of the proceedings, before passing of the Second Partial Final Award dated 19.12.2013, the arbitrator cannot be faulted for not dealing with this case. In the Second Partial Final Award, the tribunal also recorded that the Appellants case on clause 21.1 was limited to the acquisition of ACPL and direct sales into India. The argument of the Appellant, made at the fag end of the proceedings, that since the Respondent held 99.99 % shares of Jaguar, which is in a similar cable business as Ravin, as evidenced by the Memorandum and Articles of Associ .....

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..... se did intend to take control of Ravin, despite the Respondents' own particular interpretation of this event and motive. The Claimant's overall case theory therefore focuses not so much on any clash of personalities per se, but on the date when power and control under the terms of the JVA was to shift decisively away from Mr Karia. It is the Claimant s case that Mr Karia was simply not willing to abide by such provisions and wished to remain in day to day control of Ravin and prevent the Claimant from exercising such control. In other words there is a straightforward division between the parties' rival position. Neither party suggested that both versions could in essence be correct. The Tribunal therefore has to make findings as to where the evidence lies and which version fits the facts as found. This case was answered in great detail, finding that it was the Appellants and not the Respondent No.1 who materially breached the JVA. Given this position, the tribunal finally held: 291. Given the findings made by the Tribunal in favour of the Claimant's allegations of material breach it naturally follows that the Respondents do not succeed in these allegations of misman .....

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..... nswered 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 Tribunal failed to make a determination on the Appellants counter-claim concerning registration of the Ravin Trademark 90.Dr. Singhvi then argued that the tribunal failed to make any determination on the Appellants counter-claim that the Respondent No.1 s surreptitious attempts to register the Ravin trademark in its own name was a material breach of the JVA. When the First Partial Final Award is perused, it becomes clear that what was argued before the arbitrator, and therefore answered by the arbitrator, is whether the tribunal had jurisdiction to go into the Trademark License Agreement. The First Partial Final Award records: IX. Tribunal's ruling on jurisdiction 134. Finally, there were before the Tribunal three shortpoints on the scope of the jurisdiction of the Tribunal under the arbitration agreement in the JVA. 135. Sensibly, the parties only made very briefsubmissions on these points. At one point, it seemed that the Respondents' accepted that the Tribunal did not have the jurisdiction which it contended for, but inste .....

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..... the arbitration agreement in the JVA as somehow trespassing upon the arbitration agreement contained in two agreements, which the parties agreed to enter into and, in fact, did enter into with these separate dispute resolution provisions. Disputes under or concerning the Trademark License Agreement and Technical Assistance Agreement are to be resolved in accordance with the dispute resolution provisions under those agreements. The Tribunal observes that, if there had been a dispute under Clause 9 of the JVA as to whether in fact the covenant to enter into those two further agreements had been complied with, then this would be a dispute under the JVA agreement. Nevertheless, this is not the case being advanced by the Respondents in their pleaded case. 91.We have gone through the transcript of the hearings on both 12th and 13th December, 2012 before the arbitrator which clearly show that no argument was ever made by the Appellants before the tribunal that the Respondent had surreptitiously attempted to register the Ravin Trademark in its own name, and therefore was in breach of the competition clauses of the JVA. We are thus satisfied that this argument again appears to be an aftert .....

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..... appy that the Respondent No. 1 had so expanded its business. Several congratulatory emails are referred to by the arbitrator. Further, the arbitrator found that Mr. Karia s statements in cross-examination showed that he had knowledge of this acquisition way back in November 2010 but never complained of material breach of the JVA. The arbitrator also examined evidence as to serious actual loss or harm, finding no such credible evidence, except occasional instances of both companies tendering for the same business. It was held that there was no reliable evidence that the Ravin s business had been lost post the Draka acquisition or that there had been any diversion of business from Ravin to ACPL or vice versa. The arbitrator then held that ACPL is a small specialist cable business and operates principally in the area of instrumentation cables, which is not the area in which Ravin operates. The learned arbitrator also adverted to the evidence of the expert witnesses in arriving at this conclusion. It also made a reference to Mr. Karia s cross-examination, stating that Mr. Karia himself considered ACPL to be the 50th or 60th competitor given its small business. The finding, therefore, w .....

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..... il from paragraph 245 to paragraph 279. As many as five reasons are given, after examining the evidence, for rejecting the plea that agency or distribution agreements were entered into in violation of the JVA. Further, so far as direct sales into India were concerned, after considering the pleadings and the evidence, the tribunal found that the Appellants altered their case from their pleaded case and now advanced a case that the fact of direct sales amounts to a material breach of clauses 8 and 20 of the JVA, contrary to what was stated in their determination notice. Even otherwise, the tribunal found that there was no material breach for the following reason: 277. Those sales, however, were for all practical purposes made up of sales of telecom cables, industrial special cables, automotive cables, network and component and services. Ravin did not manufacture those types of cables. Indeed over 85% of the sales came from two affiliates manufacturing telecom cables, which Ravin did not manufacture and had no experience in selling either. Indeed the Tribunal accepts the evidence of Ms Farise and Mr Koch and Mr Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, &sec .....

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..... a finding in relation to the credibility of the story advanced by one side or other in relation to one allegation does impact on the credibility of other parts of the story. 105. Therefore before turning to the individualallegations it is necessary to say something about the chief witnesses on each side and their credibility and demeanour, having reviewed and considered carefully once more the evidence advanced. 106. The Tribunal has no hesitation in reaching theconclusion that the chief witnesses called by the Claimant were truthful, honest and whilst faced with a difficult and tense situation in India continued to try to resolve matters in accordance with the provisions of the JVA. VIII. The Tribunal s selective consideration of contemporaneous evidence 100. Dr. Singhvi then argued that the tribunal s analysis of contemporaneous conduct is selective and perverse. Without going into any further details in this ground, this argument must be rejected out of hand, as not falling within the parameters of Section 48. Equally, the tribunal s consideration of evidence of key witnesses being selective and perverse, must be rejected on the same ground. IX. The Tribunal appointed a conflic .....

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..... unal for appointment. Furthermore, the matters identified did not in any event impugn Deloitte's independence or ability to act as Valuer in accordance with the provisions of the JVA. The fact that Deloitte had been approached by the Respondents to conduct an independent valuation but had declined to act because of the impending role for the Company as Valuer only serves to underline not undermine their independence. Also, the fact that the Respondents had asked Deloitte earlier in the arbitration to undertake some computer forensic exercise was not relied upon by the Respondents nor did it impugn their independence. Finally, the Respondents refer to Deloitte having acted as auditor of Power Plus Cable Company LLC ("Power Plus") a company incorporated in the UAE and based in Dubai in which Ravin holds a 49% shareholding, This is not the same entity as the Company, and did not impugn Deloitte's independence and did not prohibit them under the terms of Clause 17.3 of the JVA from being appointed. Clause 17.3 only applied to a prohibition on the statutory auditor of the Parties to the JVA acting as Valuer. It is not suggested that Deloitte was the statutory auditor o .....

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..... aluation date 24. The Respondents also complain that whilstProcedural Order No 12 provided for a valuation date of 30 September 2014, Deloitte instead used data as at 31 July 2014. Respondents also complained that since the Report was only issued in November 2015, the valuation was out of date. 25. The Tribunal is unable to accept the validity of thiscriticism for the following reasons: 1) Deloitte records that it did request data from theCompany up to 30 September 2014, but this data was not provided to Deloite. The Tribunal has earlier in this Award recited the facts from which the Tribunal has reached the conclusion that the Company's lack of cooperation with Deloitte was effectively controlled and directed by the Respondent. This was most notably the case with regard to the Company's failure to issue the Engagement Letter to Deloitte following Procedural Order No 12. The Tribunal therefore concludes that it is not open to the Respondents to complain of the lack of further data being proved to Deloitte. It was the Respondents who were in control of the provision or non-provision of that data. 2) The Tribunal also concludes that the Respondentsare not entitled to complain .....

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..... concilable, this ground again does not, in any manner, shock our conscience and is therefore rejected. XIII. Violation of FEMA and the Rules thereunder 105. Dr. Singhvi then argued that in ordering the sale of shares at a 10% discount of the fair market value arrived at by Deloitte, FEMA and the Rules made thereunder would be breached, resulting in the award being contrary to the public policy of India, in that it would be against the fundamental policy of the Indian law. As pointed out hereinabove, for the reasons given in paragraphs 79 to 84 of this judgment, this ground again is bereft of any merit. In fact, the learned arbitrator awarded INR 63.90 per share as per the Deloitte valuation, which was contractually binding under clause 17 of the JVA. Therefore, the lower valuation of INR 16.88 per share as in the M/s Kalyaniwalla & Mistry valuation report dated 04.03.2016 was not accepted. XIV. Bias of the Tribunal 106. Lastly, Dr. Singhvi argued that the learned arbitrator was clearly biased in that the outcome of the Second Partial Final Award was clear to the Respondent No.1, inasmuch as its agent, one M/s Gilbert Tweed Associates, sent out an advertisement for recruiting em .....

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..... r, been a distinct feature of this process that the Respondents have not only voiced their disappointment but have not complied with the orders of the Tribunal to protect the Parties' rights during the course of the Arbitration and not complied with the terms of the JVA as has been found and determined by the Tribunal in its prior Awards. In a dispute such as the present where it has been necessary to render a series of Awards, it is necessary for the Tribunal to apply the prior findings in any subsequent Award. 107.Having answered each of the submissions of Dr. Singhvi on behalf of the Appellants, we cannot help but be left with a feeling that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. We have no doubt whatsoever that all the pleas taken by the Appellants are, in reality, pleas going to the unfairness of the conclusions reached by the award, which is plainly a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention. We have read, in detail, the four awards passed by the learn .....

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