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2020 (2) TMI 628

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..... 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 company registered under the laws of Italy. By this JVA, Respond .....

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..... 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 Period, the CEO shall be responsible for the day to day management of the Company excluding solely the inter .....

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..... 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 Party ) is in material breach of any provisions, obligations, covenants, conditions and undertakings under this Agreement , or in the event of insolvency or bankruptcy of th .....

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..... a 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 the Rules of Arbitration of the London Court of International Arbitration ( LCIA ) as amended from time to time. 27.1.3 The arbitral tribunal ( Tribunal ) shall consist of one (1) arbitrator, to be appointed b .....

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..... 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 Appellants. Later, from December 2011 till February 2012, Ms. Farise sought to convene a board-meeting to finalise one Mr. Brunetti s appointment as CFO of Ravin, which was assented to by the Respondent s Directors, but not signed by t .....

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..... rbitrator for production of documents etc. A hearing then took place in December 2012 on questions relating to the construction of various clauses of the JVA and jurisdictional issues raised by Respondent No.1 in respect of certain counter claims of the Appellants. Deciding these issues, by what was called the First Partial Final Award dated 15.02.2013, the sole arbitrator delineated the scope of the first award stating that it was restricted only to issues of interpretation of the JVA and questions of jurisdiction, and not to the merits of either the claims or counter claims made. In particular, the sole arbitrator construed clause 21.1 of the JVA as follows: 82. This then brings directly into question the scope and meaning of the words used in Clause 21.1 when each of the Claimant and the First Respondent agreed that it would not directly or through its Affiliates invest, acquire or participate in the Cable Business in India save through the Company in accordance with this Agreement . 83. The Tribunal concludes that these wordsthemselves do not prohibit the Claimant from selling cables directly in India. Such direct sales might still amount to a breach of Clause 8 or indeed Claus .....

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

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..... an Event of Default is not conditional upon the giving of a Determination Notice. The consequences, however, under Clause 23 do depend upon the giving of a Determination Notice and expiry of a Rectification Period; 7) Notwithstanding the provisions of Clause 23 and Clause 23.4, in particular with regard to Events of Default and Determination Notice, the Non Defaulting Party in addition possesses all the rights to damages and performance expressed in Clause 23.6; 8) It remains open for argument, and the Tribunal makes no decisions as to whether a party can give a Determination Notice to the other party, if in fact at the time of the giving of the notice, the party giving the notice is itself in material breach. This question was raised by the Tribunal in the course of oral submissions, but has not been fully addressed by the parties, and, indeed, is probably best addressed at the full merits hearing. 11.Insofar as the arbitrator s ruling on jurisdiction was concerned, it was held that a dispute regarding the right to register the Ravin trademark falls outside the scope of the arbitration clause under the JVA. He further held that the trademark licence agreements contained arbitrati .....

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..... ed 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 Respondents 200. The Claimant submits that none of the allegedmaterial breaches were rectifiable and, in any event, by the end of the Rectification Period, i.e. 27 April 2012, and by the end of the extended period for rectification, i.e. 6 July 2012, the Respondents had not rectified any of their breaches. On the contrary, the Claimant submits that during the period between 28 Februa .....

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..... veracity of the story originally being told by Mr Karia as not only inconsistent with the documents before the Tribunal but also mutually inconsistent with his evidence in cross-examination. 234. The Tribunal has spent some time analysing this material because Mr Karia s contemporaneous reaction is highly instructive in determining whether this is really to be analysed as a serious or material breach with serious adverse effect or rather as a pretext, an excuse. The Tribunal concludes it is the latter not the former. The Respondents somewhat bravely in their Closing Submissions assert that the Tribunal is not allowed to have regard to this material because the Claimant has not pleaded waiver or affirmation. This submission is completely rejected. As is clear from the authorities referred to above whether a breach is material or not is determined by reference to all the relevant facts and this will include a parties reaction to the events at the time. xxx xxx xxx 237. The Tribunal ultimately concluded that the Respondent did not adduce any credible evidence of actual serious adverse impact. 238. It is true that there was some evidence (albeit mainly dating back to 2008-2009) of occa .....

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..... verse 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 on which they place reliance, involved such an arrangement, commitment or engagement as stated in the First Partial Award. Indeed the Respondents have not even addressed the requirement identified in paragraph 84 of the First Partial Final Award but instead focused on the length or duration of the relationship and whether or not each relationship was exclusive or nonexclusive. This is not sufficient. For the avoidance o .....

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..... t 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-executive director at ACPL, that she was quite aware of her responsibilities to both companies and did not at any time pass on confidential or other information to ACPL from Ravin or from ACPL to Ravin. 285. The Respondents did not cross examine MsFarise on this important evidence. It is accepted by the Tribunal. 286. The Respondents instead in their ClosingSubmissions do not address the question of evidence of actual .....

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..... eally 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 right to do so under Schedule IX to the JVA. Nevertheless it cannot be said to be a material breach by the Claimant. That is unsustainable. 17. Holding thus, the learned sole arbitrator concluded that none of the counter claims were made out, as a result of which they were all dismissed. 18.The Third Partial Final Award was delivered on 14.01.2015. Prior to this award, on 23.06.2014, the Karias, through their legal counsel, informed the tribunal that they would no .....

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..... 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.12 are to continue in effect until further Order. 19. By the Final Award dated 11.04.2017, the learned sole arbitrator dealt with why and how Deloitte was appointed as the valuer of the shares; why Ravin s 49% stake in Power Plus was excluded for purposes of valuation as clause 17.1 of the JVA and the formula stated in Schedule X would have to be strictly followed; and as to what then is the fair market value of the shares of the Appellants in Ravin that was to be bought out by the Respondent No. 1. 20.Ultimately, the final relief granted by the said award was as follows: FINDS, HOLDS, ORDERS AND DECLAR .....

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..... ve)). 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 was made to the aforesaid award under the English Arbitration Law, though available. It is only when the aforesaid award was brought to India for recognition and enforcement that objections to the said award were made under Section 48 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Arbitration Act ). 22.The learned single Judge, in the impugned judgment, recorded the arguments of both parties, dealt with the allegation of bias against the arbitrator and all other objections raised by the Appellants to the award, but finally found that the award must be recognised and enforced as the objections do not fall within any of the neat legal pigeon .....

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..... ecognises and enforces a foreign award - this Court should be very slow in interfering with such judgments, and should entertain an appeal only with a view to settle the law if some new or unique point is raised which has not been answered by the Supreme Court before, so that the Supreme Court judgment may then be used to guide the course of future litigation in this regard. Also, it would only be in a very exceptional case of a blatant disregard of Section 48 of the Arbitration Act that the Supreme Court would interfere with a judgment which recognises and enforces a foreign award however inelegantly drafted the judgment may be. With these prefatory remarks we may now go on to the submissions of counsel. 25.Dr. Abhishek Manu Singhvi, Senior Advocate, led the charge so far as the Appellants are concerned. Ably assisted by Shri Nakul Dewan on the law, the learned Senior Advocates argued a large number of points which they sought to put into three legal pigeonholes, namely, the pigeonhole contained in Section 48(1)(b) of the Arbitration Act, and that the foreign award would be contrary to the public policy of India [as under Section 48(2)(b) of the Arbitration Act] in two respects: ( .....

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..... contemporaneous conduct of the parties was both selective and perverse, that the consideration of the evidence of key witnesses was also selective and perverse. (9)That Deloitte was a conflicted valuer and should not have been appointed at all. The valuer adopted a course for valuation that is contrary to both parties position, in that, Ravin s 49% shareholding in Power Plus which had been valued by another valuer BDO at INR 563 crores was completely ignored. What is very important is that the tribunal had acted contrary to the parties submissions in arriving at the valuation date, as the said date should have been the date closest to the date of the actual sale of shares, instead of which, a 2017 award took a date of September 2014 which date in any case expired by the end of December 2014. (10) That the ruling contained in the First and Second Partial Final Awards regarding interpretation of clause 21 of the JVA were inconsistent and irreconcilable. (11) That a private communication had been made of the outcome of the arbitration by the tribunal two months prior to the award, published through an agent of Respondent No.1, one M/s Gilbert Tweed Associates, which would show that R .....

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..... when answered would show that even where there was bias, perversity and breach of natural justice, all these grounds were merely brushed aside, and therefore no real determination of all the points argued before the High Court was at all undertaken by the learned Single Judge. As a without prejudice argument, Dr. Singhvi exhorted us to modify the impugned award, in case he were to fail on all other arguments, to state that the valuation date of 30.09.2014 ought at least to be the date of the judgment delivered in this case, as otherwise the sale of the Karia block of shares in Ravin would be at a tremendous undervalue. This he exhorted us to do under Article 142 of the Constitution of India. 30.Shri Kapil Sibal, learned senior advocate appearing on behalf of the Respondent No.1, read to us in copious detail each of the four awards delivered by the arbitral tribunal. He argued that each and every aspect of the matter that was argued on both sides was considered in detail in each of the said awards. He stressed the fact that though available, no challenge was ever made in the courts in England to the four awards. He defended the judgment of the learned Single Judge of the High Court .....

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..... er Section 48, are really arguments addressing the merits of the case. Without prejudice to this central argument, Shri Sibal took up every single point that was argued and answered each point. So far as the Jaguar Communication Consultancy Services Private Limited point was concerned, Shri Sibal stated that at no point did the Appellant amend its counter-claim to include such argument, which was in fact raised orally as an afterthought at the fag end of the proceedings. Secondly, as Shri Sibal s case of ouster was accepted by the arbitral tribunal, the claim of the Appellants that it was really the other way around was specifically addressed by the learned arbitrator and dismissed, inter alia on the ground that ouster was not at all pleaded by the Appellants. So far as the Ravin trademark is concerned, it is clear that the Appellant s own counsel made it clear that he would not be pressing the point - the point being as to whether it was at all open to go into registration of trademark of Ravin under separate license agreements which had separate arbitration clauses for arbitration in Italy. This was argued by both sides and dealt with by the arbitrator as a jurisdictional issue w .....

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..... lf. Secondly, such valuation was conducted strictly as per the formula contained in the JVA, which was Clause 17.1 read with Schedule X of the JVA. He was at pains to point out that though Power Plus Company LLC (hereinafter referred to as Power Plus ) was mentioned specifically in the JVA, yet nothing about Power Plus was mentioned in the formula for valuation. Shri Sibal also refuted any so called inconsistencies in the awards, stating that given the interpretation of the JVA by the arbitrator in the First Partial Final Award, all the awards that followed were in accord with the interpretation so given. He also stated that the arbitrator considered material breach with an even hand and arrived at the obvious conclusion on facts that since the CEO was never allowed to function, it was the Appellants and not the Respondent No.1 who had materially breached the terms of the JVA. Shri Sibal then went into the bogey raised re M/s Gilbert Tweed Associates. He maintained that the Respondent No.1 had no idea as to who M/s Gilbert Tweed Associates was and came to know that the agent, M/s Key2People, who was employed by the Respondent No.1, had in turn employed M/s Gilbert Tweed Associates, .....

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..... 8. 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 party furnishes to the court proof that - xxx xxx xxx (b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; xxx xxx xxx (2) Enforcement of an arbitral award may also be refused if the court finds that- (a) the subject-matter of the difference is not capableof settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary tothe public policy of India. Explanation 1.-For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contrave .....

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..... Dicey & Morris, The Conflict of Laws, 11th Edn., Vol. I, p. 578). It was, however, felt that the Geneva Convention suffered from certain defects which hampered the speedy settlement of disputes through arbitration. The New York Convention seeks to remedy the said defects by providing for a much more simple and effective method of obtaining recognition and enforcement of foreign awards. Under the New York Convention the party against whom the award is sought to be enforced can object to recognition and enforcement of the foreign award on grounds set out in sub-clauses (a) to (e) of clause (1) of Article V and the court can, on its own motion, refuse recognition and enforcement of a foreign award for two additional reasons set out in sub-clauses (a) and (b) of clause (2) of Article V. None of the grounds set out in sub-clauses ( a ) to ( e) of clause (1) and sub- clauses ( a ) and ( b) of clause (2) of Article V postulates a challenge to the award on merits. 35. Albert Jan van den Berg in his treatise The New York Arbitration Convention of 1958 : Towards a Uniform Judicial Interpretation, has expressed the view: It is a generally accepted interpretation of the Convention that the .....

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..... vered 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 refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression public policy in Article V(2) (b) of the New York Convention and Section 7(1)(b) (ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article I(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention Act of 1937. This would mean that public policy in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign .....

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..... urt speaking through one of us (R.M. Lodha, J.) accepted the submission made on behalf of the appellant therein that the meaning given to the expression public policy of India in Section 34 in Saw Pipes [ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705] must be applied to the same expression occurring in Section 48(2)(b) of the 1996 Act. However, in what we have discussed above it must be held that the statement in para 16 of the Report that the expression public policy of India used in Section 48(2)(b) has to be given a wider meaning and the award could be set aside, if it is patently illegal does not lay down correct law and is overruled. xxx xxx xxx 45. Moreover, Section 48 of the 1996 Act does not give an opportunity to have a second look at the foreign award in the award enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy. 46. In what we have discussed above .....

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..... the threshold. Taking any other view would result in encouraging successive and multiple round of proceedings for the execution of foreign awards. We cannot countenance such a situation keeping in mind the avowed object of the Arbitration and Conciliation Act, 1996, in particular, while dealing with the enforcement of foreign awards. For, the scope of interference has been consciously constricted by the legislature in relation to the execution of foreign awards. Therefore, the subject application filed by the petitioner deserves to be rejected, being barred by constructive res judicata, as has been justly observed by the High Court in the impugned judgment. xxx xxx xxx 20. Suffice it to observe that the Arbitral Tribunal has considered all aspects of the matter and even if it has committed any error, the same could, at best, be a matter for correction by way of appeal to be resorted to on grounds as may be permissible under the English law, by which the subject arbitration proceedings are governed. We may not be understood to have expressed any opinion on the correctness of those issues. 37.At this stage it is important to advert to amendments that were made by the Arbitration and .....

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..... ond the scope of submission to arbitration if otherwise the aforesaid misinterpretation (which would include going beyond the terms of the contract), could be said to have been fairly comprehended as disputes within the arbitration agreement, or which were referred to the decision of the arbitrators as understood by the authorities above. If an arbitrator is alleged to have wandered outside the contract and dealt with matters not allotted to him, this would be a jurisdictional error which could be corrected on the ground of patent illegality , which, as we have seen, would not apply to international commercial arbitrations that are decided under Part II of the 1996 Act. To bring in by the backdoor grounds relatable to Section 28(3) of the 1996 Act to be matters beyond the scope of submission to arbitration under Section 34(2) (a)(iv) would not be permissible as this ground must be construed narrowly and so construed, must refer only to matters which are beyond the arbitration agreement or beyond the reference to the arbitral tribunal. This statement of the law applies equally to Section 48 of the Arbitration Act. 39.Indeed, this approach has commended itself in other jurisdictions .....

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..... .S. No. 6997, and implemented its accession with 9 U.S.C. 201-208. Under 9 U.S.C. 208, the existing Federal Arbitration Act, 9 U.S.C. 1-14, applies to the enforcement of foreign awards except to the extent to which the latter may conflict with the Convention. See generally, Comment, International Commercial Arbitration under the United Nations Convention and the Amended Federal Arbitration Statute, 47 Wash.L.Rev. 441 (1972). The Court then went on to hold: Perhaps more probative, however, are the inferences to be drawn from the history of the Convention as a whole. The general pro-enforcement bias informing the Convention and explaining its supersession of the Geneva Convention points toward a narrow reading of the public policy defense. An expansive construction of this defense would vitiate the Convention s basic effort to remove preexisting obstacles to enforcement. See Straus, Arbitration of Disputes between Multinational Corporations, in New Strategies for Peaceful Resolution of International Business Disputes 114-15 (1971); Digest of Proceedings of International Business Disputes Conference, April 14, 1971, in id. At 191 (remarks of Professor W. Reese). Additionally, consider .....

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..... the forum state's standards of due process. See Parsons & Whittemore Overseas Co., 508 F.2d at 975; Geotech Lizenz AG v. Evergreen Systems, Inc., 697 F.Supp. 1248, 1263 (E.D.N.Y.1988) (citing Parsons & Whittemore Overseas Co.). Due process requires notice reasonably calculated, under all the circumstances, to apprise interested persons of the pendency of the action and afford them an opportunity to present their objections. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). 42.In Certain Underwriters at Lloyd s London v. BCS Ins. Co. 239 F.Supp.2d 812 (2003), the US District Court, N.D Illinois referred to the Federal Arbitration Act and went on to hold that the review of a panel decision is grudgingly narrow . (See paragraphs 2 and 3). 43.In Karaha Bodas Co., L.L.C v. Perusahaan Pertambagan Minyak 364 F.3d 274 (2004), the United States Court of Appeals for the 5th Circuit analysed the New York Convention thus: The New York Convention provides a carefully structured framework for the review and enforcement of international arbitral awards. Only a court in a country with primary jurisdiction over an arbitral award may annul that award. Courts in .....

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..... Appeals, 3rd Circuit, after setting out Article V of the New York Convention, held as follows: To carry out the policy favoring enforcement of foreign arbitral awards, courts have strictly applied the Article V defenses and generally view them narrowly. See China Minmetals, 334 F.3d at 283. In Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys R Us, Inc., 126 F.3d 15 (2d Cir.1997), the court emphasized the limited power of review granted to district courts under the Convention. The court examined the distinction between awards rendered in the same nation as the site of the arbitral proceeding and those rendered in a foreign country. The court concluded that more flexibility was available when the arbitration site and the site of the confirmation proceeding were within the same jurisdiction. Id. at 22-23. However, the [C]onvention is equally clear that when an action for enforcement is brought in a foreign state, the state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention. Id. at 23. xxx xxx xxx In the same vein, in Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de L'Industrie du Papier (RAKTA), 508 F.2d 969 (2d .....

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..... at Contracting States recognize awards (and arbitration agreements) in specified circumstances. Nothing in Article V, nor the basic structure and purpose of the Convention, imposes the opposite obligation not to recognize an award (or arbitration agreement). Article III of the Convention requires Contracting States to recognize arbitral awards made abroad, subject to procedural requirements no more onerous than those for domestic awards, provided that the minimal proof requirements of Article IV are satisfied. Articles V(I) and V(2) then provide exceptions to this affirmative obligation, beginning with the prefatory statement that [r]ecognition and enforcement of the awards may be refused in certain circumstances. The most significant aspect of this provision is its structure, which is to establish an affirmative obligation to recognize arbitral awards, subject to specified exceptions - but not to establish an affirmative obligation to deny recognition. Critically, the Article V(I) exceptions are just that: exceptions to an affirmative obligation, and not affirmative obligations in their own right. Although the matter can be debated, the text of Article V supports this structural c .....

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..... cretion to overrule the defence and to grant the enforcement of the award. Such overruling would be appropriate, for example, in the case where the respondent can be deemed to be estopped from invoking the ground for refusal. 50.Russel on Arbitration, Sweet & Maxwell (24th Edn., 2015) states: 8-033 Opposing enforcement of a New York Convention Award As stated above, subject to production of the required documents the court has no discretion but to recognise and enforce a New York Convention award unless the party opposing enforcement proves one or more of the grounds specified in s.103 of the Arbitration Act 1996. These grounds of refusal are exhaustive, and if none of the grounds is present the award will be enforced. Much has been written about these grounds and a detailed analysis of their international application is beyond the scope of this book but they will be treated summarily in this chapter. The onus of proving the existence of a ground rests upon the party opposing enforcement, but that may not be the end of the matter. There is an important public policy in the enforcement of awards and the courts should only refuse to enforce an award under s.103 in a clear case. x .....

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..... 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 was never any applicable arbitration agreement between the parties to the award. Article II of the Convention and ss.100(2) and 102(1) of the 1996 Act serve to underline the (in any event obviously fundamental) requirement that there should be a valid and existing arbitration agreement behind an award sought to be enforced or recognised. Absent some fresh circumstance such as another agreement or an estoppel, it would be a remarkable state of affairs if the word may enabled a court to enforce or recognise an award which it found to have been made without jurisdiction, under whatever law it held ought to be recognised and applied to determine that issue. 69. The factors relied upon by Dallah in support of itssuggestion that a discretion should be exercised to enforce the present award amount for the most part to repetition of Dallah s arguments for saying that there was an arbitratio .....

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..... d 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 cases listed in section 103(2). See also Kanoria v Guinness [2006] 1 Lloyd s Rep 701, para 25 per Lord Phillips CJ. Another possible example would be where there has been no prejudice to the party resisting enforcement: China Agribusiness Development Corpn v Balli Trading [1998] 2 Lloyd s Rep 76. But it is not easy to see how that could apply to a case where a party had not acceded to an arbitration agreement. 128. There may, of course, in theory be cases wherethe English court would refuse to apply a foreign law which makes the arbitration agreement invalid where the foreign law outrages its sense of justice or decency (Scarman J s phrase in In the Estate of Fuld, decd (No 3) [1968] P 675, 698), for example where it is discriminatory or arbitrary. The application of public policy in the New York Convention (article V(2)(b)) and the 1996 Act (section 103(3)) is limited to the nonrec .....

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..... absolute discretion on the courts, it is not possible to accept that the word may should be read as shall and the court is compelled to refuse enforcement, if any of the grounds under Section 48 are established. First of all, the plain meaning of the word may is not shall ; it is used to imply discretion and connote an option as opposed to compulsion. 29. In re, Nichols v. Baker: 59 LJ Ch 661, Cotton L.J. observed that May can never mean must, so long as the English language retains its meaning; but it gives a power and then it may be a question, in what cases, when any authority or body has a power given it by the word may , it becomes its duty to exercise that power . 30. In Official Liquidator v. Dharti Dhan (P) Ltd.: (1977) 2 SCC 166 the Supreme Court had explained that in certain cases where the legal and factual context in which the discretionary power is to be exercised is specified, it is also annexed with a duty to exercise it in that manner. Keeping the aforesaid in mind, there can be no cavil that since Section 48 of the Act enables the court to refuse enforcement of a foreign award on certain grounds, this court would be required to do so; however, if there are good re .....

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..... pass a wide spectrum of acts and factors as they are set in broad terms. While in some cases, it may be imperative to refuse the enforcement of the award while in some other, it may be manifestly unjust to do so. Section 48 is enacted to give effect to Article V of the New York Convention, which enables member States to retain some sovereign control over enforcement of foreign awards in their territory. The ground that enforcement of an award opposed to the national public policy would be declined perhaps provides the strongest expression of a Sovereign's reservation that its executive power shall not be used to enforce a foreign award which is in conflict with its policy. The other grounds mainly relate to the structural integrity of the arbitral process with focus on inter party rights. 38. In terms of Sub-section (1) of Section 48 of the Act, the Court can refuse enforcement of a foreign award only if the party resisting the enforcement furnishes proof to establish the grounds as set out in Section 48(1) of the Act. However, the court may refuse enforcement of a foreign award notwithstanding that a party resisting the enforcement has not provided any/sufficient proof of cont .....

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..... nt of a foreign award made without jurisdiction cannot possibly be weighed in the scales for a discretion to be exercised to enforce such award if the scales are tilted in its favour. 54.On the other hand, where the grounds taken to resist enforcement can be said to be linked to party interest alone, for example, that a party has been unable to present its case before the arbitrator, and which ground is capable of waiver or abandonment, or, the ground being made out, no prejudice has been caused to the party on such ground being made out, a Court may well enforce a foreign award, even if such ground is made out. When it comes to the public policy of India ground, again, there would be no discretion in enforcing an award which is induced by fraud or corruption, or which violates the fundamental policy of Indian law, or is in conflict with the most basic notions of morality or justice. It can thus be seen that the expression may in Section 48 can, depending upon the context, mean shall or as connoting that a residual discretion remains in the Court to enforce a foreign award, despite grounds for its resistance having been made out. What is clear is that the width of this discretion i .....

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..... ment on a particular piece of evidence or argument is not prejudicial, unless the tribunal relied on this piece of evidence or argument in making its decision. In order to ensure that the parties can exercise their right to comment effectively, the arbitral tribunal must grant them access to the evidence and arguments submitted by the other side. Affording a party the opportunity to make submissions or to give its view without also informing it of the opposing side s claims and arguments typically constitutes a violation of due process, unless specific non-disclosure rules apply (e.g., such disclosure would constitute a violation of trade secrets or applicable legal privileges). In practice, national courts have afforded arbitral tribunals considerable leeway in setting and adjusting the procedures by which parties respond to one another s submissions and evidence, reasoning that there were several ways of conducting arbitral proceedings. Accordingly, absent any specific agreement by the parties, the arbitral tribunal has wide discretion in arranging the parties right to comment, permitting or excluding the introduction of new claims, and determining which party may have the final .....

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..... ils 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) (Oberlandesgericht Munchen)]; and (b) a party is entitled to a decision by the arbitral tribunal that takes its position into account insofar as relevant [See, e.g., Judgment of 5 October 2009, 34 Sch 12/09 (Oberlandesgericht Munchen)]. Other authorities provide comparable formulations of the content of the right to be heard [See, e.g., Slaney v. Int l Amateur Athletic Foundation, 244 F.3d 580, 592 (7th Cir. 2001) (at p. 3225) Similarly, in Redfern and Hunter (supra): 11.73. The national court at the place of enforcement thus has a limited role. Its function is not to decide whether or not the award is correct, as a matter of fact and law. Its function is simply to decide whether there has been a fair hearing. One mistake in the course of the proceedings may be sufficient to lead the court to conclude that there was a denial of justice. For example, in a case to which reference has .....

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..... 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 totest his opponent's case by cross-examining his witnesses, presenting rebutting evidence and addressing oral argument. 6. The hearing must, unless the contrary is expresslyagreed, be the occasion on which the parties present the whole of their evidence and argument. 58.A recent Delhi High Court judgment in Glencore International AG v. Dalmia Cement (Bharat) Limited 2017 SCC OnLine Del 8932 puts it thus: 25. The inability to present a case as contemplated under section 48(1)(b) of the Act (which is pari materia to Article V(I)(b) of the New York Convention) must be such so as to render the proceedings violative of the due process and principles of natural justice. It is rudimentary that for a fair decision each party must have full and equal opportunity to present their respective cases and this includes due notice of proceedings. In the event a party opposing the enforcement .....

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..... rders given by the arbitrator, it must suffer the consequences. If evidence is excluded because it is not submitted in accordance with a procedural order, a party cannot purposefully ignore the procedural directives of the decision-making body and then successfully claim that the procedures were unfair or violative of due process. Likewise, in Dongwoo Mann+Hummel Co. Ltd. v. Mann+Hummel GmbH (2008) SGHC 275, the Singapore High Court held: 145. A deliberate refusal to comply with a discovery order is not per se a contravention of public policy because the adversarial procedure in arbitration admits of the possible sanction of an adverse inference being drawn against the party that does not produce the document in question in compliance with an order. The tribunal will of course consider all the relevant facts and circumstances, and the submissions by the parties before the tribunal decides whether or not to draw an adverse inference for the nonproduction. Dongwoo also had the liberty to apply to the High Court to compel production of the documents under s 13 and 14 of the IAA, if it was not content with merely arguing on the question of adverse inference and if it desperately needed .....

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..... 04 (Comm). The UK Court held: In those circumstances it has breached its duty of fairness by ignoring the agreed position of the parties that a claim under this head should not include the cabling for the HVAC equipment. In double-counting in this respect, the Tribunal has awarded Imtech more than it asked for, or could reasonably ask for. GN submits that the double-counting is probably a very significant part of the €1,000,000 awarded, on the basis that the Tribunal had previously awarded a larger amount under the HVAC claim (Claim 1, VTC 1). Whatever the size of the double-counting may be, it is unlikely to be minimal. I am satisfied that GN has been caused substantial injustice by having, on the face of the Award, to pay more than it should to Imtech for extra work. This finding was given pursuant to Section 68 of the Arbitration Act, 1996 (U.K) by which a serious irregularity would lead to the award being set aside or remitted or being declared to be of no effect in whole or in part. 64.In Malicorp Limited v. Government of Arab Republic of Egypt (2015) EWHC 361 (Comm), the U.K Court held that the Government of Egypt had no warning of the manner in which the award was made. .....

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..... f the arbitral process in contrast to the earlier practice of enthusiastic curial intervention: see, for instance, Arbitration Act 1996 ([27] supra) at p 1 on the English position; and Robert Morgan, The Arbitration Ordinance of Hong Kong: A Commentary (Butterworths Asia, 1997) on the position in Hong Kong, which also essentially reflects the English practice. As rightly observed in Weldon Plant Ltd v The Commission for the New Towns [2001] 1 All ER (Comm) 264 ( Weldon ) at [22], [a]n award should be read supportively … [and] given a reading which is likely to uphold it rather than to destroy it . Similarly, in Vee Networks Ltd v Econet Wireless International Ltd [2005] 1 Lloyd s Rep 192, the court, at [90], held: Above all it is not normally appropriate for the court to try the material issue in order to ascertain whether substantial injustice has been caused. To do so would be an entirely inappropriate inroad into the autonomy of the arbitral process. xxx xxx xxx 65. The foregoing survey of case law and principles may be further condensed into the following core principles: (a) Parties to arbitration have, in general, a right to beheard effectively on every issue that may .....

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..... n to the parties for submissions is not invariably a valid ground for challenge. Only in instances such as where the impugned decision reveals a dramatic departure from the submissions, or involves an arbitrator receiving extraneous evidence, or adopts a view wholly at odds with the established evidence adduced by the parties, or arrives at a conclusion unequivocally rejected by the parties as being trivial or irrelevant, might it be appropriate for a court to intervene. In short, there must be a real basis for alleging that the arbitrator has conducted the arbitral process either irrationally or capriciously. To echo the language employed in Rotoaira ([55] supra), the overriding burden on the applicant is to show that a reasonable litigant in his shoes could not have foreseen the possibility of reasoning of the type revealed in the award. It is only in these very limited circumstances that the arbitrator s decision might be considered unfair. (e) It is almost invariably the case that parties proposediametrically opposite solutions to resolve a dispute. They may expect the arbitrator to select one of these alternative positions. The arbitrator, however, is not bound to adopt an eit .....

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..... e Tribunal made its finding on cl 4.2 without giving notice to the parties. The Tribunal s breach was clearly connected to the making of the Award as its finding on cl 4.2 was the basis upon which the impugned findings in the Award (including the finding that Midea was not entitled to terminate the MBA) were made. I agreed with Midea that the Tribunal s finding on cl 4.2 was in breach of the rules of natural justice. 67.A Hong Kong Judgment reported as Hebei Import & Export Corporation v. Polytek Engineering Company Ltd. (1992) 2 HKC 205, found that the tribunal in the course of proceedings received communications from only one party, in the absence of the other, the other party being kept in the dark as to what those communications were. On this point, therefore it was held: On the other hand, we think it is quite clear that the defendant did not have the opportunity of hearing what was presented to the Chief Arbitrator by the plaintiff's employees during the inspection of the equipment and hence was not able to present its side of the case before the experts prepared their report. This was to some extent mitigated by the provision of a copy of the experts report and the c .....

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..... raised by Ascot on its appeal was that if the bills of lading were pledged as security, as appears on the face of the October 1998 contract, Olam's loss was not to be approached in the same way as if they were beneficial owners of the cargo. The point has, with respect, not been addressed…Since the whole process of arbitration is intended as a way of determining points at issue, it is more likely to be a matter of serious irregularity if on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding is ambiguous, or an important issue is not addressed, than if the complaints go simply to procedural matters. Mr Young submitted that Ascot's real complaint is that its arguments were not accepted and that this cannot be an irregularity. He noted that there has been no application for permission to appeal. He also submitted that if the terseness of the Board's findings made it legitimate for Ascot to have requested further reasons, they could have asked for them but have not done so. On a fair reading of the award it seems to me that this is not case in which the tribunal has .....

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..... fence had been considered at all by the Arbitrator, and if rejected by the Arbitrator after due consideration, why it was rejected. The process of arbitration is intended as a way of determining disputes and points at issue, and I agree with the sentiments expressed by the court in Ascot Commodities NV v Olam International Ltd [2002] CLC 277 and in Van der Giessen-de Noord Shipbuilding Division BV v Imtech Marine and Off shore BV [2009] 1 Lloyd s Rep 273 that it is a serious irregularity and a denial of due process which causes substantial injustice and unfairness to the parties, if an important issue, which the parties are entitled to expect to be addressed, is not in fact addressed. 34. Even if the Arbitrator finds in favor of B on all itsclaims of A s inability and failure to deliver the Products in compliance with the Relevant Standards and conforming to the contractual specifications, and A s failure to develop the Products pursuant to its contractual obligations, B s action against A and its claims for remedies in the Arbitration will fail, if the Limitation Defence succeeds. The Limitation Defence is a material point and issue which could have rendered the Award materially d .....

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..... f this would be that an arbitral tribunal will be in the breach of natural justice if in the course of reaching its decision it disregarded the submissions and arguments made by the parties on the issues without considering the merits thereof. For this, it relied upon three Australian cases and an earlier judgment which considered these three cases. The Court then concluded: 53. As I have concluded earlier, an arbitrator s failure to consider material arguments or submissions is a breach of natural justice. In the present case, the Arbitrator had dismissed Front Row s counterclaim without considering the grounds of its counterclaim in full because he was under the misapprehension that Front Row had abandoned its reliance on the Representation. Had he not been mistaken, he would have had to decide whether or not the Representation was false. A decision that there had been a misrepresentation in regard thereto would have resulted in an award in favour of Front Row, assuming the other ingredients for a successful claim (viz, reliance and detriment ) were satisfied. It was not for me to delve further into the question whether Front Row s reliance upon the Representation would have succ .....

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..... as the judicial standard. The same is true of the IAA but as the court in Thong Ah Fat held (at [19]), the general duty of a judicial body to explain its decision is ineluctably a function of due process, and therefore of justice . While there are structural differences between a court and an arbitral tribunal, it cannot be gainsaid that arbitrations are subject to the same ideals of due process and justice. It bears mentioning that Kiefel J concluded that the requirement to give a reasoned award cannot be devoid of content and for that reason, he was content to adopt Donaldson LJ s statement in Bremer (see [101] above). 104. Therefore, in my view, the standards applicable to judges are assistive indicia to arbitrators. While the rules of natural justice must be applied rigorously in arbitrations as they are in court litigation, the practical realities of the arbitral ecosystem such as promptness and price are also important (see Soh Beng Tee at [63]). On this note, the following are clear from Thong Ah Fat: (a) The standard of explanation required in every casemust correspond to the requirements of the case. Costs and delays are relevant factors to consider when determining the ex .....

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..... mind to bear on an important aspect of the dispute before him. Consideration of the pleaded issues is an essential feature of the rule of natural justice that is encapsulated in the Latin adage, audi alteram partem (see also Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 ( Soh Beng Tee ) at [43], citing Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline Contractors Ltd [1978] VR 385 at 386). Front Row is useful in so far as it demonstrates what must be shown to make out a breach of natural justice on the basis that the arbitrator failed to consider an important pleaded issue. It will usually be a matter of inference rather than of explicit indication that the arbitrator wholly missed one or more important pleaded issues. However, the inference - that the arbitrator indeed failed to consider an important pleaded issue - if it is to be drawn at all, must be shown to be clear and virtually inescapable. If the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party s case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party becau .....

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..... firmatively. (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 IAA, the claimant needs to establish the following four elements (see Soh Beng Tee at [29]; AKN v ALC 2015 at [48]): (a) which rule of natural justice was breached; (b) how it was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced its rights. 134. The failure to consider an important issue that has been pleaded in an arbitration is a breach of natural justice because in such a case, the arbitrator would not have brought his mind to bear on an important aspect of the dispute before him (AKN v ALC 2015 at [46]). It will usually be a matter of inference rather than of explicit indication that the arbitrator wholly missed one or more important pleaded issues. However, this inference must be shown to be clear and virtually inescapable (AKN v ALC 2015 at [46]). The Court of Appeal cautioned against arguments dressed up to appear .....

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..... c 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 arbitration proceedings, which was argued before her. In this fact circumstance, the Delhi High Court held: 55. In any case, the respondent nos. 1 and 2 had also made submissions on merit before the Arbitrator. Though the learned counsel for the petitioner submitted that the same were rightly excluded from consideration by the Arbitrator as the Arbitrator had never sought for the same, the Award does not reflect any such reason given by the Arbitrator for excluding them from consideration. The Arbitrator does not record a finding that she has intentionally ignored such submissions as they were filed belatedly or beyond what was permitted. In fact, as noted above, as per the Arbitrator no submission was filed by the respondents by 13.06.2016, which is factually incorrect. 56. In exercise of powers under Section 48 of the Act, this Court cannot consider the submissions made by the respondent n .....

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..... ating to maintainability of the arbitral proceedings was pigeon-holed not under Section 48(1)(b), but under the public policy of India ground, stating that such a thing would violate the most basic notion of justice. 76.Given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression was otherwise unable to present his case occurring in Section 48(1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties. Read along with the first part of Section 48(1)(b), it is clear that this expression would apply at the hearing stage and not after the award has been delivered, as has been held in Ssangyong (supra). A good working test for determining whether a party has been unable to present his case is to see whether factors outside the party s control have combined to deny the party a fair hearing. Thus, where no opportunity was given to deal with an argument which goes to the root of the .....

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..... as the fact situation in the present case. Under no circumstance can any Court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment. ) It must always be remembered that poor reasoning, by which a material issue or claim is rejected, can never fall in this class of cases. Also, issues that the tribunal considered essential and has addressed must be given their due weight - it often happens that the tribunal considers a particular issue as essential and answers it, which by implication would mean that the other issue or issues raised have been implicitly rejected. For example, two parties may both allege that the other is in breach. A finding that one party is in breach, without expressly stating that the other party is not in breach, would amount to a decision on both a claim and a counterclaim, as to which party is in breach. Similarly, after hearing the parties, a certain sum may be awarded as damages and an issue as to interest may not be answered at a .....

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..... resident in India, may transfer such equity instruments or units so held by him in compliance with the conditions, if any, specified in the Schedules of these rules and subject to the terms and conditions prescribed hereunder: (3) A person resident in India holding equity instruments of an Indian company or units, may transfer the same to a person resident outside India by way of sale, subject to the adherence to entry routes, sectoral caps or investment limits, pricing guidelines and other attendant conditions as applicable for investment by a person resident outside India and documentation and reporting requirements for such transfers as may be specified by the Reserve Bank in consultation with the Central Government from time to time; xxx xxx xxx 21. Pricing guidelines - (1) The pricing guidelines specified in these rules shallnot be applicable for any transfer by way of sale done in accordance with Securities and Exchange Board of India regulations where the pricing is specified by Securities and Exchange Board of India. (2) Unless otherwise prescribed in these rules, theprice of equity instruments of an Indian company, xxx xxx xxx (b) transferred from a person resident in Ind .....

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..... nt of awards notwithstanding that the awards are not rendered in conformity to the national laws. Thus, the objections to enforcement on the ground of public policy must be such that offend the core values of a member State's national policy and which it cannot be expected to compromise. The expression fundamental policy of law must be interpreted in that perspective and must mean only the fundamental and substratal legislative policy and not a provision of any enactment. xxx xxx xxx 102. Although, this contention appears attractive, however, fails to take into account that there has been a material change in the fundamental policy of exchange control as enacted under FERA and as now contemplated under FEMA. FERA was enacted at the time when the India's economy was a closed economy and the accent was to conserve foreign exchange by effectively prohibiting transactions in foreign exchange unless permitted. As pointed out by the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd. (supra), the object of FERA was to ensure that the nation does not lose foreign exchange essential for economic survival of the nation. With the liberalization and opening of India&# .....

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..... ental policy of Indian law, as has been held in Renusagar (supra), must amount to a breach of some legal principle or legislation which is so basic to Indian law that it is not susceptible of being compromised. Fundamental Policy refers to the core values of India s public policy as a nation, which may find expression not only in statutes but also time-honoured, hallowed principles which are followed by the Courts. Judged from this point of view, it is clear that resistance to the enforcement of a foreign award cannot be made on this ground. 84.The Appellants, however, relied upon certain observations in Dropti Devi v. Union of India (2012) 7 SCC 499. In that case, a challenge was made to the constitutional validity of Section 3 of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as COFEPOSA ), stating that by reason of the new legal regime articulated in FEMA, in replacement of FERA, the said provision has become unconstitutional in the changed situation.This submission was repelled by this Court stating: 66. It is true that provisions of FERA and FEMA differ in some respects, particularly in respect of penalties. It is als .....

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..... d 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 exchange, as against foreign exchange coming into the country as a result of sale of shares in an Indian company to a foreign company, it does not follow that such violation, even if proved, would breach the fundamental policy of Indian law. Challenge to Enforcement of the Foreign Award in this case on facts 85.Dr. Singhvi and Shri Dewan arguing for the Appellants have raised fourteen submissions, all of which fall under Section 48(1)(b) read with Explanation 1 (ii) and (iii) to Section 48(2)(b) of the Arbitration Act, taken either cumulatively as grounds of objection or separately, depending upon the nature of the ground argued. We now deal with each of these grounds seriatim. I. The Tribunal failed to deal with the Appellants counter-claim pertaining to the incorporation of Jaguar Communication Consultancy Services Private Limited. 86.According to the Appellants, this ground of objectio .....

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..... ause 21.1 was limited to the acquisition of ACPL and direct sales into India. The argument of the Appellant, made at the fag end of the proceedings, that since the Respondent held 99.99 % shares of Jaguar, which is in a similar cable business as Ravin, as evidenced by the Memorandum and Articles of Association of Jaguar, is a case that has never been pleaded. This being the case, it is obvious that the arbitrator was within his jurisdiction not to deal with this so-called counter-claim at all. This objection, therefore, does not fall within any of the grounds mentioned in Section 48 and must, therefore, be rejected. II. The Tribunal failed to make a determination on the Appellants counter-claim concerning ouster of the Appellants 88.According to the Appellants, the tribunal failed to make a determination on the Appellants counter-claim that the Respondent s efforts to oust Appellant No.1 and his family from Ravin amounted to a breach of the JVA. In answer to this submission, the tribunal, in the Second Partial Final Award, expressly set out the following: 6. Further, the parties both identify different catalysts for the breakdown of the JVA relationship. In short, the Respondents s .....

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..... s and not the Respondent No.1 who materially breached the JVA. Given this position, the tribunal finally held: 291. Given the findings made by the Tribunal in favour of the Claimant's allegations of material breach it naturally follows that the Respondents do not succeed in these allegations of mismanagement 292. The Respondents were themselves in 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 thea .....

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..... 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 instead was inviting the Claimant to agree upon an expansion of the Tribunal's jurisdiction in order to avoid any possibility of multiplicity of proceedings under different agreements. 136. In the end, however, the Respondents' counseldid invite the Tribunal to rule upon these short points. The three points were as follows: 1) Whether under Clause 27.1 of the JVA the Tribunalhas jurisdiction to decide who has the right to register the Ravin trademark. 2) Whether the Tribunal has jurisdiction to decidealleged breaches of the Trademark License Agreement. 3) Whether the Tribunal has jurisdiction to decidealleged breaches of the Technical Assistance Agreement. 137. The Tribunal concludes that it does not havejurisdiction in respect of any of these three matters. 138. The ownership of the Ravin trademark and theright to register the same is not a dispute arising out of, relating to, .....

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..... that no argument was ever made by the Appellants before the tribunal that the Respondent had surreptitiously attempted to register the Ravin Trademark in its own name, and therefore was in breach of the competition clauses of the JVA. We are thus satisfied that this argument again appears to be an afterthought which has no foundation in the submissions made before the learned arbitrator. This submission does not again fall within any of the grounds referred to under Section 48. IV. The Tribunal acted contrary to the Parties expert witnesses and ignored critical evidence with regard to the acquisition of ACPL 92.Dr. Singhvi argued that the tribunal acted contrary to the admissions of the parties expert witnesses and ignored critical evidence with regard to the acquisition of ACPL. Further, since the Respondent failed to produce the relevant documents regarding the competing business carried out by ACPL, an adverse inference ought to be drawn against the Respondent No.1, which the Appellants allege the learned arbitrator failed to do. 93.The learned arbitrator indicated his approach in the Second Partial Final Award as follows: 23. Whilst therefore the parties' detailed submissi .....

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..... ates. 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, was that the acquisition of ACPL did not in any manner amount to a serious material breach of the JVA. 95.Insofar as the failure to produce documents by Respondent No.1 with regard to its subsidiary ACPL is concerned, it must be remembered that ACPL is not a direct subsidiary of Respondent No. 1, being an indirect subsidiary of Respondent No.1 s parent company consequent upon the acquisition of Draka. It has an independent Board of Directors. Above all, ACPL was not a party to these arbitral proceedings. The tribunal therefore made Procedural Order No. 5 dated 27.11.2012 in which it specifically recorded that if the Appellants wish to pursue their request for disclosure of further documents qua ACPL, they must approach the Courts to do so, as it was not within the arbitrator s power to direct a person who is not party to the proceedings to produce documents. At no stage did the Appe .....

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..... . Indeed over 85% of the sales came from two affiliates manufacturing telecom cables, which Ravin did not manufacture and had no experience in selling either. Indeed the Tribunal accepts the evidence of Ms Farise and Mr Koch and Mr Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§18- 32. E(I)/23/184186, 11 December 2012 hearing, pp.134-140, §46, E(I)/17/92, Day 2, pp.83-86, §18 of, E(l)/24/189). This renders the whole argument of diversion of sales or breach of good faith by virtue of these direct sales somewhat academic. 278. Indeed these figures illustrate exactly why the Respondents placed so much emphasis on their argument that the mere fact of sales was a breach irrespective of anything else. This was once more how it was put by Mr Salve SC in his oral closing argument (Day 10, pp. 183-185) The Tribunal has, however, found against the Respondents on this point. 98. Having perused the Award in this behalf, it cannot be said that the tribunal has in any manner ignored admissions or other critical evidence with regard to the issue of direct sales. In any case, if at all, this ground goes to a .....

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..... nto any further details in this ground, this argument must be rejected out of hand, as not falling within the parameters of Section 48. Equally, the tribunal s consideration of evidence of key witnesses being selective and perverse, must be rejected on the same ground. IX. The Tribunal appointed a conflicted valuer 101. Dr. Singhvi then contended that the tribunal appointed a conflicted valuer, which prevented the Appellants from participating in the valuation exercise. This has been dealt with in the Final Award dated 11.04.2017 by the learned arbitrator as follows: II. Deloitte Valuation Report and the Respondents' Challenge to Deloitte 4. It is important at this stage to record one specificmatter here which is referred to and set out in the Claimant's submissions (see paragraph 24 and Annexure E thereto at pages 170-172) and not contradicted by the Respondents in its submissions. On 14 October 2014 (Annexure E p. 171), Mr Karia on behalf of the Respondents sent an email to the Claimant in response to the Claimant's request dated 14 October 2014 (Annexure E p.170) that the Respondents do cause the Company in a timely fashion to execute the Engagement letter for Deloit .....

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..... did not impugn Deloitte's independence and did not prohibit them under the terms of Clause 17.3 of the JVA from being appointed. Clause 17.3 only applied to a prohibition on the statutory auditor of the Parties to the JVA acting as Valuer. It is not suggested that Deloitte was the statutory auditor of Ravin. Power Plus was not a Party to the JVA. Further, Clause 17.1 of the JVA expressly identified Deloitte as a suitable independent party to be appointed as Valuer. In any event, Deloitte's role as auditor of Power Plus was known to the Respondents and having agreed not to object to Deloitte in their 30 April 2013 email it was no longer open to the Respondents to advance this point. There was no breach of the JVA but even if there had been it was waived by the Respondents. 6. Thus following this exchange, Deloitte were in duecourse engaged albeit through the default mechanisms provided for in Procedural Order No 12. We are satisfied that the learned arbitrator has considered this point in some detail and dismissed it. This objection again does not fall under any of the grounds mentioned in Section 48. X. Valuation ignores Ravin s stake in Power Plus 102. Dr. Singhvi then ar .....

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..... e 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 of the delay in the production of the Deloitte Valuation Report since that delay was materially contributed to by reason of the Respondents' complaint with regard to Deloitte's involvement which is made to the LCIA. It is notable that the Respondents have not in their submission denied that they made such a complaint to the LCIA and have not contradicted the Claimant's submission that this complaint materially contributed to the delay in the production of the Deloitte Report. 3) Furthermore, the Respondents are not entitled tocomplain that Deloitte has used a valuation date of 30 September 2014. This was the valuation date agreed to and requested by the Respondents. Furthermore, as is recorded in the Recital to Procedural Order No 12 prior to the hearing in October 2014 leading to the making of the order of the valuation date, the Respondents expressly accepted that th .....

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..... ot 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 employees for Ravin, two months before the Second Partial Final Award, thereby showing that this agent was clear as to the outcome of the proceedings. This was strongly refuted by the Respondent, stating that at no time had Gilbert Tweed Associates been retained by them. As a matter of fact, an agency called M/s Key2People was engaged by Respondent No.1 to identify potential candidates who could be recruited for the company in due course. M/s Key2People, in turn, appointed M/s Gilbert Tweed Associates. In any case, the Respondent undertook to terminate the engagement of M/s Key2People by its email of 28.10.2013. The allegation of bias thus made was clearly a desperate afterthought. The contention that the arbitrator was otherwise biased was dealt with in the Final Award as follows: 16. The Respondents have also made a repeated reference to an allegation that the Tribunal lacked indep .....

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