9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 448 - SC - Indian LawsRecognition and enforcement of foreign awards - Part II of the Arbitration and Conciliation Act, 1996 - Jurisdiction of District Judge to judge Foreign Award - enforcement of arbitration clause against persons who are non-signatories - HELD THAT - All the requirements of sub-section (1) are procedural in nature, the object being that the enforcing court must first be satisfied that it is indeed a foreign award, as defined, and that it is enforceable against persons who are bound by the award. Shri Vishwanathan and Shri Salve s arguments that to prove that a nonsignatory to an arbitral agreement can only be roped in to the aforesaid agreement on evidence being adduced before the enforcing court as to whether the non-signatory is a person who claims under a party or is otherwise affected by the alter ego doctrine, is disingenuous to say the least. Section 47(1)(c) being procedural in nature does not go to the extent of requiring substantive evidence to prove that a non-signatory to an arbitration agreement can be bound by a foreign award. As a matter of fact, Section 47(1)(c) speaks of only evidence as may be necessary to prove that the award is a foreign award. Section 47(1)(c) would apply to adduce evidence as to whether the arbitration agreement is a New York Convention agreement. Also, the requisite Central Government notification can be produced under Section 47(1)(c), so that Section 44(b) gets satisfied. To argue that the burden of proof is on the person enforcing the award and that this burden can only be discharged by such person leading evidence to affirmatively show that a non-signatory to an arbitration agreement can be bound by a foreign award is outside Section 47(1)(c). This argument consequently stands dismissed. The appellants then pressed Section 48(1)(c) into operation. As can be seen, Section 48(1)(c) relates to an award which deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submissions to arbitration - the proviso to Section 48(1)(c) states that an award may be partially enforced, provided that matters which are outside the submission to arbitration can be segregated, thereby again showing that the thrust of the provision is whether the dispute between parties are qua excepted matters for example, or are otherwise outside the scope of the arbitration agreement. As a matter of fact, if an international commercial arbitration were to be held in India, Section 28(1)(b) recognises that an arbitral tribunal can decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute which, in turn, has a direct nexus to the substantive law of the country whose laws are said to apply. There is no ground in the pari materia provisions of Section 34 to set aside such award on the ground that the substantive law of that country has been infracted. Indeed, the only ground on which such award could possibly be interfered with is if such award, valid under the law which it applied, could be held to be contrary to the public policy of India. There can be no doubt whatsoever that as a result of the machinations of Upadhyaya and Pathak, as found by the arbitral tribunal, ISS was deprived of commission legitimately due to it under the representation agreement. This being so, there can be no doubt that, on facts as proved before the arbitral tribunal, actual loss can be said to have been occasioned to ISS - In any case, the damages so awarded in the facts of this case cannot even remotely be said to shock the conscience of this Court so as to clutch at the basic notion of justice ground contained in Section 48(2) Explanation (1)(iii). Appeal dismissed.
Issues Involved:
1. Recognition and enforcement of a foreign award under the Arbitration and Conciliation Act, 1996. 2. Jurisdiction over non-signatory parties. 3. Piercing the corporate veil. 4. Breach of the Representation Agreement. 5. Award of damages and their calculation. 6. Grounds for refusal of enforcement of a foreign award under Section 48 of the Arbitration Act, 1996. Detailed Analysis: 1. Recognition and Enforcement of a Foreign Award: The appeals raised questions under Part II of the Arbitration and Conciliation Act, 1996, concerning the recognition and enforcement of foreign awards. The agreement between the parties specified that disputes would be arbitrated in Kansas City, Missouri, USA, under the rules of the American Arbitration Association. The award rendered by the arbitrator was sought to be enforced in India. 2. Jurisdiction Over Non-Signatory Parties: The arbitrator included non-signatory parties in the arbitration proceedings, applying the "alter ego" doctrine. The arbitrator found that the Chairman of DMC controlled and dominated the activities of DMC Global, Gemini Bay Consulting Limited, and Gemini Bay Transcription Private Limited, using these entities to evade contractual obligations. The arbitrator concluded that these entities were alter egos of the Chairman and should be bound by the arbitration agreement. 3. Piercing the Corporate Veil: The arbitrator determined that the corporate veil should be pierced, considering the control and manipulation by the Chairman to avoid paying commissions to ISS. The arbitrator found that the entities were used as facades to commit fraud, justifying the application of the alter ego doctrine. 4. Breach of the Representation Agreement: The arbitrator held that the Representation Agreement was valid and enforceable. It was determined that ISS fulfilled its obligations under the agreement, and DMC's termination of the agreement was unjustified. The arbitrator concluded that DMC and its associated entities colluded to breach the agreement and avoid paying commissions. 5. Award of Damages and Their Calculation: The arbitrator awarded damages based on the commissions ISS would have earned from the two customers, MedQuist and AssistMed, estimating the commissions at $100,000 per month for 48 months, totaling $4.8 million. The arbitrator also awarded additional amounts for administrative fees and expenses, resulting in a total award of $6,948,100. 6. Grounds for Refusal of Enforcement Under Section 48: The appellants resisted enforcement under Section 48 of the Arbitration Act, 1996, arguing that: - The non-signatories could not be bound by the award (Section 48(1)(a)). - The award was perverse and lacked proper reasoning (Section 48(1)(b)). - The award dealt with matters beyond the scope of the arbitration agreement (Section 48(1)(c)). The court held that: - Section 48(1)(a) does not apply to non-signatories and focuses on the validity of the agreement. - The ground of perversity is not applicable post the 2015 amendment, as it does not fall under "public policy of India." - Section 48(1)(c) pertains to disputes outside the arbitration agreement, not to whether a non-party can be bound. The court dismissed the appeals, emphasizing the pro-enforcement bias of the New York Convention and the narrow grounds for refusing enforcement under Section 48. The court upheld the arbitrator's findings and the enforcement of the award against the appellants.
|
