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2012 (11) TMI 737 - HC - Indian LawsArbitration and Conciliation Act - Challenge to the award - whether the award is contrary to the public policy of India - held that - With IFSL having withdrawn the anti-injunction suit filed by it in this court questioning the continuation of the confirmation proceedings, there was no restraint as far as those proceedings were concerned. In terms of the New York law as well as New York Convention, it was open to IFSL to point out to the New York Court in the confirmation proceedings that recognition ought not to be granted since the Award was opposed to the public policy of India. IFSL did not avail of such opportunity. Although there was no express exclusion of the jurisdiction of the Indian courts, the parties intended that the further proceedings concerning the challenge, if any, to the Award had to take place in the New York Courts and that the judgment concerning the recognition of the Award may be entered by any state or federal court of competent jurisdiction. This Court is of the view that IFSL cannot invoke jurisdiction of this Court under Section 34 of the Act to challenge the impugned Award. Consequently, the Court does not consider it necessary to examine the question whether the Award is opposed to the public policy of India. It leaves the said contention to be decided at the appropriate stage as and when Amaprop seeks enforcement of the Award in India under the Act.
Issues Involved
1. Maintainability of the petition under Section 34 of the Arbitration and Conciliation Act, 1996. 2. Jurisdiction of Indian courts. 3. Applicability of Part I of the Act to foreign awards. 4. Public policy of India concerning the award. 5. Confirmation and enforcement of the award in New York. Detailed Analysis 1. Maintainability of the Petition under Section 34 of the Arbitration and Conciliation Act, 1996 The primary issue was whether the petition filed by IFSL under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the foreign award dated 21st March 2011, was maintainable. The court analyzed the Agreement's clauses, particularly Sections 12.10 and 12.11, which provided for the arbitration to be conducted in New York under the American Arbitration Association rules and for the laws of New York to govern the Agreement. The court concluded that the parties intended that any challenge to the award should occur in New York courts, thus implicitly excluding the jurisdiction of Indian courts. 2. Jurisdiction of Indian Courts The court examined whether there was an express or implied exclusion of the jurisdiction of Indian courts. The Agreement's clauses indicated that any action related to the Agreement could be brought in New York courts, which had "non-exclusive jurisdiction." The court noted that the term "non-exclusive jurisdiction" did not automatically imply that Indian courts had jurisdiction. Given the context and the parties' actions, including the confirmation proceedings in New York, the court found an implied exclusion of Indian court jurisdiction. 3. Applicability of Part I of the Act to Foreign Awards The court referred to the landmark case of Bhatia International v. Bulk Trading S.A., which held that Part I of the Act applies to international commercial arbitrations held outside India unless expressly or impliedly excluded by the parties. The court also considered subsequent cases, such as Venture Global Engineering v. Satyam Computer Services Ltd., which reinforced this principle. In this case, the court found that the Agreement's clauses and the parties' conduct impliedly excluded the application of Part I of the Act, thus making the petition under Section 34 non-maintainable. 4. Public Policy of India Concerning the Award IFSL argued that the award was contrary to the public policy of India because it required actions that would violate Indian foreign exchange laws. However, the court did not delve into this issue, as it had already concluded that it lacked jurisdiction to entertain the petition under Section 34. The court noted that this argument could be considered if and when Amaprop sought enforcement of the award in India under Section 48 of the Act. 5. Confirmation and Enforcement of the Award in New York The court noted that Amaprop had already initiated confirmation proceedings in the Southern District of New York (SDNY) and that IFSL had not opposed these proceedings. The New York court confirmed the award on 9th September 2011, and a judgment was entered in favor of Amaprop on 14th September 2011. The court observed that IFSL had an opportunity to challenge the award in New York but chose not to, thereby allowing the confirmation to become final. Conclusion The court dismissed the petition under Section 34 of the Act, holding that it was not maintainable due to the implied exclusion of the jurisdiction of Indian courts. The court also imposed costs of Rs. 50,000 on IFSL, to be paid to Amaprop within four weeks. The court left open the question of whether the award was contrary to the public policy of India, to be decided if Amaprop sought enforcement of the award in India.
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