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TMI Blog2020 (6) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No.2564 of 2006. After all consignments were delivered, payments had been made in accordance with the contract. However, a dispute arose between the parties as regards the quantity of dry weight of copper concentrate delivered. Clause 14 of the agreement contained a two-tier arbitration agreement by which the first tier was to be settled by arbitration in India. If either party disagrees with the result, that party will have the right to appeal to a second arbitration to be held by the ICC in London. The appellant M/s Centrotrade Minerals and Metals Inc. (hereinafter referred to as "Centrotrade"/ "the appellant") invoked the arbitration clause. By an award dated 15.06.1999 the arbitrator appointed by the Indian Council of Arbitration made a Nil Award. Thereupon, Centrotrade invoked the second part of the arbitration agreement, as a result of which Jeremy Cook QC, appointed by the ICC, delivered an award in London, dated 29.09.2001, in which the following amounts were awarded: "27. For the above reasons I THEREFORE AWARD and ADJUDGE that (1) HCL do pay Centrotrade the sum of $152,112.33, inclusive of interest to the date of the Award in respect of the purchase price for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the learned single Judge was set aside. 5. At this juncture, the matter came to a Division Bench of this Court. Two separate judgments were delivered by S.B. Sinha, J. and Tarun Chatterjee, J. reported in Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd. (2006) 11 SCC 245. After setting out the facts of the case, S.B. Sinha,J. held that a two tier clause of the kind contained in clause 14 of this agreement is non est in the eye of law and would be invalid under Section 23 of the Indian Contract Act. In this view of the matter, the foreign award could not enforced in India and Centrotrade's appeal was therefore dismissed, the appeal filed by HCL being allowed. Tarun Chatterjee, J. set out four questions in paragraph 134 as follows: "134. We have heard Mr Sarkar, learned Senior Counsel appearing for Centrotrade and Mr Debabrata Ray Choudhury, learned Senior Counsel for HCL. I have also examined the entire material on record including the arbitration agreement, the awards and judgments of the Division Bench as well as the learned Single Judge. Before us, the following issues were raised by the learned counsel for the parties for decision in the appeals: (1) Whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Sinha and Chatterjee, JJ. are reported as Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd. [Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SCC 245]" Paragraph 5 of the aforesaid judgment set out the two questions that arose in this case as follows: "5. The issues that have arisen for our consideration, as a result of the difference of opinion between the learned Judges, are as under: (1) Whether a settlement of disputes or differences through a two-tier arbitration procedure as provided for in Clause 14 of the contract between the parties is permissible under the laws of India? (2) Assuming that a two-tier arbitration procedure is permissible under the laws of India, whether the award rendered in the appellate arbitration being a "foreign award" is liable to be enforced under the provisions of Section 48 of the Arbitration and Conciliation Act, 1996 at the instance of Centrotrade? If so, what is the relief that Centrotrade is entitled to? For the present, we propose to address only the first question and depending upon the answer, the appeals would be set down for hearing on the remaining issue. We have adopted this somewhat unusual cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996. 10. Shri Harin P. Raval, learned senior counsel appearing on behalf of HCL, has taken a preliminary submission that the only point of difference between S.B. Sinha,J. and Tarun Chatterjee,J. was on whether the two-tier arbitration clause was valid in law. Once that point had been answered, the question of being unable to present one's case, not having been decided by S.B. Sinha, J., was not referred to the larger bench as there was no difference of opinion between the learned Judges on this aspect and therefore this aspect cannot now be adjudicated upon. Even otherwise, he argued, basing his submissions on a list of dates and a paper book of documents filed before this Court for the first time, to show that as a matter of fact once the arbitrator had extended time, the last extension being till 12.09.2001, he ought to have allowed further time in which, apart from legal submissions furnished, documents could have been furnished in support of HCL's case. This is particularly in view of the fact that on 11.09.2001, a terrorist attack had taken place in New York as a result of which globally, there was disruption of transport and communication, and therefore it was very difficu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention on their part to put in a Defence and to seek an extension of time for doing so. 8. Following a further fax on 9th August 2001, in which I informed the parties that I was proceeding with the Award, on 11th August I received a fax from Fox & Mandal requesting an extension of time of one month to put in a defence. On 16th August I ordered that any submissions in support of an application for an extension of time for a defence and any submissions on the substantive merits of the dispute, together with any evidence relied on in relation to the application and any submissions should be received by me by 31st August 2001, in the absence of which I would not give them any consideration. On 27th August Fox & Mandal sought a further 3 weeks' extension of time for making their submissions and serving supporting evidence. I allowed a final extension for these submissions and evidence until 12th September 2001. Seventy - five pages of submissions were received by me on 13th September 2001, without any supporting evidence or any justification for not complying with my earlier orders. No grounds were put forward for any application for an extension of time for putting in Defence submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try on March 28th 2000; it wanted to stop the second arbitration in terms of the arbitration agreement. The arbitrator was appointed on June 7th, 2000. Till August 2001 the respondent maintained that the second part of the arbitration agreement being against the public policy of India, the arbitration through the ICC International Court of Arbitration was not permissible. On this ground the respondent refused to participate in the arbitral proceeding. It took the matter upto the Apex Court. Ultimately when it failed to obtain any order to stop the arbitration, it filed its submissions running into seventy-five pages. Though the papers reached the arbitrator beyond the stipulated date, he has considered such submissions. He, however, did not find any merit in the case made out by the respondent. The arbitrator has recorded that at every stage he consulted the procedural aspects with the solicitors representing the respondent. There is no proof that the respondent ever objected to the rules and procedure followed by the arbitrator or that the arbitrator followed a procedure not contemplated in the agreement. It is apparent from the award that all opportunities were given to the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions and supporting evidence through orders dated 20-12-2000, 19-1-2001 and 3-5-2001. However, HCL did not comply with these orders. On 30-7-2001, he sent a fax to HCL to find out whether they intended to file their defence. He sent a further fax on 9-8-2001 informing them that he was proceeding with the award. (emphasis supplied) Then on 11-8-2001, the ICC arbitrator received a reply seeking extension of time. He granted time till 31-8-2001. He received another request from HCL's representatives on 27-8-2001 for further extension of time. He granted extension till 12-9-2001. He received the first set of submissions filed by HCL, without supporting evidence, on 13-9-2001. He considered those submissions and took them into account while making the award. He has further recorded in his award that: "I made plain in my orders that no further material provided thereafter would be taken into account, and I have not done so." (emphasis supplied) This last statement indicates that he received further material from HCL, which he did not consider while making the award. On the face of it, it seems that HCL was given sufficient opportunity to present its case by the arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maheshwari v. Vinitkumar Parikh [(2005) 1 SCC 379] and Minmetal Germany GmbH v. Ferco Steel Ltd. [ (1999) 1 All ER (Comm) 315] it is true that where a party is refused an adjournment and where it is not prevented from presenting its case, it cannot, normally, claim violation of natural justice and denial of a fair hearing. However, in the light of the delays, some of which were not attributable to HCL's conduct, it was only fair to excuse HCL's lapse in filing the relevant material on time. Therefore, it can be said that HCL did not get a fair hearing and could not effectively present its case. 169. For the reasons aforesaid, I am of the view that HCL could not effectively present its case before the ICC arbitrator and therefore enforcement of the ICC award should be refused in view of Section 48(1)(b) of the Act. Accordingly, the judgment of the Division Bench and also the judgment of the learned Single Judge of the Calcutta High Court must be set aside and the matter be remitted back to the ICC arbitrator for fresh disposal of the arbitral proceedings in accordance with law after giving fair and reasonable opportunity to both the parties to present their cases before hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Arbitration Act. Bearing this in mind, it is important to remember that the Supreme Court's jurisdiction under Article 136 should not be used to circumvent the legislative policy so contained. We are saying this because this matter has been argued for several days before us as if it was a first appeal from a judgment recognising and enforcing a foreign award. Given the restricted parameters of Article 136, it is important to note that in cases like the present - where no appeal is granted against a judgment which recognises and enforces a foreign award - this Court should be very slow in interfering with such judgments, and should entertain an appeal only with a view to settle the law if some new or unique point is raised which has not been answered by the Supreme Court before, so that the Supreme Court judgment may then be used to guide the course of future litigation in this regard. Also, it would only be in a very exceptional case of a blatant disregard of Section 48 of the Arbitration Act that the Supreme 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction 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 the production by M+H of those documents for its inspection so that it could properly argue the point on drawing an adverse inference. However, Dongwoo chose not to do so. 146. Further, the present case was not one where a party hides even the existence of the damning document and then dishonestly denies its very existence so that the opposing party does not even have the chance to submit that an adverse inference ought to be drawn for non-production. M+H in fact disclosed the existence of the documents but gave reasons why it could not disclose them. Here, Dongwoo had the full opportunity to submit that an adverse inference ought to be drawn, but it failed to persuade the tribunal to draw the adverse inference. The tribunal examined the other evidence before it, considered the submissions of the parties and rightfully exercised its fact finding and decision making powers not to draw the adverse inference as it was entitled to do so. It would appear to me that the tribunal was doing nothing more than exercising its no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Act reads as follows: "2. Notwithstanding any decision of Court, any sthanam in respect of which: (b) the members of the tarwad have been receiving maintenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise" The Constitution Bench then held: "The word "otherwise" in the context, it is contended, must be construed by applying the rule of ejusdem generis. The rule is that when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified. But it is clearly laid down by decided case that the specific words must form a distinct genus or category. It is not an inviolable rule of law, but is only permissible inference in the absence of an indication to the contrary. On the basis of this rule, is contended, that the right or the custom mentioned in the clause is a distinct genus and the words "or otherwise" must be confined to things analogous to right or contract such as lost grant, immemorial user etc. It appears to us that the word "otherwise" in the context only means "whatever may be the origin of the receipt of mainte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitrator misconducted himself or the proceedings. It will be seen that "misconduct" as a ground for setting aside an award is conceptually much wider than a party being unable to present its case before the arbitrator, which is contained in Section 48(1)(b). Thus, in Ganges Waterproof Works (P) Ltd. v. Union of India (1999) 4 SCC 33, this Court was faced with the legality and validity of the arbitration proceedings, three grounds being raised as follows: "2. Challenge to the legality and validity of the arbitration proceedings has been laid on three grounds: firstly, that the claimant-Union of India (respondent herein) filed an additional statement accompanied by documents before the arbitrator on 11-8-1982, which was the last day of hearing, and that was taken into consideration by the arbitrator without affording the petitioner an opportunity for contesting the same or even delivering a copy thereof to the petitioner; secondly, though no oral evidence was adduced by any of the parties, yet the arbitrator has in his award expressed having heard the evidence which shows inapplication of mind to the record of the proceedings and material available before the arbitrator; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason to take a view different from the one taken by the High Court." 20. In Sohan Lal Gupta v. Asha Devi Gupta (2003) 7 SCC 492, this Court dealt with the arbitrator misconducting the proceedings as follows: "27. The arbitrator, as appears from the minutes of the meeting, proceeded only on the documentary evidence. No party appears to have presented oral evidence. Thus, the question of cross-examination of the witnesses appearing on behalf of the other parties did not arise. Submissions must have been made by the parties themselves. Ghanshyamdas Gupta does not say that he had difficulty in appearing on 15-6-1976 or any subsequent date and he had asked for an adjournment. Even otherwise, a party has no absolute right to insist on his convenience being consulted in every respect. The matter is within the discretion of the arbitrator and the Court will intervene only in the event of positive abuse. (See Montrose Canned Foods Ltd. [(1965) 1 Lloyd's Rep 597] ) If a party, after being given proper notice, chooses not to appear, then the proceedings may properly continue in his absence. (See British Oil and Cake Mills Ltd. v. Horace Battin & Co. Ltd. [(1922) 13 LI L Rep 443] )" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act while allowing petitions to set aside the arbitration awards." The learned Single Judge's finding in the aforesaid case, which was accepted by the Division Bench judgment on the facts of the case, is set out in paragraph 12 of the said judgment as follows: "12. It is the above award that was challenged under Section 30 of the Arbitration Act, 1940 before the learned Single Judge by the respondent which came to be allowed by the learned Single Judge. While doing so learned Single Judge observed: "the cross-examination of M/s D. Jain and Co. was over in 1997, the cross-examination of witness examined in Shri Maheshwari's reference was completed on 8-4-1999 and the arbitrators adjourned the matter to 10-5-1999 and 11-5-1999 for the petitioner to lead his evidence. However, it appears that the petitioner noted a wrong date and therefore, he did not appear on 10-5-1999. It is clear from the record that there is an application submitted by the petitioner before the arbitrators on 20-5-1999 regarding the mistake committed by him in recording the date of hearing and requested the arbitrators to give an opportunity to lead the evidence. One can understand if the arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to above with approval. xxx xxx xxx 34. The general approach to enforcement of an award should be pro-enforcement. See eg Parsons & Whittemore Overseas Co Inc v Société Générale 508 F 2d 969 (1974) at 973: "The 1958 Convention's basic thrust was to liberalize procedures for enforcing foreign arbitral awards ... [it] clearly shifted the burden of proof to the party defending against enforcement and limited his defences to seven set forth in Article V." In IPCO (Nigeria) v Nigerian National Petroleum [2005] 2 Lloyd's Rep 326, Gross J said at para 11, when considering the equivalent provision of the English Arbitration Act 1996: "... there can be no realistic doubt that section 103 of the Act embodies a pre-disposition to favour enforcement of New York Convention awards, reflecting the underlying purpose of the New York Convention itself ..." The Board agrees. There must therefore be good reasons for refusing to enforce a New York Convention award. The Board can see no basis upon which it should refuse to enforce the award here if Cukurova fails to show that it was unable to present its case for reasons beyond its control." The Privy Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability decision was based on the earlier reports of Mr Large and other witnesses. That is common ground. In relation to quantum, the arbitrator's reliance upon Large 3 had the effect of reducing the quantum awarded to EEEL (by some EUR9 million). It therefore cannot be said that VCL was prejudiced by Large 3. If it was prejudiced it was by its failure to avail itself of the opportunity given it to respond." (emphasis supplied) 24. Jorf Lasfar (supra), referred to in paragraph 61 of Vijay Karia (supra), is also instructive. This case deals with a specific plea relating to natural justice in relation to a Tribunal's procedural orders as follows: "7. We disagree. AMCI was given a full and fair opportunity to present its case. However, AMCI failed to meet its obligations under the Tribunal's procedural orders, 3 and suffered the consequences. It failed to submit any witness statements by the deadline set forth by the Tribunal. Rather, AMCI attempted to name Mr. Thrasher as a witness after the deadline, and without submitting a witness statement. AMCI submitted no documentary evidence save a governmental report indicating that coal was in short supply around the time of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitration." Dean v. Sullivan, 118 F.3d 1170, 1173 (7th Cir.1997). 28. Consistent with the federal policy of encouraging arbitration and enforcing arbitration awards, the defense that a party was "unable to present its case" raised pursuant to article V(1) (b) of the Convention is narrowly construed. Parsons & Whittemore Overseas Co. v. Societe Generale de L'Industrie du Papier, 508 F.2d 969, 975 (2d Cir.1974). 29. In the instant case, the Court finds that Briggs of Cancun was not "unable to present its case," because Briggs of Cancun could have participated by means other than David Briggs's physical presence at the arbitration. For instance, Briggs of Cancun could have sent a company representative to attend; could have sent its attorney to attend; or David Briggs could have attended by telephone. 30. Moreover, the evidence indicates that Briggs of Cancun did participate to the extent that it designated an arbitrator and filed over 80 pages of legal argument and documentation in support of its position. Because Briggs of Cancun has brought forward no additional information or evidence that it would have presented at the arbitration if it had the opportunity to do so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g did not render Consorcio unable to present its case within the meaning of Article V(1)(b). Therefore, Consorcio has not met its burden of proving that Article V(1)(b) applies as a defense." 27. Shri Banerji then referred to a judgment of the Supreme Court of Hong Kong, reported in Nanjing Cereals v. Luckmate Commodities XXI Y.B. Com. Arb. 542 (1996). In paragraph 5 of the judgment the court held: "5. However, it appeared that the Defendants had had ample opportunity to present their own evidence as to quantum to the Tribunal, but by their own admission they had failed to do so. In addition, regarding the issue of whether I should exercise my discretion in refusing in any case to set aside the Award, Mr. Chan conceded that the fact that the final Award was lower than that claimed by the Plaintiffs was against his clients. xxx xxx xxx 7. At all events, the Defendants maintain that they did not submit their own figures to the Tribunal, though this was clearly going to be an issue before the Tribunal, nor, it appears, did they avail themselves of the opportunity to submit them later. That decision was up to them. They must now live with its consequences. 8. Their omission wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . V(1) provides that the party against whom the award is invoked has the burden to prove the ground for refusal of enforcement under letter (b), as well as the other grounds in that paragraph. Further, we must consider that, according to the spirit of the Convention, the recognition of arbitral awards depends on specific requirements which must be interpreted narrowly. [8] "Since in the present case it is undisputed that Interskins informed De Maio that it had appointed an arbitrator, the reasons given in the lower decision, which deems that this information and the time limit [given to De Maio] guaranteed due process, suffice, independent of a failure to give reasons on the objections raised by De Maio. [9] "Second, we must consider that the ground for refusal under letter (b) concerns the impossibility rather than the difficulty to present one's case. De Maio does not argue and certainly does not prove that it could not present its case when the arbitration was commenced or while it was held." 29. We now come to the facts of the present case. Shri Raval's plea that this Court cannot go into the question posed before it as there was no difference of opinion on HCL being u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the learned arbitrator did not heed the stay order of the Rajasthan High Court dated 27.04.2000. First and foremost, the stay order of the Rajasthan High Court was not and could not be directed against the arbitrator - it was directed only against the parties to the proceeding. Secondly, the learned arbitrator initially began the proceedings, after the green signal given to him by the ICC Court to proceed with the arbitration, by directing that the appellant serve submissions along with supporting evidence, followed by the respondent's response and evidence on 19.01.2001. This, however, was reiterated only on 03.05.2001, by which time the Supreme Court had vacated the ad-interim ex parte order on 08.02.2001. This plea taken by Shri Raval, also taken before us for the first time, has no legs to stand on. 32. Shri Raval then strenuously argued that considering that the last extension expired on 12.09.2001, the learned arbitrator ought to have taken onboard two other bundles of documents and granted time for the same, given the terrorist attack in New York on 11.09.2001. 33. The sequence of events, even from the documents presented by Shri Raval for the first time, is that legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck in New York, the learned arbitrator received the same and took the same into account despite being beyond time. It was only on 29.09.2001 that the learned arbitrator then passed his award. Given the aforesaid timeline, it is clear that the learned arbitrator was extremely fair to the respondent. Having noticed that the respondent wanted to stall the arbitral proceedings by approaching the Courts in Rajasthan and having succeeded partially, at least till February 2001, the conduct of the respondent leaves much to be called for. Despite being informed time and again to appear before the Tribunal and submit their response and evidence in support thereof, it is only after the arbitrator indicated that he was going to pass an award that the respondent's attorneys woke up and started asking for time to present their response. This too was granted by the learned arbitrator, by not only granting extension of time, but by extending this time even further. Finally, when the legal submissions of 75 pages were sent even beyond the time that was granted, the learned Arbitrator took this into account and then passed his award. This being the case, on facts we can find no fault whatsoever with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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