1989 (9) TMI 391 - SC - Indian Laws

Supreme Court enforces foreign arbitral award, orders costs payment. Upholding international arbitration.

The Supreme Court allowed the appeal, directing the enforcement of the award and ordering the respondent to pay the costs of reference as specified in the ... - Issues:1. Interpretation of a charter party clause regarding dispute resolution.2. Enforcement of a foreign arbitral award under the Foreign Awards (Recognition & Enforcement) Act, 1961.3. Determination of costs of reference to arbitration and their enforcement.Analysis:1. The case involved a dispute arising from a charter party between the parties, governed by English law. The charter party contained clauses specifying that disputes would be resolved through arbitration in London. An arbitrator made an award in favor of the appellant, directing the respondent to pay a specified sum along with interest and costs. The respondent failed to pay the interest, costs of reference to arbitration, and the cost of the award, leading to the appellant seeking enforcement of the award in the High Court of Bombay.2. The High Court initially decreed in favor of the appellant, directing the respondent to pay the interest and costs of the award. However, the court rejected the appellant's claim for the costs of reference to arbitration. On appeal, the Division Bench held that no order could be made for the payment of the taxed costs of reference since there was no agreement between the parties on the costs before the appeal was filed. The Division Bench's decision was challenged before the Supreme Court.3. The Supreme Court analyzed the provisions of the Foreign Awards (Recognition & Enforcement) Act, 1961, which allows for the enforcement of foreign arbitral awards in India. The Court emphasized that once a court is satisfied with the enforceability of a foreign award, it must order the award to be filed and pronounce judgment accordingly. In this case, the arbitrator's award directed the payment of costs of reference, subject to agreement or taxation. As the parties failed to agree on the costs, and the costs were subsequently taxed and certified, the Court held that the appellant was entitled to the costs of reference as directed by the award.4. The Court rejected the respondent's contention that the award should be executed as it was without any additions. It clarified that the costs of reference were clearly awarded by the arbitrator, and the failure to agree on the costs did not disentitle the appellant from receiving them. The Court distinguished previous case law and held that the award unambiguously directed the respondent to pay the costs of reference, which were to be determined by agreement or taxation. Therefore, the Division Bench should have passed an order for the payment of the taxed costs of reference as directed by the award.5. Ultimately, the Supreme Court allowed the appeal, directing the enforcement of the award and ordering the respondent to pay the costs of reference as specified in the award. The judgment and order of the High Court were modified accordingly, emphasizing the importance of upholding foreign arbitral awards and ensuring compliance with the terms set forth in such awards.