2009 (9) TMI 1034 - HC - Indian Laws

Enforcement of Foreign Arbitral Award Upheld under Arbitration Act

Naval Gent Maritime Limited Versus Shivnath Rai Harnarain (I) Ltd.

The Court found in favor of the Execution Petitioner/Decree Holder, holding the foreign award enforceable under Part II Chapter I of the Arbitration & ... - Issues Involved:1. Enforceability of the foreign award under Part II Chapter I of the Arbitration & Conciliation Act, 1996.2. Whether the award had become binding under Section 48(1)(e) of the Arbitration & Conciliation Act, 1996.3. Whether the award was contrary to public policy of India.4. Whether the award was enforceable despite not being stamped as per the Indian Stamp Act.Summary:1. Enforceability of the Foreign Award:The Execution Petitioner/Decree Holder filed a petition for enforcement of a foreign award dated 22.1.2001 under Part II Chapter I of the Arbitration & Conciliation Act, 1996. The petitioner complied with all conditions u/s 47, including filing a certified copy of the award, the Charter Party Agreement, and an affidavit confirming no appeal was filed against the award in England. Despite repeated opportunities, the Judgment Debtor/respondent did not file an application u/s 48 nor a response to the Execution Petition. The matter was fixed for arguments on enforceability, and the Judgment Debtor was permitted to address arguments on 7th July, 2009.2. Binding Nature of the Award:The Judgment Debtor argued that the award had not become binding as per Section 66 of the Arbitration Act, 1996 (England) and u/s 48(1)(e) of the Arbitration & Conciliation Act, 1996 (India). The Court clarified that the enforceability of a foreign award in India is determined under Part II of the Arbitration & Conciliation Act, 1996, not under Section 66 of the English Arbitration Act. Since the Judgment Debtor did not challenge the award in England, the plea that the award had not become binding was baseless.3. Public Policy:The Judgment Debtor contended that the award was contrary to public policy, citing duress in the execution of Addendum 3. The Arbitrator had considered the evidence and concluded that the pressure exerted by the Owners was not sufficient to vitiate the Charterers' consent. The Court held that the Arbitrator's decision on duress, being a mixed issue of law and facts, could not be re-evaluated by the Court and did not constitute a violation of public policy.4. Stamping of the Award:The Judgment Debtor argued that the award was not stamped as per the Indian Stamp Act and relied on a Punjab & Haryana High Court judgment. However, the Supreme Court in Harendera H. Mehta and Ors. v. Mukesh H. Mehta and Ors. clarified that a foreign award does not require registration under the Registration Act. The Court held that the issue of stamp duty cannot impede the enforceability of a foreign award.Conclusion:The Court found no merit in the issues raised by the Judgment Debtor. The foreign award was held executable, and the Decree Holder was permitted to encash the bank guarantee issued by the Judgment Debtor. If any further amount remained unpaid, the Decree Holder could take steps for further execution.