2017 (8) TMI 1498 - HC - Indian Laws

Court upholds enforceability of foreign award, dismisses challenge. Section 48 limits review to specific grounds.

Sleepwell Industries Co. Ltd. Versus Lmj International Ltd.

Sleepwell Industries Co. Ltd. Versus Lmj International Ltd. - TMI Issues Involved:1. Second look at the foreign award.2. Grounds for challenging the enforceability of the foreign award.3. Composition and procedure of the Arbitral Tribunal.4. Allegations of fraud and suppression of documents.5. Interpretation of contract terms and obligations.Detailed Analysis:1. Second Look at the Foreign Award:The judgment-debtor sought a second look at the foreign award under Section 48 of the Arbitration and Conciliation Act, 1996, despite an earlier order dated 4th September 2014 addressing maintainability and enforceability. The court clarified that the terms 'maintainability' and 'enforceability' were used interchangeably in previous orders and were understood as such by both parties.2. Grounds for Challenging the Enforceability of the Foreign Award:The judgment-debtor raised five objections:- No Declaration for Enforceability: The court rejected the objection that the application lacked a prayer for a declaration of enforceability, citing the Bombay High Court decision in Toepfer International Asia Pvt. Ltd. Vs. Thapar Ispat Ltd.- Pending Civil Suit: The court dismissed the argument that the pending civil suit rendered the execution premature, noting that the suit's outcome would not affect the award's finality.- Improper Invocation of Arbitration Clause: The court found that the arbitration clause was properly invoked, and the requirement for amicable settlement attempts was not a barrier.- Appointment of Sole Arbitrator: The court held that proper procedures under GAFTA rules were followed for appointing the arbitrator.- Nominee Arbitrator Appointment: The court found no irregularity in the appointment of the nominee arbitrator.3. Composition and Procedure of the Arbitral Tribunal:The court upheld the composition and procedure of the Arbitral Tribunal, stating that it did not suffer from any infirmity. The judgment-debtor's objections regarding the tribunal's composition and the appointment of arbitrators were previously considered and rejected, and the Supreme Court did not interfere with the order.4. Allegations of Fraud and Suppression of Documents:The judgment-debtor alleged that the award was induced by fraud due to the suppression of two communications dated 14th February 2011. The court found that non-disclosure of these documents did not amount to fraud affecting the award. The judgment-debtor, having chosen not to participate in the arbitration, could not later claim suppression of documents as a ground for setting aside the award.5. Interpretation of Contract Terms and Obligations:The court addressed the interpretation of the contract terms, particularly regarding the obligation to provide a quality inspection report at the destination port. The tribunal's findings were based on the contract and GAFTA rules, concluding that the buyer was responsible for providing the quality inspection report. The court emphasized that interpretation of contract terms is within the arbitrator's domain and cannot be re-examined in enforcement proceedings.Conclusion:The application challenging the enforceability of the foreign award was dismissed. The court held that the objections raised were either previously addressed or lacked merit. The award was found to be enforceable, and the execution application was deemed maintainable. The court reiterated that the scope of inquiry under Section 48 does not permit a review of the foreign award on merits and is limited to specific grounds such as public policy, which were not violated in this case.