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of <h1>Foreign Award Deemed Unenforceable: Violates Indian Law and Public Policy, NAFED Cleared From Liability.</h1> <h3>National Agricultural Co-Operative Marketing Federation of India Versus Alimenta S.A.</h3> National Agricultural Co-Operative Marketing Federation of India Versus Alimenta S.A. - (2020) 19 SCC 260 Issues Involved:1. Enforceability of the foreign award.2. Compliance with contractual obligations by NAFED due to Government's refusal.3. Liability of NAFED for breach of contract under Clause 14 of the Agreement.4. Enforcement of the award against public policy of India.Detailed Analysis:1. Enforceability of the Foreign Award:The Supreme Court examined whether the foreign award could be enforced against NAFED. The primary objections were based on the argument that NAFED could not comply with the contractual obligations due to the Government's refusal to permit the export of groundnuts, the applicability of Clause 14 of the Agreement, and whether the enforcement of the award was against the public policy of India.2. Compliance with Contractual Obligations by NAFED Due to Government's Refusal:The Court observed that NAFED, being a canalizing agency for the Government of India, required express permission from the Government to carry forward exports from one year to the next. The Government refused permission to carry forward the exports for the season 1979-80 to 1980-81. Clause 14 of the Agreement stipulated that in the event of prohibition by an executive or legislative act by the Government, the contract would be deemed canceled. The Court concluded that the Government's refusal to grant permission was a valid reason for NAFED's inability to fulfill the contractual obligations, thus rendering the contract void under Section 32 of the Indian Contract Act.3. Liability of NAFED for Breach of Contract Under Clause 14 of the Agreement:The Court held that due to the Government's refusal, the contract was rendered void as per Clause 14 of the Agreement. The prohibition by the Government was a valid ground under the contract to cancel the unfulfilled portion. Consequently, NAFED could not be held liable to pay damages for non-performance, as the contract had become void on the occurrence of the specified contingency.4. Enforcement of the Award Against Public Policy of India:The Court emphasized that enforcement of the award would be contrary to the public policy of India. It was noted that enforcing the award would violate the fundamental policy of Indian law, as NAFED was prohibited from exporting the commodity without Government permission. The Court referred to Section 7(1)(b)(ii) of the Foreign Awards Act, which allows refusal of enforcement if it is against public policy. The Court concluded that enforcing the award would contravene the fundamental policy of Indian law and the basic concept of justice, thus making the award unenforceable.Conclusion:The Supreme Court allowed the appeal filed by NAFED, setting aside the High Court's judgment and holding the foreign award unenforceable. The Court found that the award violated the fundamental policy of Indian law and public policy, as NAFED was prohibited from exporting the commodity without Government permission. The contract was rendered void under Clause 14 of the Agreement and Section 32 of the Indian Contract Act, relieving NAFED from liability to pay damages under the foreign award.
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