Foreign-seated arbitration: limitation follows the seat's curial law and enforcement objections are confined to narrow statutory grounds.
For a foreign-seated arbitration, limitation was treated as part of the curial law of the seat rather than the substantive law of the contract, so Malaysian limitation law governed the claims and they were held to be within time. Compound interest consistent with the contract was not, by itself, contrary to public policy, and the objections to enforcement under Section 48 were rejected because the statutory grounds for refusing enforcement are narrow. The challenge to the foreign award therefore failed, and the award was upheld in substance.
Issues: (i) whether a petition under Section 34 of the Arbitration and Conciliation Act, 1996 was maintainable against a foreign award where the seat of arbitration was outside India; (ii) whether limitation was to be determined by Indian law or by the curial law of the seat of arbitration; and (iii) whether the award of compound interest and the objections to enforcement under Section 48 of the Arbitration and Conciliation Act, 1996 could be sustained.
Issue (i): whether a petition under Section 34 of the Arbitration and Conciliation Act, 1996 was maintainable against a foreign award where the seat of arbitration was outside India.
Analysis: The agreement between the parties did not fix a seat, and the ICC fixed Kuala Lumpur as the seat of arbitration. The law declared in Bharat Aluminium Co. was applied prospectively, so the challenge under Section 34 was examined on merits. The Court accepted that, for a foreign-seated arbitration, the curial law is ordinarily the law of the seat and that the foreign award remained amenable to the statutory scheme only to the extent permitted by the governing law and the enforcement provisions.
Conclusion: The petition under Section 34 was treated as maintainable for consideration on merits, but the challenge ultimately failed.
Issue (ii): whether limitation was to be determined by Indian law or by the curial law of the seat of arbitration.
Analysis: Limitation was held to be procedural and not part of the substantive law governing the contract. Since the seat of arbitration was Malaysia, the curial law, including the law of limitation, was Malaysian law. The Court upheld the arbitrator's view that the Malaysian Limitation Act, 1953 governed the claims and that the claims were within time. The alternative argument based on Indian limitation law was not accepted.
Conclusion: Limitation was governed by Malaysian law, and the claims were held to be within limitation.
Issue (iii): whether the award of compound interest and the objections to enforcement under Section 48 of the Arbitration and Conciliation Act, 1996 could be sustained.
Analysis: The Court held that compound interest consistent with the contract is not, by itself, opposed to public policy. The grounds available under Section 48 are narrow, and nothing in the award or its enforcement required the respondent to act contrary to Indian law or public policy. The enforcement objection therefore lacked merit.
Conclusion: The challenge to compound interest and the objections to enforcement were rejected.
Final Conclusion: The foreign award was upheld in substance, the enforcement objections were rejected, and the petition seeking to set aside the award failed, resulting in dismissal of the challenge with costs.
Ratio Decidendi: In an international arbitration seated outside India, limitation is part of the curial law of the seat and not the substantive law of the contract, and enforcement of a foreign award can be refused only on the narrow statutory grounds, including a real conflict with public policy.