Foreign award enforcement: res judicata is not an absolute bar, and FEMA breach alone does not defeat public policy objections.

Enforcement of a foreign award is assessed independently from a set-aside challenge at the seat, so failure to pursue the same objections there does not create an absolute bar of res judicata or issue estoppel under Section 48. The enforcing court may consider prior conduct, but the resisting party remains entitled to invoke statutory refusal grounds. On notice and scope, the award was upheld because the party had notice of the claims, raised its defence, and the delivery-based payment direction was treated as implementing the keepwell obligation rather than exceeding the reference. A mere FEMA breach does not, by itself, establish violation of the fundamental policy of Indian law, and the public policy defence under Section 48(2)(b) remains narrow.

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Issues: (i) whether objections to enforcement of the foreign award were barred by res judicata or issue estoppel because the same objections had not been pursued before the supervisory court; (ii) whether the award was unenforceable under Section 48(1)(b) and Section 48(1)(c) of the Arbitration and Conciliation Act, 1996 for alleged lack of notice, inability to present the case, or excess of the scope of reference; and (iii) whether enforcement was barred by Section 48(2)(b) on the ground that the award violated FEMA and thereby the public policy of India.

Issue (i): whether objections to enforcement of the foreign award were barred by res judicata or issue estoppel because the same objections had not been pursued before the supervisory court

Analysis: The enforcing court held that proceedings for enforcement are distinct from proceedings to set aside an award at the seat. A prior challenge before the supervisory court may have persuasive value, but it does not bar the resisting party from showing grounds under Section 48 of the Arbitration and Conciliation Act, 1996. The court accepted that principles akin to res judicata, issue estoppel and abuse of process may be relevant in the exercise of discretion under Section 48, but they do not create an absolute bar.

Conclusion: The objections were not barred as a matter of res judicata, though the party's conduct could be considered in deciding whether enforcement should be refused.

Issue (ii): whether the award was unenforceable under Section 48(1)(b) and Section 48(1)(c) of the Arbitration and Conciliation Act, 1996 for alleged lack of notice, inability to present the case, or excess of the scope of reference

Analysis: The court found that the resisting party had notice of the demand, the arbitral proceedings, and the claims against it. The request for arbitration and the statement of claim expressly sought reliefs founded on the keepwell obligations, including payment by or through the subsidiary and damages for breach. The defence on these points was actually raised and considered by the tribunal. The award directing payment against delivery of shares was treated as a mechanism to implement the contractual obligation and not as an order compelling the resisting party to purchase shares outside the reference.

Conclusion: The award did not suffer from lack of notice, inability to present the case, or excess of jurisdiction under Section 48(1)(b) or Section 48(1)(c).

Issue (iii): whether enforcement was barred by Section 48(2)(b) on the ground that the award violated FEMA and thereby the public policy of India

Analysis: The court held that a mere violation of FEMA or the exchange-control regulations does not, by itself, amount to a violation of the fundamental policy of Indian law for the purpose of refusing enforcement of a foreign award. The public policy defence under Section 48(2)(b) is narrow. The court further held that the relevant FEMA framework permitted the kind of offshore guarantee/keepwell arrangement in substance, subject to regulatory conditions, and in any event the resisting party could not, after having made contrary representations and not raised the plea before the tribunal, rely on those inconsistent contentions to defeat enforcement. Any remittance issues could be addressed at the stage of actual payment and regulatory compliance.

Conclusion: Enforcement could not be refused on the ground of FEMA or public policy under Section 48(2)(b).

Final Conclusion: The court rejected the objections to enforcement and held that the foreign award was not shown to fall within any of the refusal grounds pleaded under Section 48.

Ratio Decidendi: For enforcement of a foreign award, res judicata does not operate as an absolute bar, and a mere contravention of FEMA does not by itself establish a violation of the fundamental policy of Indian law under Section 48(2)(b); the public policy defence remains narrow and enforcement will not be refused unless the objection squarely fits the statutory grounds.

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