2020 (6) TMI 117 - SC - Indian Laws

Supreme Court Enforces ICC Foreign Award, Upholds Two-Tier Arbitration Clause

M/s. CENTROTRADE MINERALS AND METALS INC. Versus HINDUSTAN COPPER LTD.

The Supreme Court upheld the validity of the two-tier arbitration clause, recognized the ICC award as a foreign award, and concluded that HCL had been ... Execution of foreign arbitration award - two-tier arbitration process - Quantity of dry weight of copper concentrate delivered - Difference of opinion between the Judges of Division Bench - HELD THAT:- Despite the fact that the legal submissions running into 75 pages were submitted beyond time, that is only on 13.9.2001, in view of the 11.09.2001 attack in New York, the learned arbitrator received the same and took the same into account despite being beyond time. It was only on 29.09.2001 that the learned arbitrator then passed his award. Given the aforesaid timeline, it is clear that the learned arbitrator was extremely fair to the respondent. Having noticed that the respondent wanted to stall the arbitral proceedings by approaching the Courts in Rajasthan and having succeeded partially, at least till February 2001, the conduct of the respondent leaves much to be called for. Despite being informed time and again to appear before the Tribunal and submit their response and evidence in support thereof, it is only after the arbitrator indicated that he was going to pass an award that the respondent’s attorneys woke up and started asking for time to present their response. This too was granted by the learned arbitrator, by not only granting extension of time, but by extending this time even further. Finally, when the legal submissions of 75 pages were sent even beyond the time that was granted, the learned Arbitrator took this into account and then passed his award. This being the case, on facts we can find no fault whatsoever with the conduct of the arbitral proceedings. Factually, there is no supporting material to show that any such further material was received by the learned arbitrator, except documents that have been presented by Shri Raval for the first time before us. They were clearly not before Chatterjee,J. when this surmise was made by the learned Judge, Further, the arbitrator cannot be faulted on this ground as, given the authorities referred to by us hereinabove, the arbitrator is in control of the arbitral proceedings and procedural orders which give time limits must be strictly adhered to. Even otherwise, Chatterjee, J., refers to the judgment in Hari Om Maheshwari (supra) as well as Minmetals (supra), but then does not proceed to apply the ratio of the said judgments. Had he applied the ratio of even these two judgments, it would have been clear that an arbitrator’s refusal to adjourn the proceedings at the behest of one party cannot be said to be perverse, keeping in mind the object of speedy resolution of disputes of the Arbitration Act. Further, the Minmetals (supra) test was not even adverted to by Chatterjee,J., which is that HCL was never unable to present its case as it was at no time outside its control to furnish documents and legal submissions within the time given by the learned arbitrator. HCL chose not to appear before the arbitrator, and thereafter chose to submit documents and legal submissions outside the timelines granted by the arbitrator. Foreign Award enforced. Issues Involved:1. Validity of the two-tier arbitration clause under Indian law.2. Interpretation of the two-tier arbitration clause and whether the ICC arbitrator acted as an appellate authority.3. Classification of the ICC award as a foreign award.4. Whether HCL was given a proper opportunity to present its case before the ICC arbitrator.Detailed Analysis:1. Validity of the Two-Tier Arbitration Clause:The two-tier arbitration clause, as per Clause 14 of the agreement, was contested for its validity under Indian law. Initially, a Division Bench of the Supreme Court had differing opinions on this issue. S.B. Sinha, J. found the clause invalid under Section 23 of the Indian Contract Act, while Tarun Chatterjee, J. upheld its validity. The matter was referred to a three-judge bench, which concluded that the two-tier arbitration process was indeed valid and permissible under Indian law.2. Interpretation of the Two-Tier Arbitration Clause:The interpretation of whether the ICC arbitrator sat in appeal against the Indian arbitrator's award was also debated. The Supreme Court ultimately agreed with Tarun Chatterjee, J.'s view that the ICC arbitrator did act in an appellate capacity, thus interpreting the two-tier arbitration clause as allowing an appeal to the ICC arbitrator in London.3. Classification of the ICC Award as a Foreign Award:The classification of the ICC award as a foreign award was another point of contention. The Division Bench of the Calcutta High Court initially held that the London award could not be considered a foreign award. However, the Supreme Court, agreeing with Tarun Chatterjee, J., concluded that the ICC award was indeed a foreign award, thus making it enforceable under Indian law.4. Opportunity for HCL to Present Its Case:The crux of the matter revolved around whether HCL was given a fair opportunity to present its case before the ICC arbitrator. The ICC arbitrator, Jeremy Cook QC, extended multiple opportunities to HCL to submit their defense and supporting evidence. Despite these opportunities, HCL delayed and submitted documents beyond the stipulated deadlines. The arbitrator considered the late submissions but did not accept further documents sent even later.Justice Tarun Chatterjee, J., in his judgment, found that HCL was not given a fair opportunity, citing delays not attributable to HCL and the impact of the 9/11 terrorist attacks. However, the three-judge bench, in reviewing the matter, found that the arbitrator had acted fairly and within his procedural rights. The bench emphasized that procedural orders must be adhered to and that HCL's inability to present its case was due to its own actions and not due to any procedural unfairness by the arbitrator.Conclusion:The Supreme Court set aside Justice Tarun Chatterjee, J.'s judgment, which had found in favor of HCL on the grounds of procedural unfairness. The court upheld the validity of the two-tier arbitration clause, recognized the ICC award as a foreign award, and concluded that HCL had been given ample opportunity to present its case. Consequently, Centrotrade’s appeal was allowed, HCL’s appeal was dismissed, and the foreign award dated 29.09.2001 was ordered to be enforced.