TaxTMI 
TaxTMI 
2017 (8) TMI 1498
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....ty" used in the order dated 4th December, 2014. The award-holder has filed an application for enforcement of a foreign award in November 13, 2013. Initially, the execution application was not accompanied by the original award and a certified copy of the agreement for which a leave was given to the decree-holder to produce the said documents, pursuant thereto on 16th January, 2014, the original award and a certified copy of the agreement were produced in Court. Justice I.P. Mukerji by an order dated 16th January, 2014 recorded the production of the said two documents and photocopies of the said documents were taken on record without prejudice to the rights and contentions to the judgment-debtor. The said order was passed in presence of the judgment-debtor. The question of maintainability of the application was kept open. On 18th September, 2014, the judgment-debtor was directed to file an affidavit disclosing the particulars of the bank accounts and the amounts lying on to the credit of judgment-debtor in each of such bank accounts with supporting documents mentioned in Paragraph 26 of the Affidavit in support of the tabular statements. The said direction was passed without preju....
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....1) Arb. LR 230(Bombay) Paragraph 19. The second objection is that a civil suit is pending between the parties in which there is a categorical observation both by the learned Single Judge as well as the Division Bench that any action taken by the parties to the suit during the pendency of the suit shall subject to and abide by the result of the suit. It is submitted that a cross appeal was preferred by the decree-holder and this observation of the learned Single Judge was not interfered with and accordingly the execution application is premature and unless the suit is decided, the award does not attain its finality. The third objection is that the arbitration clause has not been properly invoked. It is submitted that arbitration clause is a two-tier clause. Before the arbitration clause could be invoked, the parties are required to first make an attempt to amicably settle their disputes and only upon failure, the parties could refer their disputes to the arbitration as per GAFTA clause for rice and arbitration rules 125. It is submitted that there is no averment in the petition that before invoking the arbitration clause there was any attempt to settle the disputes amicably. Sin....
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.... submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. (2) Enforcement of an arbitral award may also be refused if the Court finds that - (a) the subject matter of the difference is not capable of settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary to the public policy of India. Explanation. - Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. (3) If an application for th....
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....not be entitled to invoke the clause unilaterally for appointment of an arbitrator. In my opinion, this submission cannot be accepted. It is an institutionalized arbitration, the rules provide the manner in which the parties are to act in matters relating to arbitration. Elaborate procedures and mechanisms are provided in the Act for conduct of the arbitration. Rule 3 of GAFTA Rules deals with appointment of the Tribunal. It clearly shows that the disputes shall be heard and determined by a Tribunal or three Arbitrators (appointed in accordance with Rule 3.2) or, if both parties agree by a single Arbitrator (appointment in accordance with Clause 3.1). Once the petitioner has named an arbitrator and sent the notice to the opposite party it was open to the opposite party either to accept the said name or to disagree with the same, not later than 9th subsequent day after serving of the said notice, failing which the consequences mentioned in the other rules shall follow. On the basis of the materials on record it cannot be said that GAFTA Rules have not been followed with regard to the appointment of the Arbitrator. In fact the judgment-debtor was informed about the exercise of opti....
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....only on consideration of such objections, the order dated 4th December, 2014 was passed. A review application filed was also dismissed. In view of the aforesaid, the objection raised with regard to the composition of the Arbitral Tribunal and that the procedure for appointment of Mr. R. Eikel as second Arbitrator on behalf of the petitioner by GAFTA was not in accordance with the agreement of the parties (GAFTA Rules) and the petitioner was not given proper notice of appointment of Eikel as the Arbitrator on their behalf is final and cannot be reopened. In fact, this argument runs counter to the pleadings made in the plaint. The petitioner cannot be allowed to re-agitate the said point, on which the objection was already considered in the order dated 4th December, 2014. In the Special Leave Petition, same point was urged. The Hon'ble Supreme Court did not interfere with the order dated 4th December, 2014. Mr. Anindya Kr. Mitra, the learned senior Counsel appearing on behalf of the applicant/award-debtor submits that the said order is not conclusive with regard to the enforcement of the foreign award as at the stage of receiving an application for execution of a foreign award, th....
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....t crop, Thailand origin at the rate of USD 450 per metric ton. The contract contains stipulation that the quantity would be final at the Port of loading as per official weight certificate issued by SGS at the seller's cost meaning thereby the award-holder. The award-debtor under the contract was required to open an irrevocable, confirmed, unrestricted letter of credit in US Dollar in favour of the awarddebtor within 5 working days from the date of signing of contract through Standard Chartered Bank (India) for the value of the goods to be shipped under the contract. The contract is a FOB contract. The contract stipulates that 100% value of the contracted cargo shall be payable on receipt of the shipping documents by the L/C negotiating bank at 30 days sight. The contract mentions about 16 shipping documents to be submitted for receiving payment under the L/C. The contract in "Other Terms" provided that all other terms and conditions not in contradiction with the stipulated terms of the contract shall be governed by GAFTA 48 and disputes to be resolved by Arbitration as per GAFTA 125 in London. The goods were meant for Government of People's Republic of Bangladesh. In 'special ins....
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.... December, 2010. Since the third consignment could not be shipped, a further amendment to the Letter of Credit was made on 31st December, 2010 by which the latest date of shipment was extended until to 15th January, 2011 with new date of expiry of L/C on 30th January, 2011. The validity of the Letter of Credit thereafter was not extended neither the latest date of shipment beyond the aforesaid dates. Seller shipped the consignment as follows: 1. 1,610.00 mt on board of MV Study Falcon on 27 December, 2010 2. 3,430.00 mt on board of MV Genius Mariner on 31 December, 2010 3. 8,689.55 mt on board of MV Tuman Gang [sic] on 17th January 2011 For each single shipment invoices had been issued by Sellers in accordance with the addendum to the Contract displaying the first instalments at each USD 440.00 per metric ton, totalling at USD 6,041,139.30, as follows: 1. Invoice No.2021C/2010/PB/LMJ dated 27 December 2010 for USD 708,416.10 2. Invoice No.2021D/2010/PB/LMJ dated 31 December, 2010 for USD 1,509,234.30 3. Invoice No.2021E/2011/PB/LMJ dated 17th January 2011 for USD 3,823,488.90. On 17th January, 2017, the buyer arranged for a North-Korean Vessel, namely, MV Tu Man Gang....
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....ept the sellers' offer to take delivery of the remaining quantity of about 2000 MT. The sellers, accordingly, informed the buyers on 4th February, 2011 that the contract for the remaining quantities is foreclosed and the contract should be treated as completed. The buyers, however, by its e-mail dated 5th February, 2011 did not accept the decision of cancellation of balance quantity and had agreed to establish fresh L/C for the balance quantity of about 2000 MT. The buyer alleged that the cargo as loaded on the vessel was of inferior quality for which their ultimate buyer was not accepting the cargo. The buyers asked the sellers to depute their representative to Mongla, Bangladesh to check the quality. The buyers by their e-mail dated 8th February, 2011 asked for details of the person visiting Mongla to check the quality. The buyer alleged that the preliminary report on the quality is not satisfactory. The seller responded to the said e-mail on the same day, that is, on 8th February, 2011 and asked for the report as to the exact nature of the complaint. The seller on 10th February, 2011 informed the buyer that the surveyors have confirmed by their e-mail dated 9th February, 2011 t....
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....balance payment for MV Tu Man Gang would be effected as soon as the final accounts of the Bangladesh would be received. On 31st May, 2011, Buyers through their bank, the Bank of Baroda, informed Sellers that the balance of 10% of the invoice in reference with the shipment on board of MV Tu Man Gang will only be effected after completion of a joint inspection of the landed cargo at the port of discharge. On 3rd June 2011, Sellers through their bank, the Bangkok Bank, replied that the weight and the quality were final at loading port Bangkok as per certificate issued by the surveyor ISC nominated by Buyers themselves. Subsequently, Sellers rejected a joint inspection in the country of destination, i.e. Bangladesh. Sellers on 10th June 2011 sent to Buyers a further reminder for payment of the unpaid invoices. Only on 29th June 2011 Buyer replied and stated, inter alia, that the goods shipped under the contract "were not of the prescribed specification and the dead, damaged and discoloured grains were in much excess of the maximum limit of 3% specified" in the contract. Further, Buyers stated that both parties to the Contract agreed, at least by Sellers email dated 4th February 201....
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....they had sent inferior quality of rice and had promised that they would send the representatives to destination Port in Bangladesh for joint inspection of the consignment of rice. The existence of the said two documents although is not in disputes by suppressing the said letter and the e-mail, the claimant was emboldened to make false statement in Paragraph 19 of the claim submission that states: "The sellers were under tremendous pressure as the payment of the invoice was not being released by the buyers despite the fact that they had received the cargo. The seller, therefore, under pressure agreed for release of 90% payment of the invoice of USD 3,823,488.90 which was received by them on 21st February, 2011." The above statement is in conflict to the letter of February 14, 2011 by which the claimant proposed and agreed that they will accept 90% payment provisionally against their bill of exchange and the balance will be paid after joint inspection and settlement of claim. However, as soon as 90% payment was received by the claimant against the bill of exchange from Bank of Baroda on 21st February, 2011 the claimant omitted to send their representatives for joint inspection and....
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....al a suit has been filed being Suit No.196 of 2011 against Bank of Baroda only and no leave has been obtained to file a claim for the same amount from the Tribunal. The petitioner has deliberately suppressed on the Tribunal that parallel proceedings are initiated for realization of the said amount in respect of an alleged cause of action against the petitioner. The petitioner was also not made a party in the said suit. The award has been obtained by the claimant by suppression of breach of the agreement as recorded in the letter of 14th February, 2011 of the claimant that the balance 10% to be settled after inspection and finalization by practicing fraud upon the Tribunal. The second objection is that the Tribunal has made out a new case for the parties what is impermissible in law. The learned Senior Counsel has submitted that the seller did not even contend before the Tribunal or in their claim submission that a certificate of inspection report of the destination Port was to be procured by the buyer. The case that the buyer was to produce certificate of inspection of the destination port Bangladesh was not even made out in the claim submission of the claimant. No dispute was ....
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....ling Rules 124 Clause 6.1 is not applicable in this case. GAFTA Sampling Rules 124 does not provide that the buyer is to acquire the quality inspection report. It was not even the case of the claimant that said GAFTA Sampling Rules provide that a quality inspection report was to be provided by the buyer. It is submitted that in paragraph 6.18 the Tribunal has quoted GAFTA Sampling Rules 124, without holding that the said clause 6.1 provided that the certificate of analysis was to be sent to the seller by the buyer. The finding in paragraph 6.20 that "with respect to clause 6.1 of the GAFTA Sampling Rules 124 buyer was obliged to provide certificate of analysis" is without any reasons and is not supported by paragraph 6.18 of the award. It is not a case of interpretation of GAFTA Rules No.6.1 by the Tribunal, who have not analysed or interpreted Clause 6.1 of the Rule. Suddenly, the Tribunal have made an observation in paragraph 6.20, without any reason in support of their assumption, which is not really a finding. It is totally unreasonable, contradictory and wholly perverse. The award is contrary to the terms of the agreement to be read with Letters of Credit as required under E....
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....t case. Consequently, GAFTA Sampling Rules No.124 would also be in applicable. Therefore, the inference drawn by the Arbitral Tribunal in paragraphs 6.18, 6.20 and 6.22 of the award is on the fact of its untenable as it is against the specific contract terms. Furthermore the Arbitral Tribunal has omitted to consider that GAFTA Sampling Rules if in contradiction with the terms of the contract would not be applicable. The terms of the contract read with letter of credit clearly mean that certificate of quality inspection report of the destination port was to be acquired by the seller. Accordingly, reliance on the GAFTA Sampling Rules is perverse, contrary to the terms of the contract and void. The fourth objection is that award suffers from patent illegality as it fails to appreciate that it was the obligation of the buyer to provide the certificate of analysis under Clause 6.1 of the GAFTA Sampling Rules 124 is perverse, unreasonable and suffers from patent illegality and cannot be sustained on the basis of the materials on record. There is a patent illegality in the award which goes to the root of the matter. There is no finding that the issuing bank wrongfully refused to honour....
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....ta estoppel, cause of action estoppel and/or principles analogous thereto. It is submitted that the public challenge to the enforceability of the foreign award as opposed to public policy is not as wide as Section 34 of the Arbitration and Conciliation Act, 1996 as held in Shrilal Mahal Ltd. Vs. Progetto Grano SPA reported at (2014) 2 SCC 433. It is submitted that in Shrilal Mahal (supra) it has been categorically held that the public policy grounds available for setting aside of the domestic award under Section 34 are not the same "public policy grounds" mentioned under Section 48 of the Arbitration and Conciliation Act, 1996. Mr. Bose has requested this Court to consider the fundamental and preliminary objections before considering the merits of the matter. It is submitted that the contract is a FOB contract. The fundamental basis of a FOB contract is that the seller loads the goods at the loading port and thereafter the seller is not informed the respondents for the goods. The moment, the goods are loaded on board the vessel, obligation of the seller ceases. That is why in the list of "documents required" mentioned in the contract, one fundamental document is missing, namely, ....
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....led upon to answer such issues before the Arbitral Tribunal. The existence or non-existence of the invoices was never an issue before the Arbitral Tribunal. The claimant has in its possession an email message dated 25th February, 2011 by which various invoices were again submitted by the claimant. However, this being not an issue arising out of the award and beyond the scope of the application under Section 48 of the Arbitration and Conciliation Act, 1996, such documents has not been disclosed. If called upon, the claimant is willing to disclose such documents. The arbitral tribunal, however, has not relied upon the invoices at all. Instead, the arbitral tribunal has passed the award on the basis of the value of the goods. The total value of the goods was 450 USD per MT. The first three invoices representing 97.78%, represented 440 USD per MT. The balance three invoices represented 2.22% of the value of the goods and this constituted balance 10 USD per MT. Mr. Bose submits that the claim on account of bill of exchange is for 97.78% of value of goods loaded on MV Tu Man Gang. It is clear from the contract as well as the amendment dated 7th December, 2010 that recovery of 97.78% of ....
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....he terms of the Letter of Credit. The arbitral tribunal was aware of the fact that the shipment period was till 15th January, 2011 and that shipment on MV Tu Man Gang was done after last date of shipment. The discussions and findings of the arbitral tribunal, therefore, are correctly based on construction of the contract. It is submitted that it is the buyer's obligation to furnish quality inspection report at the destination port. The construction of the contract will show that a FOB seller never has any obligation at a destination port. It is pertinent to mention that from the contract itself, it would appear that the documents which were to be furnished by the seller were all related to the loading Port. The contract of insurance was on account of LMJ International Ltd. The risk in the goods had passed to LMJ the moment the goods were loaded at the Load Port by the seller. Thereafter, it was between LMJ arranged for shipment to the Port in Bangladesh. It was the choice of LMJ. The moment LMJ on 1st February, 2011 accepted the bill of exchange and asked for release of export documents and finally got the documents, the property in the goods were transferred to LMJ. The claimant ....
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....coming. By the letter dated 23rd August, 2011, GAFTA Tribunal was reminded that the requisite nine day period mentioned in Rule 3.2(b) of the GAFTA Rules had expired and that the arbitrator on behalf of LMJ had to be appointed. A copy of the said letter was also sent to LMJ at the same email address. Rule 20(3) of GAFTA Rules states that for the purpose of the GAFTA Rules, the date when the 'nine consecutive days' should start will not be taken into account. Thus, even after 28th July, 2011, the nine consecutive days thereafter expired on 6th August, 2011. After 6th August, 2011 the claimant became entitled to request GAFTA to appoint arbitrator on behalf of LMJ. By the letter dated 23rd August, 2011, the claimant requested GAFTA to appoint arbitrator on behalf of LMJ since the requisite nine day period had already expired. The subsequent letter dated 19th September, 2011 also addressed at the said email address, [email protected], is not a notice under Rule 3.3 of the GAFTA Rules. Necessary request to GAFTA had already been made on 23rd August, 2011. The subsequent letter dated 19th September, 2011 was merely a reminder particularly since the ex parte order of injunction which ....
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....80 and the four guidelines mentioned therein, the present application is barred under the principles of res judicata. The two cases, namely, Kanshi Ram Vs. Bansi Lal reported at AIR 1977 HP 61 (Paragraphs 6 and 7) and Sm. Muktakesi Dawn & Ors. Vs. Haripada Mazumdar & Anr. reported at AIR 1988 Cal 25 (Paragraph 6) were all cases involving orders of injunction for which principles of res judicata usually do not apply. Apart from the question of res judicata, the application is also barred under the principles of estoppel. Principles of estoppel may be similar to that of res judicata, although the strict requirements of res judicata may not apply to principles of estoppel. It is barred by Issue Estoppel and Cause of Action Estoppel. Issue Estoppel means, if an issue has been raised, the unsuccessful party cannot raise the same issue again. Cause of Action Estoppel means, if a party had a particular cause of action and has exhausted that cause of action or failed to exhaust the same, then the same cause of action cannot be agitated later. A brief guideline of Issue Estoppel and Cause of Action Estoppel is given by the Apex Court in Bhanu Kumar Jain Vs. Archana Kumar & Anr. reported a....
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....he Letter of Credit. The buyer knew that documents could not be negotiated under the Letter of Credit. Presentation of documents under the Letter of Credit, therefore, was not even a possibility. In Shamsher Jute Mills Ltd. (supra) and Ficom S.A. (supra) can both be distinguished by one sentence, viz. "the buyer had not taken delivery of the goods" in such cases. A buyer who takes delivery of goods is obliged to pay for the value of the goods. Mr. Bose has referred to two standard and celebrated Books on Letter of Credit, namely:- (a) Jack on Documentary Credits where specifically mentioned the situation "where the buyer has received the goods", and (b) Guttridge and Megrah's Laws of Bankers Commercial Credit where the entire discussion on the various case laws referred to by LMJ have been discussed and the buyer's frustration of a Letter of Credit and the consequence of breach are outlined. The disputes regarding whether a Letter of Credit payment is conditional or absolute arises only when there is a valid and subsisting Letter of Credit opened by the buyer. This has not happened in this case. Secondly, such issues arise only when a buyer refuses to accept delivery of goods ....
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....nk of Baroda, that bank of Baroda released 90% of the Bill of Exchange amount. The relevant documents have been disclosed in the statement of claim. I have considered the rival contentions. Section 48 of the 1996 Act materially corresponds to Section 7 of the Foreign Awards (Recognition and Enforcement) Act, 1961. Section 48(1)(a)(b)(c)(d) and (e) of the Act corresponds to provisions of Section 103(2)(a)(b)(c)(d)(e) and (f) respectively of the English Arbitration Act, 1996. Sub-sections 48(2) and 48(3) of the Act correspond to sub-sections 103(2) and 103(5) respectively of the English Arbitration Act. For the sake of convenience and brevity Section 48 of the 1996 Act is set out below:- "48. Conditions for enforcement of foreign awards.- (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that- (a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the....
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....t does not give an opportunity to have a "second look" at the foreign award in the award enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy. The scope of "Public Policy" in relation to enforcement of a foreign award was considered in Renusagar Power Company vs. General Electric Company reported at 1990 (92) Bom. L.R. 70, paragraphs 109 to 113. In Renusagar (supra) the award was challenged on the ground that it granted interest on interest and awarded heavy costs not entirely incurred in arbitration proceedings. It was contended that allowing these claims is contrary to law. The Division Bench was considering whether the enforcement of an award which grants compound interest is contrary to our public policy. It was held that the challenge to enforcement of the foreign award on the ground of public policy should receive a narrow interpretation. It would not be....
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....ed they have always been held to be not illegal notwithstanding the fact that the statute declared them void" It said that there is no definite head or principle of public policy evolved by Courts or laid down by precedents which would directly apply to wagering contracts. Even if it is permissible for Courts to evolve a new head of public policy under extraordinary circumstances giving rise to incontestable harm to the society, wager is not one of such instances of exceptional gravity, for it has been recognized for centuries and has been tolerated by the public and the State alike. Applying the same principle to compound interest, one can say that granting of compound interest has been tolerated in several types of cases and the Courts have not evolved any public policy ground on which awarding of compound interest by the arbitrators can be invalidated. The Supreme Court in the above case observed at page 792 - "The doctrine, as Lord Atkin remarked in a leading case, "should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds. X X X X X .... 'public policy....
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....In the field of private international law, courts refuse to apply a rule of foreign law or recognise a foreign judgment or a foreign arbitral award if it is found that the same is contrary to the public policy of the country in which it is sought to be invoked or enforced. The English courts follow the following principles: "Exceptionally, the English court will not enforce or recognise a right conferred or a duty imposed by a foreign law where, on the facts of the particular case, enforcement or, as the case may be, recognition, would be contrary to a fundamental policy of English law. The court has, therefore, refused in certain cases to apply foreign law where to do so would in the particular circumstances be contrary to the interests of the United Kingdom or contrary to justice or morality." (See : Halsbury's Laws of England, 4th Edn., Vol. 8, para 418.) 51. A distinction is drawn while applying the said rule of public policy between a matter governed by domestic law and a matter involving conflict of laws. The application of the doctrine of public policy in the field of conflict of laws is more limited than that in the domestic law and the courts are slower to invoke p....
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....it would also be of relevance to mention that under Article I(e) of the Geneva Convention Act of 1927, it is permissible to raise objection to the enforcement of arbitral award on the ground that the recognition or enforcement of the award is contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon. To the same effect is the provision in Section 7(1) of the Protocol & Convention Act of 1837 which requires that the enforcement of the foreign award must not be contrary to the public policy or the law of India. Since the expression "public policy" covers the field not covered by the words "and the law of India" which follow the said expression, contravention of law alone will not attract the bar of public policy and something more than contravention of law is required. 66. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public po....
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....in setting aside the award under Section 34. 27. In our view, what has been stated by this Court in Renusagar with reference to Section 7(1)(b)(ii) of the Foreign Awards Act must equally apply to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar it has been expressly exposited that the expression "public policy" in Section 7(1)(b)(ii) of the Foreign Awards Act refers to the public policy of India. The expression "public policy" used in Section 7(1)(b)(ii) was held to mean "public policy of India". A distinction in the rule of public policy between a matter governed by the domestic law and a matter involving conflict of laws has been noticed in Renusagar3. For all this there is no reason why Renusagar should not apply as regards the scope of inquiry under Section 48(2)(b). Following Renusagar3, we think that for the purposes of Section 48(2)(b), the expression "public policy of India" must be given narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to public policy of India if it is covered by one of the three categories enumerated in Renusagar3. Although the same expression 'public policy of India' is used bo....
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.... proceeding has also failed. The buyers now want to contend that the award is vitiated by reason of non-disclosure of the letter dated 14th February, 2011. The applicant was aware that while vacating the interim order on 9th September, 2011, Justice Dipankar Datta observed that "this Court is also in agreement with Mr. Mookerji that the limitation to refer the dispute to arbitration, if at all Clause 2.2(d) applies, would run form June1, 2011 when the petitioner refuted the claim of the respondent no.1 and not form the last date mentioned in the payment clause of the contract, as originally agreed, and the reference having been made on July 28, 2011, the submission that it is time-barred is unacceptable." However, in Paragraph 14, the Court hastened to observe that "the finding that the reference is not time-barred is prima facie and would not preclude the petitioner to raise such point in defence before the arbitral tribunal, as and when the occasion thereof arises." Thereafter in Paragraph 15 it is stated that "on consideration of the agreement between the parties that in the likelihood of a dispute arising between them which cannot be settled amicably the arbitral tribunal un....
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.... of any order passed by a superior Court. The relevant observations of the Division Bench in this regard are:- "The intention of the parties to have their disputes resolved by arbitration cannot be doubted. The parties have entered into such contract with their eyes wide open. They have decided that all disputes are to be resolved, adjudicated and decided by arbitral tribunal to be constituted under the GAFTA Rules. The principal ground for avoiding the said Tribunal is of forum inconvenience. The additional grounds appeared to be that there is no agreement between the plaintiff and the defendant to refer any dispute arising out of the said contract to arbitration either as per GAFTA Rules, 125 in London or otherwise. In deciding the said issue, the reference is required to be made to the contract containing such arbitration clause. There cannot be any dispute that the obligation to make payment or avoidance of any such payment is arising out of a transaction covered by the contract which contains the arbitration the arbitration clause. In the instant case, there is no dispute that the said contract containing arbitration clause has been validly and duly executed by the parties....
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....oval to be effective before he made his award. None of the above conditions apply in the instant case. The petitioner is not alleging fraud or bias by the arbitrator. Even under the domestic award, a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, and then he is the last word on facts. The construction of the terms of the contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person would do, of course, the arbitrator cannot wander outside the contract and deals with the matters not forming the subject matter or allotted to him as in that case he would commit jurisdictional error. The judgment in Associate Builders (supra), which was passed in relation to a dom....
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....tself defines in "1. Quantity" that the weight in accordance with the Contract would be still "final at loading" while the amended Payment Term now states that "a balance amount of US$ 10.00 per MT" would only "be payable after receipt of a quality inspection report of destination port". 6.17. We therefore find that the Contract had been validly altered to the provision that Sellers could only have triggered payment of the balance of USD 10.00 per metric ton after presentation of a quality inspection report from the port of destination, i.e. Bangladesh. 6.18 As no such quality inspection report had been presented by Buyers, despite various reminders from Sellers, until the present day, the GAFTA Sampling Rules No.124, cl. 6:1 provide that a "certificate of analysis" should be sent to the other party "within 14 consecutive days" after dispatch of the samples to the analyst. 6.19. Buyers in their message of 5 February, 2011 firstly explained that the quality of the cargo on the last vessel, i.e. MV Tu Man Gang, was inferior. 6.20. The Tribunal therefore finds that Buyers, with respect to cl. 6:1 of the GAFTA Sampling Rules No.124 were obliged to provide a certificate of analy....
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....ucceeded in recovering against a buyer personally. If this were an available road to recovery, many of the familiar arguments about discrepancies in documents would be unnecessary. Bearing in mind the likelihood that buyers will (as here) sell on to sub-buyers, such a result would, I think, throw the course of international trade into some confusion. It must in my view follow that the sellers here, not having complied with the credit terms, cannot recover against the buyers personally". The aforesaid decision is distinguishable on facts inasmuch as the award is passed on interpretation of the contract clause read with the GAFTA sample rules. The Tribunal held that the buyer has failed to furnish proof of inferior quality of food grains. In Ficom S.A. (supra) the Court was concerned with a contract of sale in which the terms of the letter of credit and in particular of the documents to be presented under the letter of credit - were undefined in the sale contract. In deciding the said issue, the following approach was adopted:- "I approach the matter in this way. It is plain on the authorities that parties to a contract of sale, under which payment is to be made by means of a let....
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....personally. 3-30 In the Shamsher Jute, Bingham, J. was dealing with a case where the failure to present documents required by the terms of the credit is the fault of the seller. In Saffron v. Societe Miniere Cafrika the seller shipped goods under an F.O.B contract in circumstances which enabled the buyer to obtain control of the goods upon shipment prior to issue of the bill of lading. The buyer then obtained a bill of lading made out in terms that prevented the seller from complying with the terms of the credit and as a result the seller could not obtain payment from the bank. The seller sued for the price. The High Court of Australia upheld the claim, saying: The question could only arise in special circumstances, e.g. if the bank responsible for the credit were to become insolvent, or as here, where notwithstanding that the documents tendered were not in conformity with the letter of credit, the seller had lost control of the goods to the buyer. The Court held that property in the goods had passed to the buyer and, the buyer not having restored dominion over the goods to the seller, the seller was able to maintain an action for the price. The seller had sold and delivered ....
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.... for a consideration that has wholly failed. 3-45. If it transpires that the documents tendered to the bank are fraudulent (by, for example, the bill of lading being ante-dated) and the bank pays the seller, the buyer may be able to recover damages from the seller for breach of contract or, if the facts justify it in deceit." (emphasis supplied) Jack on Documentary Credits, 4th Edition has also discussed this aspect of the matter. The learned Author observed:- "3.60 Whether the credit is conditional or absolute payment, if the seller presents documents to the bank that do not comply with the credit and are rejected the seller cannot sue the buyer directly unless the buyer has actually obtained the goods. This is so whether or not the goods conform to the contract. This is the clear outcome of both Soproma (1) and Shamsher Jute (2). 1 [1966] 1 Lloyd's Rep 367: see para 3.50 above. 2 [1987] 1 Lloyd's Rep 388: see para 3.54 above. 3.63 The buyer may receive the goods and yet the seller remain unpaid in two contrasting situations. One is where the credit provides for deferred payment and the documents are duly processed and taken up by the buyer in order to obtain the goods.....
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....rder to ascertain whose obligation it would be to produce such certificate. It is an admitted fact that when the third consignment was received by that time the validity of the L/C had expired and the parties had agreed to replace the L/C by bill of exchange. There was no stipulation concerning the said consignment that the payment is subject to production of the Quality Inspection Report by the seller at the port of destination. Even for 2.22% there was no valid and subsisting L/C. The buyer nonetheless obtained the goods. The findings of the Tribunal would show that the buyers in spite of notice did not furnish any proof of inferior quality of the goods. The Tribunal has interpreted the contract clause with regard to furnishing a quality certificate at the port of destination to be the responsibility of the buyer and, in absence of any document to show that the goods were inferior in quality returned a finding in favour of the seller. The Court in this limited jurisdiction and the narrower scope within which the Court has to act under Section 48 of the Arbitration and Conciliation Act, 1996 is unable to accept the submission of the buyer that the said award is contrary to public....