| Headnote |
Arbitration and Conciliation Act, 1996: s.48(1)(b) – Enforcement of foreign awards – Violation of provisions of FEMA – Whether amounts to breach of Public Policy of India – If a particular act violates any provision of FEMA or the Rules framed thereunder, permission of the Reserve Bank of India may be obtained post-facto if such violation can be condoned – Neither the award, nor the agreement being enforced by the award, can, therefore, be held to be of no effect in law – This being the case, a rectifiable breach under FEMA can never be held to be a violation of the fundamental policy of Indian law – Further, even if the Reserve Bank of India were to take action under FEMA, the non-enforcement of a foreign award on the ground of violation of a FEMA Regulation or Rule would not arise as the award does not become void on that count – The fundamental policy of Indian law, must amount to a breach of some legal principle or legislation which is so basic to Indian law that it is not susceptible of being compromised – “Fundamental Policy” refers to the core values of India’s public policy as a nation, which may find expression not only in statutes but also time-honoured, hallowed principles which are followed by the Courts – Judged from this point of view, resistance to the enforcement of a foreign award cannot be made on this ground. Arbitration and Conciliation Act, 1996: s.48(1)(b) – Enforcement of foreign awards – Refusal at the request of party if that party furnishes to the court that he was unable to present his case – Expression “was otherwise unable to present his case” – Interpretation of – Held: Expression “was otherwise unable to present his case” occurring in s.48(1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase – This expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties – Read along with the first part of s.48(1)(b), this expression would apply at the hearing stage and not after the award is delivered – Such breach should be clearly made out on the facts of a given case, and that awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under s.48 of the Act – Mere failure to consider a material issue would not fall within the rubric of s.48(1)(b) – However, if a foreign award fails to determine a material issue which goes to the root of the matter or fails to decide a claim or counter- claim in its entirety, the award shocking the conscience of the Court may be set aside on the ground of violation of the public policy of India, in that it would then offend a most basic notion of justice in this country – Poor reasoning, by which a material issue or claim is rejected, can never fall in this class of cases – The foreign award must be read as a whole, fairly, and without nit-picking – In the instant case, when award is read as a whole, it has addressed the basic issues raised by the parties and has, in substance, decided the claims and counter-claims of the parties, its enforcement must follow. Arbitration and Conciliation Act, 1996: s.48 – Recognition and enforcement of foreign awards – Scope of interference under Art.136 – The legislative policy so far as recognition and enforcement of foreign awards is that an appeal is provided against a judgment refusing to recognise and enforce a foreign award but not the other way around (i.e. an order recognising and enforcing an award) – This is because the policy of the legislature is that there ought to be only one bite at the cherry in a case where objections are made to the foreign award on the extremely narrow grounds contained in s.48 of the Act and which have been rejected – This is in consonance with the fact that India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”) and intends - through this legislation - to ensure that a person who belongs to a Convention country, and who, in most cases, has gone through a challenge procedure to the said award in the country of its origin, must then be able to get such award recognised and enforced in India as soon as possible – Bearing this in mind, the Supreme Court’s jurisdiction under Art.136 should not be used to circumvent the legislative policy so contained – Constitution of India – Art.136 – Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. |
