VIJAY KARIA & ORS. versus PRYSMIAN CAVI E SISTEMI SRL & ORS. on 13 February 2020

SUPREME COURT REPORTS

[2020] 4 S.C.R.

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VIJAY KARIA & ORS.

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PRYSMIAN CAVI E SISTEMI SRL & ORS.

(Civil Appeal No. 1544 of 2020)

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FEBRUARY 13, 2020

[R. F. NARIMAN, ANIRUDDHA BOSE ANDV. RAMASUBRAMANIAN, JJ.]

Arbitration and Conciliation Act, 1996: s.48(1)(b) –Enforcement of foreign awards – Violation of provisions of FEMAC– Whether amounts to breach of Public Policy of India – If aparticular act violates any provision of FEMA or the Rules framedthereunder, permission of the Reserve Bank of India may be obtainedpost-facto if such violation can be condoned – Neither the award,nor the agreement being enforced by the award, can, therefore, beDheld to be of no effect in law – This being the case, a rectifiablebreach under FEMA can never be held to be a violation of thefundamental policy of Indian law – Further, even if the ReserveBank of India were to take action under FEMA, the non-enforcementof a foreign award on the ground of violation of a FEMA Regulationor Rule would not arise as the award does not become void on thatEcount – The fundamental policy of Indian law, must amount to abreach of some legal principle or legislation which is so basic toIndian law that it is not susceptible of being compromised –“Fundamental Policy” refers to the core values of India’s publicpolicy as a nation, which may find expression not only in statutesFbut also time-honoured, hallowed principles which are followed bythe Courts – Judged from this point of view, resistance to theenforcement 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 ifGthat party furnishes to the court that he was unable to present hiscase – Expression “was otherwise unable to present his case” –Interpretation of – Held: Expression “was otherwise unable topresent his case” occurring in s.48(1)(b) cannot be given anexpansive meaning and would have to be read in the context andcolour of the words preceding the said phrase – This expressionH

would be a facet of natural justice, which would be breached onlyif 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 wouldapply at the hearing stage and not after the award is delivered –Such breach should be clearly made out on the facts of a givencase, and that awards must always be read supportively with aninclination to uphold rather than destroy, given the minimalinterference possible with foreign awards under s.48 of the Act –Mere failure to consider a material issue would not fall within therubric of s.48(1)(b) – However, if a foreign award fails to determinea material issue which goes to the root of the matter or fails todecide a claim or counter- claim in its entirety, the award shockingthe conscience of the Court may be set aside on the ground ofviolation of the public policy of India, in that it would then offend amost basic notion of justice in this country – Poor reasoning, bywhich a material issue or claim is rejected, can never fall in thisclass of cases – The foreign award must be read as a whole, fairly,and without nit-picking – In the instant case, when award is read asa whole, it has addressed the basic issues raised by the parties andhas, in substance, decided the claims and counter-claims of theparties, its enforcement must follow.

Arbitration and Conciliation Act, 1996: s.48 – Recognitionand enforcement of foreign awards – Scope of interference underArt.136 – The legislative policy so far as recognition andenforcement of foreign awards is that an appeal is provided againsta judgment refusing to recognise and enforce a foreign award butnot the other way around (i.e. an order recognising and enforcingan award) – This is because the policy of the legislature is thatthere ought to be only one bite at the cherry in a case whereobjections are made to the foreign award on the extremely narrowgrounds 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 theConvention on the Recognition and Enforcement of Foreign ArbitralAwards, 1958 (“New York Convention”) and intends - through thislegislation - to ensure that a person who belongs to a Conventioncountry, and who, in most cases, has gone through a challengeprocedure to the said award in the country of its origin, must thenbe able to get such award recognised and enforced in India assoon as possible – Bearing this in mind, the Supreme Court’s ABCD

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Ajurisdiction under Art.136 should not be used to circumvent thelegislative policy so contained – Constitution of India – Art.136 –Convention on the Recognition and Enforcement of Foreign ArbitralAwards, 1958.

Dismissing the appeals, the CourtB

HELD: 1. Unlike Section 37 of the Arbitration Act, whichis contained in Part I of the said Act, and which provides an appealagainst either setting aside or refusing to set aside a ‘domestic’arbitration award, the legislative policy so far as recognition andenforcement of foreign awards is that an appeal is providedCagainst a judgment refusing to recognise and enforce a foreignaward but notthe other way around (i.e. an order recognising andenforcing an award). This is because the policy of the legislatureis that there ought to be only one bite at the cherry in a casewhere objections are made to the foreign award on the extremelynarrow grounds contained in Section 48 of the Act and which haveDbeen rejected. This is in consonance with the fact that India is asignatory to the Convention on the Recognition and Enforcementof Foreign Arbitral Awards, 1958 (“New York Convention”) andintends - through this legislation - to ensure that a person whobelongs to a Convention country, and who, in most cases, hasEgone through a challenge procedure to the said award in thecountry of its origin, must then be able to get such awardrecognised and enforced in India as soon as possible. This is sothat such person may enjoy the fruits of an award which has beenchallenged and which challenge has been turned down in thecountry of its origin, subject to grounds to resist enforcementFbeing made out under Section 48 of the Arbitration Act. Bearingthis in mind, the Supreme Court’s jurisdiction under Article 136should not be used to circumvent the legislative policy socontained. This is so because this matter has been argued forseveral days before this court as if it was a first appeal from aGjudgment recognising and enforcing a foreign award. Given therestricted parameters of Article 136, in cases like the present -where no appeal is granted against a judgment which recognisesand enforces a foreign award - this Court should be very slow ininterfering with such judgments, and should entertain an appealonly with a view to settle the law if some new or unique point isH

raised which has not been answered by the Supreme Court before,so that the Supreme Court judgment may then be used to guidethe course of future litigation in this regard. Also, it would onlybe in a very exceptional case of a blatant disregard of Section 48of the Arbitration Act that the Supreme Court would interferewith a judgment which recognises and enforces a foreign awardhowever inelegantly drafted the judgment may be. [Para 24][375-F-H; 376-A-E]

2. Enforcement of Foreign Awards under Section 48

2. Enforcement of Foreign Awards under Section 48

Amendments were made by the Arbitration and Conciliation(Amendment) Act, 2015. Section 48 was amended to delete theground of “contrary to the interest of India”. In the context ofchallenge to domestic awards, Section 34 of the Arbitration Actdifferentiates between international commercial arbitrations heldin India and other arbitrations held in India. So far as “the publicpolicy of India” ground is concerned, both Sections 34 and 48are now identical, so that in an international commercial arbitrationconducted in India, the ground of challenge relating to “publicpolicy of India” would be the same as the ground of resistingenforcement of a foreign award in India. This feature of the 2015Amendment Act states that all grounds relating to patent illegalityappearing on the face of the award are outside the scope ofinterference with international commercial arbitration awardsmade in India and foreign awards whose enforcement is resistedin India. [Paras 37, 38][390-F, H; 391-A-B]

3. General approach to enforcement and recognition ofForeign Awards The US cases show that given the “pro-enforcement bias”of the New York Convention, which has been adopted in Section48 of the Arbitration Act, 1996 - the burden of proof on partiesseeking enforcement has now been placed on parties objectingto enforcement and not the other way around; in the guise ofpublic policy of the country involved, foreign awards cannot beset aside by second guessing the arbitrator’s interpretation ofthe agreement of the parties; the challenge procedure in theprimary jurisdiction gives more leeway to Courts to interfere withan award than the narrow restrictive grounds contained in the A

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[2020] 4 S.C.R.

ANew York Convention when a foreign award’s enforcement isresisted. [Para 45][397-C-D]4. Discretion of the Court to Enforce Foreign AwardsEnforcement of a foreign award may under Section 48 ofthe Arbitration Act be refused only if the party resistingBenforcement furnishes to the Court proof that any of the statedgrounds has been made out to resist enforcement. The saidgrounds are watertight – no ground outside Section 48 can belooked at. Also, the expression used in Section 48 is “may”. Whenthe grounds for resisting enforcement of a foreign award underCSection 48 are seen, they may be classified into three groups –grounds which affect the jurisdiction of the arbitrationproceedings; grounds which affect party interest alone; andgrounds which go to the public policy of India, as explained byExplanation 1 to Section 48(2). Where a ground to resistenforcement is made out, by which the very jurisdiction of theDtribunal is questioned - such as the arbitration agreement itselfnot being valid under the law to which the parties have subjectedit, or where the subject matter of difference is not capable ofsettlement by arbitration under the law of India, it is obvious thatthere can be no discretion in these matters. Enforcement of aEforeign award made without jurisdiction cannot possibly beweighed in the scales for a discretion to be exercised to enforcesuch award if the scales are tilted in its favour. On the other hand,where the grounds taken to resist enforcement can be said to belinked to party interest alone, for example, that a party has beenunable to present its case before the arbitrator, and which groundFis capable of waiver or abandonment, or, the ground being madeout, no prejudice has been caused to the party on such groundbeing made out, a Court may well enforce a foreign award, evenif such ground is made out. When it comes to the “public policyof India” ground, again, there would be no discretion in enforcingGan award which is induced by fraud or corruption, or which violatesthe fundamental policy of Indian law, or is in conflict with themost basic notions of morality or justice. It can thus be seen thatthe expression “may” in Section 48 can, depending upon thecontext, mean “shall” or as connoting that a residual discretionremains in the Court to enforce a foreign award, despite groundsH

for its resistance having been made out. What is clear is that thewidth of this discretion is limited in which case a balancing actmay be performed by the Court enforcing a foreign award. [Paras46, 53, 54][397-E-F; 407-E-G; 408-A-C]

Shri Lal Mahal Ltd. v. Progetto Grano SPA (2014) 2SCC 433; Phulchand Exports Ltd. v. O.O.O Patriot(2011) 10 SCC 300 : [2011] 15 SCR 1129; LMJInternational Ltd. v. Sleepwell Industries (2019) 5 SCC302 : [2019] 4 SCR 617; Sohan Lal Gupta v. Asha DeviGupta (2003) 7 SCC 492 : [2003] 3 Suppl. SCR 249;Glencore International AG v. Dalmia Cement (Bharat)Limited (2017) SCC OnLine Del 8932 – referred to Sui Southern Gas Co. Ltd. v. Habibullah Coastal PowerCo. (2010) SGHC 62; Parsons & Whittemore OverseasCo. v. Societe Generale De L’Industrie Du Papier 508F.2d 969 (1974); Compagnie des Bauxites de Guinee v.Hammermills Inc. (1992) WL 122712; CertainUnderwriters at Lloyd’s London v. BCS Ins. Co. 239 F.Supp.2d 812 (2003); Karaha Bodas Co., L.L.C v.Perusahaan Pertambagan Minyak 364 F.3d 274(2004); Admart AG v. Stephen and Mary BirchFoundation Inc. 457 F.3d 302 (2006); Dallah RealEstate and Tourism Holding Co. v. The Ministry ofReligious Affairs, Government of Pakistan (2010)UKSC 46 – referred to

5. The Natural Justice Ground under Section 48

5. The Natural Justice Ground under Section 48

5.1 Given the fact that the object of Section 48 is to enforceforeign awards subject to certain well-defined narrow exceptions,the expression “was otherwise unable to present his case”occurring in Section 48(1)(b) cannot be given an expansivemeaning and would have to be read in the context and colour ofthe words preceding the said phrase. In short, this expressionwould be a facet of natural justice, which would be breached onlyif a fair hearing was not given by the arbitrator to the parties.Read along with the first part of Section 48(1)(b), it is clear thatthis expression would apply at the hearing stage and not afterthe award has been delivered, as has been held in Ssangyong. A

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Agood working test for determining whether a party has been unableto present his case is to see whether factors outside the party’scontrol have combined to deny the party a fair hearing. Thus,where no opportunity was given to deal with an argument whichgoes to the root of the case or findings based on evidence whichgo behind the back of the party and which results in a denial ofBjustice to the prejudice of the party; or additional or new evidenceis taken which forms the basis of the award on which a party hasbeen given no opportunity of rebuttal, would, on the facts of agiven case, render a foreign award liable to be set aside on theground that a party has been unable to present his case. ThisCmust, of course, be with the caveat that such breach be clearlymade out on the facts of a given case, and that awards must alwaysbe read supportively with an inclination to uphold rather thandestroy, given the minimal interference possible with foreignawards under Section 48. [Para 76][433-E-H; 434-A]

DSsangyong Engineering & Construction Co. Ltd. v.National Highways Authority of Indi (NHAI) CivilAppeal No. 4779 of 2019 – relied on Minmetals Germany GmbH v. Ferco Steel Ltd. (1999)C.L.C. 647; Ajay Kanoria v. Tony Guinness (2006)EEWCA Civ 222; Jorf Lasfar Energy Co. v. AMCI ExportCorp. 2008 WL 1228930; Dongwoo Mann+HummelCo. Ltd. v. Mann+Hummel GmbH (2008) SGHC 275;Gbangbola v. Smith and Sheriff 1998 3 All ER 730;Bahman Irvani v. Ali Irvani 1999 WL 1142456; VanDer Giessen-De-Noord Shipbuilding Division B.V. v.FImtech Marine & Offshore B.V. (2008) EWHC 2904(Comm); Malicorp Limited v. Government of ArabRepublic of Egypt (2015) EWHC 361 (Comm); SohBeng Tee & Co. v. Fairmount Development Pte Ltd.(2007) SGCA 28; JVL Agro Industries Ltd v. AgritradeGInternational Pte Ltd. (2016) SGHC 126; G.D. MideaAir Conditioning Equipment Co. v. Tornado ConsumerGoods Ltd. (2017) SGHC 193; Hebei Import & ExportCorporation v. Polytek Engineering Company Ltd.(1992) 2 HKC 205; Ascot Commodities NV v. Olam International Ltd. 2001 WL 1560709; Zebra Industriesv. Wah Tong Paper Products Group Ltd. (2012) HKCU1308; Front Row Investment Holdings v. Daimler SouthEast Asia (2010) SGHC 80; TMM Division MaritimeSA v. Pacific Richfield Marine Pte Ltd. (2013) SGHC186; AKN & Anr. v. ALC & Ors. (2015) SGCA 18; BAZv. BBA & Ors. (2018) SGHC 275 – referred to.

5.2 It is not possible to hold that failure to consider amaterial issue would fall within the rubric of Section 48(1)(b).However, if a foreign award fails to determine a material issuewhich goes to the root of the matter or fails to decide a claim orcounter-claim in its entirety, the award may shock the conscienceof the Court and may be set aside, as was done by the Delhi HighCourt in Campos on the ground of violation of the public policy ofIndia, in that it would then offend a most basic notion of justice inthis country. It must always be remembered that poor reasoning,by which a material issue or claim is rejected, can never fall inthis class of cases. Also, issues that the tribunal consideredessential and has addressed must be given their due weight – itoften happens that the tribunal considers a particular issue asessential and answers it, which by implication would mean thatthe other issue or issues raised have been implicitly rejected.[Paras 77, 78][434-C-F]

Campos Brothers Farms v. Matru Bhumi Supply ChainPvt. Ltd. (2019) 261 DLT 201 – affirmed

6. Violation of FEMA Rules

If a particular act violates any provision of FEMA or theRules framed thereunder, permission of the Reserve Bank ofIndia may be obtained post-facto if such violation can be condoned.Neither the award, nor the agreement being enforced by theaward, can, therefore, be held to be of no effect in law. This beingthe case, a rectifiable breach under FEMA can never be held tobe a violation of the fundamental policy of Indian law. Evenassuming that Rule 21 of the Non-Debt Instrument Rules requiresthat shares be sold by a resident of India to a non-resident at asum which shall not be less than the market value of the shares,and a foreign award directs that such shares be sold at a sum lessthan the market value, the Reserve Bank of India may choose to A

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Astep in and direct that the aforesaid shares be sold only at themarket value and not at the discounted value, or may choose tocondone such breach. Further, even if the Reserve Bank of Indiawere to take action under FEMA, the non-enforcement of aforeign award on the ground of violation of a FEMA Regulationor Rule would not arise as the award does not become void onBthat count. The fundamental policy of Indian law, as has beenheld in Renusagar must amount to a breach of some legalprinciple or legislation which is so basic to Indian law that it isnot susceptible of being compromised. “Fundamental Policy”refers to the core values of India’s public policy as a nation, whichCmay find expression not only in statutes but also time-honoured,hallowed principles which are followed by the Courts. Judgedfrom this point of view, it is clear that resistance to theenforcement of a foreign award cannot be made on this ground.[Para 83][439-C-G]

DRenusagar Power Plant Co. Ltd. v. General Electric Co.(1994) Supp (1) SCC 644 : [1993] 3 Suppl. SCR 22 –relied on.

Cruz City 1 Mauritius Holdings v. Unitech Limited(2017) 239 DLT 649; Dropti Devi v. Union of IndiaE(2012) 7 SCC 499 : [2012] 6 SCR 307 – relied on.7. Challenge to Enforcement of the Foreign Award in thiscase on facts 7.1 The Tribunal failed to deal with the Appellants’ counter-claim pertaining to the incorporation of Jaguar CommunicationFConsultancy Services Private Limited.

According to the Appellants, this ground of objection – i.e.the incorporation of Jaguar - was pleaded by them as a “concealedbreach”, which became known to them only at a much later stageof the arbitral proceedings. Despite the tribunal specifically rulingGin the First Partial Final Award that a non-defaulting party couldrely on a “concealed breach” and treat the same as an unrectifiedevent of default under clause 23.4 of the JVA, the submissionmade by the Appellant in this behalf was ignored in its entirety.The First Partial Final Award was made only on 15.02.2013. Whenthe Respondent No.1 made its oral submissions and filed writtenH

closing submissions on 19.07.2013, the Appellants did not pleadany case of breach due to Jaguar. It was only at the fag end, i.e. inthe Appellants’ Responsive Closing Submissions, filed on20.08.2013, that the tribunal was invited to rule on this breach.Obviously, by this time, the Respondent did not have anyopportunity to controvert this case put up for the first time bythe Appellants. Since this case had been put up for the first timeat the fag end of the proceedings, before passing of the SecondPartial Final Award dated 19.12.2013, the arbitrator cannot befaulted for not dealing with this case. In the Second Partial FinalAward, the tribunal also recorded that the Appellants’ case onclause 21.1 was limited to the acquisition of ACPL and directsales into India. The argument of the Appellant, made at the fagend of the proceedings, that since the Respondent held 99.99 %shares of Jaguar, which is in a similar cable business as Ravin, asevidenced by the Memorandum and Articles of Association ofJaguar, is a case that has never been pleaded. This being thecase, it is obvious that the arbitrator was within his jurisdictionnot to deal with this so-called counter-claim at all. This objection,therefore, does not fall within any of the grounds mentioned inSection 48 and must, therefore, be rejected. [Paras 86, 87][441-E-G; 442-C-F]

7.2 The Tribunal failed to make a determination on theAppellants’ counter-claim concerning ouster of the Appellants It would be wholly incorrect to state that the tribunal hasfailed to make a determination on the Appellants’ counter-claimthat the Respondent’s efforts to oust Appellant No. 1 and hisfamily amounted to a breach of the JVA. While considering thecase of the Appellants and the cross-case of the Respondent, thetribunal has adverted to pleadings, evidence and has givendetailed findings as to why the Appellants are in material breachof the JVA, as a result of which the Respondent cannot be said tobe in material breach of the JVA. This being the case, it cannotbe said that this material issue has not been answered by theSecond Partial Final Award. This ground, therefore, also doesnot fall within any of the stated pigeon-holes under Section 48.[Para 89][445-A-C]

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A7.3 The Tribunal failed to make a determination on theAppellants’ counter-claim concerning registration of the RavinTrademark

It is clear from the perusal of the First Partial Final Awardthat what was argued before the arbitrator, and thereforeBanswered by the arbitrator, was whether the tribunal hadjurisdiction to go into the Trademark License Agreement. Aperusal of the transcript of the hearings on both 12[th] and 13[th]December, 2012 before the arbitrator clearly showed that noargument was ever made by the Appellants before the tribunalthat the Respondent had surreptitiously attempted to registerCthe Ravin Trademark in its own name, and therefore was in breachof the competition clauses of the JVA. Thus, this argument againappears to be an afterthought which has no foundation in thesubmissions made before the arbitrator. [Paras 90, 91][445-E;447-D-E]D7.4 The Tribunal acted contrary to the Parties’ expertwitnesses and ignored critical evidence with regard to theacquisition of ACPL

The tribunal went into the acquisition of ACPL in the SecondPartial Final Award, and held that Mr. Karia’s contemporaneousEreaction to the acquisition of Draka, which led to an indirectacquisition of 60 subsidiaries, one of which was ACPL, was thathe was very happy that Respondent No. 1 had so expanded itsbusiness. Several congratulatory emails were referred to by thearbitrator. Further, the arbitrator found that Mr. Karia’sFstatements in cross-examination showed that he had knowledgeof this acquisition way back in November 2010 but nevercomplained of material breach of the JVA. The arbitrator alsoexamined evidence as to serious actual loss or harm, finding nosuch credible evidence, except occasional instances of bothcompanies tendering for the same business. It was held that thereGwas no reliable evidence that the Ravin’s business had been lostpost the ‘Draka acquisition’ or that there had been any diversionof business from Ravin to ACPL or vice versa. The arbitratorthen held that ACPL is a small specialist cable business andoperates principally in the area of instrumentation cables, whichHis not the area in which Ravin operates. The learned arbitrator also adverted to the evidence of the expert witnesses in arrivingat this conclusion. It also made a reference to Mr. Karia’s cross-examination, stating that Mr. Karia himself considered ACPL tobe the 50[th] or 60[th] competitor given its small business. Thefinding, therefore, was that the acquisition of ACPL did not in anymanner amount to a serious material breach of the JVA. Insofaras the failure to produce documents by Respondent No.1 withregard to its subsidiary ACPL is concerned, ACPL is not a directsubsidiary of Respondent No. 1, being an indirect subsidiary ofRespondent No.1’s parent company consequent upon theacquisition of Draka. It has an independent Board of Directors.Above all, ACPL was not a party to these arbitral proceedings.The tribunal therefore made Procedural Order No. 5 dated27.11.2012 in which it specifically recorded that if the Appellantswish to pursue their request for disclosure of further documentsqua ACPL, they must approach the Courts to do so, as it was notwithin the arbitrator’s power to direct a person who is not partyto the proceedings to produce documents. At no stage did theAppellants act in compliance of this Procedural Order andapproach an English Court to direct ACPL to produce documentswithin its possession. This being so, a party cannot complain ofbreach of natural justice when it was within the control of suchparty to approach a U.K Court for production of such documents.This not having been done, it is clear that no adverse inference,could have been drawn by the arbitrator. This ground also,therefore, does not fall within any of the grounds under Section48. [Paras 94, 95][448-D-H; 449-A-D]

7.5 Perverse Interpretation of the JVA.

7.5 Perverse Interpretation of the JVA.

The interpretation of an agreement by an arbitrator beingperverse is not a ground that can be made out under any of thegrounds contained in Section 48(1)(b). Without therefore gettinginto whether the tribunal’s interpretation is balanced, correct oreven plausible, this ground is rejected. [Para 96][449-F]

7.6 The Tribunal ignored critical evidence with regard tothe issue of agency agreements and Direct Sales Having perused the Award in this behalf, it cannot be saidthat the tribunal has in any manner ignored admissions or othercritical evidence with regard to the issue of direct sales. In any AB

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Acase, if at all, this ground goes to alleged perversity of the award,which is outside the ken of Section 48. [Para 98][450-F-G]

7.7 The Tribunal adopted disparate thresholds indetermining material breach All the allegations made under this ground go to perversityBof the award, which is outside the ken of Section 48. That apart,the tribunal indicates in paragraphs 104 to 106 of the SecondPartial Final Award, that no disparate thresholds in determiningmaterial breach was adopted. [Para 99][451-A]

7.8 The Tribunal’s selective consideration ofCcontemporaneous evidence This argument must be rejected out of hand, as not fallingwithin the parameters of Section 48. Equally, the tribunal’sconsideration of evidence of key witnesses being selective andperverse, must be rejected on the same ground. [Para 100]D[451-G-H; 455-A]

7.9 The Tribunal appointed a conflicted valuer The arbitrator has considered this point in some detail anddismissed it. This objection again does not fall under any of thegrounds of Section 48. [Para 101][452-B; 453-H]E

7.10 Valuation ignores Ravin’s stake in Power Plus The appellant argued that the valuation made by Deloitteignored a stake of 49% of Ravin in a company called Power Plus,which stake has been valued by the Appellants’ valuer (one BDO)Fat INR 563 crores. Considering that this aspect was not takeninto account by Deloitte, the valuation report ought not to havebeen accepted by the arbitrator, also being contrary to the positiontaken by both parties. This submission was dealt with by thearbitrator in great detail in Final Award. Among other things, thearbitrator referred to clause 17 of the JVA and stated that theGsaid clause together with the formula prescribed therein wasfollowed by Deloitte. Since this was done, Deloitte cannot possiblybe faulted and cannot further be asked to take into account thestake of Ravin in Power Plus, as that would go outside the JVA.

This again is a matter for the arbitrator to determine. This againis a ground wholly outside grounds that can attract challenge toforeign awards under Section 48. [Para 102][454-A-D]

7.11 Valuation Date

The appellant argued that the tribunal acted contrary tothe parties’ submissions in arriving at a valuation date of30.09.2014, much later on the date of the Final Award which is11.04.2017, as the parties had agreed that this date ought to bethe date closest to the date of actual sale of share and would bevalid only until 31.12.2014. The arbitrator dealt with this objectionin the Final Award dated 11.04.2017. Having found that the delayin the valuation report was attributable largely to the Appellantsand that therefore the agreed date of 30.09.2014 is the correctdate, there is nothing in the award which can be said to evenremotely shock conscience of this Court. This ground is alsotherefore rejected. The plea to exercise power under Article 142of the Constitution of India, so as to shift the valuation date from30.09.2014 to the date of judgment is also rejected given thearbitrator’s finding. Quite apart from this, nothing in Section 48of the Arbitration Act would permit an enforcing court to add toor subtract from a foreign award that must either be enforced orrejected by reason of any of the grounds under Section 48 beingmade out to resist enforcement of such foreign award. This Court’spower under Article 142 ought not to be used to circumvent thelegislative policy contained in Section 48 of the Arbitration Act.[Para 103][454-E; 455-F-H; 456-A]

7.12 Violation of FEMA and the Rules thereunder The arbitrator awarded INR 63.90 per share as per theDeloitte valuation, which was contractually binding under clause17 of the JVA. The lower valuation of INR 16.88 per share as inthe M/s Kalyaniwalla & Mistry valuation report dated 04.03.2016was not accepted. [Para 105][456-E]

7.13 Bias of the Tribunal

The appellant argued that the arbitrator was clearly biasedin that the outcome of the Second Partial Final Award was clear A

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Ato Respondent No.1, inasmuch as its agent, one M/s GilbertTweed Associates, sent out an advertisement for recruitingemployees for Ravin, two months before the Second Partial FinalAward, thereby showing that this agent was clear as to theoutcome of the proceedings. This was strongly refuted by theRespondent, stating that at no time had Gilbert Tweed AssociatesBbeen retained by them. As a matter of fact, an agency called M/sKey2People was engaged by Respondent No.1 to identifypotential candidates who could be recruited for the company indue course. M/s Key2People, in turn, appointed M/s GilbertTweed Associates. In any case, the Respondent undertook toCterminate the engagement of M/s Key2People by its email of28.10.2013. The allegation of bias thus made was clearly adesperate afterthought. The contention that the arbitrator wasotherwise biased was dealt with in the Final Award. [Para 106][456-F-H; 457-A]

D8. The sole arbitrator exhaustively discussed the evidenceand arrived at detailed findings for each of the issues, claims andcounter-claims, and finally accepted the Respondent’s case andrejected the Appellants’. Given the fact that jurisdiction underArticle 136 of the Constitution is itself limited, and given the factthat this Court’s time has unnecessarily been taken by a caseEwhich has already been dealt with by four exhaustive awards onmerits and also by the impugned judgment, these appeals aredismissed with costs of INR 50 lakhs, to be paid by the Appellantto Respondent No.1. [Para 107][458-B-C]

Case Law Reference

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1544

of 2020

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Civil Appeal No. 1545 of 2022.

From the Judgment and Order dated 07.01.2019 of the High Courtof Judicature at Bombay in Arbitration Petition No. 442 of 2017.

Dr. Abhishek Manu Singhvi, Nakul Dewan, Ritin Rai, Sr. Advs.,Moazzam Khan, Ms. Bhavana Sunder, Amit Bhandari, Pradhuman Gohil,Mrs. Taruna Singh Gohil, Ms. Ranu Purohit, Alipak Banerjee, BrijeshUjjainwal, Vikash Singh, Advs. for the Appellants.

Kapil Sibal, K.V. Viswanathan, Sr. Advs., Ms. Shreya Gupta,Ms. Akanksha Banerjee, Raghav Tankha, Ms. Anusha Nagrajan, ApoorvSinghal, King Dungerwal, Kunal Vajani, Ms. Sonam Gupta, Advs. forthe Respondents.

The Judgment of the Court was delivered by

R. F. NARIMAN, J.

1. Leave granted.

2. The present appeals are filed against the judgment of a SingleJudge of the Bombay High Court dated 07.01.2019, by which four finalawards made by a sole arbitrator in London under the London Court ofInternational Arbitration Rules (2014) (hereinafter referred to as the“LCIA Rules”) were held to be enforceable against the Appellants inIndia.

3. The brief facts of this case are as follows. The Appellants, i.e.Appellant No.1 Shri Vijay Karia, and Appellants No.2 to 39 (who arerepresented by Appellant No.1) are individual, non-corporate shareholdersof Ravin Cables Limited (hereinafter referred to as “Ravin”). On19.01.2010, the Appellants and Ravin entered into a Joint VentureAgreement (hereinafter referred to as “JVA”) with Respondent No.1,i.e. Prysmian Cavi E Sistemi SRL – a company registered under thelaws of Italy. By this JVA, Respondent No.1 acquired a majorityshareholding (51%) of Ravin’s share capital. The material clauses ofthe JVA are set out hereinbelow:

“8. Purpose and Objectives

8.1 Purpose of the Company and Scope of the Agreement Subsequent to Closing, the Company shall be a joint venturebetween Prysmian and the Existing Shareholders for the purposes A

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of undertaking and conducting the business of the company, orfor such other activities as may be determined by the Shareholdersfrom time to time, subject to the applicable law. The business ofthe company shall be conducted in the best interests of theCompany, and in accordance with sound professional andcommercial principles.”

“12.6. Chairman and Managing Director

12.6.1 Mr. Karia shall be the Chairman of the Board as well asthe Managing Director of the Company until:

(i) Expiry of seven (7) years from the Agreement Date; or

(ii) The date of which the Existing Shareholders cease to hold inthe aggregate at least ten percent (10%) of the share capital ofthe Company:

Whichever occurs earlier.

It is hereby agreed that Mr. Karia shall not, during such term, beentitled to be removed as a Chairman and Managing Director bythe passing of an ordinary resolution at a general meeting of theCompany…”

“12.6.4.Without prejudice to the aforesaid clause 12.6.3, theManaging Director shall continue to remain responsible for theday to day management of the Company in accordance with theInterim Period Policy adopted by the Board on the Closing Date,until the appointment of the CEO of the Company (“InterimPeriod”)”

“12.6.5 As soon as practicable after the efflux of the InterimPeriod, a Board shall be convened to resolve upon a new policy,applicable for a period of 6 (six) months thereafter (the“Integration Period”), for the delegation of the powers to themanagers of the Company (the “Delegation of Powers Policy”)all powers not delegated to the managers of the Company pursuantto such Delegation of Powers Policy, shall be delegated jointly tothe CEO and the Managing Director…”

“12.6.6 Provided however, that subject to the overall supervisionof the Board, after the efflux of the Integration Period, theManaging Director shall be directly responsible solely for managing

the internal audit as well as the strategy and business developmentof the Company and present to the Board his findings and analysisfor final determination by the Board. Accordingly all the powerswhich are not delegated to the managers of the Company pursuantto the Delegation of Powers Policy, as may be amended by theBoard from time to time, shall be delegated to the ManagingDirector to the extent such powers fall within his duties asaforesaid.

12.6.7 After the Integration Period, the Managing Director mayappoint an internal auditor to assist the Managing Director in hisresponsibility towards the internal audit of the company. Thisinternal auditor shall report directly to the Managing Director andfunctionally report to the internal audit department of PrysmianS.P.A.”

“12.7 Chief Executive Officer

12.7.1 The CEO shall be appointed by and shall directly report tothe Board.

12.7.2 Without prejudice to the aforesaid Clause 12.7.1, the CEOshall from the date of its appointment till the efflux of the IntegrationPeriod, be responsible for the day to day management of theCompany jointly with the Managing Director.

12.7.3 Provided however, that subject to the overall supervisionof the Board, after the efflux of the Integration Period, the CEOshall be responsible for the day to day management of the Companyexcluding solely the internal audit and the strategy and businessdevelopment of the Company for which the Managing Directorshall be responsible. Accordingly all the powers which are notdelegated to the managers of the Company pursuant to theDelegation of Powers Policy, as may be amended by the Boardfrom time to time, shall be delegated to the CEO to the extentsuch powers fall within his duties as aforesaid.”

“17. PROCEDURE FOR FAIR MARKET VALUATION

17.1 Notwithstanding anything contained in this Agreement, allreferences in this Agreement to Fair Market Value shall be thefair market value as determined, applying the definition ofEBITDA, Net Financial Indebtedness (NFI) and Net Working A

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Capital (NWC) set forth under Schedule X, by any one of thefollowing four accounting firms settled in India:

(a) KPMG

(b) Ernst & Young;

(c) PriceWaterhouseCoopers;

(d) Deloitte

17.2 The accounting firm shall be chosen from among thoseindicated under clause 17.1 above by the Party that, according toclauses 23 and 24, is called by the other Party to sell, in whole orin part its share participation in the Company to the other Party;or by the Party that, according to Clauses 11.5 (iv), 16 and 23,calls the other Party to buy, in whole or in part, its share participationin the Company (in either case the “Exiting Party”). If the ExitingParty fails to choose the accounting firm within thirty (30) calendardays from (i) the receipt of the notice by which the other Partyhas intimated it to sell, in whole or in part, its share participation inthe Company to the other Party; or (ii) from the serving of noticeto the other Party to buy, in whole or in part, its share participationin the Company, then the accounting firm shall be chosen by theParty (the “Non-Exiting Party”) that called the other Party to sell,in whole or in part, its share participation in the Company to theother Party or was called by the Exiting Party to buy, in whole orin part, the Exiting Party’s share participation in the Company.”

“20. Mutual Covenants and Undertakings

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20.1.2 The Parties further agree to cooperate and act in goodfaith, fairness and equity as between themselves.”

“21. Business in India

21.1 The Parties agree that neither Prysmian nor Mr. Karia,whether directly or through their Affiliates, shall invest, acquire orparticipate in the Cable Business in India, save and except throughthe Company in accordance with this agreement.”

“21.5 Further, it is agreed that, within March 31, 2011, thePromoters shall either stop or cease to have any interest in any activity they are currently or will be conducting in India, directlyor indirectly through any Affiliates, which is in competition withthe business of the Company. Such ceased activities shall thennot be offered by Mr. Karia to the Company, pursuant to Clause21.2 for a period of three years from the date of such cessation.

For the sake of clarity, it is agreed that this Clause 21.4 shallapply, without being limited, to the activities carried out by (i) VijayIndustrial Electricals, a company incorporated under the laws ofIndia and having its registered office at 302, Akruti Trade Centre,Third Floor, Road no. 7, MIDC, Marol, Andheri(east) Mumbai-400093 (ii) Special Cable Industries, a company incorporated underthe laws of India and having its registered office at A-1/404 GIDCEstate, Ankleshwar 393002.”

“23. Event of Default

23.1 If any party (“Defaulting Party”) is in material breach of anyprovisions, obligations, covenants, conditions and undertakingsunder this Agreement , or in the event of insolvency or bankruptcyof the Defaulting Party or if the substantial undertaking or assetsof the Defaulting Party is under receivership or any otherequivalent status, it shall be considered as an event of default(“Event of Default”).

23.2 In such an event, the other party (“Non Defaulting Party”)may give notice of the same (“Determination Notice”) to theDefaulting Party.

23.3 The Defaulting Party shall have a period of 60 (sixty) calendardays from the receipt of the Determination Notice (or Such furtherperiod as the Non Defaulting Party may agree in writing) to rectifythe Event of Default (“Rectification Period”). It is hereby clarifiedthat this clause 23.3 is not applicable if the Event of Default isrepresented by the insolvency or bankruptcy of the defaulting Partyin which case the Non Defaulting Party may forthwith serve theEOD Notice to the Defaulting Party.

23.4 If upon expiry of the Rectification Period, the Event of Defaulthas not been so rectified the Non Defaulting Party may requirethe Defaulting Party by written notice (“EOD Notice”) to either(i) sell to the Non Defaulting Party or such other Person as may A

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be nominated by the Non Defaulting Party, all , but not less thanall, the Shares held by the Defaulting Party (“Defaulting PartyShares”) at the 10% (ten percent) discount to the Fair MarketValue (“Discounted Price”) or (ii) buy from the Non DefaultingParty all, but not less than all, the Shares held by the Non DefaultingParty at 10% (ten percent) over the Fair Market Value (“PremiumPrice”). The Defaulting Party shall be then under the obligationto either (I) sell all, but not less than all, its Shares in the Companywithin 30 (thirty) calendar days of the EOD Notice or (II) buy all,but not less than all, the Non Defaulting Party Shares in theCompany within 30 (thirty) calendar days of the EOD Notice, asthe case may be.

23.5 It is hereby agreed that:

23.5.1 If Prysmian is the Defaulting Party, then Mr. Karia only(and not the Existing Shareholders) will be entitled to either (a)buy all(but not less than all) Prysmian Shares at the DiscountedPrice or (b) sell to Prysmian all (but not less than all its ownshares) and those of the Existing Shareholders at the PremiumPrice.

23.5.2 If Mr. Karia or any of the Existing Shareholders is theDefaulting Party, then Prysmian will be entitled to either (a) buyall ( but not less than all) the Shares held by Mr. Karia and ExistingShareholders at the Discounted Price or (b) sell to Mr. Karia all( but not less than all) its own shares at the Premium Price.

For sake of clarity, the Parties agree that for the purpose of thisClause 23.5 any reference to Mr. Karia Shares, Prysmian Sharesand Existing Shareholders Share shall be deemed to include anyShares transferred to any or their respective Affiliates pursuantto the provisions of Clause 10.4 above.”

“27. ARBITRATION

27.1 Dispute Resolution

27.1.1 The Parties agree to use all reasonable efforts to resolveany dispute under, or in relation to this Agreement quickly andamicably to achieve timely and full performance of the terms ofthis Agreement.

27.1.2 Any dispute, controversy or claim arising out of or relatingto or in connection with this Agreement including a dispute as tothe validity or existence of the Agreement or the arbitrationagreement, or any breach or alleged breach thereof, shall be settledexclusively by arbitration under the Rules of Arbitration of theLondon Court of International Arbitration (“LCIA”) as amendedfrom time to time.

27.1.3 The arbitral tribunal (“Tribunal”) shall consist of one (1)arbitrator, to be appointed by the LCIA. The arbitrator shall befrom a neutral nationality, i.e. from a nationality and origin otherthan any of the Parties.

27.1.4 The seat of the arbitration shall be London, United Kingdom.

27.1.5 The language to be used in the arbitration shall be English.

27.1.6 The law applicable and governing the arbitration agreement(proper law of the arbitration agreement) and in all respectsincluding the conduct of the proceedings shall be English Law. Ifthe Institution above named ceases to exist or is unable for anyreason to administer the arbitration proceedings then the arbitrationshall be conducted in accordance with the (English) ArbitrationACT 1996 as amended from time to time or any statute that mayreplace the said Act.

27.1.7 Parties expressly agree that Part I of the (Indian) Arbitrationand Conciliation Act, 1996 (as amended from time to time andany statutory enactment thereof) shall have no application to thearbitration agreement or the conduct of arbitration or to the settingaside of any award made there under, and the provisions of PartI ) including the provisions of section 9 of the Arbitration andConciliation Act, 1996 is hereby expressly excluded….

27.1.9 The arbitration award (the “Award”) shall be final andbinding on the Parties.

27.1.10 The courts of London (United Kingdom) shall haveexclusive jurisdiction in respect of all matters arising in connectionwith the arbitration and Existing Shareholders submits to thejurisdiction of the said courts. Provided however that the Awardmay be enforced in any appropriate jurisdiction. If to be enforcedin India the Award shall be a foreign award to which the legislative AB

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Aprovisions incorporated in the applicable Indian Act to give effectto the New York Convention on foreign arbitral awards 1958 ( theNew York Convention) shall apply(currently Part II of the (Indian)Arbitration and Conciliation Act 1996)…”

4. By a separate ‘Control Premium Agreement’ of the same date,BRespondent No.1 paid €5 million to the Appellants as ‘control premium’for the acquisition of the share capital of Ravin.

5. On 10.08.2010, pursuant to clause 12 of the JVA - as the interimperiod of six months under the JVA had come to an end - one Mr. LuigiSarogni was appointed as CEO of Ravin by Respondent No.1. Until theCexpiry of the ‘integration period’, Ravin was to be jointly managed bythe said CEO and the Managing Director for another period of six months.Factually, however, we are informed that the said ‘integration period’carried on beyond December 2010 and continued until September 2011.

6. In April 2011, Mr. Giancarlo Esposito was designated byDRespondent No.1 as the H.R. Director of Ravin. On 15.09.2011, theBoard of Directors of Ravin conferred exclusive powers of the day today management of the company on the CEO so appointed by RespondentNo.1. It is the case of Respondent No.1 that the appointed CEO wasthwarted in jointly managing the company during this ‘integration period’,as a result of which, in November 2011, one Ms. Cinzia Farise wasEappointed as CEO in the place of Mr. Sarogni by the Board of Directors.Since the Board Resolution of 01.11.2011 conferred on Ms. Farise thepower to employ and lay-off permanent staff, she imposed a temporaryfreeze and check on new hiring without her approval, which was allegedto be breached by the Appellants. Later, from December 2011 till FebruaryF2012, Ms. Farise sought to convene a board-meeting to finalise oneMr. Brunetti’s appointment as CFO of Ravin, which was assented to bythe Respondent’s Directors, but not signed by the Appellant’s Directors.Things reached a head on 31.01.2012 when the employees of thecompany went on a strike at Ravin’s Akruti office. By February 2012,the Appellants and Respondent No.1 were at loggerheads, as a result ofGwhich Respondent No.1 issued a request for arbitration in terms of clause27 of the JVA, claiming that the Appellants had committed ‘materialbreaches’ of the JVA, inter alia, by ousting Respondent No.1 from thecontrol of Ravin altogether. On 26.03.2012, the Appellants responded tothe request for arbitration and included several counter claims. EachHparty claimed that the other had committed material breaches, as a result of which the successful party in the arbitration would be entitled underthe JVA to buy out the other party at a 10% premium or discount (as thecase may be). Given the fact that the JVA required service of a‘Determination Notice’ which alleged material breaches, such noticewas served by Respondent No.1 on the Appellants on 26.03.2012. Sixtydays from this date, called a ‘Rectification Period’ under the JVA, noticewas given by the Respondent No.1 to the Appellants to remedy/rectifythe alleged breaches. Further time even beyond the sixty days, i.e. until06.07.2012 was given, but according to Respondent No.1, none of thebreaches were remedied. As a result, on 06.06.2012, the LCIA appointeda sole arbitrator - one Mr. David Joseph QC - to adjudicate the disputebetween the parties.

7. An early skirmish was contained in a letter dated 07.06.2012,alleging that the learned arbitrator was conflicted, as he had been engagedas counsel by Respondent’s advocates, Bharucha and Partners, in anotherunconnected matter. However, on 08.06.2012, Bharucha and Partnerswrote a letter making it clear there was no such conflict. The solearbitrator also denied any such conflict. The LCIA Registry informedthe Appellants that they could challenge the appointment of the solearbitrator under the LCIA Rules if they so desired. The Appellants,however, gave up the right to any such challenge. As a result, on04.07.2012, Respondent No.1 filed its Statement of Claim before thelearned sole arbitrator. On 09.09.2012, the Appellants then filed theirstatement of defence and counter claims. On 28.09.2012, RespondentNo.1 filed its rejoinder and opposition to the counter claim.

8. Meanwhile, various procedural orders were passed by thelearned arbitrator for production of documents etc. A hearing then tookplace in December 2012 on questions relating to the construction ofvarious clauses of the JVA and jurisdictional issues raised by RespondentNo.1 in respect of certain counter claims of the Appellants. Decidingthese issues, by what was called the ‘First Partial Final Award’ dated15.02.2013, the sole arbitrator delineated the scope of the first awardstating that it was restricted only to issues of interpretation of the JVAand questions of jurisdiction, and not to the merits of either the claims orcounter claims made. In particular, the sole arbitrator construed clause21.1 of the JVA as follows:

“82. This then brings directly into question the scope and meaningof the words used in Clause 21.1 when each of the Claimant and AB

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the First Respondent agreed that it would not directly or throughits Affiliates “invest, acquire or participate in the Cable Businessin India save through the Company in accordance with thisAgreement”.

83. The Tribunal concludes that these words themselves do notprohibit the Claimant from selling cables directly in India. Suchdirect sales might still amount to a breach of Clause 8 or indeedClause 20 of the JVA, but direct sales as a stand-alone activity isnot an investment, acquisition or participation in the Cable Businessin India.

84. It seems to the Tribunal that each of these expressions connotesdifferent forms of long term engagement, arrangement orcommitment involving either an injection or exchange of capitalor know how on the part of the investor, acquirer or participatorin the sphere of the activities identified by the compendiousdefinition of Cable Business in India.

85. A person who concludes a contract of sale of goods to anothercounter-party is not in accordance with ordinary parlance investing,acquiring or participating in the Cable Business in India.

86. Therefore, the Tribunal concludes that on a true constructionof the JVA simply by applying the ordinary meaning of the wordsdeployed together with the contractual definition, the Respondentsdo not succeed in their primary submission namely that theconclusion of one or more contracts of sales of cables directly inIndia by the Claimant itself or through its subsidiaries constitutedthe investment, acquisition or participation in the Cable Businessin India contrary to the terms of Clause 21.1 of the JVA.

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93. In summary therefore contracts of sale for cables within thedefinition of Cable Business concluded directly by the Claimantor its affiliates and otherwise than through Ravin do not of itselfconstitute a breach of Clause 21.1.

94. The conclusion of a series of such contracts might, however,depending on the facts, constitute a breach of Clause 8 or Clause20 of the JVA. Yet further, the Tribunal does not rule out thepossibility of the Respondents alleging and proving some kind of

investment or participation which consist of some kind of longterm contractual arrangement itself involving sale, export, importor distribution. Nothing stated herein, however, in any way decidesor considers the materiality of any such allegation or theconsequences of any such breach even if proven.”

9. Insofar as the parent company of Respondent No.1 (onePrysmian SA) had made a global acquisition of the ‘Draka Group’ inFebruary/March 2011, which included - as one out of 60 companiesbelonging to the Draka Group - one ‘Associated Cables Private Limited’(hereinafter referred to as “ACPL”), which was an Indian Companydoing business in India, the learned arbitrator held:

“108. The Tribunal is once more careful to make it clear thatthese pleaded allegations have not been proved yet. The proof ofthese allegations is left to be explored at the substantive meritshearing. Nevertheless, on the basis of the parties’ respectivepleaded cases, the Tribunal concludes that on a true constructionof Clause 21, the wider acquisition by Prysmian Spa of Draka,which in turn holds a 60% shareholding in ACPL, is capable ofamounting to an acquisition in the Cable Business in India throughan Affiliate of the Claimant in circumstances where it is notdisputed that Prysmian Spa is another person which Controls theClaimant. Equally, the continued carrying on of business in Indiathrough ACPL is capable of amounting to the participation in theCable Business in India through an Affiliate of the Claimant;namely through another person, ACPL. Although there has notbeen any proof of this question, there would at least appear to besome evidence on which the Respondents might contend thatACPL is Controlled by the same person, namely Prysmian Spa,who directly or indirectly Controls the Claimant so as to comewithin the parameters of sub-paragraph (c) of the definition ofAffiliate.”

10. The learned arbitrator then construed clause 23, which speaksof ‘material breaches’ by the parties, as follows:

“132. The Tribunal’s conclusions are as follows:

1) Clauses 23.1 and 23.2 do require the giving of a DeterminationNotice of an Event of Default by the Non Defaulting Party, ifindeed the Non Defaulting Party wishes to make complaint, A

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and if, ultimately, the Non Defaulting Party wishes to invokethe provisions of Clauses 23.4 and 23.7, even in circumstanceswhere the Non Defaulting Party contends that the materialbreach is irremediable;

2) Clause 23.3 does require the Non Defaulting Party to give theBDefaulting Party a period of 60 days, the Rectification Period,to rectify the Event of Default even in a case where the NonDefaulting Party alleges that the Event of Default isirremediable. The only exception to this in Clause 23.3 is withrespect to what might be called events of insolvency, whichamount to Events of Default; C

3) Excluding the cases of insolvency events, which are expresslyexempted, the service of a written EOD Notice pursuant toClause 23.4 must be upon the expiry of the Rectification Period;

4) Adapting one of the principal hypothetical examples given byDthe Claimant’s counsel in the course of its submissions, if aNon Defaulting Party gives a Determination Notice to theDefaulting Party identifying material breach (1) but theDefaulting Party has in fact concealed material breach (2)and in any event does not rectify one or both, then the NonDefaulting Party when it gives its EOD Notice under ClauseE23.4 and then subsequently seeks to justify its EOD Notice inarbitration can rely upon both the un-rectified material breach(i) and/or material breach (2) if it is subsequently discovered.

This is because a concealed, but subsequently discovered,Event of Default which has not been rectified at the end ofFthe Rectification Period is still an un-rectified Event of Defaultfor the purpose of Clause 23.4;

5) Equally, if a Defaulting Party has not rectified a concealedEvent of Default at the end of a Rectification Period, then, it isa matter which can be relied upon by the Non Defaulting PartyGunder Clause 23.7, so to give rise to the deprivation or alterationof rights set out therein;

6) An Event of Default is defined as a material breach of anyprovisions, obligations, covenants, conditions, and undertakings.The definition of an Event of Default is not conditional uponHthe giving of a Determination Notice. The consequences, however, under Clause 23 do depend upon the giving of aDetermination Notice and expiry of a Rectification Period; A

7) Notwithstanding the provisions of Clause 23 and Clause 23.4,in particular with regard to Events of Default and DeterminationNotice, the Non Defaulting Party in addition possesses all therights to damages and performance expressed in Clause 23.6;B

8) It remains open for argument, and the Tribunal makes nodecisions as to whether a party can give a DeterminationNotice to the other party, if in fact at the time of the giving ofthe notice, the party giving the notice is itself in material breach.This question was raised by the Tribunal in the course of oralsubmissions, but has not been fully addressed by the parties,and, indeed, is probably best addressed at the full meritshearing.”

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11. Insofar as the arbitrator’s ruling on jurisdiction was concerned,it was held that a dispute regarding the right to register the ‘Ravin’trademark falls outside the scope of the arbitration clause under theJVA. He further held that the trademark licence agreements containedarbitration clauses which provided for disputes to be referred to arbitrationin Milan, Italy under Italian law, and this being the case, any dispute inrelation to these agreements would be outside the ken of the arbitrationclause contained in the JVA.

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12. The ‘Second Partial Final Award’ dated 19.12.2013 then dealtwith which of the parties materially breached the terms and conditionsof the JVA. The claims, in this respect, made by Respondent No.1, weredisposed of as follows:

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“199. The Tribunal’s findings and conclusions in relation to theparticulars of the Claimant’s allegations of material breach areset out below. The Tribunal finds that:

1) The Respondents interfered with the proper and effectivefunctioning of the CEO by refusing to implement and/or bypreventing the implementation of the Board of Directors’resolution empowering the CEO to operate Ravin’s bankaccounts in material breach of JVA Clauses 12 and/or 8 and/or 20.1.2; G

2) in refusing to pass resolutions, whether at a Board meeting orby circulation, to appoint the Claimant’s nominee as the CFO

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3) the Respondents employed Ms. Mathure and created a falserecord with regard thereto in material breach of JVA Clauses12 and /or 8 and/or 20.1.2;B

4) the Respondents denied the HR Director and the CEO fulland unconditional access to the HR and payroll data systemsof Ravin in material breach of JVA Clauses 12 and/or 8 and/or20.1.2;

5) the Respondents refused to report to the or attend managementCmeetings convened by the CEO in material breach of JVAClauses 12 and /or 8 and/or 20.1.2;

6) when the incidents of 12 and 13 January 2012 and 4 February2012 are considered in isolation there is insufficient evidenceto conclude that there has been a material breach by theDRespondents. When the incidents are considered together andset in their proper context the Tribunal concludes that theyform part of a pattern of the Respondent’s conduct whichconstituted a material breach of the JVA. As such, there is amaterial breach in relation to the Claimant’s combinedEallegations that the Respondents incited staff to surround,sequester, heckle, humiliate and threaten Mr Esposito andMr Kamdar on those dates;

7) the Respondents encouraged and failed to prevent Companyemployees from going on strike on 31 January 2012 and theFRespondents encouraged and incited indiscipline and breachof Company policies and procedures by supporting Mr. Dhallin his insubordination and defiance of direct orders ofMr. Esposito and Ms Farise in material breach of JVA Clauses12 and/or 8 and/or 20.1.2;

8) see (7) above;G

9) the Respondents were not in breach of the JVA by refusing toconvene a Board meeting at short notice;

10) Mr. Karia’s letters to the FRRO were hand-delivered on 29February 2012 and therefore cannot be considered in relationHto the events constituting material breach as alleged in the Request dated 27 February 2012. Nevertheless, the Tribunalfinds that the letters to the FRRO are consistent with MrKaria’s modus operandi and support the Tribunal’s otherfindings of material breach.

(4) Rectification of the Events of Default found to have beencommitted by the Respondents

200. The Claimant submits that none of the alleged materialbreaches were rectifiable and, in any event, by the end of theRectification Period, i.e. 27 April 2012, and by the end of theextended period for rectification, i.e. 6 July 2012, the Respondentshad not rectified any of their breaches. On the contrary, theClaimant submits that during the period between 28 February 2012and 6 July 2012, the Respondents continued to breach the JVAby conduct which was calculated to destroy the relationship oftrust and confidence between the parties and completely removeor render redundant any element of Claimant control over Ravin.As stated above, however, these post-Request breaches are notthe subject of this Award (see, inter alia, Claimant’s CS §§730-737).

201. The Respondents do not contend that they rectified any ofthe alleged breaches of the JVA by 6 July 2012.

202. The Tribunal concludes that, in relation to the materialbreaches committed by the Respondents, the Respondents failedto rectify those breaches within the extended period forrectification, i.e. by 6 July 2012.”

13. So far as the counter claims of the Appellants were concerned,the arbitrator dealt with the effect of Prysmian SA acquiring ACPL,which was a competing business of Ravin [through Prysmian’s acquisitionof the Draka group, of which ACPL was a subsidiary]. The sole arbitratorfirst dealt with the reaction of Shri Karia on the Draka takeover togetherwith Shri Karia’s evidence as follows:

“233. The Tribunal finds the many changes to the story ofMr. Karia in this regard to be of considerable significance. Intruth, Mr. Karia did know as long back as July 2009 of the ACPL/Draka connection. When the merger between Draka andPrysmian was announced Mr. Karia did understand that Prysmianhad acquired a controlling stake in ACPL as he fully accepted in A

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cross examination. Mr. Karia had that knowledge in November2010. Nevertheless, Mr. Karia did not complain of any materialbreach to the JVA under Clause 21. The Tribunal further acceptsthe truth of the evidence given by Ms. Farise that first of all whenMr. Karia heard of her appointment to the ACPL Board sometime in late 2011 possibly December, Mr. Karia did not complainbut congratulated her (§18,EI/5/28). This fits in with his earliercongratulatory email to Mr. Battista. Nevertheless by the timeone gets to February 2012 Mr. Karia had completely changed histune and saw Ms. Farise’s appointment to the ACPL as a device,an excuse, to try to derail her carrying on as CEO on the RavinBoard and thus further his campaign not to cede day to day controlof Ravin to the Claimant. The Tribunal accepts the evidence givenby the Claimant witnesses on this. Mr. Karia has changed histune. The Tribunal rejects the veracity of the story originally beingtold by Mr. Karia as not only inconsistent with the documentsbefore the Tribunal but also mutually inconsistent with his evidencein cross-examination.

234. The Tribunal has spent some time analysing this materialbecause Mr. Karia’s contemporaneous reaction is highly instructivein determining whether this is really to be analysed as a serious ormaterial breach with serious adverse effect or rather as a pretext,an excuse. The Tribunal concludes it is the latter not the former.The Respondents somewhat bravely in their Closing Submissionsassert that the Tribunal is not allowed to have regard to thismaterial because the Claimant has not pleaded waiver oraffirmation. This submission is completely rejected. As is clearfrom the authorities referred to above whether a breach is materialor not is determined by reference to all the relevant facts and thiswill include a parties’ reaction to the events at the time.

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237. The Tribunal ultimately concluded that the Respondent didnot adduce any credible evidence of actual serious adverse impact.

238. It is true that there was some evidence (albeit mainly datingback to 2008-2009) of occasional instances of both companiestendering for the same business. Yet there was no reliableevidence that business had been lost from Ravin to ACPL postthe Draka acquisition, or that there had been any diversion of business from Ravin to ACPL or that there had been any targetingof Ravin’s business by ACPL or indeed vice versa.

239. In the end the two companies operate in a very differentspace. ACPL is a small specialist cable business with a turnoverof € 7-7.5m per annum. This is approximately 10% of that ofRavin. ACPL operates principally in the area of instrumentationcables. Ravin operates principally in the area of power and controlcables. Yet further, a large part of the small turnover of ACPLconstitutes exports from ACPL to its Omani shareholder. Thisrenders the notion of serious adverse harm by reference to ACPL’sturnover even more remote.

240. The contemporaneous management documents at Ravin didnot show that Ravin considered ACPL as one of its competitorsor indeed operating in the same space. When Mr. Karia wasasked about this in cross examination, he said that when a companyexamines its competitors it does not make a list down to the 50[th]or 60[th] competitor (Day 9, p.82). This gives an eloquent indicationof how far down the list Ravin would have considered ACPL.

241. Equally, the fact that a list of company names was identifiedand relied upon by the respondent to show that Ravin and ACPLsell cables to some of the same companies is stretching a pointbeyond where it can naturally go. This does not yield an answerof material breach. The evidence adduced by the Respondents isnot of a quality which would enable the Tribunal to conclude thata breach had been committed with serious adverse effect.

242. The Tribunal further makes mention of the assistance itreceived from two distinguished experts of long standingparticipation in the market; Messrs Honavar and Hargopal. TheTribunal did get some benefit from this evidence in the clearexplanation of different types of cables together with samplesand this explanation was also helpfully provided in part byMr. Karia himself. Nevertheless, once more this evidencesomewhat missed the point. It is not enough to establish materialbreach to identify certain types of cables produced and sold byeach company. There was no reliable analysis advanced by theRespondents’ evidence of serious adverse effect either on Ravintoday or likely in the future.

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243. Finally, the Tribunal for completeness makes it clear that itcompletely rejects the further allegation that ACPL had beenacquired in bad faith by the Claimant with a view to destroyingvalue in Ravin or that it has since pursued the operations of ACPLwith that aim in view.

244. There is quite simply no credible evidence to support suchan allegation and indeed the Tribunal is of the view that it is anallegation which should not have been advanced.”

14. So far as the counter claim dealing with direct sales in Indiawhich competed with the business of Ravin, and agency/distributionagreements, the arbitrator held as follows:

“252. Essentially the Respondents have not established that theAgency Agreements on which they place reliance, involved suchan arrangement, commitment or engagement as stated in the FirstPartial Award. Indeed the Respondents have not even addressedthe requirement identified in paragraph 84 of the First Partial FinalAward but instead focused on the length or duration of therelationship and whether or not each relationship was exclusiveor non-exclusive. This is not sufficient. For the avoidance of doubtthe Tribunal concludes that there was no satisfactory basis onwhich it could be concluded that these Agency Agreementsinvolved an injection or exchange of capital or know how on thepart of the investor, acquirer or participator. They are best analysedas classic sales distribution/agency agreements pursuant to whichan agent receives a sales commission in return for the promotionand conclusion of identified types of sales in India.

xxx xxx xxx

273. Making every conceivable allowance in favour of theRespondents, the Tribunal concludes that the Respondents(perhaps for understandable reasons following the First PartialFinal Award) have tried to alter their case and now advance acase that the fact of direct sales amounts to a material breach ofClauses 8 and 20 of the JVA. That was not advanced in theDetermination Notice or in its pleaded case and is not open to therespondents.

(I) No material breach in any event.

274. Yet further, even ignoring the limitations of the DeterminationNotice and pleadings, the Tribunal yet further concludes that theRespondents have not in any event succeeded in showing materialbreach of Clauses 8 or 20 on the facts of the case.

275. The Tribunal concludes that the Respondents’ analysis istoo simplistic to be of any real utility in analysing the issue.

276. The Respondents start by referring to a total 644m of saleswhich were made directly into India by various Prysmian affiliates.

277. Those sales, however, were for all practical purposes madeup of sales of telecom cables, industrial special cables, automotivecables, network and component and services. Ravin did notmanufacture those types of cables. Indeed over 85% of the salescame from two affiliates manufacturing telecom cables, whichRavin did not manufacture and had no experience in selling either.Indeed the Tribunal accepts the evidence of Ms. Farise andMr. Koch and Mr. Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§18-32. E(I)/23/184-186, 11 December 2012 hearing, pp. 134-140, §46, E(I)/17/92, Day 2, pp. 83-86, §18 of, E(I)/24/189).This renders the wholeargument of diversion of sales or breach of good faith by virtue ofthese direct sales somewhat academic.

278. Indeed these figures illustrate exactly why the Respondentsplaced so much emphasis on their argument that the mere fact ofsales was a breach irrespective of anything else. This was oncemore how it was put by Mr. Salve SC in his oral closing argument(Day 10, pp. 183-185) the Tribunal has, however, found againstthe Respondents on this point.

279. The Tribunal concludes that the Respondents have not shownany material breach on the part of the Claimant in the developmentof Ravin’s business in accordance with clause 8 or any breach ofthe good faith obligations under Clause 20 with respect to directsales.”

15. So far as the breach of confidentiality by Respondent No.1was concerned, the counter claim of the Appellants was rejected thus:

“284. Ms. Farise was quite clear in her First Witness Statementof 20 July 2012 (E(I)/5/29) at paragraph 22 (j) – (I) that she was A

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a non-executive director at ACPL, that she was quite aware ofher responsibilities to both companies and did not at any time passon confidential or other information to ACPL from Ravin or fromACPL to Ravin.

285. The Respondents did not cross examine Ms Farise on thisimportant evidence. It is accepted by the Tribunal.

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286. The Respondents instead in their Closing Submissions donot address the question of evidence of actual breach but insteadtry to build up a case of surmise or inference. The Respondentsrely upon the fact that Prysmian referred to ACPL and Ravin asCpart of “Prysmian India”. They also rely upon the fact that theycontend that the appointment of Ms Farise to ACPL was covertlycarried out. The first point leads nowhere. It is not evidence ofbreach of the JVA. The second point is in any event rejected bythe Tribunal. As has been referred to above in the context of theanalysis of the Claimant’s allegations of material breach, theDTribunal finds that Ms. Farise did inform Mr. Karia of herappointment at ACPL. In the first instance Mr. Karia congratulatedher and only objected later as the power struggle grew and thiswas used as a weapon in order to try to have Ms. Farise excludedfrom the Ravin Board.”

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16. So far as multiple acts of alleged mismanagement byRespondent No.1 in breach of clauses 8 and 20 of the JVA wereconcerned, the learned sole arbitrator dealt with this as follows:

“290. The remaining allegations can be seen as essentially theflip side of the Claimant’s allegations of material breach directedFat the Respondents. Three examples will suffice for presentpurposes:

i.the strike orchestrated by the Respondents in response to thesuspension of Mr. Dhall;

ii. the attendance or non-attendance of Claimant nominees atGthe Akruti offices;

iii. the circumstances surrounding the appointment of the CEOand CFO of Ravin.

291. Given the findings made by the Tribunal in favour of theHclaimant’s allegations of material breach it naturally follows that the Respondents do not succeed in these allegations ofmismanagement.

292. The Respondents were themselves in material breach withregard to the whole conduct surrounding Mr. Dhall’s appointmentof Ms. Mathure and the so called authorisation form. The Claimantwas not in material breach in suspending Mr. Dhall. Far from it.The Respondents, however, were plainly in material breach bytheir reaction to this suspension effectively leading to a one daystrike.

293. The question of the attendance of Claimant nominees at theAkruti office is another chapter of the saga in which theRespondents do not emerge without serious criticism. As is clearfrom this Award the Respondents engendered a toxic atmosphereat Akruti in January 2012 (even in its fire stricken state) and suchwas the situation at the ground that it was not really possible forClaimant nominees to attend without fear of their own safety.

294. Lastly, the circumstances surrounding the appointment ofthe CEO and CFO does not give rise to any conceivable materialbreach on the part of the Claimant. The claimant was entitled tonominate a CFO and the CEO. They did so. The Respondents didnot oppose the appointment of Ms Farise. Nevertheless they didobstruct her at every turn once she was appointed because itbecame apparent that she intended pursuant to the JVA to takeday to day control of Ravin and the Respondents did not wish thisto happen. As regards Mr. Brunetti, the CFO, the Respondentsdid veto his appointment. This was not a material breach on theirpart as it was their right to do so under Schedule IX to the JVA.Nevertheless it cannot be said to be a material breach by theClaimant. That is unsustainable.”

17. Holding thus, the learned sole arbitrator concluded that noneof the counter claims were made out, as a result of which they were alldismissed.

18. The Third Partial Final Award was delivered on 14.01.2015.Prior to this award, on 23.06.2014, the Karias, through their legal counsel,informed the tribunal that they would no longer be represented byM/s Nishith Desai Associates. This was the prelude to Shri Vijay Kariawriting to the LCIA Court on 28.09.2014, a few days before the hearing A

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Afixed before the arbitrator, seeking revocation of the appointment of thearbitrator, on the ground of alleged lack of impartiality or independence.At the hearing fixed on 1[st]-2[nd] October 2014, Shri Vijay Karia did notappear. On 10.10.2014, the LCIA Court communicated to the tribunalthat it had dismissed the challenge made to the arbitrator on the groundthat the said application was made out of time under the provisions ofBthe LCIA Rules. The award then went on to address some of the writtensubmissions dated 02.06.2014 of Shri Vijay Karia. The learned arbitratorexplained how he was not ‘functus officio’ with respect to the reliefsought. He further went on to state that he could not now review theSecond Partial Final Award as he had no jurisdiction to do so, and madeCit clear that he did not go beyond the claims submitted by the claimant tohim, or beyond the scope of the JVA. The award also recorded the factthat the present Appellants did not take the necessary steps to appoint avaluer, as a result of which KPMG refused to go ahead with the valuation.As Deloitte was the only other valuer, Deloitte was then requested to goahead with the valuation. The Third Partial Final Award then declaredDas follows:

“1. The Respondents are the Defaulting Party under clause 23.7of the JVA;

2. All rights of whatsoever nature conferred on the RespondentsEand specifically Mr. Karia under the JVA have ceased to beeffective;

3. Any reference in the JVA to any rights of the Respondents andspecifically Mr. Karia including the requirement of consent orapproval of Respondents and specifically Mr. Karia stand omitted; F

4. The Respondents are prohibited from exercising or attemptingto exercise any rights under the JVA including in particular anyrepresentation on the Board of the Company;

5. The date for the assessment of the Discounted Price be 30September 2014 and that this date be substituted for the finding inGparagraph 335(4) of the Second Partial Final Award, which dateand finding the parties agreed would be remitted back to the Tribunalfor further consideration;

6. The Tribunal reserves the matters set out in paragraph 31 above,which includes the costs of the arbitration.

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7. Notwithstanding paragraph 6 above, the Tribunal records thefurther costs of the arbitration (other than the legal or other costsincurred by the parties themselves and other than those costsrecorded in the Second Partial Final Award) up to the date of thisAward, which have been determined by the LCIA Court, pursuantto Article 28.1 of the applicable (1998) Rules, to be as follows:

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8. The Tribunal’s previous Procedural Orders and Interim Reliefas amended by Procedural Order No.12 are to continue in effectuntil further Order.”

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19. By the Final Award dated 11.04.2017, the learned sole arbitratordealt with why and how Deloitte was appointed as the valuer of theshares; why Ravin’s 49% stake in ‘Power Plus’ was excluded forpurposes of valuation as clause 17.1 of the JVA and the formula statedin Schedule X would have to be strictly followed; and as to what then isthe fair market value of the shares of the Appellants in Ravin that was tobe bought out by the Respondent No. 1.

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20. Ultimately, the final relief granted by the said award was asfollows:

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“FINDS, HOLDS, ORDERS AND DECLARES as follows:

1) The Respondents do transfer to the Claimant 10,252,275 sharesheld by them to the Claimant the Discounted Price of INR63.9 per share aggregating to INR 655,200,000.

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2) The Third Respondent, Mr. Karia (who holds Power ofAttorney executed by each Existing shareholder) do forthwithand without delay execute the requisite transfer forms fortransfer of 10,252,275 shares in favour of the Claimant.

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3) The Third Respondent and the Twelfth Respondent, Mr. PiyushKaria, who purport to be and continue to act as director of theCompany, do forthwith and without delay:

a)Convene and hold a meeting of the Board of Directors ofthe Company not later than 21 days after the date of thisFinal Award limited to noting and registering the transferH

of 10,252,275 shares from the Respondents in favour ofthe Claimant; A

b)Table before that meeting the executed transfer forms;

c)Vote in favour of the resolution / motion to register thetransfer of the 10,252,275 shares in favour and in the nameBof the Claimant; and d)On registration of the transfer of the shares as aforesaidto resign from the Board of the Company as Chairmanand Managing Director and as Executive Director of theCompany respectively.

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4) Each of the Respondents and particularly the Third and TwelfthRespondents, Mr. Karia and Mr. Piyush Karia, are restrainedfrom acting themselves or through servants or agents, from:

a)Claiming or attempting to exercise or exercising any rightsDwhatsoever under the JVA in relation to the Companyincluding but not limited to representation on the Board ofthe Company or their consent or approval being requiredin any matter relating to the Company whether at the Boardof the Company or at meetings of the shareholders of theCompany.

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b)Claiming or attempting to claim, or representing orattempting to represent, the Company in any matter and inany manner whatsoever.

c)Using or attempting to use any assets, properties or facilitiesof the Company including but not limited to the Company’sFoffices and communication facilities.

5) The third and Twelfth Respondents, Mr. Karia and Mr. PiyushKaria, themselves or through servants or agents are restrainedfrom acting, or claiming or holding themselves out to be theChairman or Managing Director and as Executive Director,Grespectively, or directors of the Company (except for the limitedpurpose as set out in (3)(above)).

6) The Respondents jointly and severally do pay to the Claimantthe legal and sundry disbursements costs of and relating tothis Arbitration in the sum of US $ 2,317,199.82.H

7) The Respondents are to bear and, insofar as not already paid,to reimburse the Claimant the total costs of the Arbitration asdetermined by the LCIA Court pursuant to Article 28.1 of theLCIA Rules, which are £ 283,043.71.

8) All other claims of the Claimant and Respondents aredismissed.”

21. It is important to note that no challenge was made to theaforesaid award under the English Arbitration Law, though available. Itis only when the aforesaid award was brought to India for recognitionand enforcement that objections to the said award were made underSection 48 of the Arbitration and Conciliation Act, 1996 (hereinafterreferred to as the “Arbitration Act”).

22. The learned single Judge, in the impugned judgment, recordedthe arguments of both parties, dealt with the allegation of bias againstthe arbitrator and all other objections raised by the Appellants to theaward, but finally found that the award must be recognised and enforcedas the objections do not fall within any of the neat legal pigeonholescontained in Section 48 of the Arbitration Act.

23. As Section 50 of the Arbitration Act does not provide an appealwhen a foreign award is recognised and enforced by a judgment of alearned Single Judge of a High Court, the Appellants have appealedagainst the said judgment under Article 136 of the Constitution of India.

24. Before referring to the wide ranging arguments on both sides,it is important to emphasise that, unlike Section 37 of the Arbitration Act,which is contained in Part I of the said Act, and which provides anappeal against either setting aside or refusing to set aside a ‘domestic’arbitration award, the legislative policy so far as recognition andenforcement of foreign awards is that an appeal is provided against ajudgment refusing to recognise and enforce a foreign award but nottheother 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 onlyone bite at the cherry in a case where objections are made to the foreignaward on the extremely narrow grounds contained in Section 48 of theAct and which have been rejected. This is in consonance with the factthat India is a signatory to the Convention on the Recognition andEnforcement of Foreign Arbitral Awards, 1958 (hereinafter referred toas “New York Convention”) and intends - through this legislation - to A

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Aensure that a person who belongs to a Convention country, and who, inmost cases, has gone through a challenge procedure to the said award inthe country of its origin, must then be able to get such award recognisedand enforced in India as soon as possible. This is so that such personmay enjoy the fruits of an award which has been challenged and whichchallenge has been turned down in the country of its origin, subject toBgrounds to resist enforcement being made out under Section 48 of theArbitration Act. Bearing this in mind, it is important to remember thatthe Supreme Court’s jurisdiction under Article 136 should not be used tocircumvent the legislative policy so contained. We are saying this becausethis matter has been argued for several days before us as if it was a firstCappeal from a judgment recognising and enforcing a foreign award. Giventhe restricted parameters of Article 136, it is important to note that incases like the present - where no appeal is granted against a judgmentwhich recognises and enforces a foreign award - this Court should bevery slow in interfering with such judgments, and should entertain anappeal only with a view to settle the law if some new or unique point isDraised which has not been answered by the Supreme Court before, sothat the Supreme Court judgment may then be used to guide the courseof future litigation in this regard. Also, it would only be in a very exceptionalcase of a blatant disregard of Section 48 of the Arbitration Act that theSupreme Court would interfere with a judgment which recognises andEenforces a foreign award however inelegantly drafted the judgment maybe. With these prefatory remarks we may now go on to the submissionsof counsel.

25. Dr. Abhishek Manu Singhvi, Senior Advocate, led the chargeso far as the Appellants are concerned. Ably assisted by Shri Nakul FDewan on the law, the learned Senior Advocates argued a large numberof points which they sought to put into three legal pigeonholes, namely,the pigeonhole contained in Section 48(1)(b) of the Arbitration Act, andthat the foreign award would be contrary to the ‘public policy of India’[as under Section 48(2)(b) of the Arbitration Act] in two respects: (1)that it would be in contravention of the fundamental policy of Indian law;Gand (2) that in several respects it would violate the most basic notions ofjustice.

26. Dr. Singhvi’s arguments were as follows:

(1) That the arbitral tribunal entirely failed to deal with theHAppellants’ counter claim pertaining to the incorporation of one Jaguar Communication Consultancy Services PrivateLimited (hereinafter referred to as “Jaguar”), which wouldshow that, in material breach of the non-compete provisionsof the JVA, this company was set up in India by RespondentNo.1 to do business in the manufacture and sale of cables,in competition with the joint venture company, i.e. Ravin.

(2) That the tribunal failed to make a determination on theAppellants’ counter claim that Respondent No.1’s effortsto oust the Appellant No.1 and his family from Ravinamounted to a breach of the JVA.

(3) That the tribunal failed to make any determination on theAppellants’ counter claim that Respondent No.1 made asurreptitious attempt to register the Ravin trademark in itsown name, which would be a breach of the material clausesof the JVA.

(4) That the tribunal has acted contrary to the admissions madeby expert witnesses of both parties, both of whom statedthat ACPL - a company acquired by the parent ofRespondent No.1 - was in competition with Ravin, and thatthis would therefore vitiate the award. In addition, sincethe most material evidence with regard to the acquisition ofACPL was ignored by the tribunal, this would also vitiatethe award. Insofar as ACPL was concerned, RespondentNo.1’s failure to produce documents that were with ACPLought to have led to an adverse inference being drawnagainst Respondent No.1, which was not done by the learnedarbitrator.

(5) The tribunal was perverse in considering the issue of materialbreach in that it applied the maxim de minimus non curatlex to ACPL, being a small specialist cable business.

(6) That a perverse interpretation of the JVA was given by thelearned arbitrator in the First Partial Final Award of clause21.1, stating that it only prohibited long-term arrangementsand engagements, which was a condition added by thearbitrator himself into the said clause.

(7) So far as direct sales of Respondent No.1 in India wereconcerned, the tribunal ignored material evidence andadmissions of Respondent No.1.

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(8) That the tribunal’s analysis of the contemporaneous conductof the parties was both selective and perverse, that theconsideration of the evidence of key witnesses was alsoselective and perverse.

(9) That Deloitte was a conflicted valuer and should not havebeen appointed at all. The valuer adopted a course for valuationthat is contrary to both parties’ position, in that, Ravin’s 49%shareholding in Power Plus which had been valued by anothervaluer ‘BDO’ at INR 563 crores was completely ignored. Whatis very important is that the tribunal had acted contrary to theparties’ submissions in arriving at the valuation date, as thesaid date should have been the date closest to the date of theactual sale of shares, instead of which, a 2017 award took adate of September 2014 which date in any case expired by theend of December 2014.

(10) That the ruling contained in the First and Second PartialFinal Awards regarding interpretation of clause 21 of the JVAwere inconsistent and irreconcilable.

(11) That a private communication had been made of theoutcome of the arbitration by the tribunal two months prior tothe award, published through an agent of Respondent No.1,one M/s Gilbert Tweed Associates, which would show thatRespondent No.1 knew that the Second Partial Final Awardwould be in its favour. The mere undertaking to terminate theengagement of M/s Key2People as the agent, who in turn hademployed M/s Gilbert Tweed Associates, and an apology madeby Respondent’s counsel, ought not to have been held to havebeen sufficient to condone this lapse by the learned solearbitrator.

(12) That the award is in contravention of the Foreign ExchangeManagement Act, 1999 (hereinafter referred to as “FEMA”)in that it directed the sale of shares of Ravin at a 10% discount,which would be in the teeth of rule 21(2)(b)(iii) of the ForeignExchange Management (Non-Debt Instrument) Rules, 2019(hereinafter referred to as “the Non-Debt Instrument Rules”).

27. Shri Nakul Dewan cited a large number of judgments largelyfrom Singapore, Hong Kong and the U.K. to buttress his submission that an award which fails to deal with or make any determination on theclaim of a party ought to be set aside on the ground contained in Section48(2)(b) of the Arbitration Act, as it would be in breach of the audialteram partem principle, and also on the ground that it would shock theconscience of the court, being contrary to a basic notion of justice in thiscountry. He also argued that where an award is directly contrary toadmitted facts, it would be perverse, and hence liable to be set side.Also, where a party is unable to present its case on account of theopposite party’s wilful failure to produce documents ordered, and thetribunal’s failure to draw an adverse inference therefrom, on most materialaspects of the case, would render such award unenforceable.

28. He also cited judgments on awards which treat parties unequallyin that they adopt disparate thresholds for determining material breach,as a result of which an award read as a whole would be vulnerable onaccount of egregious bias. Also, a private communication of the outcomeof the arbitration by the tribunal to one party to the exclusion of anotherwould fatally undermine the independence and impartiality of thearbitration process, rendering the award vulnerable on the ground ofbias.

29. Both Dr. Singhvi and Mr. Nakul Dewan, after setting out allthe aforesaid grounds and case law supporting such grounds, haveattacked the impugned High Court judgment, stating that a large numberof these points were not answered by the High Court at all, and whenanswered would show that even where there was bias, perversity andbreach of natural justice, all these grounds were merely brushed aside,and therefore no real determination of all the points argued before theHigh Court was at all undertaken by the learned Single Judge. As a‘without prejudice’ argument, Dr. Singhvi exhorted us to modify theimpugned award, in case he were to fail on all other arguments, to statethat the valuation date of 30.09.2014 ought at least to be the date of thejudgment delivered in this case, as otherwise the sale of the Karia blockof shares in Ravin would be at a tremendous undervalue. This he exhortedus to do under Article 142 of the Constitution of India.

30. Shri Kapil Sibal, learned senior advocate appearing on behalfof the Respondent No.1, read to us in copious detail each of the fourawards delivered by the arbitral tribunal. He argued that each and everyaspect of the matter that was argued on both sides was considered indetail in each of the said awards. He stressed the fact that though A

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Aavailable, no challenge was ever made in the courts in England to thefour awards. He defended the judgment of the learned Single Judge ofthe High Court and said that if the awards were read, it would be clearthat the arbitrator adopted an extremely balanced approach, despiteextreme provocation from Shri Vijay Karia, who only started allegingbias when he realized that the ‘Second Partial Final Award’ relating toBwho was in material breach, would be decided against him. Despite this,the learned arbitrator dispassionately considered every single claim andcounter-claim made by the parties. This being the case, none of thegrounds mentioned in Section 48 of the Arbitration Act would be available in the form of objections to such well-reasoned and balanced awards. InCparticular, Shri Sibal stressed that since the decision of this Court inRenusagar Power Plant Co. Ltd. v. General Electric Co. (1994)Supp (1) SCC 644, any interference on the merits of the decision of thearbitral tribunal would be outside the ken of Section 48 of the ArbitrationAct. Shri Sibal stressed the fact that Dr. Singhvi had argued this matteras if it was a first appeal on merits, and that each and every groundDtaken, if properly viewed, was really to invite this Court to interfere onthe merits of the awards, which would be clearly outside the groundscontained in Section 48 of the Arbitration Act.

31. Shri Sibal stressed the fact that the central point of this casewas as to who was in material breach of the provisions of the JVA.EOnce the learned arbitrator held that it was the Appellants and not theRespondent No.1 who materially breached the terms of the JVA, in thatpost the integration period, the appointed CEO, who was to be in-chargeof the day to day affairs of Ravin, was never allowed to take over suchcharge, would make it clear that this most material breach committed byFthe Appellants on facts, as held by the learned arbitrator, could not beinterfered with given the parameters of the Court’s jurisdiction underSection 48 of the Arbitration Act. Once this was so, everything elsefollowed, as a result of which it was the Respondent No.1 who was tobuy-out the Appellants’ 49% stake in Ravin at a price arrived at by awell-known independent valuer, Deloitte, at a date that was correctlyGfixed by the arbitral tribunal. This being the heart of the case, all thecontentions of Dr. Singhvi raising objections to the four awards in questionmust fall, as every argument, though dressed up as arguments fallingwithin three grounds under Section 48, are really arguments addressingthe merits of the case. Without prejudice to this central argument, ShriHSibal took up every single point that was argued and answered each point. So far as the Jaguar Communication Consultancy Services PrivateLimited point was concerned, Shri Sibal stated that at no point did theAppellant amend its counter-claim to include such argument, which wasin fact raised orally as an afterthought at the fag end of the proceedings.Secondly, as Shri Sibal’s case of ouster was accepted by the arbitraltribunal, the claim of the Appellants that it was really the other wayaround was specifically addressed by the learned arbitrator and dismissed,inter alia on the ground that ouster was not at all pleaded by theAppellants. So far as the Ravin trademark is concerned, it is clear thatthe Appellant’s own counsel made it clear that he would not be pressingthe point – the point being as to whether it was at all open to go intoregistration of trademark of Ravin under separate license agreementswhich had separate arbitration clauses for arbitration in Italy. This wasargued by both sides and dealt with by the arbitrator as a jurisdictionalissue which was turned down by the arbitrator stating that the registrationof the Ravin trademark was an issue which would be outside the JVAand hence not arbitrable. So far as ACPL was concerned, the learnedarbitrator made it clear that Shri Vijay Karia knew all along that ACPLwould come to Respondent No.1 as a result of the ‘Draka acquisition’and never objected, but in fact congratulated the Respondent No.1 onmaking such acquisition. That ACPL was in a competing business wastaken much later as an afterthought, Shri Vijay Karia admitting in cross-examination that ACPL’s business was so small that it could bedisregarded altogether. Also, Shri Sibal adverted to a Procedural Ordermade by the learned arbitrator, in which it was stated that since ACPLwas not a party to the arbitration, the Appellants could approach theCourt in England to get a direction that ACPL produce the documentsasked for by them. This was never done. Further, Shri Sibal made itclear that ACPL was not a subsidiary of Respondent No.1, but was anindirect subsidiary of Respondent No.1’s parent company, consequentupon the ‘Draka acquisition’, with a separate Board of Directors; andbeing a different person in law and fact, who is not a party to the arbitralproceedings, the learned arbitrator’s Procedural Order, which was neverchallenged and never followed, was a complete answer to the contentionthat an adverse inference ought to be drawn. So far as the interpretationof the JVA was concerned, Shri Sibal made it clear that it was interpretedfairly, given the fact that there was no challenge to any part of the FirstPartial Final Award, except the interpretation given to Clause 21.1, whichwas an interpretation given by the learned arbitrator keeping in mind the A

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Acommercial background and commercial efficacy doctrine. Accordingto Shri Sibal, not only was it a possible interpretation, it was also a correctinterpretation. So far as the direct sales of Respondent No.1 in Indiawere concerned, the tribunal took into account all the material evidenceand dismissed, after a full hearing, the counter-claim of the Appellants inthis behalf. When it came to the Final Award, Shri Sibal pointed out thatBon facts Deloitte was appointed by consent long after the valuer thatwas chosen by lots finally stated its inability to conduct the valuation dueto the Appellants dragging their feet in this behalf. Secondly, such valuationwas conducted strictly as per the formula contained in the JVA, whichwas Clause 17.1 read with Schedule X of the JVA. He was at pains toCpoint out that though Power Plus Company LLC (hereinafter referredto as “Power Plus”) was mentioned specifically in the JVA, yet nothingabout Power Plus was mentioned in the formula for valuation. Shri Sibalalso refuted any so called inconsistencies in the awards, stating thatgiven the interpretation of the JVA by the arbitrator in the First PartialFinal Award, all the awards that followed were in accord with theDinterpretation so given. He also stated that the arbitrator consideredmaterial breach with an even hand and arrived at the obvious conclusionon facts that since the CEO was never allowed to function, it was theAppellants and not the Respondent No.1 who had materially breachedthe terms of the JVA. Shri Sibal then went into the bogey raised reEM/s. Gilbert Tweed Associates. He maintained that the Respondent No.1had no idea as to who M/s Gilbert Tweed Associates was and came toknow that the agent, M/s Key2People, who was employed by theRespondent No.1, had in turn employed M/s Gilbert Tweed Associates,who published an advertisement to employ certain persons. From this, tojump to and try to make out a ground that the arbitrator was biased is aFhuge leap not warranted either in fact or law. Shri Sibal then argued thatthe award, in that it directed a sale of shares at a 10% discount, did notin any manner contravene the Foreign Exchange Management Act, 1999and Rules thereunder. He took us through the relevant Rules and arguedthat unlike the Foreign Exchange Regulation Act, 1973 (hereinafterGreferred to as “FERA”), FEMA did not contain Section 47 of FERAwhich voided agreements that were made contrary to FERA. Accordingto him, the FEMA regime is a permissive regime and any violation of theRules could be monitored by the Reserve Bank of India by way of adirection of the sale of the shares without the discount, if at all. In anycase, the Appellants would be estopped from taking this plea, havingH

entered into a solemn agreement with the Respondent No.1 which theycannot go against. In any case, at worst, a violation of the Rules madeunder FEMA, by which shares would be sold not at market price but atsomething lower, contrary to the Rules, would also amount to a mereviolation of law, which is far removed from a violation of any fundamentalpolicy of Indian law, as foreign exchange is coming into the country andnot going out therefrom.

32. Shri K.V. Viswanathan, learned senior advocate appearing onbehalf of the Respondent No. 1, also supported the submissions madeby Shri Sibal. In particular, he dealt with the judgments cited by ShriNakul Dewan and cited judgments of his own to show that the parameterscontained in Section 48 of the Arbitration Act for resisting enforcementof foreign awards are extremely narrow, and the Court can in nocircumstance go into the merits of a foreign award. He was at pains topoint out that as a full hearing had been given and every opportunityextended by the learned arbitrator to both parties, no ground relatable tobreach of natural justice or any prejudice as a result was made out onthe facts. He then made it clear that public policy must be understood inthe narrow sense as understood and exposited by Renusagar (supra)and the later decisions of this Court. There was also nothing in the awardsthat would shock the conscience of the Court to attract the most basicnotions of justice exception contained in Section 48.

Enforcement of Foreign Awards under Section 48

33. Having heard learned counsel on both sides, it is important tofirst set out the relevant parts of Section 48 of the Arbitration Act. Section48 reads as follows:

“48.Conditions for enforcement of foreign awards.—(1)Enforcement of a foreign award may be refused, at the requestof the party against whom it is invoked, only if that party furnishesto the court proof that —

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(b) the party against whom the award is invoked was not givenproper notice of the appointment of the arbitrator or of the arbitralproceedings or was otherwise unable to present his case; xxx xxx xxx A

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A(2) Enforcement of an arbitral award may also be refused if thecourt finds that—

(a) the subject-matter of the difference is not capable of settlementby arbitration under the law of India; or (b) the enforcement of the award would be contrary to the publicBpolicy of India.

Explanation 1.—For the avoidance of any doubt, it is clarified thatan award is in conflict with the public policy of India, only if,—

(i) the making of the award was induced or affected by fraud orcorruption or was in violation of section 75 or section 81; or C

(ii) it is in contravention with the fundamental policy of Indianlaw; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2.—For the avoidance of doubt, the test as to whetherDthere is a contravention with the fundamental policy of Indian lawshall not entail a review on the merits of the dispute.”

34. One of the first judgments which construed pari materiaprovisions in the Foreign Awards Act, 1961 was the celebrated judgmentin Renusagar (supra). This judgment was given pride of place in theErecent judgment of Ssangyong Engineering & Construction Co.Ltd. v. National Highways Authority of India (NHAI) Civil AppealNo. 4779 of 2019, in which this court referred to Renusagar (supra) asfollows:

“33. In Renusagar (supra), this Court dealt with a challenge to aFforeign award under Section 7 of the Foreign Awards (Recognitionand Enforcement) Act, 1961 [“Foreign Awards Act”]. TheForeign Awards Act has since been repealed by the 1996 Act.However, considering that Section 7 of the Foreign Awards Actcontained grounds which were borrowed from Article V of theGConvention on the Recognition and Enforcement of Foreign ArbitralAwards, 1958 [“New York Convention”], which is almost inthe same terms as Sections 34 and 48 of the 1996 Act, the saidjudgment is of great importance in understanding the parametersof judicial review when it comes to either foreign awards orinternational commercial arbitrations being held in India, the grounds H

for challenge/refusal of enforcement under Sections 34 and 48,respectively, being the same. After referring to the New YorkConvention, this Court delineated the scope of enquiry of groundsunder Sections 34/48 (equivalent to the grounds under Section 7of the Foreign Awards Act, which was considered by the Court),and held:

“34. Under the Geneva Convention of 1927, in order to obtainrecognition or enforcement of a foreign arbitral award, therequirements of clauses (a) to (e) of Article I had to be fulfilledand in Article II, it was prescribed that even if the conditionslaid down in Article I were fulfilled recognition and enforcementof the award would be refused if the Court was satisfied inrespect of matters mentioned in clauses (a), (b) and (c). Theprinciples which apply to recognition and enforcement of foreignawards are in substance, similar to those adopted by the Englishcourts at common law. (See: Dicey & Morris, The Conflict ofLaws, 11th Edn., Vol. I, p. 578). It was, however, felt that theGeneva Convention suffered from certain defects whichhampered the speedy settlement of disputes through arbitration.The New York Convention seeks to remedy the said defectsby providing for a much more simple and effective method ofobtaining recognition and enforcement of foreign awards.Under the New York Convention the party against whom theaward is sought to be enforced can object to recognition andenforcement of the foreign award on grounds set out in sub-clauses (a) to (e) of clause (1) of Article V and the court can,on its own motion, refuse recognition and enforcement of aforeign award for two additional reasons set out in sub-clauses(a) and (b) of clause (2) of Article V. None of the grounds setout in sub-clauses ( a ) to ( e) of clause (1) and sub- clauses (a ) and ( b) of clause (2) of Article V postulates a challenge tothe award on merits.

35. Albert Jan van den Berg in his treatise The New YorkArbitration Convention of 1958 : Towards a UniformJudicial Interpretation, has expressed the view:

“It is a generally accepted interpretation of the Conventionthat the court before which the enforcement of the foreignaward is sought may not review the merits of the award. The A

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main reason is that the exhaustive list of grounds for refusal ofenforcement enumerated in Article V does not include amistake in fact or law by the arbitrator. Furthermore, underthe Convention the task of the enforcement judge is a limitedone. The control exercised by him is limited to verifying whetheran objection of a respondent on the basis of the grounds forrefusal of Article V(1) is justified and whether the enforcementof the award would violate the public policy of the law of hiscountry. This limitation must be seen in the light of the principleof international commercial arbitration that a national courtshould not interfere with the substance of the arbitration.” (p.269)

36. Similarly Alan Redfern and Martin Hunter have said:

“The New York Convention does not permit any review on themerits of an award to which the Convention applies and, in thisrespect, therefore, differs from the provisions of some systemsof national law governing the challenge of an award, where anappeal to the courts on points of law may be permitted.”(Redfern & Hunter, Law and Practice of InternationalCommercial Arbitration, 2nd Edn., p. 461.)

37. In our opinion, therefore, in proceedings for enforcementof a foreign award under the Foreign Awards Act, 1961, thescope of enquiry before the court in which award is sought tobe enforced is limited to grounds mentioned in Section 7 of theAct and does not enable a party to the said proceedings toimpeach the award on merits.

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65. This would imply that the defence of public policy which ispermissible under Section 7(1)(b)(ii) should be construednarrowly. In this context, it would also be of relevance to mentionthat under Article I(e) of the Geneva Convention Act of 1927,it is permissible to raise objection to the enforcement of arbitralaward on the ground that the recognition or enforcement ofthe award is contrary to the public policy or to the principles ofthe 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 policyor the law of India. Since the expression “public policy” coversthe field not covered by the words “and the law of India” whichfollow the said expression, contravention of law alone will notattract the bar of public policy and something more thancontravention of law is required.

66. Article V(2)(b) of the New York Convention of 1958 andSection 7(1)(b)(ii) of the Foreign Awards Act do not postulaterefusal of recognition and enforcement of a foreign award onthe ground that it is contrary to the law of the country ofenforcement and the ground of challenge is confined to therecognition and enforcement being contrary to the public policyof the country in which the award is set to be enforced. Thereis nothing to indicate that the expression “public policy” inArticle V(2) (b) of the New York Convention and Section7(1)(b)(ii) of the Foreign Awards Act is not used in the samesense in which it was used in Article I(c) of the GenevaConvention of 1927 and Section 7(1) of the Protocol andConvention Act of 1937. This would mean that “public policy”in Section 7(1)(b)(ii) has been used in a narrower sense and inorder to attract the bar of public policy the enforcement of theaward must invoke something more than the violation of thelaw of India. Since the Foreign Awards Act is concerned withrecognition and enforcement of foreign awards which aregoverned by the principles of private international law, theexpression “public policy” in Section 7(1)(b)(ii) of the ForeignAwards Act must necessarily be construed in the sense thedoctrine of public policy is applied in the field of privateinternational law. Applying the said criteria, it must be held thatthe enforcement of a foreign award would be refused on theground that it is contrary to public policy if such enforcementwould be contrary to (i) fundamental policy of Indian law; or(ii) the interests of India; or (iii) justice or morality.”

35. The judgment of Shri Lal Mahal Ltd. v. Progetto GranoSPA (2014) 2 SCC 433 is important in that it made it clear that theRenusagar (supra) position would continue to apply to cases whicharose under Section 48(2)(b), the wider meaning given “to public policy A

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Aof India” in the domestic sphere not being applicable. In doing so itoverruled the judgment in Phulchand Exports Ltd. v. O.O.O Patriot(2011) 10 SCC 300 as follows:

“28. We are not persuaded to accept the submission ofMr. Rohinton F. Nariman that the expression “public policy ofIndia” in Section 48(2)(b) is an expression of wider import thanthe “public policy” in Section 7(1)(b)(ii) of the Foreign AwardsAct. We have no hesitation in holding that Renusagar [RenusagarPower Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC644] must apply for the purposes of Section 48(2)(b) of the 1996Act. Insofar as the proceeding for setting aside an award underSection 34 is concerned, the principles laid down in SawPipes [ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705] wouldgovern the scope of such proceedings.

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29. We accordingly hold that enforcement of foreign award wouldbe refused under Section 48(2)(b) only if such enforcement wouldbe contrary to (1) fundamental policy of Indian law; or (2) theinterests of India; or (3) justice or morality. The wider meaninggiven to the expression “public policy of India” occurring in Section34(2)(b)(ii) in Saw Pipes [ONGC Ltd. v. Saw Pipes Ltd., (2003)5 SCC 705] is not applicable where objection is raised to theenforcement of the foreign award under Section 48(2)(b).

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30. It is true that in Phulchand Exports [Phulchand ExportsLtd. v. O.O.O. Patriot, (2011) 10 SCC 300 : (2012) 1 SCC (Civ)131] a two-Judge Bench of this Court speaking through one of us(R.M. Lodha, J.) accepted the submission made on behalf of theappellant therein that the meaning given to the expression “publicpolicy of India” in Section 34 in Saw Pipes [ONGC Ltd. v. SawPipes Ltd., (2003) 5 SCC 705] must be applied to the sameexpression occurring in Section 48(2)(b) of the 1996 Act. However,in what we have discussed above it must be held that the statementin para 16 of the Report that the expression “public policy of Indiaused in Section 48(2)(b) has to be given a wider meaning and theaward could be set aside, if it is patently illegal” does not laydown correct law and is overruled.

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45. Moreover, Section 48 of the 1996 Act does not give anopportunity to have a “second look” at the foreign award in theaward enforcement stage. The scope of inquiry under Section 48does not permit review of the foreign award on merits. Proceduraldefects (like taking into consideration inadmissible evidence orignoring/rejecting the evidence which may be of binding nature)in the course of foreign arbitration do not lead necessarily to excusean award from enforcement on the ground of public policy.

46. In what we have discussed above, even if it be assumed thatthe Board of Appeal erred in relying upon the report obtained bythe buyers from Crepin which was inconsistent with the terms onwhich the parties had contracted in the contract dated 12-5-1994and wrongly rejected the report of the contractual agency, in ourview, such errors would not bar the enforceability of the appealawards passed by the Board of Appeal.”

36. In LMJ International Ltd. v. Sleepwell Industries (2019)5 SCC 302, an ex-parte award was passed in London which was soughtto be executed by the Respondents in the High Court of Calcutta. Thelearned Single Judge of the High Court passed a common order in theexecution cases rejecting objections taken regarding the maintainabilityof the applications. Against this, a review petition was rejected by theHigh Court and so were Special Leave Petitions before this Court. Whatwas argued before this Court was that grounds as to maintainability hadbeen taken, as a result of which grounds under Section 48 of theArbitration Act were not actually argued as objections before the SingleJudge. This plea of the appellant was rejected by this Court, given theobject of Section 48 of the Act. Since the appellant “might and “ought”to have taken these grounds, before the learned Single Judge thesegrounds were barred by an application of doctrine of constructive resjudicata as follows:

“17. Be that as it may, the grounds urged by the petitioner in theearlier round regarding the maintainability of the execution casecould not have been considered in isolation and dehors the issueof enforceability of the subject foreign awards. For, the samewas intrinsically linked to the question of enforceability of thesubject foreign awards. In any case, all contentions available tothe petitioner in that regard could and ought to have been raisedspecifically and, if raised, could have been examined by the Court A

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Aat that stage itself. We are of the considered opinion that thescheme of Section 48 of the Act does not envisage piecemealconsideration of the issue of maintainability of the execution caseconcerning the foreign awards, in the first place; and then theissue of enforceability thereof. Whereas, keeping in mind thelegislative intent of speedy disposal of arbitration proceedings andBlimited interference by the courts, the Court is expected to considerboth these aspects simultaneously at the threshold. Taking anyother view would result in encouraging successive and multipleround of proceedings for the execution of foreign awards. Wecannot countenance such a situation keeping in mind the avowedCobject of the Arbitration and Conciliation Act, 1996, in particular,while dealing with the enforcement of foreign awards. For, thescope of interference has been consciously constricted by thelegislature in relation to the execution of foreign awards. Therefore,the subject application filed by the petitioner deserves to berejected, being barred by constructive res judicata, as has beenDjustly observed by the High Court in the impugned judgment.

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20. Suffice it to observe that the Arbitral Tribunal has consideredall aspects of the matter and even if it has committed any error,the same could, at best, be a matter for correction by way ofappeal to be resorted to on grounds as may be permissible underthe English law, by which the subject arbitration proceedings aregoverned. We may not be understood to have expressed anyopinion on the correctness of those issues.”

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F37. At this stage it is important to advert to amendments thatwere made by the Arbitration and Conciliation (Amendment) Act, 2015(hereinafter referred to as the “2015 Amendment Act”). Section 48 wasamended to delete the ground of “contrary to the interest of India”.Also, what was important was to reiterate the Renusagar (supra) position,that the test as to whether there is a contravention with the fundamentalGpolicy of Indian law shall not entail a review on the merits of the dispute(vide Explanation 2 to Section 48(2)).

38. It will be noticed that in the context of challenge to domesticawards, Section 34 of the Arbitration Act differentiates betweeninternational commercial arbitrations held in India and other arbitrationsHheld in India. So far as “the public policy of India” ground is concerned, both Sections 34 and 48 are now identical, so that in an internationalcommercial arbitration conducted in India, the ground of challenge relatingto “public policy of India” would be the same as the ground of resistingenforcement of a foreign award in India. Why it is important to advert tothis feature of the 2015 Amendment Act is that all grounds relating topatent illegality appearing on the face of the award are outside the scopeof interference with international commercial arbitration awards madein India and foreign awards whose enforcement is resisted in India. Inthis respect, it is important to advert to paragraphs 30 and 43 ofSsangyong (supra) as follows:

“30. What is important to note is that a decision which is perverse,as understood in paragraphs 31 and 32 of Associate Builders(supra), while no longer being a ground for challenge under “publicpolicy of India”, would certainly amount to a patent illegalityappearing on the face of the award. Thus, a finding based on noevidence at all or an award which ignores vital evidence in arrivingat its decision would be perverse and liable to be set aside on theground of patent illegality. Additionally, a finding based ondocuments taken behind the back of the parties by the arbitratorwould also qualify as a decision based on no evidence inasmuchas such decision is not based on evidence led by the parties, andtherefore, would also have to be characterised as perverse.

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43. We therefore hold, following the aforesaid authorities, that inthe guise of misinterpretation of the contract, and consequent“errors of jurisdiction”, it is not possible to state that the arbitralaward would be beyond the scope of submission to arbitration ifotherwise the aforesaid misinterpretation (which would includegoing beyond the terms of the contract), could be said to havebeen fairly comprehended as “disputes” within the arbitrationagreement, or which were referred to the decision of the arbitratorsas understood by the authorities above. If an arbitrator is allegedto have wandered outside the contract and dealt with matters notallotted to him, this would be a jurisdictional error which could becorrected on the ground of “patent illegality”, which, as we haveseen, would not apply to international commercial arbitrations thatare decided under Part II of the 1996 Act. To bring in by thebackdoor grounds relatable to Section 28(3) of the 1996 Act to be AB

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Amatters beyond the scope of submission to arbitration under Section34(2)(a)(iv) would not be permissible as this ground must beconstrued narrowly and so construed, must refer only to matterswhich are beyond the arbitration agreement or beyond thereference to the arbitral tribunal.”

BThis statement of the law applies equally to Section 48 of theArbitration Act.

39. Indeed, this approach has commended itself in otherjurisdictions as well. Thus, in Sui Southern Gas Co. Ltd. v. HabibullahCoastal Power Co. (2010) SGHC 62, the Singapore High Court, afterCsetting out the legislative policy of the Model Law that the ‘public policy’exception is to be narrowly viewed and that an arbitral award that shocksthe conscience alone would be set aside, went on to hold:

“48. It is clear, therefore, that in order for SSGC to have succeededon the public policy argument, it had to cross a very high thresholdDand demonstrate egregious circumstances such as corruption,bribery or fraud, which would violate the most basic notions ofmorality and justice. Nothing of the sort had been pleaded or provedby SSGC, and its ambiguous contention that the Award was“perverse” or “irrational” could not, of itself, amount to a breachof public policy.”

EGeneral approach to enforcement and recognition ofForeign Awards

40. The USA was a late signatory to the New York Convention,acceding to the Convention only in 1970. However, in an early judgmentFof the U.S Court of Appeals, Second Circuit, namely Parsons &Whittemore Overseas Co. v. Societe Generale De L’IndustrieDu Papier 508 F.2d 969 (1974), the Court in a succinct paragraph pointedout the change made by the New York Convention when compared withthe older Geneva Convention of 1927 as follows:

“In 1958 the Convention was adopted by 26 of the 45 statesGparticipating in the United Nations Conference on CommercialArbitration held in New York. For the signatory state, the NewYork Convention superseded the Geneva Convention of 1927, 92League of Nations Treaty Ser. 302.The 1958 Convention’s basicthrust was to liberalize procedures for enforcing foreign arbitralHawards: While the Geneva Convention placed the burden of proof

on the party seeking enforcement of a foreign arbitral award anddid not circumscribe the range of available defences to thoseenumerated in the convention, the 1958 Convention clearly shiftedthe burden of proof to the party defending against enforcementand limited his defenses to seven set forth in Article V. See Contini,International Commercial Arbitration, 8 Am.J.Comp.L. 283, 299(1959). Not a signatory to any prior multilateral agreement onenforcement of arbitral awards, the United States declined to signthe 1958 Convention at the outset. The United States ultimatelyacceded to the Convention, however, in 1970, (1970) 3 U.S.T.2517, T.I.A.S. No. 6997, and implemented its accession with 9U.S.C. 201-208. Under 9 U.S.C. 208, the existing FederalArbitration Act, 9 U.S.C. 1-14, applies to the enforcement offoreign awards except to the extent to which the latter may conflictwith the Convention. See generally, Comment, InternationalCommercial Arbitration under the United Nations Convention andthe Amended Federal Arbitration Statute, 47 Wash.L.Rev. 441(1972).”

The Court then went on to hold:

“Perhaps more probative, however, are the inferences to be drawnfrom the history of the Convention as a whole. The generalpro-enforcement biasinforming the Convention and explaining itssupersession of the Geneva Convention points toward a narrowreading of the public policy defense. An expansive constructionof this defense would vitiate the Convention’s basic effort toremove pre-existing obstacles to enforcement. See Straus,Arbitration of Disputes between Multinational Corporations, inNew Strategies for Peaceful Resolution of International BusinessDisputes 114-15 (1971); Digest of Proceedings of InternationalBusiness Disputes Conference, April 14, 1971, in id. at 191(remarks of Professor W. Reese). Additionally, considerations ofreciprocity— considerations given express recognition in theConvention itself — counsel courts to invoke the public policydefense with caution lest foreign courts frequently accept it as adefense to enforcement of arbitral awards rendered in the UnitedStates.

We conclude, therefore, that the Convention’s public policydefense should be construed narrowly. Enforcement of foreign AB

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arbitral awards may be denied on this basis only whereenforcement would violate the forum state’s most basic notionsof morality and justice.

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Although the Convention recognizes that an award may not beenforced where predicated on a subject matter outside thearbitrator’s jurisdiction, it does not sanction second-guessing thearbitrator’s construction of the parties’ agreement. The appellant’sattempt to invoke this defense, however, calls upon the court toignore this limitation on its decision-making powers and usurp thearbitrator’s role. The district court took a proper view of its ownjurisdiction in refusing to grant relief on this ground.”

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41. This judgment was followed in Compagnie des Bauxitesde Guinee v. Hammermills Inc. (1992) WL 122712 where the USDDistrict Court, District of Colombia followed Parsons (supra) as follows:

“The principal purpose of the Convention and its implementationby Congress was to “remove pre-existing obstacles toenforcement” of foreign arbitration awards. Parsons &Whittemore Overseas Co. v. Societe Generale de L’IndustrieEdu Papier, 508 F.2d 969, 973 (2d Cir.1974). To facilitate this policy,which applies with special force in the field of internationalcommerce, see Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 625 (1985), the courts havedeveloped a “general pro-enforcement bias,” Parsons &Whittemore Overseas Co., 508 F.2d at 973, under which the burdenFof proof rests on the party challenging the arbitration award,Dworkin Cosell Interair Courier Servs., Inc. v. Avraham, 728F.Supp. 156, 158 (S.D.N.Y.1989); Overseas Private Invest.Corp. v. Anaconda Co., 418 F.Supp. 107, 110 (D.D.C.1976),and the grounds for refusing to recognize arbitral awards areGnarrowly construed, Parsons & Whittemore Overseas Co., 508F.2d at 976–77.

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The few courts to address this provision of the Convention haveconcluded that the provision “essentially sanctions the application H

of the forum state’s standards of due process.” See Parsons &Whittemore Overseas Co., 508 F.2d at 975; Geotech Lizenz AGv. Evergreen Systems, Inc., 697 F.Supp. 1248, 1263(E.D.N.Y.1988) (citing Parsons & Whittemore Overseas Co.).Due process requires notice “reasonably calculated, under all thecircumstances, to apprise interested persons of the pendency ofthe action and afford them an opportunity to present theirobjections.” Mullane v. Central Hanover Bank & Trust Co.,339 U.S. 306, 314 (1950).”

42. In Certain Underwriters at Lloyd’s London v. BCS Ins.Co. 239 F.Supp.2d 812 (2003), the US District Court, N.D Illinois referredto the Federal Arbitration Act and went on to hold that the review of apanel decision is “grudgingly narrow”. (See paragraphs 2 and 3).

43. In Karaha Bodas Co., L.L.C v. Perusahaan PertambaganMinyak 364 F.3d 274 (2004), the United States Court of Appeals forthe 5[th] Circuit analysed the New York Convention thus:

“The New York Convention provides a carefully structuredframework for the review and enforcement of international arbitralawards. Only a court in a country with primary jurisdiction overan arbitral award may annul that award. Courts in other countrieshave secondary jurisdiction; a court in a country with secondaryjurisdiction is limited to deciding whether the award may beenforced in that country. The Convention “mandates very differentregimes for the review of arbitral awards (1) in the countries inwhich, or under the law of which, the award was made, and (2) inother countries where recognition and enforcement are sought.”Under the Convention, “the country in which, or under thearbitration law of which, an award was made” is said to haveprimary jurisdiction over the arbitration award. All other signatorystates are secondary jurisdictions, in which parties can only contestwhether that state should enforce the arbitral award. It is clearthat the district court had secondary jurisdiction and consideredonly whether to enforce the Award in the United States.

Article V enumerates specific grounds on which a court withsecondary jurisdiction may refuse enforcement. In contrast to thelimited authority of secondary-jurisdiction courts to review anarbitral award, courts of primary jurisdiction, usually the courts ofthe country of the arbitral situs, have much broader discretion to AB

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set aside an award. While courts of a primary jurisdiction countrymay apply their own domestic law in evaluating a request to annulor set aside an arbitral award, courts in countries of secondaryjurisdiction may refuse enforcement only on the grounds specifiedin Article V.

BThe New York Convention and the implementing legislation,Chapter 2 of the Federal Arbitration Act (“FAA”), provide that asecondary jurisdiction court must enforce an arbitration awardunless it finds one of the grounds for refusal or deferral ofrecognition or enforcement specified in the Convention. The Courtmay not refuse to enforce an arbitral award solely on the groundCthat the arbitrator may have made a mistake of law or fact. “Absentextraordinary circumstances, a confirming court is not to reconsideran arbitrator’s findings.” The party defending against enforcementof the arbitral award bears the burden of proof. Defences toenforcement under the New York Convention are construedDnarrowly “to encourage the recognition and enforcement of””commercial arbitration agreements in international contracts…

44. Likewise, in Admart AG v. Stephen and Mary BirchFoundation Inc. 457 F.3d 302 (2006), the U.S Court of Appeals, 3[rd]ECircuit, after setting out Article V of the New York Convention, held asfollows:

“To carry out the policy favoring enforcement of foreign arbitralawards, courts have strictly applied the Article V defenses andgenerally view them narrowly. See China Minmetals, 334 F.3dat 283. In Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R”Us, Inc., 126 F.3d 15 (2d Cir.1997), the court emphasized thelimited power of review granted to district courts under theConvention. The court examined the distinction between awardsrendered in the same nation as the site of the arbitral proceedingand those rendered in a foreign country. The court concluded thatmore flexibility was available when the arbitration site and thesite of the confirmation proceeding were within the samejurisdiction. Id. at 22–23. However, “the [C]onvention is equallyclear that when an action for enforcement is brought in a foreignstate, the state may refuse to enforce the award only on the groundsexplicitly set forth in Article V of the Convention.” Id. at 23.

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In the same vein, in Parsons & Whittemore Overseas Co., Inc.v. Societe Generale de L’Industrie du Papier (RAKTA), 508F.2d 969 (2d Cir.1974), the Court of Appeals reviewed the groundsfor refusal contained in the Convention and said that the publicpolicy defense is available “only where enforcement would violatethe forum state’s most basic notions of morality and justice.” Id.at 974. Similarly, the court noted that an award cannot be enforcedunder the Convention where it is “predicated on a subject matteroutside the arbitrator’s jurisdiction,” but the Convention does not“sanction second-guessing the arbitrator’s construction of theparties’ agreement.” Id. at 977.”

45. The U.S cases show that given the “pro-enforcement bias”of the New York Convention, which has been adopted in Section 48 ofthe Arbitration Act, 1996 - the burden of proof on parties seekingenforcement has now been placed on parties objecting to enforcementand not the other way around; in the guise of public policy of the countryinvolved, foreign awards cannot be set aside by second guessing thearbitrator’s interpretation of the agreement of the parties; the challengeprocedure in the primary jurisdiction gives more leeway to Courts tointerfere with an award than the narrow restrictive grounds contained inthe New York Convention when a foreign award’s enforcement is resisted.

Discretion of the Court to Enforce Foreign Awards

Discretion of the Court to Enforce Foreign Awards

46. Thus far, it is clear that enforcement of a foreign award mayunder Section 48 of the Arbitration Act be refused only if the partyresisting enforcement furnishes to the Court proof that any of the statedgrounds has been made out to resist enforcement. The said grounds arewatertight – no ground outside Section 48 can be looked at. Also, theexpression used in Section 48 is “may”. Shri Viswanathan has arguedthat “may” would vest a discretion in a Court enforcing a foreign awardto enforce such award despite the fact that one or more grounds mayhave been made out to resist enforcement. For this purpose, he reliedupon Sections 45 to 47, which contain the word “shall” in contradistinctionto the word “may”. He also relied upon Article V of the New YorkConvention which also uses the word “may”.

47. Gary Born in International Commercial Arbitration, Vol. II(2009) puts it thus:

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Nothing in the New York Convention requires a Contracting Stateever to deny recognition to an arbitral award. The Conventionrequires only that Contracting States recognize awards (andarbitration agreements) in specified circumstances. Nothing inArticle V, nor the basic structure and purpose of the Convention,imposes the opposite obligation not to recognize an award (orarbitration agreement).

Article III of the Convention requires Contracting States torecognize arbitral awards made abroad, subject to proceduralrequirements no more onerous than those for domestic awards,provided that the minimal proof requirements of Article IV aresatisfied. Articles V(I) and V(2) then provide exceptions to thisaffirmative obligation, beginning with the prefatory statement that“[r]ecognition and enforcement of the awards may be refused”in certain circumstances. The most significant aspect of thisprovision is its structure, which is to establish an affirmativeobligation to recognize arbitral awards, subject to specifiedexceptions – but not to establish an affirmative obligation to denyrecognition. Critically, the Article V(I) exceptions are just that:exceptions to an affirmative obligation, and not affirmativeobligations in their own right.

Although the matter can be debated, the text of Article V supportsthis structural conclusion. The English language text of Article Vis unmistakably permissive, providing that Contracting States“may” refuse recognition of an award; the Russian and Chineseversions of the Convention are identical in meaning. The Spanishversion of Article V also indicates that recognition may be denied,without indicating that it must be. The only exception is the Frenchtext, which has been relied on by some authorities as supposedlyestablishing an obligation to deny recognition to awards that havebeen annulled in the arbitral seat. In fact, the better view appearsto be that the French text is ambiguous, assuming that awardsfalling within one of Article V’s exceptions would not be enforced,but not affirmatively requiring this result.

This is also consistent with Article VII of the Convention, whichprovides that the Convention shall not “deprive any interested partyof any right he may have to avail himself of an arbitral award inthe manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.” Thisprovision expresses a fundamental objective of the Convention –which was to facilitate, not limit, the circumstances in whichinternational arbitral awards could be recognized. Indeed, there isnot a hint in the drafting history of the Convention of any intentionto prevent Contracting States from recognizing foreign awardsunder provisions of local law that are more liberal than Article V.”

48. Redfern and Hunter on International Arbitration, 6[th] Edn.(2015) states:

48. Redfern and Hunter on International Arbitration, 6[th] Edn.(2015) states:

“11.59 Fourthly, even if grounds for refusal of recognition andenforcement of an award are proved to exist, the enforcing courtis not obliged to refuse enforcement. The opening lines of ArticleV(1) and (2) of the Convention say that enforcement ‘may’ berefused; they do not say that it ‘must’ be refused. The language ispermissive, not mandatory. The same is true of the Model Law.”

49. Likewise, Albert Jan van den Berg’s The New YorkArbitration Convention of 1958 (1981) states:

“It is to be noted that the opening lines of both the first and thesecond paragraph of Article V employ a permissive rather thanmandatory language: enforcement “may be” refused. For the firstparagraph it means that even if a party against whom the awardis invoked proves the existence of one of the grounds for refusalof enforcement, the court still has a certain discretion to overrulethe defence and to grant the enforcement of the award. Suchoverruling would be appropriate, for example, in the case wherethe respondent can be deemed to be estopped from invoking theground for refusal.”

50. Russel on Arbitration, Sweet & Maxwell (24[th] Edn., 2015)states:

“8-033 Opposing enforcement of a New York ConventionAward As stated above, subject to production of the required documentsthe court has no discretion but to recognise and enforce a NewYork Convention award unless the party opposing enforcementproves one or more of the grounds specified in s.103 of theArbitration Act 1996. These grounds of refusal are exhaustive, A

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Aand if none of the grounds is present the award will be enforced.Much has been written about these grounds and a detailed analysisof their international application is beyond the scope of this bookbut they will be treated summarily in this chapter. The onus ofproving the existence of a ground rests upon the party opposingenforcement, but that may not be the end of the matter. There isBan important public policy in the enforcement of awards and thecourts should only refuse to enforce an award under s.103 in aclear case.

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8-035 Discretion

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The court also has a discretion to allow enforcement even incircumstances where one or more of the grounds are made out.This discretion is not to be exercised arbitrarily however becausethe word “may” in s.103(2) is intended to refer to the correspondingDword in the New York Convention. In any event the discretion isa very narrow one. If one or more of the grounds in s.103(2) ismade out, the strong presumption is that the award will not beenforced. The discretion to enforce notwithstanding will not beexercised where the award in question was subject to afundamental or structural defect. The discretion may however beEavailable where D

“despite the original existence of one or more of the listedcircumstances, the right to rely on them had been lost by, forexample, another agreement or estoppel”, Or where there are circumstancesF

“which might on some recognisable legal principles affect theprima facie right to have an award set aside arising in caseslisted in s.103(2).”

51. An interesting judgment of the U.K. Supreme Court is reportedGas Dallah Real Estate and Tourism Holding Co. v. The Ministryof Religious Affairs, Government of Pakistan (2010) UKSC 46. Inthis judgment - given the resistance to a foreign award in the U.K - thediscretion of a Court to enforce such award, even if grounds to resist theaward have been made out, was set out thus:

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“Per Lord Mance:

Discretion

67. Dallah has a fall-back argument, which has also failed in bothcourts below. It is that s.103(2) of the 1996 Act and Article V(1)of the New York Convention state that “Recognition andenforcement of the award may be refused” if the person againstwhom such is sought proves (or furnishes proof of) one of thespecified matters. So, Miss Heilbron submits, it is open to a courtwhich finds that there was no agreement to arbitrate to hold thatan award made in purported pursuance of the non-existentagreement should nonetheless be enforced. In Dardana Ltd vYukos Oil Company [2002] 1 All ER (Comm) 819 I suggestedthat the word “may” could not have a purely discretionary forceand must in this context have been designed to enable the court toconsider other circumstances, which might on some recognisablelegal principle affect the prima facie right to have enforcement orrecognition refused (paras 8 and 18). I also suggested as possibleexamples of such circumstances another agreement or estoppel.

68. S.103(2) and Article V in fact cover a wide spectrum ofpotential objections to enforcement or recognition, in relation tosome of which it might be easier to invoke such discretion as theword “may” contains than it could be in any case where theobjection is that there was never any applicable arbitrationagreement between the parties to the award. Article II of theConvention and ss.100(2) and 102(1) of the 1996 Act serve tounderline the (in any event obviously fundamental) requirementthat there should be a valid and existing arbitration agreementbehind an award sought to be enforced or recognised. Absentsome fresh circumstance such as another agreement or anestoppel, it would be a remarkable state of affairs if the word“may” enabled a court to enforce or recognise an award which itfound to have been made without jurisdiction, under whateverlaw it held ought to be recognised and applied to determine thatissue.

69. The factors relied upon by Dallah in support of its suggestionthat a discretion should be exercised to enforce the present awardamount for the most part to repetition of Dallah’s arguments for A

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saying that there was an arbitration agreement binding on theGovernment, or that an English court should do no more thanconsider whether there was a plausible or reasonably supportablebasis for its case or for the tribunal’s conclusion that it hadjurisdiction. But Dallah has lost on such points, and it is impossibleto re-deploy them here. The application of s.103(2) and ArticleV(1) must be approached on the basis that there was no arbitrationagreement binding on the Government and that the tribunal actedwithout jurisdiction. General complaints that the Government didnot behave well, unrelated to any known legal principle, are equallyunavailing in a context where the Government has proved that itwas not party to any arbitration agreement. There is here no scopefor reliance upon any discretion to refuse enforcement which theword “may” may perhaps in some other contexts provide.

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Per Lord Collins:

Discretion

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Per Lord Collins:

Discretion

126. The court before which recognition or enforcement is soughthas a discretion to recognise or enforce even if the party resistingrecognition or enforcement has proved that there was no validarbitration agreement. This is apparent from the difference inwording between the Geneva Convention on the Execution ofForeign Arbitral Awards 1927 and the New York Convention. TheGeneva Convention provided (article 1) that, to obtain recognitionor enforcement, it was necessary that the award had been madein pursuance of a submission to arbitration which was valid underthe law applicable thereto, and contained (article 2) mandatorygrounds (“shall be refused”) for refusal of recognition andenforcement, including the ground that it contained decisions onmatters beyond the scope of the submission to arbitration. ArticleV(1)(a) of the New York Convention (and section 103(2)(b) ofthe 1996 Act) provides: “Recognition and enforcement of the awardmay be refused …” See also van den Berg, p 265; Paulsson, Mayor Must Under the New York Convention: An Exercise inSyntax and Linguistics (1998) 14 Arb Int 227.

127. Since section 103(2)(b) gives effect to an internationalconvention, the discretion should be applied in a way which gives effect to the principles behind the Convention. One examplesuggested by van den Berg, op cit, p 265, is where the partyresisting enforcement is estopped from challenge, which wasadopted by Mance LJ in Dardana Ltd v Yukos Oil Co [2002] 2Lloyd’s Rep 326, para 8. But, as Mance LJ emphasised at para18, there is no arbitrary discretion: the use of the word “may”was designed to enable the court to consider other circumstances,which might on some recognisable legal principle affect the primafacie right to have an award set aside arising in the cases listed insection 103(2). See also Kanoria v Guinness [2006] 1 Lloyd’sRep 701, para 25 per Lord Phillips CJ. Another possible examplewould be where there has been no prejudice to the party resistingenforcement: China Agribusiness Development Corpn v BalliTrading [1998] 2 Lloyd’s Rep 76. But it is not easy to see howthat could apply to a case where a party had not acceded to anarbitration agreement.

128. There may, of course, in theory be cases where the Englishcourt would refuse to apply a foreign law which makes thearbitration agreement invalid where the foreign law outrages itssense of justice or decency (Scarman J’s phrase in In the Estateof Fuld, decd (No 3) [1968] P 675, 698), for example where it isdiscriminatory or arbitrary. The application of public policy in theNew York Convention (article V(2)(b)) and the 1996 Act (section103(3)) is limited to the non-recognition or enforcement of foreignawards. But the combination of (a) the use of public policy torefuse to recognise the application of the foreign law and (b) thediscretion to recognise or enforce an award even if the arbitrationagreement is invalid under the applicable law could be used toavoid the application of a foreign law which is contrary to thecourt’s sense of justice.

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130. In the United States the courts have refused to enforceawards which have been set aside in the State in which the awardwas made, on the basis that the award does not exist to beenforced if it has been lawfully set aside by a competent authorityin that State: Baker Marine (Nigeria) Ltd v Chevron (Nigeria)Ltd, 191 F 3d 194 (2d Cir 1999); TermoRio SA ESP v ElectrantaSP, 487 F 3d 928 (DC Cir 2007). But an Egyptian award which AB

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had been set aside by the Egyptian court was enforced becausethe parties had agreed that the award would not be the subject ofrecourse to the local courts: Chromalloy Aeroservices v ArabRepublic of Egypt, 939 F Supp 907 (DDC 1996). That decisionwas based both on the discretion in the New York Convention,article V(1) and on the power under article VII(1) (see KarahaBodas Co v Perusahaan Pertambangan Minyak Dan Gas BumiNegara, 335 F 3d 357, 367 (5th Cir 2003)) and whether it wascorrectly decided was left open in TermoRio SA ESP v ElectrantaSP, ante, at p 937.

131. The power to enforce notwithstanding that the award hasbeen set aside in the country of origin does not, of course, arise inthis case. The only basis which Dallah puts forward for the exerciseof discretion in its favour is the Government’s failure to resort tothe French court to set aside the award. But Moore-Bick LJ wasplainly right in the present case (at para 61) to say that the failureby the resisting party to take steps to challenge the jurisdiction ofthe tribunal in the courts of the seat would rarely, if ever, be aground for exercising the discretion in enforcing an award madewithout jurisdiction. There is certainly no basis for exercising thediscretion in this case.”

52. A learned single judge of the Delhi High Court in Cruz City 1Mauritius Holdings v. Unitech Limited (2017) 239 DLT 649, advertedto this issue and held:

“28. Whilst this court accepts the contention that the use of theword “may” as used in the context of Section 48 of the Act doesnot confer an absolute discretion on the courts, it is not possible toaccept that the word “may” should be read as “shall” and thecourt is compelled to refuse enforcement, if any of the groundsunder Section 48 are established. First of all, the plain meaning ofthe word “may” is not “shall”; it is used to imply discretion andconnote an option as opposed to compulsion.

29. In re, Nichols v. Baker: 59 LJ Ch 661, Cotton L.J. observedthat ‘“May’ can never mean must, so long as the Englishlanguage retains its meaning; but it gives a power and then itmay be a question, in what cases, when any authority or body has a power given it by the word ‘may’, it becomes its duty toexercise that power”.

30. In Official Liquidator v. Dharti Dhan (P) Ltd.: (1977) 2 SCC166 the Supreme Court had explained that in certain cases wherethe legal and factual context in which the discretionary power isto be exercised is specified, it is also annexed with a duty to exerciseit in that manner. Keeping the aforesaid in mind, there can be nocavil that since Section 48 of the Act enables the court to refuseenforcement of a foreign award on certain grounds, this courtwould be required to do so; however, if there are good reasonsfounded on settled principles of law, the court is not precludedfrom declining the same. The word “may” in Section 48(1) and(2) of the Act must be interpreted as used in a sense so as not tofetter the courts to refuse enforcement of a foreign award even ifthe grounds as set out in Section 48 are established, providedthere is sufficient reason to do so. Viewed from this perspective,the considerations that this court may bear while examining groundsas set out under Section 48(1) (enacted to give effect to ArticleV(1) of the New York convention) may be materially differentfrom the consideration that this court may bear while examiningthe issue of declining enforcement of a foreign award on theground of public policy (Section 48(2) of the Act). Whereas thegrounds as set out under Section 48(1) essentially concern thestructural integrity of the arbitral process and inter party rightstherefore considerations such as the conduct of parties, balancingof the inter se rights etc are of material significance but suchconsiderations may not be of any significant relevance inconsidering whether enforcing the award contravenes the publicpolicy of India.

31. It is necessary to bear in mind that Section 48 of the Act is astatutory expression of Article V of the New York Conventionand is similarly worded. The object of Article V of the New YorkConvention is to enable the signatory States to retain the discretionto refuse enforcement of a foreign award on specified groundsand none other; it does not compel the member States to declineenforcement of foreign awards. Article V of the convention thussets out the maximum leeway available to member States to refuseenforcement of a foreign award. This view has also been accepted A

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by courts in the United States. In ChromalloyAeroservices. v. The Arab Republic of Egypt: 939 F. Supp. 907(DDC 1996), an Egyptian award, which was set aside by anEgyptian court, was enforced notwithstanding Article V(1)(e) ofthe New York Convention.

32. The principle that courts may enforce a foreign awardnotwithstanding that one or more of the specified grounds havebeen established, is also accepted in the United Kingdom.(See: China Agribusiness Development Corporation v. BalliTrading: [1998] 2 Lloyd’s Rep 76).

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37. The grounds as set out in Section 48 of the Act for refusingenforcement of the award encompass a wide spectrum of actsand factors as they are set in broad terms. While in some cases,it may be imperative to refuse the enforcement of the award whilein some other, it may be manifestly unjust to do so. Section 48 isenacted to give effect to Article V of the New York Convention,which enables member States to retain some sovereign controlover enforcement of foreign awards in their territory. The groundthat enforcement of an award opposed to the national public policywould be declined perhaps provides the strongest expression of aSovereign’s reservation that its executive power shall not be usedto enforce a foreign award which is in conflict with its policy. Theother grounds mainly relate to the structural integrity of the arbitralprocess with focus on inter party rights.

38. In terms of Sub-section (1) of Section 48 of the Act, the Courtcan refuse enforcement of a foreign award only if the partyresisting the enforcement furnishes proof to establish the groundsas set out in Section 48(1) of the Act. However, the court mayrefuse enforcement of a foreign award notwithstanding that aparty resisting the enforcement has not provided any/sufficientproof of contravention of public policy. In such cases, the Court isnot precluded from examining the question of public policy suomotu and would refuse to enforce the foreign award that is foundto offend the public policy of India. The approach of the courtwhile examining whether to refuse enforcement of a foreign awardwould also depend on the nature of the defence established.

39. Even where public policy considerations are to be weighed, itis not difficult to visualise a situation where both permitting aswell as declining enforcement would fall foul of the public policy.Thus, even in cases where it is found that the enforcement of theaward may not conform to public policy, the courts may evaluateand strike a balance whether it would be more offensive to publicpolicy to refuse enforcement of the foreign award - consideringthat the parties ought to be held bound by the decision of theforum chosen by them and there is finality to the litigation - or toenforce the same; whether declining to enforce a foreign awardwould be more debilitating to the cause of justice, than to enforceit. In such cases, the court would be compelled to evaluate thenature, extent and other nuances of the public policy involved andadopt a course which is less pernicious.

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43. Thus, whilst there is no absolute or open discretion to rejectthe request for declining to enforce a foreign award, it cannot beaccepted that it is totally absent. The width of the discretion isnarrow and limited, but if sufficient grounds are established, thecourt is not precluded from rejecting the request for decliningenforcement of a foreign award.”

53. When the grounds for resisting enforcement of a foreign awardunder Section 48 are seen, they may be classified into three groups –grounds which affect the jurisdiction of the arbitration proceedings;grounds which affect party interest alone; and grounds which go to thepublic policy of India, as explained by Explanation 1 to Section 48(2).Where a ground to resist enforcement is made out, by which the veryjurisdiction of the tribunal is questioned - such as the arbitration agreementitself not being valid under the law to which the parties have subjected it,or where the subject matter of difference is not capable of settlement byarbitration under the law of India, it is obvious that there can be nodiscretion in these matters. Enforcement of a foreign award made withoutjurisdiction cannot possibly be weighed in the scales for a discretion tobe exercised to enforce such award if the scales are tilted in its favour.

54. On the other hand, where the grounds taken to resistenforcement can be said to be linked to party interest alone, for example,that a party has been unable to present its case before the arbitrator, andwhich ground is capable of waiver or abandonment, or, the ground being AB

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Amade out, no prejudice has been caused to the party on such groundbeing made out, a Court may well enforce a foreign award, even if suchground is made out. When it comes to the “public policy of India” ground,again, there would be no discretion in enforcing an award which is inducedby fraud or corruption, or which violates the fundamental policy of Indianlaw, or is in conflict with the most basic notions of morality or justice. ItBcan thus be seen that the expression “may” in Section 48 can, dependingupon the context, mean “shall” or as connoting that a residual discretionremains in the Court to enforce a foreign award, despite grounds for itsresistance having been made out. What is clear is that the width of thisdiscretion is limited to the circumstances pointed out hereinabove, inCwhich case a balancing act may be performed by the Court enforcing aforeign award.

The Natural Justice Ground under Section 48

55. Shri Sibal has argued that the expression “or was otherwiseunable to present his case” occurring in Section 48(1)(b) of the ActDmust be read along with the words preceding it noscitur a sociis, and,given the fact that the grounds for resistance of enforcement have to beconstrued narrowly in the case of ambiguity, this expression cannotpossibly go beyond the hearing before the arbitrator and to the awardrendered by the arbitrator. Shri Nakul Dewan, on the other hand, arguedEthat the expression “unable to present his case” was co-terminus withbreach of natural justice which went to not only the hearing before thearbitrator, but also to the award, in that, if the arbitrator were not to givea finding on a material issue or were not to decide a claim or counter-claim, this would breach the broader requirements of the audi alterampartem rule of natural justice and would, therefore, be covered by SectionF48(1)(b) of the Act.56. This Court in Ssangyong (supra) has dealt with this aspect ofSection 48 as follows:

“37. Under the rubric of a party being otherwise unable to presentGits case, the standard textbooks on the subject have stated thatwhere materials are taken behind the back of the parties by theTribunal, on which the parties have had no opportunity to comment,the ground under Section 34(2)(a)(iii) would be made out. In NewYork Convention on the Recognition and Enforcement ofForeign Arbitral Awards – Commentary, edited by Dr. ReinmarHWolff (C.H. Beck, Hart, Nomos Publishing, 2012), it is stated:

VIJAY KARIA & ORS. v. PRYSMIAN CAVI E SISTEMI SRL & ORS.[R. F. NARIMAN, J. ]

“4. Right to Comment

According to the principle of due process, the tribunal must grantthe parties an opportunity to comment on all factual and legalcircumstances that may be relevant to the arbitrators’ decision-making.

a) Right to Comment on Evidence and ArgumentsSubmitted by the Other Party As part of their right to comment, the parties must be given anopportunity to opine on the evidence and arguments introduced inthe proceedings by the other party. The right to comment on thecounterparty’s submissions is regarded as a fundamental tenet ofadversarial proceedings. However, in accordance with the generalrequirement of causality, the denial of an opportunity to commenton a particular piece of evidence or argument is not prejudicial,unless the tribunal relied on this piece of evidence or argument inmaking its decision.

In order to ensure that the parties can exercise their right tocomment effectively, the arbitral tribunal must grant them accessto the evidence and arguments submitted by the other side.Affording a party the opportunity to make submissions or to giveits view without also informing it of the opposing side’s claims andarguments typically constitutes a violation of due process, unlessspecific non-disclosure rules apply (e.g., such disclosure wouldconstitute a violation of trade secrets or applicable legal privileges).

In practice, national courts have afforded arbitral tribunalsconsiderable leeway in setting and adjusting the procedures bywhich parties respond to one another’s submissions and evidence,reasoning that there were “several ways of conducting arbitralproceedings.” Accordingly, absent any specific agreement by theparties, the arbitral tribunal has wide discretion in arranging theparties’ right to comment, permitting or excluding the introductionof new claims, and determining which party may have the finalword.

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The parties’ right to comment also extends to facts that have notbeen introduced in the proceedings by the parties, but that thetribunal has raised sua sponte, provided it was entitled to do so.For instance, if the tribunal gained “out of court knowledge” ofcircumstances (e.g., through its own investigations), it may onlyrest its decision on those circumstances if it informed both partiesin advance and afforded them the opportunity to comment thereon.The same rule applies to cases where an arbitrator intends tobase the award on his or her own expert knowledge, unless thearbitrator was appointed for his or her special expertise orknowledge (e.g., in quality arbitration). Similarly, a tribunal mustgive the parties an opportunity to comment on facts of commonknowledge if it intends to base its decision on those facts, unlessthe parties should have known that those facts could be decisivefor the final award.”(emphasis in original)

In Fouchard, Gaillard, Goldman on International CommercialArbitration (Kluwer Law International, 1999) [“Fouchard”] it isstated:

“In some rare cases, recognition or enforcement of an award hasbeen refused on the grounds of a breach of due process. Oneexample is the award made in a quality arbitration where thedefendant was never informed of the identity of the arbitratorshearing the dispute [Danish buyer v German (F.R.) seller, IVY.B. Comm. Arb. 258 (1979) (Oberlandesgericht Cologne)]. Italso occurred in a case where various documents were submittedby one party to the arbitral tribunal but not to the other party[G.W.I. Kersten & Co. B.V. v. Société Commerciale Raoul Duvalet Co., XIX Y.B. Comm. Arb. 708 (Amsterdam Court of Appeals)(1992)], in another case where the defendant was not given theopportunity to comment on the report produced by the expertappointed by the tribunal [Paklito Inv. Ltd. v. Klockner EastAsia Ltd., XIX Y.B. Comm. Arb. 664, 671 (Supreme Court ofHong Kong) (1994)], and again where the arbitral tribunal criticizeda party for having employed a method of presenting evidencewhich the tribunal itself had suggested [Iran Aircraft Indus. vAvco Corp., 980 F.2d 141 (2nd Cir. 1992)].”(at p. 987)

Gary Born (supra) states:

Gary Born (supra) states:

“German courts have adopted similar reasoning, holding that theright to be heard entails two related sets of rights: (a) a party isentitled to present its position on disputed issues of fact and law,to be informed about the position of the other parties and to adecision based on evidence or materials known to the parties [See,e.g., Judgment of 5 July 2011, 34 SCH 09/11, II(5)(c)(bb)(Oberlandesgericht Munchen)]; and (b) a party is entitled to adecision by the arbitral tribunal that takes its position into accountinsofar as relevant [See, e.g., Judgment of 5 October 2009, 34Sch 12/09 (Oberlandesgericht Munchen)]. Other authoritiesprovide comparable formulations of the content of the right to beheard [See, e.g., Slaney v. Int’l Amateur Athletic Foundation,244 F.3d 580, 592 (7th Cir. 2001) (at p. 3225)

Similarly, in Redfern and Hunter (supra):

“11.73. The national court at the place of enforcement thus has alimited role. Its function is not to decide whether or not the awardis correct, as a matter of fact and law. Its function is simply todecide whether there has been a fair hearing. One mistake in thecourse of the proceedings may be sufficient to lead the court toconclude that there was a denial of justice. For example, in a caseto which reference has already been made, a US corporation,which had been told that there was no need to submit detailedinvoices, had its claim rejected by the Iran-US Claims Tribunal,for failure to submit detailed invoices! The US court, rightly it issuggested, refused to enforce the award against the US company[Iran Aircraft Ind v Avco Corp. 980 F.2d. 141 (2nd Cir. 1992)].In different circumstances, a German court held that an awardthat was motivated by arguments that had not been raised by theparties or the tribunal during the arbitral proceedings, and thus onwhich the parties had not had an opportunity to comment, violateddue process and the right to be heard [See the decision of theStuttgart Court of Appeal dated 6 October 2001 referred to inLiebscher, The Healthy Award, Challenge in InternationalCommercial Arbitration (Kluwer law International, 2003), 406].Similarly, in Kanoria v Guinness, [2006] EWCA Civ. 222, theEnglish Court of Appeal decided that the respondent had not beenafforded the chance to present its case when critical legalarguments were made by the claimant at the hearing, which the AB

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Arespondent could not attend due to a serious illness. In thecircumstances, the court decided that ‘this is an extreme case ofpotential injustice’ and resolved not to enforce the arbitral award.

11.74. Examples of unsuccessful ‘due process’ defences toenforcement are, however, more numerous. In MinmetalsBGermany v Ferco Steel, [1999] CLC 647, the losing respondentin an arbitration in China opposed enforcement in England on thegrounds that the award was founded on evidence that the arbitraltribunal had obtained through its own investigation. An Englishcourt rejected this defence on the basis that the respondent waseventually given an opportunity to ask for the disclosure of evidenceCat issue and comment on it, but declined to do so. The court heldthat the due process defence to enforcement was not intended toaccommodate circumstances in which a party had failed to takeadvantage of an opportunity duly accorded to it.”

57. This Court’s judgment in Sohan Lal Gupta v. Asha DeviDGupta (2003) 7 SCC 492, lays down the ingredients of a fair hearing asfollows:

“23. For constituting a reasonable opportunity, the followingconditions are required to be observed:

E1. Each party must have notice that the hearing is to take place.2. Each party must have a reasonable opportunity to be presentat the hearing, together with his advisers and witnesses.

3. Each party must have the opportunity to be present throughoutthe hearing.

F4. Each party must have a reasonable opportunity to presentevidence and argument in support of his own case.

5. Each party must have a reasonable opportunity to test hisopponent’s case by cross-examining his witnesses, presentingrebutting evidence and addressing oral argument.G6. The hearing must, unless the contrary is expressly agreed, bethe occasion on which the parties present the whole of theirevidence and argument.”

58. A recent Delhi High Court judgment in Glencore International HAG v. Dalmia Cement (Bharat) Limited 2017 SCC OnLine Del 8932puts it thus:

“25. The inability to present a case as contemplated under section48(1)(b) of the Act (which is pari materia to Article V(I)(b) ofthe New York Convention) must be such so as to render theproceedings violative of the due process and principles of naturaljustice. It is rudimentary that for a fair decision each party musthave full and equal opportunity to present their respective casesand this includes due notice of proceedings. In the event a partyopposing the enforcement of a foreign award is able to presentsufficient proof of such infirmity in the arbitral proceedings, thecourts may decline to enforce the foreign award.

26. A clear distinction needs to be drawn between cases where aparty is unable to present its case, rendering the arbitral awardsusceptible to challenge as falling foul of the minimal standards ofdue process/natural justice and cases where the arbitral tribunaldoes not accept the case sought to be set up by a party. The lattercase, obviously, does not give rise to a ground as mentioned insection 48(1)(b) of the Act, even if the decision of the arbitraltribunal is erroneous.”

59. The English judgments advocate applying the test of a personbeing prevented from presenting its case by matters outside his control.This was done in Minmetals Germany GmbH v. Ferco Steel Ltd.(1999) C.L.C. 647 as follows:

“In my judgment, the inability to present a case to arbitrators withins.103(2)(c) contemplates at least that the enforcee has beenprevented from presenting his case by matters outside his control.This will normally cover the case where the procedure adoptedhas been operated in a manner contrary to the rules of naturaljustice. Where, however, the enforcee has, due to matters withinhis control, not provided himself with the means of taking advantageof an opportunity given to him to present his case, he does not inmy judgment, bring himself within that exception to enforcementunder the convention. In the present case that is what hashappened”

60. Likewise, in Ajay Kanoria v. Tony Guinness (2006) EWCACiv 222 the Court of Appeal in England referred to Minmetals (supra)with approval as follows:

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A“23. There is not much authority on the meaning of section103(2)(c) of the 1996 Act. In Minmetals Germany GmbH v FercoSteel Ltd [1999] 1 All ER (Comm) 315 , 326, Colman J observed:

“In my judgment, the inability to present a case to arbitrators withinsection 103(2)(c) contemplates at least that the enforcee has beenBprevented from presenting his case by matters outside his control.This will normally cover the case where the procedure adoptedhas been operated in a manner contrary to the rules of naturaljustice.””

61. An application of this test is found in Jorf Lasfar EnergyCCo. v. AMCI Export Corp. 2008 WL 1228930, where the U.S DistrictCourt, W.D. Pennsylvania decided that if a party fails to obey proceduralorders given by the arbitrator, it must suffer the consequences. If evidenceis excluded because it is not submitted in accordance with a proceduralorder, a party cannot purposefully ignore the procedural directives of thedecision-making body and then successfully claim that the proceduresDwere unfair or violative of due process. Likewise, in DongwooMann+Hummel Co. Ltd. v. Mann+Hummel GmbH (2008) SGHC275, the Singapore High Court held:

“145. A deliberate refusal to comply with a discovery order is notper se a contravention of public policy because the adversarialEprocedure in arbitration admits of the possible sanction of anadverse inference being drawn against the party that does notproduce the document in question in compliance with an order.The tribunal will of course consider all the relevant facts andcircumstances, and the submissions by the parties before thetribunal decides whether or not to draw an adverse inference forFthe non-production. Dongwoo also had the liberty to apply to theHigh Court to compel production of the documents under s 13and 14 of the IAA, if it was not content with merely arguing onthe question of adverse inference and if it desperately needed theproduction by M+H of those documents for its inspection so thatGit could properly argue the point on drawing an adverse inference.However, Dongwoo chose not to do so.

146. Further, the present case was not one where a party hideseven the existence of the damning document and then dishonestlydenies its very existence so that the opposing party does not evenHhave the chance to submit that an adverse inference ought to be drawn for non-production. M+H in fact disclosed the existenceof the documents but gave reasons why it could not disclose them.Here, Dongwoo had the full opportunity to submit that an adverseinference ought to be drawn, but it failed to persuade the tribunalto draw the adverse inference. The tribunal examined the otherevidence before it, considered the submissions of the parties andrightfully exercised its fact finding and decision making powersnot to draw the adverse inference as it was entitled to do so. Itwould appear to me that the tribunal was doing nothing more thanexercising its normal fact finding powers to determine whether ornot an adverse inference ought to be drawn.”

62. Other English judgments deal with the expression “unable topresent his case” as a breach of a facet of natural justice at the hearingstage only. Thus, in Gbangbola v. Smith and Sheriff 1998 3 All ER730, the Court held:

“A tribunal does not act fairly and impartially if it does not give aparty an opportunity of dealing with arguments which have notbeen advanced by either party. It is not suggested by the claimantcontractor that either of the two points mentioned in the arbitrator’sletter was raised by it in the arbitration as being influential on theoverall burden and determination of costs. Unless such anopportunity is given there is danger that the final result will not bedetermined fairly against the party who would be ordered to paythe costs. That is indeed the position as regards both the first andsecond points.”

Likewise, in Bahman Irvani v. Ali Irvani 1999 WL 1142456,the Court found:

“181. …Nor was it satisfactory that Mr Amin’s questions wereonly replied to with the award, instead of being dealt with inadvance of the award so that comment could be advanced.”

63. Another facet of “unable to present his case” was stated inVan Der Giessen-De-Noord Shipbuilding Division B.V. v. ImtechMarine & Offshore B.V. (2008) EWHC 2904 (Comm). The UK Courtheld:

“In those circumstances it has breached its duty of fairness byignoring the agreed position of the parties that a claim under thishead should not include the cabling for the HVAC equipment. In A

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“double-counting” in this respect, the Tribunal has awarded Imtechmore than it asked for, or could reasonably ask for. GN submitsthat the double-counting is probably a very significant part of the€1,000,000 awarded, on the basis that the Tribunal had previouslyawarded a larger amount under the HVAC claim (Claim 1, VTC1). Whatever the size of the double-counting may be, it is unlikelyto be minimal. I am satisfied that GN has been caused substantialinjustice by having, on the face of the Award, to pay more than itshould to Imtech for extra work.”

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This finding was given pursuant to Section 68 of the ArbitrationAct, 1996 (U.K) by which a “serious irregularity” would lead to theCaward being set aside or remitted or being declared to be of no effect inwhole or in part.

64. In Malicorp Limited v. Government of Arab Republic ofEgypt (2015) EWHC 361 (Comm), the U.K Court held that theGovernment of Egypt had no warning of the manner in which the awardDwas made. The Court held:

“41. In these circumstances I have no doubt whatsoever that theaward of damages under article 142 must have been a completesurprise to Egypt. So, too, must have been the basis upon whichsuch an award was made – apportioning to the Republic 10%responsibility for the relevant mistake, and allowing as the majorpart of the award a substantial sum for loss of profit. It wouldhave been astonishing, if there had been any suggestion that thiswas in contemplation, that Egypt would fail to protest that thetribunal ought to make a finding on its case on fraud rather thanallocate responsibility on the footing of a good faith mistake onthe part of Malicorp. It would similarly have been astonishing, ifthere had been any suggestion that damages in place ofreinstatement were contemplated, that Egypt would fail to protestthat such damages could not properly incorporate an element forloss of profit. There were undoubtedly strong arguments for Egyptto advance in these respects among others. The notion that, in theabsence of any mention of these matters, Egypt could and shouldhave anticipated the basis of proceeding adopted in the Cairoaward, is to my mind manifestly repugnant to elementary principlesof fairness.

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42. The failure of the tribunal to ensure that Egypt had warningof these matters can only constitute a serious breach of naturaljustice. In so far as I have any discretion to enforce the awarddespite that breach, I decline to do so: the breach is too serious,and the consequences for Egypt are too grave. It is suggestedthat the hearing be reconvened so that Mr Soliman can giveevidence and be cross-examined. I decline to take this course: forthe reasons given above, Mr Soliman’s statement cannot assistMalicorp.”

65. The judgments from the Singapore Courts are also instructive.In Soh Beng Tee & Co. v. Fairmount Development Pte Ltd. (2007)SGCA 28, the Court fleshed out what was meant by “fair hearing” forthe purposes of Section 48(1)(a)(vii) of the Arbitration Act, 2002(Singapore) as follows:

“59. These cases must be read in the context of the current judicialclimate which dictates that courts should not without good reasoninterfere with the arbitral process, whether domestic orinternational. It is incontrovertible that international practice hasnow radically shifted in favour of respecting and preserving theautonomy of the arbitral process in contrast to the earlier practiceof enthusiastic curial intervention: see, for instance, ArbitrationAct 1996 ([27] supra) at p 1 on the English position; and RobertMorgan, The Arbitration Ordinance of Hong Kong: ACommentary (Butterworths Asia, 1997) on the position in HongKong, which also essentially reflects the English practice. As rightlyobserved in Weldon Plant Ltd v The Commission for the NewTowns [2001] 1 All ER (Comm) 264 (“Weldon”) at [22], “[a]naward should be read supportively … [and] given a reading whichis likely to uphold it rather than to destroy it”. Similarly, in VeeNetworks Ltd v Econet Wireless International Ltd [2005] 1 Lloyd’sRep 192, the court, at [90], held:

Above all it is not normally appropriate for the court to try thematerial issue in order to ascertain whether substantial injusticehas been caused. To do so would be an entirely inappropriateinroad into the autonomy of the arbitral process.

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65. The foregoing survey of case law and principles may be furthercondensed into the following core principles:

(a) Parties to arbitration have, in general, a right to be heardeffectively on every issue that may be relevant to the resolutionof a dispute. The overriding concern, as Goff LJ aptly noted inThe Vimeira ([45] supra), is fairness. The best rule of thumb toadopt is to treat the parties equally and allow them reasonableopportunities to present their cases as well as to respond. Anarbitrator should not base his decision(s) on matters not submittedor argued before him. In other words, an arbitrator should notmake bricks without straw. Arbitrators who exercise unreasonableinitiative without the parties’ involvement may attract serious andsustainable challenges.

(b) Fairness, however, is a multidimensional concept and it wouldalso be unfair to the successful party if it were deprived of thefruits of its labour as a result of a dissatisfied party raising amultitude of arid technical challenges after an arbitral award hasbeen made. The courts are not a stage where a dissatisfied partycan have a second bite of the cherry.

(c) Indeed, the latter conception of fairness justifies a policy ofminimal curial intervention, which has become common as a matterof international practice. To elaborate, minimal curial interventionis underpinned by two principal considerations. First, there is aneed to recognise the autonomy of the arbitral process byencouraging finality, so that its advantage as an efficient alternativedispute resolution process is not undermined. Second, having optedfor arbitration, parties must be taken to have acknowledged andaccepted the attendant risks of having only a very limited right ofrecourse to the courts. It would be neither appropriate norconsonant for a dissatisfied party to seek the assistance of thecourt to intervene on the basis that the court is discharging anappellate function, save in the very limited circumstances thathave been statutorily condoned. Generally speaking, a court willnot intervene merely because it might have resolved the variouscontroversies in play differently.

(d) The delicate balance between ensuring the integrity of thearbitral process and ensuring that the rules of natural justice arecomplied with in the arbitral process is preserved by strictly

adhering to only the narrow scope and basis for challenging anarbitral award that has been expressly acknowledged under theAct and the IAA. In so far as the right to be heard is concerned,the failure of an arbitrator to refer every point for decision to theparties for submissions is not invariably a valid ground for challenge.Only in instances such as where the impugned decision reveals adramatic departure from the submissions, or involves an arbitratorreceiving extraneous evidence, or adopts a view wholly at oddswith the established evidence adduced by the parties, or arrivesat a conclusion unequivocally rejected by the parties as being trivialor irrelevant, might it be appropriate for a court to intervene. Inshort, there must be a real basis for alleging that the arbitrator hasconducted the arbitral process either irrationally or capriciously.To echo the language employed in Rotoaira ([55] supra), theoverriding burden on the applicant is to show that a reasonablelitigant in his shoes could not have foreseen the possibility ofreasoning of the type revealed in the award. It is only in thesevery limited circumstances that the arbitrator’s decision might beconsidered unfair.

(e) It is almost invariably the case that parties propose diametricallyopposite solutions to resolve a dispute. They may expect thearbitrator to select one of these alternative positions. The arbitrator,however, is not bound to adopt an either/or approach. He is perfectlyentitled to embrace a middle path (even without apprising the partiesof his provisional thinking or analysis) so long as it is based onevidence that is before him. Similarly, an arbitrator is entitled –indeed, it is his obligation – to come to his own conclusions orinferences from the primary facts placed before him. In thiscontext, he is not expected to inexorably accept the conclusionsbeing urged upon him by the parties. Neither is he expected toconsult the parties on his thinking process before finalising hisaward unless it involves a dramatic departure from what has beenpresented to him.

(f) Each case should be decided within its own factual matrix. Itmust always be borne in mind that it is not the function of thecourt to assiduously comb an arbitral award microscopically inattempting to determine if there was any blame or fault in thearbitral process; rather, an award should be read generously such AB

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Athat only meaningful breaches of the rules of natural justice thathave actually caused prejudice are ultimately remedied.”

(emphasis supplied)

66. In JVL Agro Industries Ltd v. Agritrade InternationalPte Ltd. (2016) SGHC 126, the Court held that the natural justice provisionBcontained in Section 24(b) of the International Arbitration Act (Singapore)was breached when new points are taken up by the arbitrator, i.e. pointsnot argued by either party, which formed the basis of the award. Sincethese new points were not put to the parties, natural justice was said tobe breached in the facts of that case. Likewise, in G. D. Midea AirCConditioning Equipment Co. v. Tornado Consumer Goods Ltd.(2017) SGHC 193, the Court found:

“65. A party seeking to set aside an arbitral award under Art34(2)(a)(ii) of the Model Law or s 24(b) of the IAA must establish(a) which rule of natural justice was breached; (b) how that ruleDwas breached; (c) in what way the breach was connected to themaking of the award; and (d) how the breach prejudiced the party’srights: Soh Beng Tee & Co Pte Ltd v Fairmount DevelopmentPte Ltd [2007] 3 SLR(R) 86 (“Soh Beng Tee”) at [29].

66. The crux of Midea’s case was that the Tribunal’s finding onEcl 4.2 breached the fair hearing rule because Midea was denied afull opportunity to present its case. As stated earlier (see [62]above), the issue of a breach of cl 4.2 did not arise in theArbitration; the Tribunal made its finding on cl 4.2 without givingnotice to the parties. The Tribunal’s breach was clearly connectedto the making of the Award as its finding on cl 4.2 was the basisFupon which the impugned findings in the Award (including thefinding that Midea was not entitled to terminate the MBA) weremade. I agreed with Midea that the Tribunal’s finding on cl 4.2was in breach of the rules of natural justice.”

67. A Hong Kong Judgment reported as Hebei Import & ExportGCorporation v. Polytek Engineering Company Ltd. (1992) 2 HKC205, found that the tribunal in the course of proceedings receivedcommunications from only one party, in the absence of the other, theother party being kept in the dark as to what those communicationswere. On this point, therefore it was held:

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“On the other hand, we think it is quite clear that the defendantdid not have the opportunity of hearing what was presented to theChief Arbitrator by the plaintiff’s employees during the inspectionof the equipment and hence was not able to present its side of thecase before the experts prepared their report. This was to someextent mitigated by the provision of a copy of the experts’ reportand the chance to comment on it. But neither the reply from theTribunal or the report mentioned what transpired during the briefingsession. In the peculiar circumstances of this case, we think thatthe Tribunal should have held further hearings with regard to thematters which had arisen from the inspection and the experts’report. There was no request or consent that an oral hearing couldbe omitted. In our view, the defendant has a legitimate complaintthat there was a breach of Art 32 of the Arbitration rules and Art45 of the PRC Arbitration Law. It can be said that the defendantdid not have a proper opportunity to present its case to the Tribunalafter the inspection and the compilation of the experts’ report.”

68. Shri Nakul Dewan, however, relied upon a number of judgmentsto buttress his submission that failure to deal with material issues wouldfall within Section 48(1)(b) of the Arbitration Act, as a result of which aforeign award could not be enforced. He cited Ascot CommoditiesNV v. Olam International Ltd. 2001 WL 1560709, for this proposition.This judgment was delivered keeping in mind Section 68 of the ArbitrationAct, 1996 (U.K), which states as follows:

“68. Challenging the award: serious irregularity.

(1) A party to arbitral proceedings may (upon notice to the otherparties and to the tribunal) apply to the court challenging an awardin the proceedings on the ground of serious irregularity affectingthe tribunal, the proceedings or the award.

A party may lose the right to object (see section 73) and the rightto apply is subject to the restrictions in section 70(2) and (3).

(2) Serious irregularity means an irregularity of one or more ofthe following kinds which the court considers has caused or willcause substantial injustice to the applicant—

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(d) failure by the tribunal to deal with all the issues that were putto it;”

It was in this context that the Court held:

“Has the Board dealt with all essential issues? GAFTA findingsare habitually brief. Many would regard that as a virtue. It isBcertainly not an irregularity. Nor is it incumbent on arbitrators todeal with every argument on every point raised. But an awardshould deal, however concisely, with all essential issues. One ofthe heads of serious irregularity recognised in section 68(2)(d) is“Failure by the tribunal to deal with all the issues that were put toCit”. The central point raised by Ascot on its appeal was that if thebills of lading were pledged as security, as appears on the face ofthe October 1998 contract, Olam’s loss was not to be approachedin the same way as if they were beneficial owners of the cargo.The point has, with respect, not been addressed…Since the wholeprocess of arbitration is intended as a way of determining pointsDat issue, it is more likely to be a matter of serious irregularity if ona central matter a finding is made on a basis which does not reflectthe case which the party complaining reasonably thought he wasmeeting, or a finding is ambiguous, or an important issue is notaddressed, than if the complaints go simply to procedural matters.EMr Young submitted that Ascot’s real complaint is that its argumentswere not accepted and that this cannot be an irregularity. Henoted that there has been no application for permission to appeal.He also submitted that if the terseness of the Board’s findingsmade it legitimate for Ascot to have requested further reasons,they could have asked for them but have not done so.

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69. Likewise, in Zebra Industries v. Wah Tong Paper ProductsGroup Ltd. (2012) HKCU 1308, the Hong Kong Statute, namely, Section23(2) of Old Arbitration Ordinance (Cap 391), enabled an award to beset aside on the ground of error of law. In this context, it was held:

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“44. In light of Zebra’s above submissions, the question of lawthat arises is whether the arbitrator was wrong in law in failing totake into account of the Venture Capital Clauses in determiningZebra’s claim for damages.

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47. In my view, properly looked at, a claim on damages for breachof the Agreement based on and by reference to the VentureCapital Clauses had been put forward by Zebra in the SD.

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49. In the circumstances, I think the arbitrator has also committedan error of law in failing to consider and address this part of Zebra’sclaim for consequential damages, if any, for the loss of chance insecuring a venture capital fund investment and the listing of thecompany.

50. I would therefore also remit this part of the Award to thearbitrator for his reconsideration. These issues for reconsiderationare closely tied with the assessment of the relevant parts of theevidence on the alleged loss of chance, if any, and should best bedealt with by the arbitrator. In doing so, the arbitrator should takeinto account of the Venture Capital Clauses to consider and decidethis part of Zebra’s claim for consequential damages as mentionedin paragraph 42 above.”

70. In A v. B (2015) 3 HKLRD 586, the Court held:

70. In A v. B (2015) 3 HKLRD 586, the Court held:

“33. It is fundamental to concepts of fairness, due process andjustice, as recognized in Hong Kong, that key and material issuesraised for determination, either by a court or the arbitral tribunal,should be considered and dealt with fairly. An award should bereasoned, to the extent of being reasonably sufficient andunderstandable by the parties (ie within the confines set out in R vF [2012] 5 HKLRD 278). Under Article 33(2) of the Model Law,the award should state the reasons upon which it is based. Havingcarefully considered the Award, I have to agree that the partiesare entitled to query whether the Limitation Defence had beenconsidered at all by the Arbitrator, and if rejected by the Arbitratorafter due consideration, why it was rejected. The process ofarbitration is intended as a way of determining disputes and points A

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at issue, and I agree with the sentiments expressed by the court inAscot Commodities NV v Olam International Ltd [2002] CLC277 and in Van der Giessen-de Noord Shipbuilding DivisionBV v Imtech Marine and Off shore BV [2009] 1 Lloyd’s Rep273 that it is a serious irregularity and a denial of due processwhich causes substantial injustice and unfairness to the parties, ifan important issue, which the parties are entitled to expect to beaddressed, is not in fact addressed.

34. Even if the Arbitrator finds in favor of B on all its claims ofA’s inability and failure to deliver the Products in compliance withthe Relevant Standards and conforming to the contractualspecifications, and A’s failure to develop the Products pursuant toits contractual obligations, B’s action against A and its claims forremedies in the Arbitration will fail, if the Limitation Defencesucceeds. The Limitation Defence is a material point and issuewhich could have rendered the Award materially different, andthe failure to consider it, or to explain the dismissal of the LimitationDefence, results in unfairness to A, as well as a real risk of injusticeand prejudice to its case. Based on what was set out in the Reasonsfor the Award and the materials before the Tribunal, it cannot besaid that it is plain and obvious, or beyond any doubt, that theAward would have been the same, if the Limitation Defence had been considered (Brunswick Bowling & Billiards Corp vShanghai Zhonglu Industrial Co Ltd [2011] 1 HKLRD 707;Paklito Investment Ltd v Kolckner East Asia Ltd [1993] 2 HKLR49). This is not a case in which different defences are raised, anyone of which would have defeated the claims made, such that thefailure to deal with any one of the other defences would not havemade any difference to the award.

35. For the above reasons, I consider that there is sufficient injusticearising out of the Award, in its current form, which cannot beoverlooked by the Court’s conscience, and that enforcement ofthe Award would offend our notions of justice.”

This finding was given under Article 34(2)(b) of the UNCITRALModel Law on International Commercial Arbitration, 1985 which statesas follows:

“Article 34. Application for setting aside as exclusiverecourse against arbitral award

2. An arbitral award may be set aside by the court specified inarticle 6 only if:

(b) the court finds that:

(i) the subject-matter of the dispute is not capable of settlementby arbitration under the law of this State; or

(ii) the award is in conflict with the public policy of this State.”

71. Shri Dewan strongly relied upon judgments from Singapore insupport of the proposition that non-consideration of material issues wouldamount to a breach of natural justice and, therefore, would fit within theground mentioned in Section 48(1)(b). In Front Row InvestmentHoldings v. Daimler South East Asia (2010) SGHC 80, the SingaporeHigh Court decided whether there was a breach of natural justice inconnection with the making of the award by which the rights of anyparty has been prejudiced under Section 48(1)(a)(vii) of the ArbitrationAct, 2002 (Singapore). It referred to breach of natural justice if an awardwas set aside on a basis not raised or contemplated by the parties sincethe affected party would have been deprived of its opportunity to beheard. It then held that the corollary of this would be that an arbitraltribunal will be in the breach of natural justice if in the course of reachingits decision it disregarded the submissions and arguments made by theparties on the issues without considering the merits thereof. For this, itrelied upon three Australian cases and an earlier judgment whichconsidered these three cases. The Court then concluded:

“53. As I have concluded earlier, an arbitrator’s failure to considermaterial arguments or submissions is a breach of natural justice.In the present case, the Arbitrator had dismissed Front Row’scounterclaim without considering the grounds of its counterclaimin full because he was under the misapprehension that Front Rowhad abandoned its reliance on the Representation. Had he notbeen mistaken, he would have had to decide whether or not theRepresentation was false. A decision that there had been amisrepresentation in regard thereto would have resulted in anaward in favour of Front Row, assuming the other ingredients fora successful claim (viz, “reliance” and “detriment”) were satisfied.

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It was not for me to delve further into the question whether FrontRow’s reliance upon the Representation would have succeededbut for the arbitrator’s misrepresentation. It sufficed that theArbitrator failed to consider such a material ground. That alonewas sufficient prejudice to Front Row.

B54. In the result, I allowed Front Row’s application and orderedthat the part of the Award dealing with Front Row’s counterclaimand with costs of the Arbitration be set aside as a whole. I furtherordered that the part of the Award so set aside be tried afresh bya newly appointed arbitrator. Finally, I also ordered that the costsof and incidental to Front Row’s application be paid by Daimler toCFront Row.”

72. In TMM Division Maritime SA v. Pacific RichfieldMarine Pte Ltd. (2013) SGHC 186, the Singapore High Court referredto Section 24(b) of the International Arbitration Act (Singapore), whichrequires an award to be set aside if the rules of natural justice areDbreached. In arriving at its conclusion under the caption “GeneralPrinciples of Curial Scrutiny”, the Court held “However, it does not follow,and neither do I accept, that this process always entails sifting throughthe entire record of the arbitral proceedings with a fine-tooth comb.”(See paragraph 42). The Court also held, “the Court should not nit-pickEat the award. Infelicities are to be expected and are generally irrelevantto the merits of any challenges” (See paragraph 45). The Court went onto hold that the high standard of cogent reasons required by the judiciaryshould not be applied to arbitration awards (See paragraph 102). TheCourt then outlined what standards could be applied to arbitral awardsas follows:F

“103. The Singapore Court of Appeal’s decision in Thong AhFat v Public Prosecutor [2012] 1 SLR 676 (“Thong Ah Fat”)which sets out the scope and content of the court’s duty to givereasons offers, in my view, an instructive parallel. I note in passingthat Professor Jeffrey Waincymer suggests that it is unhelpful toGdefine the content of arbitrators’ duty to give reasons by referenceto judicial standards: Waincymer at para 16.9.3. In support of hisview, he referred to the High Court of Australia decision ofWestport Insurance Corporation & Ors v Gordian RunoffLimited [2011] HCA 37 where Kiefel J stated (at [168]–[169])that there is nothing in the relevant Australian legislation, the H

Commercial Arbitration Act 1984, which stipulates that thestandard for giving reasons in arbitration should be the same asthe judicial standard. The same is true of the IAA but as the courtin Thong Ah Fat held (at [19]), the general duty of a judicial bodyto explain its decision is ineluctably “a function of due process,and therefore of justice”. While there are structural differencesbetween a court and an arbitral tribunal, it cannot be gainsaid thatarbitrations are subject to the same ideals of due process andjustice. It bears mentioning that Kiefel J concluded that therequirement to give a reasoned award cannot be devoid of contentand for that reason, he was content to adopt Donaldson LJ’sstatement in Bremer (see [101] above).

104. Therefore, in my view, the standards applicable to judgesare assistive indicia to arbitrators. While the rules of natural justicemust be applied rigorously in arbitrations as they are in courtlitigation, the practical realities of the arbitral ecosystem such aspromptness and price are also important (see Soh Beng Tee at[63]). On this note, the following are clear from Thong Ah Fat:

(a) The standard of explanation required in every case mustcorrespond to the requirements of the case. Costs and delays arerelevant factors to consider when determining the extent to whichreasons and explanations are to be set out in detail: at [29]–[30].

(b) In “very clear cases” with specific and straightforward factualor legal issues, the court may even dispense with reasons. Itsconclusion will be sufficient because the reasons behind theconclusion are a matter of necessary inference: at [32].

(c) Decisions or findings which do not bear directly on the substanceof the dispute or affect the final resolution of the parties’ rightsmay not require detailed reasoning. As a rule of thumb, the moreprofound the consequences of a specific decision, the greater thenecessity for detailed reasoning: at [33].

(d) There should be a summary of all the key relevant evidencebut not all the detailed evidence needs to be referred to: at [34].

(e) The parties’ opposing stance and the judge’s findings of facton the material issues should be set out. However, the judge doesnot have to make an explicit ruling on each and every factualissue: at [35]–[36].

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(f) The decision should demonstrate an examination of the relevantevidence and the facts found with a view to explaining the finaloutcome on each material issue: at [36].”

73. In AKN & Anr. v. ALC & Ors. (2015) SGCA 18, theSingapore High Court, again in considering the natural justice requirementBcontained in Section 24(b) of the International Arbitration Act (Singapore),held as follows:

“38. In particular, there is no right of appeal from arbitral awards.That is not to say that the courts can never intervene. However,the grounds for curial intervention are narrowly circumscribed,and generally concern process failures that are unfair and prejudicethe parties or instances where the arbitral tribunal has made adecision that is beyond the scope of the arbitration agreement. Itfollows that, from the courts’ perspective, the parties to anarbitration do not have a right to a “correct” decision from thearbitral tribunal that can be vindicated by the courts. Instead, theyonly have a right to a decision that is within the ambit of theirconsent to have their dispute arbitrated, and that is arrived atfollowing a fair process.”

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It then dealt with failure to consider important issues as follows:

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“46. To fail to consider an important issue that has been pleadedin an arbitration is a breach of natural justice because in such acase, the arbitrator would not have brought his mind to bear on animportant aspect of the dispute before him. Consideration of thepleaded issues is an essential feature of the rule of natural justicethat is encapsulated in the Latin adage, audi alteram partem(see also Soh Beng Tee & Co Pte Ltd v Fairmount DevelopmentPte Ltd [2007] 3 SLR(R) 86 (“Soh Beng Tee”) at [43], citingGas & Fuel Corporation of Victoria v Wood Hall Ltd &Leonard Pipeline Contractors Ltd [1978] VR 385 at 386). FrontRow is useful in so far as it demonstrates what must be shown tomake out a breach of natural justice on the basis that the arbitratorfailed to consider an important pleaded issue. It will usually be amatter of inference rather than of explicit indication that thearbitrator wholly missed one or more important pleaded issues.However, the inference – that the arbitrator indeed failed to F

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–consider an important pleaded issue if it is to be drawn at all,must be shown to be clear and virtually inescapable. If the factsare also consistent with the arbitrator simply having misunderstoodthe aggrieved party’s case, or having been mistaken as to the law,or having chosen not to deal with a point pleaded by the aggrievedparty because he thought it unnecessary (notwithstanding thatthis view may have been formed based on a misunderstanding ofthe aggrieved party’s case), then the inference that the arbitratordid not apply his mind at all to the dispute before him (or to animportant aspect of that dispute) and so acted in breach of naturaljustice should not be drawn.

47. Front Row was recently considered in AQU v AQV [2015]SGHC 26 (“AQU”), where the High Court judge distilled the veryprinciples which we have just enunciated above (see AQU at[30]–[35]). The judge in AQU also considered the High Courtdecision of TMM Division Maritima SA de CV v PacificRichfield Marine Pte Ltd [2013] 4 SLR 972 (“TMM”), andreiterated the proposition that no party to an arbitration had a rightto expect the arbitral tribunal to accept its arguments, regardlessof how strong and credible it perceived those arguments to be(see AQU at [35], citing TMM at [94]). This principle is importantbecause it points to an important distinction between, on the onehand, an arbitral tribunal’s decision to reject an argument (whetherimplicitly or otherwise, whether rightly or wrongly, and whetheror not as a result of its failure to comprehend the argument and soto appreciate its merits), and, on the other hand, the arbitraltribunal’s failure to even consider that argument. Only the latteramounts to a breach of natural justice; the former is an error oflaw, not a breach of natural justice.

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59. With respect, poor reasoning on the part of an arbitral tribunalis not a ground to set aside an arbitral award; even amisunderstanding of the arguments put forward by a party is notsuch a ground. As noted by this court in BLC at [86], the court “isnot required to carry out a hypercritical or excessively syntacticalanalysis of what the arbitrator has written” when consideringwhether an arbitral award should be set aside for breach of naturaljustice. Neither should it approach an arbitral award with a AB

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“meticulous legal eye endeavouring to pick holes, inconsistenciesand faults … with the objective of upsetting or frustrating theprocess of arbitration” (likewise at [86] of BLC). Taking theseconsiderations into account, we find no breach of natural justiceas there is no basis for concluding that the Tribunal did not considerthe Liquidator’s Primary Argument. Accordingly, we answerAppeal Issue 1 affirmatively.”

74. In BAZ v. BBA & Ors. (2018) SGHC 275, again withreference to Section 24(b) of the International Arbitration Act (Singapore),the Court approached the issue of natural justice as follows:

“133. It is well established that to succeed in a claim unders.24(b) of the IAA, the claimant needs to establish the followingfour elements (see Soh Beng Tee at [29]; AKN v ALC 2015 at[48]): (a) which rule of natural justice was breached; (b) how itwas breached; (c) in what way the breach was connected to themaking of the award; and (d) how the breach prejudiced its rights.

134. The failure to consider an important issue that has beenpleaded in an arbitration is a breach of natural justice because insuch a case, the arbitrator would not have brought his mind tobear on an important aspect of the dispute before him (AKN vALC 2015 at [46]). It will usually be a matter of inference ratherthan of explicit indication that the arbitrator wholly missed one ormore important pleaded issues. However, this inference must beshown to be “clear and virtually inescapable” (AKN v ALC 2015at [46]). The Court of Appeal cautioned against arguments dressedup to appear as breaches of natural justice: if the facts are alsoconsistent with the arbitrator simply having misunderstood theaggrieved party’s case, or having been mistaken as to the law, orhaving chosen not to deal with a point pleaded by the aggrievedparty because he thought it unnecessary, then the inference thatthe arbitrator did not apply his mind at all to the dispute before himor to an important aspect of that dispute and so acted in breach ofnatural justice should not be drawn.

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141. Although the Majority did not comment on the legal basis forthe application of a discount rate, it does not mean that it did not consider the issue. A tribunal does not have to give responses onall submissions made (SEF Construction Pte Ltd v SkoyConnected Pte Ltd [2010] 1 SLR 733 at [60]).

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159. The legal area concerning the enforcement and setting asideof awards is governed by statute, namely the Arbitration Act (Cap10, 2002 Rev Ed) and the IAA. As such, the conceptual frameworkoutlined in UKM can be helpful to navigate public policyconsiderations in arbitration, even though the subject matter ofthe public policies that can be raised under Art 34(2)(b)(ii) of theModel Law and Art V(2)(b) of the New York Convention mayinclude both socio-economic policies and legal policies. When achallenge on the ground of public policy is brought, the outlinedraws attention to the importance of conducting a forensic exerciseto identify whether the alleged public policy exists, and the criteriainfluencing the identification as explained in UKM are applicable.The balancing exercise in the context of arbitration is betweenthe policy of enforcing arbitral awards – as encapsulated ins.19B(1) of the IAA which states that awards are “final and bindingon the parties” and the judicial policy of minimal curial intervention– and the alleged public policy which the award purportedlyviolates. This balance is generally in favour of the policy ofenforcing arbitral awards, and only tilts in favour of thecountervailing public policy where the violation of that policy would“shock the conscience” or would be contrary to “the forum’s mostbasic notion of morality and justice”. In determining whether thebalance tilts towards the countervailing public policy, it is importantto consider both the subject nature of the public policy, the degreeof violation of that public policy and the consequences of theviolation.”

75. In Campos Brothers Farms v. Matru Bhumi Supply ChainPvt. Ltd. (2019) 261 DLT 201, the Delhi High Court had to consider theenforcement of a foreign award. The arbitrator in the aforesaid case didnot give any finding on maintainability of the arbitration proceedings,which was argued before her. In this fact circumstance, the Delhi HighCourt held:

“55. In any case, the respondent nos. 1 and 2 had also madesubmissions on merit before the Arbitrator. Though the learned A

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counsel for the petitioner submitted that the same were rightlyexcluded from consideration by the Arbitrator as the Arbitratorhad never sought for the same, the Award does not reflect anysuch reason given by the Arbitrator for excluding them fromconsideration. The Arbitrator does not record a finding that shehas intentionally ignored such submissions as they were filedbelatedly or beyond what was permitted. In fact, as noted above,as per the Arbitrator no submission was filed by the respondentsby 13.06.2016, which is factually incorrect.

56. In exercise of powers under Section 48 of the Act, this Courtcannot consider the submissions made by the respondent nos. 1and 2 in their e-mail dated 13.06.2016 on merit as if it is a Court ofOriginal Jurisdiction and find out whether such submission of therespondent nos. 1 and 2 had any merit or not. Once it is found thatthe Arbitrator has ignored the submissions of a party in totality,whatever be the merit of the submissions, in my opinion, suchAward cannot be enforced being in violation of the Principles ofNatural Justice and contrary to the public policy of India as statedin sub-Section 2(b) read with Explanation 1(iii) of Section 48 ofthe Act.

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76. It may be correct that the Arbitrator, upon considering evidenceled before it by the parties, comes to a conclusion that in the givenfacts the transaction, though under different Contracts, is one orthat the corporate veil deserves to be lifted, however, for arrivingat such a finding the Arbitrator has to give reasons for the same.This Court, in exercise of its power under Section 48 and 49 ofthe Act, cannot supplant such reasons by considering the claimsand defence of the parties on merit. Whether the request of therespondent no. 1 to the petitioner to make shipments in the nameof respondent no. 2 under Contracts that had been executedbetween the petitioner and respondent no. 1, would entitle thepetitioner to file a consolidated statement of claim againstrespondent nos. 1 and 2 or not, was an issue to be determined bythe Arbitrator and reasons for such determination were to be givenin the Award. From a reading of the Award it seems that theArbitrator was neither alive to the issue whether such claimsagainst different Contracts can be consolidated as one, nor was she alive to the fact that joint and several liability cannot be fastenedon respondent nos. 1 and 2 without lifting the corporate veil andgiving reasons for the same. The Award in question clearly qualifiesas a non speaking Award.

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81. In any case, as noted above, if the arbitrator had consideredthis issue giving reasons therefore, this Court may not have thepower under Section 48 of the Act to test the validity of suchreasons, however, the present is the case where the arbitratorhas not only not given any reasons for her conclusion but infact,the Award indicates that the Arbitrator is not even alive to suchan issue.”

Thus, the ground on which the award was not enforced for failureto consider a material issue relating to maintainability of the arbitralproceedings was pigeon-holed not under Section 48(1)(b), but under the“public policy of India” ground, stating that such a thing would violatethe most basic notion of justice.

76. Given the fact that the object of Section 48 is to enforce foreignawards subject to certain well-defined narrow exceptions, the expression“was otherwise unable to present his case” occurring in Section 48(1)(b)cannot be given an expansive meaning and would have to be read in thecontext and colour of the words preceding the said phrase. In short, thisexpression would be a facet of natural justice, which would be breachedonly if a fair hearing was not given by the arbitrator to the parties. Readalong with the first part of Section 48(1)(b), it is clear that this expressionwould apply at the hearing stage and not after the award has beendelivered, as has been held in Ssangyong (supra). A good workingtest for determining whether a party has been unable to present his caseis to see whether factors outside the party’s control have combined todeny the party a fair hearing. Thus, where no opportunity was given todeal with an argument which goes to the root of the case or findingsbased on evidence which go behind the back of the party andwhich results in a denial of justice to the prejudice of the party; or additionalor new evidence is taken which forms the basis of the award onwhich a party has been given no opportunity of rebuttal, would, on theacts of a given case, render a foreign award unenforceable on theground that a party has been unable to present his case.

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77. All the cases cited by Mr. Nakul Dewan are judgments basedBon the language of the particular statute reflected in each of them – forexample, Section 68 of the Arbitration Act, 1996 (U.K), Section 23(2) ofthe Hong Kong Old Arbitration Ordinance (Cap 391), Section 24(b) ofthe International Arbitration Act (Singapore) and Section 48(1)(a)(vii)of the Arbitration Act, 2002 (Singapore), all of which are differentlyworded from Section 48(1)(b). Each of these statutes deal with a breachCof natural justice which, as we have seen, is a wider expression than theexpression “unable to present his case”. Thus, it is not possible to holdthat failure to consider a material issue would fall within the rubric ofSection 48(1)(b).

78. Having said this, however, if a foreign award fails to determineDa material issue which goes to the root of the matter or fails to decide aclaim or counter-claim in its entirety, the award may shock the conscienceof the Court and may not be enforced as was done by the Delhi HighCourt in Campos (supra) on the ground of violation of the public policyof India, in that it would then offend a most basic notion of justice in thisEcountry[1]. It must always be remembered that poor reasoning, by whicha material issue or claim is rejected, can never fall in this class of cases.Also, issues that the tribunal considered essential and has addressedmust be given their due weight – it often happens that the tribunalconsiders a particular issue as essential and answers it, which byimplication would mean that the other issue or issues raised have beenFimplicitly rejected. For example, two parties may both allege that the 1 In Sssangyong (supra), this Court cautioned that this ground would only be attractedwith the following caveat:

“48. However, when it comes to the public policy of India argument basedupon “most basic notions of justice”, it is clear that this ground can be attracted only inGvery exceptional circumstances when the conscience of the Court is shocked by infractionof fundamental notions or principles of justice… However, we repeat that this groundis available only in very exceptional circumstances, such as the fact situation in thepresent case. Under no circumstance can any Court interfere with an arbitral award onthe ground that justice has not been done in the opinion of the Court. That would be anentry into the merits of the dispute which, as we have seen, is contrary to the ethos ofHSection 34 of the 1996 Act, as has been noted earlier in this judgment.”

other is in breach. A finding that one party is in breach, without expresslystating that the other party is not in breach, would amount to a decisionon both a claim and a counter-claim, as to which party is in breach.Similarly, after hearing the parties, a certain sum may be awarded asdamages and an issue as to interest may not be answered at all. Thisagain may, on the facts of a given case, amount to an implied rejection ofthe claim for interest. The important point to be considered is that theforeign award must be read as a whole, fairly, and without nit-picking. Ifread as a whole, the said award has addressed the basic issues raised bythe parties and has, in substance, decided the claims and counter-claimsof the parties, enforcement must follow.

Violation of FEMA Rules

79. It has been argued by the Appellants, based on the Non-DebtInstrument Rules, that a foreign award by which shares have to bepurchased at a discounted value, would violate the aforesaid Rules, andtherefore, would amount to a violation of the fundamental policy of Indianlaw. Resultantly, the Appellants contended that as a result of this, theaward in the present case would not be enforceable in India.

80. The relevant provisions of the aforesaid rules are set outhereinbelow:

“2. Definitions:

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(ac) “investment” means to subscribe, acquire, hold or transferany security or unit issued by a person resident in India; Explanation:-

(i) Investment shall include to acquire, hold or transfer depositoryreceipts issued outside India, the underlying of which is a securityissued by a person resident in India;

(ii) for the purpose of LLP, investment shall mean capitalcontribution or acquisition or transfer of profit shares; xxx xxx xxx

3. Restriction on investment in India by a person residentoutside India.- Save as otherwise provided in the Act or rules orregulations made thereunder, no person resident outside India shallmake any investment in India :

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Provided that an investment made in accordance with the Act orthe rules or the regulations made thereunder and held on the dateof commencement of these rules shall be deemed to have beenmade under these rules and shall accordingly be governed by theserules:

Provided further that the Reserve Bank may, on an applicationmade to it and for sufficient reasons and in consultation with theCentral Government, permit a person resident outside India tomake any investment in India subject to such conditions as maybe considered necessary.

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9. Transfer of equity instruments of an Indian company byor to a person resident outside India.- A person resident outside India holding equity instruments of anIndian company or units in accordance with these rules or a personresident in India, may transfer such equity instruments or units soheld by him in compliance with the conditions, if any, specified inthe Schedules of these rules and subject to the terms and conditionsprescribed hereunder:

(3) A person resident in India holding equity instruments of anIndian company or units, may transfer the same to a person residentoutside India by way of sale, subject to the adherence to entryroutes, sectoral caps or investment limits, pricing guidelines andother attendant conditions as applicable for investment by a personresident outside India and documentation and reportingrequirements for such transfers as may be specified by the ReserveBank in consultation with the Central Government from time totime; xxx xxx xxx

21. Pricing guidelines –

(1) The pricing guidelines specified in these rules shall not beapplicable for any transfer by way of sale done in accordancewith Securities and Exchange Board of India regulations wherethe pricing is specified by Securities and Exchange Board of India.

(2) Unless otherwise prescribed in these rules, the price of equityinstruments of an Indian company, - xxx xxx xxx (b) transferred from a person resident in India to a person residentoutside India shall not be less than,- xxx xxx xxx

(iii) the valuation of equity instruments done as per anyinternationally accepted pricing methodology for valuation on anarm’s length basis duly certified by a Chartered Accountant or aMerchant Banker registered with the Securities and ExchangeBoard of India or a practising Cost Accountant, in case of anunlisted Indian company.”

81. Based on the aforesaid Rules, the Appellants have arguedthat the transfer of shares from the Karias, who are persons resident inIndia, to the Respondent No.1, who is a person resident outside India,cannot be less than the valuation of such shares as done by a duly certifiedChartered Accountant, Merchant Banker or Cost Accountant, and, asthe sale of such shares at a discount of 10% would violate Rule 21(2)(b)(iii),the fundamental policy of Indian law contained in the aforesaid Ruleswould be breached; as a result of which the award cannot be enforced.

82. Before answering this question, it is important to first advertto the decision of the Delhi High Court in Cruz (supra). The learnedSingle Judge was faced with a similar problem of a foreign award violatingthe provisions of FEMA. In an exhaustive analysis, the learned SingleJudge referred to Renusagar (supra) and then held:

“97.It plainly follows from the above that a contravention of aprovision of law is insufficient to invoke the defence of publicpolicy when it comes to enforcement of a foreign award.Contravention of any provision of an enactment is not synonymousto contravention of fundamental policy of Indian law. Theexpression fundamental Policy of Indian law refers to the principlesand the legislative policy on which Indian Statutes and laws arefounded. The expression “fundamental policy” connotes the basicand substratal rationale, values and principles which form thebedrock of laws in our country.

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98. It is necessary to bear in mind that a foreign award may bebased on foreign law, which may be at variance with acorresponding Indian statute. And, if the expression “fundamentalpolicy of Indian law” is considered as a reference to a provisionof the Indian statue, as is sought to be contended on behalf ofUnitech, the basic purpose of the New York Convention to enforceforeign awards would stand frustrated. One of the principalobjective of the New York Convention is to ensure enforcementof awards notwithstanding that the awards are not rendered inconformity to the national laws. Thus, the objections to enforcementon the ground of public policy must be such that offend the corevalues of a member State’s national policy and which it cannot beexpected to compromise. The expression “fundamental policy oflaw” must be interpreted in that perspective and must mean onlythe fundamental and substratal legislative policy and not a provisionof any enactment.

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102. Although, this contention appears attractive, however, failsto take into account that there has been a material change in thefundamental policy of exchange control as enacted under FERAand as now contemplated under FEMA. FERA was enacted atthe time when the India’s economy was a closed economy andthe accent was to conserve foreign exchange by effectivelyprohibiting transactions in foreign exchange unless permitted. Aspointed out by the Supreme Court in Life Insurance Corporationof India v. Escorts Ltd. (supra), the object of FERA was to ensurethat the nation does not lose foreign exchange essential foreconomic survival of the nation. With the liberalization and openingof India’s economy it was felt that FERA must be repealed. FERAwas enacted to replace the Foreign Exchange Regulation Act,1947 which was originally enacted as a temporary measure. TheStatement of Objects and Reasons of FERA indicate that FERAwas enacted as the RBI had suggested and Government hadagreed on the need for regulating, among other matters, the entryof foreign capital in the form of branches and concerns withsubstantial non-resident interest in them, the employment offoreigners in India etc.

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110. The contention that enforcement of the Award againstUnitech must be refused on the ground that it violates any one orthe other provision of FEMA, cannot be accepted; but, anyremittance of the money recovered from Unitech in enforcementof the Award would necessarily require compliance of regulatoryprovisions and/or permissions.”

83. This reasoning commends itself to us. First and foremost,FEMA - unlike FERA - refers to the nation’s policy of managingforeignexchange instead of policingforeign exchange, the policeman being theReserve Bank of India under FERA. It is important to remember thatSection 47 of FERA no longer exists in FEMA, so that transactions thatviolate FEMA cannot be held to be void. Also, if a particular act violatesany provision of FEMA or the Rules framed thereunder, permission ofthe Reserve Bank of India may be obtained post-facto if such violationcan be condoned. Neither the award, nor the agreement being enforcedby the award, can, therefore, be held to be of no effect in law. This beingthe case, a rectifiable breach under FEMA can never be held to be aviolation of the fundamental policy of Indian law. Even assuming thatRule 21 of the Non-Debt Instrument Rules requires that shares be soldby a resident of India to a non-resident at a sum which shall not be lessthan the market value of the shares, and a foreign award directs thatsuch shares be sold at a sum less than the market value, the ReserveBank of India may choose to step in and direct that the aforesaid sharesbe sold only at the market value and not at the discounted value, or maychoose to condone such breach. Further, even if the Reserve Bank ofIndia were to take action under FEMA, the non-enforcement of a foreignaward on the ground of violation of a FEMA Regulation or Rule would not arise as the award does not become void on that count. Thefundamental policy of Indian law, as has been held in Renusagar (supra),must amount to a breach of some legal principle or legislation which isso basic to Indian law that it is not susceptible of being compromised.“Fundamental Policy” refers to the core values of India’s public policyas a nation, which may find expression not only in statutes but also time-honoured, hallowed principles which are followed by the Courts. Judgedfrom this point of view, it is clear that resistance to the enforcement of aforeign award cannot be made on this ground.

84. The Appellants, however, relied upon certain observations inDropti Devi v. Union of India (2012) 7 SCC 499. In that case, a A

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Achallenge was made to the constitutional validity of Section 3 ofConservation of Foreign Exchange and Prevention of SmugglingActivities Act, 1974 (hereinafter referred to as “COFEPOSA”), statingthat by reason of the new legal regime articulated in FEMA, inreplacement of FERA, the said provision has become unconstitutional inthe changed situation. This submission was repelled by this Court stating:B

“66. It is true that provisions of FERA and FEMA differ in somerespects, particularly in respect of penalties. It is also true thatFEMA does not have provision for prosecution and punishmentlike Section 56 of FERA and its enforcement for default is throughcivil imprisonment. However, insofar as conservation and/orCaugmentation of foreign exchange is concerned, the restrictionsin FEMA continue to be as rigorous as they were in FERA. FEMAcontinues with the regime of rigorous control of foreign exchangeand dealing in the foreign exchange is permitted only throughauthorised person. While its aim is to promote the orderlyDdevelopment and maintenance of foreign exchange markets inIndia, the Government’s control in matters of foreign exchangehas not been diluted. The conservation and augmentation of foreignexchange continues to be as important as it was under FERA.The restrictions on the dealings in foreign exchange continue tobe as rigorous in FEMA as they were in FERA and the control ofEthe Government over foreign exchange continues to be as completeand full as it was in FERA.

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have serious and deleterious effect on nationaleconomy.”

It is important to note that this Court recognized that FEMA, unlikeFERA, does not have any provision for prosecution and punishment likethat contained in Section 56 of FERA. The observations as toconservation and/or augmentation of foreign exchange, so far as FEMAis concerned, were made in the context of preventive detention of personswho violate foreign exchange regulations. The Court was careful tonote that any illegal activity which jeopardises the economic fabric ofthe country, which includes smuggling activities relating to foreignexchange, are a serious menace to the nation and can be dealt witheffectively, inter alia, through the mechanism of preventive detention.From this to contend that any violation of any FEMA Rule would makesuch violation an illegal activity does not follow. In fact, even if thereasoning contained in this judgment is torn out of its specific contextand applied to this case, there being no alleged smuggling activity whichinvolves depletionof foreign exchange, as against foreign exchangecoming into the country as a result of sale of shares in an Indian companyto a foreign company, it does not follow that such violation, even if proved,would breach the fundamental policy of Indian law.

Challenge to Enforcement of the Foreign Award in this caseon facts

85. Dr. Singhvi and Shri Dewan arguing for the Appellants haveraised fourteen submissions, all of which fall under Section 48(1)(b) readwith Explanation 1 (ii) and (iii) to Section 48(2)(b) of the Arbitration Act,taken either cumulatively as grounds of objection or separately, dependingupon the nature of the ground argued. We now deal with each of thesegrounds seriatim.

I. The Tribunal failed to deal with the Appellants’ counter-claim pertaining to the incorporation of Jaguar CommunicationConsultancy Services Private Limited.

86. According to the Appellants, this ground of objection – i.e. theincorporation of Jaguar - was pleaded by them as a “concealed breach”,which became known to them only at a much later stage of the arbitralproceedings. Despite the tribunal specifically ruling in the First PartialFinal Award that a non-defaulting party could rely on a “concealed breach”and treat the same as an unrectified event of default under clause 23.4

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Aof the JVA, the submission made by the Appellant in this behalf wasignored in its entirety. This was countered by Respondent No.1 by statingthat there was no “concealed breach” at all, inasmuch as, as early as05.10.2012, the Appellant had filed a request calling upon the Respondentto produce documents which included the list of clients, employees anddisclosure of business activities of Jaguar. These documents were calledBfor in order to buttress the case of the Appellant that the Respondentwas in breach of clause 21.1 of the JVA, and to ascertain whether theemployees of Jaguar were passing on Ravin’s confidential informationto Jaguar. In response to this request, on 12.10.2012, the Respondentstated that no case of breach of clause 21.1 of the JVA had been pleaded;Cthat Jaguar does not have any business of producing cables; and that ithad been set up for the sole purpose of hiring office premises. TheMemorandum of Association and the Articles of Association of Jaguarwere also handed over to the Appellants. What was stressed is that atno time after 12.10.2012 did the Appellants seek the leave of the tribunalto amend their counter-claim.D

87. It must be remembered that the First Partial Final Award wasmade only on 15.02.2013. When the Respondent No.1 made its oralsubmissions and filed written closing submissions on 19.07.2013, theAppellants did not plead any case of breach due to Jaguar. It was only atthe fag end, i.e. in the Appellants’ Responsive Closing Submissions, filedEon 20.08.2013, that the tribunal was invited to rule on this breach.Obviously, by this time, the Respondent did not have any opportunity tocontrovert this case put up for the first time by the Appellants. Since thiscase had been put up for the first time at the fag end of the proceedings,before passing of the Second Partial Final Award dated 19.12.2013, theFarbitrator cannot be faulted for not dealing with this case. In the SecondPartial Final Award, the tribunal also recorded that the Appellants’ caseon clause 21.1 was limited to the acquisition of ACPL and direct salesinto India. The argument of the Appellant, made at the fag end of theproceedings, that since the Respondent held 99.99 % shares of Jaguar,which is in a similar cable business as Ravin, as evidenced by theGMemorandum and Articles of Association of Jaguar, is a case that hasnever been pleaded. This being the case, it is obvious that the arbitratorwas within his jurisdiction not to deal with this so-called counter-claim atall. This objection, therefore, does not fall within any of the groundsmentioned in Section 48 and must, therefore, be rejected.H

II.The Tribunal failed to make a determination on theAppellants’ counter-claim concerning ouster of the Appellants

88. According to the Appellants, the tribunal failed to make adetermination on the Appellants’ counter-claim that the Respondent’sefforts to oust Appellant No.1 and his family from Ravin amounted to abreach of the JVA. In answer to this submission, the tribunal, in theSecond Partial Final Award, expressly set out the following:

“6. Further, the parties both identify different catalysts for thebreakdown of the JVA relationship. In short, the Respondentssubmitted that, as far as they were concerned, during the tenureof Mr. Sarogni their relationship with the Claimant was good andboth parties were working together to make Ravin a moresuccessful company. The swing point came and the trouble startedbrewing when Ms. Farise was sent out to head the affairs ofRavin with the single agenda to take control of Ravin and oust theKarias. The Respondents’ overall case theory therefore focuseson a clash of personalities combined with the acquisition of ACPLand the Claimant’s overriding intention to create a situation wherethe Karias appeared to be in breach so that the Claimant couldbuy the Respondents out for a lower price.

7. The Claimant submitted that whilst relations had not been goodfrom the time of the JVA onwards, matters took a turn for theworse after 15 September 2011, when the Integration Period cameto an end. The Claimant contends that up until this point Mr Kariahad been able to maintain a large degree of control over theCompany, both because of the arrangements in the IntegrationPeriod and the fact that Mr. Sarogni had been absent from Indiafor long periods of time. The end of the Integration Period wasfollowed shortly after by a change of CEO. Pursuant to the BoardResolution of 1 November 2011, Ms. Farise was appointed CEOof Ravin (H16/3381) and came to India with the legitimate intentto actually take over the day to day management of Ravin. Indeed,the Claimant does not shy away from the fact that Ms. Farise didintend to take control of Ravin, despite the Respondents’ ownparticular interpretation of this event and motive. The Claimant’soverall case theory therefore focuses not so much on any clashof personalities per se, but on the date when power and controlunder the terms of the JVA was to shift decisively away fromMr. Karia. It is the Claimant’s case that Mr. Karia was simply not A

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willing to abide by such provisions and wished to remain in day today control of Ravin and prevent the Claimant from exercisingsuch control. In other words there is a straightforward divisionbetween the parties’ rival position. Neither party suggested thatboth versions could in essence be correct. The Tribunal thereforehas to make findings as to where the evidence lies and whichversion fits the facts as found.”

This case was answered in great detail, finding that it was theAppellants and not the Respondent No.1 who materially breached theJVA. Given this position, the tribunal finally held:

“291. Given the findings made by the Tribunal in favour of theClaimant’s allegations of material breach it naturally follows thatthe Respondents do not succeed in these allegations ofmismanagement

292. The Respondents were themselves in material breach withregard to the whole conduct surrounding Mr. Dhall’s appointmentof Ms. Mathure and the so called authorisation form. The Claimantwas not in material breach in suspending Mr. Dhall. Far from it.The Respondents, however, were plainly in material breach bytheir reaction to this suspension effectively leading to a one daystrike.

293. The question of the attendance of Claimant nominees at theAkruti office is another chapter of the saga in which theRespondents do not emerge without serious criticism. As is clearfrom this Award the Respondents engendered a toxic atmosphereat Akruti in January 2012 (even in its fire stricken state) and suchwas the situation at the ground that it was not really possible forClaimant nominees to attend without fear of their own safety.

294. Lastly, the circumstances surrounding the appointment ofthe CEO and CFO does not give rise to any conceivable materialbreach on the part of the Claimant. The Claimant was entitled tonominate a CFO and the CEO. They did so. The Respondents didnot oppose the appointment of Ms. Farise. Nevertheless they didobstruct her at every turn once she was appointed because itbecame apparent that she intended pursuant to the JVA to takeday to day control of Ravin and the Respondents did not wish thisto happen. As regards Mr. Brunetti, the CFO, the Respondents did veto his appointment. This was not a material breach on theirpart as it was their right to do so under Schedule IX to the JVA.Nevertheless it cannot be said to be a material breach by theClaimant. That is unsustainable.

CONCLUSION

295. The Respondents have not succeeded in establishing anymaterial breach of the JVA committed by the Claimant.”

89. This being the case, it would be wholly incorrect to state thatthe tribunal has failed to make a determination on the Appellants’ counter-claim that the Respondent’s efforts to oust Appellant No. 1 and his familyamounted to a breach of the JVA. While considering the case of theAppellants and the cross-case of the Respondent, the tribunal hasadverted to pleadings, evidence and has given detailed findings as towhy the Appellants are in material breach of the JVA, as a result ofwhich the Respondent cannot be said to be in material breach of theJVA. This being the case, it cannot be said that this material issue hasnot been answered by the Second Partial Final Award. This ground,therefore, also does not fall within any of the stated pigeon-holes underSection 48.

III.The Tribunal failed to make a determination on theAppellants’ counter-claim concerning registration of the RavinTrademark

90. Dr. Singhvi then argued that the tribunal failed to make anydetermination on the Appellants’ counter-claim that the RespondentNo.1’s surreptitious attempts to register the Ravin trademark in its ownname was a material breach of the JVA. When the First Partial FinalAward is perused, it becomes clear that what was argued before thearbitrator, and therefore answered by the arbitrator, is whether the tribunalhad jurisdiction to go into the Trademark License Agreement. The FirstPartial Final Award records:

“IX. Tribunal’s ruling on jurisdiction

134. Finally, there were before the Tribunal three short points onthe scope of the jurisdiction of the Tribunal under the arbitrationagreement in the JVA.

135. Sensibly, the parties only made very brief submissions onthese points. At one point, it seemed that the Respondents’accepted that the Tribunal did not have the jurisdiction which it A

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contended for, but instead was inviting the Claimant to agree uponan expansion of the Tribunal’s jurisdiction in order to avoid anypossibility of multiplicity of proceedings under different agreements.

136. In the end, however, the Respondents’ counsel did invite theTribunal to rule upon these short points. The three points were asfollows:

1) Whether under Clause 27.1 of the JVA the Tribunal hasjurisdiction to decide who has the right to register the Ravintrademark.

2) Whether the Tribunal has jurisdiction to decide allegedbreaches of the Trademark License Agreement.

3) Whether the Tribunal has jurisdiction to decide allegedbreaches of the Technical Assistance Agreement.

137. The Tribunal concludes that it does not have jurisdiction inrespect of any of these three matters.

138. The ownership of the Ravin trademark and the right to registerthe same is not a dispute arising out of, relating to, or in connectionwith the JVA. There is no provision in the JVA permitting theparties to the JVA to change the name of Ravin Cables to a newname incorporating the word Prysmian – see Clause 9. There isalso a provision for Ravin to enter into a trademark licenceagreement in the form of Schedule 5, but that agreement dealswith the licence by Prysmian and not the Ravin trademark.

139. Quite simply a dispute regarding the right to register the Ravintrademark falls outside of the scope of the arbitration clause.

140. This makes it unnecessary for the Tribunal to consider furtherthe interesting and difficult questions of the arbitrability of suchdisputes, even if they were held to fall within the scope of thearbitration agreement. The Tribunal makes no finding on this point,it not having been argued, but observes that it is by no means aforegone conclusion that such disputes would under English lawbe arbitrable.

141. Further, the disputes respectively under the TrademarkLicense Agreement (in the form of Schedule 5) and the Technical Assistance Agreement (in the form of Schedule 6) fall outside thejurisdiction of the Tribunal.

142. It is common ground that the parties did enter into a TrademarkLicense Agreement in the form of Schedule 5 and the TechnicalAssistance Agreement in the form of Schedule 6.

143. Equally, it is common ground that these agreements madeprovision for disputes to be referred to arbitration in Milan, ltalyunder Italian law. There is no warrant to construe the arbitrationagreement in the JVA as somehow trespassing upon the arbitrationagreement contained in two agreements, which the parties agreedto enter into and, in fact, did enter into with these separate disputeresolution provisions. Disputes under or concerning the TrademarkLicense Agreement and Technical Assistance Agreement are tobe resolved in accordance with the dispute resolution provisionsunder those agreements. The Tribunal observes that, if there hadbeen a dispute under Clause 9 of the JVA as to whether in factthe covenant to enter into those two further agreements had beencomplied with, then this would be a dispute under the JVAagreement. Nevertheless, this is not the case being advanced bythe Respondents in their pleaded case.”

91. We have gone through the transcript of the hearings on both12[th] and 13[th] December, 2012 before the arbitrator which clearly showthat no argument was ever made by the Appellants before the tribunalthat the Respondent had surreptitiously attempted to register the RavinTrademark in its own name, and therefore was in breach of thecompetition clauses of the JVA. We are thus satisfied that this argumentagain appears to be an afterthought which has no foundation in thesubmissions made before the learned arbitrator. This submission doesnot again fall within any of the grounds referred to under Section 48.

IV. The Tribunal acted contrary to the Parties’ expertwitnesses and ignored critical evidence with regard to theacquisition of ACPL

92. Dr. Singhvi argued that the tribunal acted contrary to theadmissions of the parties’ expert witnesses and ignored critical evidencewith regard to the acquisition of ACPL. Further, since the Respondentfailed to produce the relevant documents regarding the competingbusiness carried out by ACPL, an adverse inference ought to be drawn A

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Aagainst the Respondent No.1, which the Appellants allege the learnedarbitrator failed to do.

93. The learned arbitrator indicated his approach in the SecondPartial Final Award as follows:

“23. Whilst therefore the parties’ detailed submissions have setBthe parameters for the Tribunal’s decisions and have assisted theTribunal in reaching its conclusions on the individual particulars ofalleged material breach, it has simply not been possible and nor isit desirable for the Tribunal to undertake an exhaustive analysis ofeach sub-argument and each piece of evidence referred to.CInstead, in disposing of this dispute the Tribunal will focus, in largepart, on the heart of the rival contentions with respect to the disputeas a whole and the individual allegations in the rival DeterminationNotices. This requires the detailed submissions to be substantiallystripped back to reveal the essential complaint being made, whichcan then be assessed against the terms of the JVA and the rivalDtheories.

24. In respect of the rival theories, the Tribunal has not lost sightof the broader case theories which frame the disputed events andallegations. The veracity of the individual and collective allegationsarising from the crucial period between November 2011 and MarchE2012 can and indeed must be tested by reference to the parties’rival theories and should not necessarily be isolated and examinedin the abstract.”

94. The tribunal then went into the acquisition of ACPL in somedetail, from paragraphs 216 to 244 of the Second Partial Final Award,Fand held that Mr. Karia’s contemporaneous reaction to the acquisitionof Draka, which led to an indirect acquisition of 60 subsidiaries, one ofwhich was ACPL, was that he was very happy that the Respondent No.1 had so expanded its business. Several congratulatory emails are referredto by the arbitrator. Further, the arbitrator found that Mr. Karia’sGstatements in cross-examination showed that he had knowledge of thisacquisition way back in November 2010 but never complained of materialbreach of the JVA. The arbitrator also examined evidence as to seriousactual loss or harm, finding no such credible evidence, except occasionalinstances of both companies tendering for the same business. It washeld that there was no reliable evidence that the Ravin’s business hadH

been lost post the ‘Draka acquisition’ or that there had been any diversionof business from Ravin to ACPL or vice versa. The arbitrator then heldthat ACPL is a small specialist cable business and operates principally inthe area of instrumentation cables, which is not the area in which Ravinoperates. The learned arbitrator also adverted to the evidence of theexpert witnesses in arriving at this conclusion. It also made a referenceto Mr. Karia’s cross-examination, stating that Mr. Karia himselfconsidered ACPL to be the 50[th] or 60[th] competitor given its small business.The finding, therefore, was that the acquisition of ACPL did not in anymanner amount to a serious material breach of the JVA.

95. Insofar as the failure to produce documents by RespondentNo.1 with regard to its subsidiary ACPL is concerned, it must beremembered that ACPL is not a direct subsidiary of Respondent No. 1,being an indirect subsidiary of Respondent No.1’s parent companyconsequent upon the acquisition of Draka. It has an independent Boardof Directors. Above all, ACPL was not a party to these arbitralproceedings. The tribunal therefore made Procedural Order No. 5 dated27.11.2012 in which it specifically recorded that if the Appellants wish topursue their request for disclosure of further documents qua ACPL,they must approach the Courts to do so, as it was not within thearbitrator’s power to direct a person who is not party to the proceedingsto produce documents. At no stage did the Appellants act in complianceof this Procedural Order and approach an English Court to direct ACPLto produce documents within its possession. This being so, as has beenheld hereinabove, a party cannot complain of breach of natural justicewhen it was within the control of such party to approach a U.K Courtfor production of such documents. This not having been done, it is clearthat no adverse inference, as has been argued, could have been drawnby the learned arbitrator. This ground also, therefore, does not fall withinany of the grounds argued before us under Section 48.

V. Perverse Interpretation of the JVA

96. According to Dr. Singhvi, the tribunal’s interpretation of clause21 of the JVA is perverse. As has been held, referring to some of thejudgments quoted hereinabove, in particular Shri Lal Mahal (supra),the interpretation of an agreement by an arbitrator being perverse is nota ground that can be made out under any of the grounds contained inSection 48(1)(b). Without therefore getting into whether the tribunal’sinterpretation is balanced, correct or even plausible, this ground is rejected.

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AVI. The Tribunal ignored critical evidence with regard tothe issue of agency agreements and Direct Sales

97. Dr. Singhvi argued that the tribunal ignored admissions of theRespondent and other critical evidence with regard to the issue of agencyagreements and direct sales. The Second Partial Final Award deals withBthis issue and the issue regarding agreements with agents in great detailfrom paragraph 245 to paragraph 279. As many as five reasons aregiven, after examining the evidence, for rejecting the plea that agency ordistribution agreements were entered into in violation of the JVA. Further,so far as direct sales into India were concerned, after considering thepleadings and the evidence, the tribunal found that the Appellants alteredCtheir case from their pleaded case and now advanced a case that thefact of direct sales amounts to a material breach of clauses 8 and 20 ofthe JVA, contrary to what was stated in their determination notice. Evenotherwise, the tribunal found that there was no material breach for thefollowing reason:

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“277. Those sales, however, were for all practical purposes madeup of sales of telecom cables, industrial special cables, automotivecables, network and component and services. Ravin did notmanufacture those types of cables. Indeed over 85% of the salescame from two affiliates manufacturing telecom cables, whichERavin did not manufacture and had no experience in selling either.Indeed the Tribunal accepts the evidence of Ms. Farise andMr. Koch and Mr. Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§18- 32. E(I)/23/184-186, 11 December 2012 hearing, pp.134-140, §46, E(I)/17/92, Day 2, pp.83-86, §18 of, E(l)/24/189). This renders the wholeFargument of diversion of sales or breach of good faith by virtue ofthese direct sales somewhat academic.

278. Indeed these figures illustrate exactly why the Respondentsplaced so much emphasis on their argument that the mere fact ofsales was a breach irrespective of anything else. This was onceGmore how it was put by Mr Salve SC in his oral closing argument(Day 10, pp. 183-185) The Tribunal has, however, found againstthe Respondents on this point.”

98. Having perused the Award in this behalf, it cannot be said thatthe tribunal has in any manner ignored admissions or other critical evidenceHwith regard to the issue of direct sales. In any case, if at all, this ground VIJAY KARIA & ORS. v. PRYSMIAN CAVI E SISTEMI SRL & ORS.[R. F. NARIMAN, J. ]

goes to alleged perversity of the award, which as has been held by ushereinabove, is outside the ken of Section 48.

VII. The Tribunal adopted disparate thresholds indetermining material breach

99. Dr. Singhvi has then argued that the tribunal adopted disparatethresholds for determining material breach between the Appellant andthe Respondent. Again, all the allegations made under this ground go toperversity of the award, which is outside the ken of Section 48. Thatapart, the tribunal indicates in paragraphs 104 to 106 of the Second PartialFinal Award, that no disparate thresholds in determining material breachwas adopted as follows:

“(3) Tribunal’s conclusions on the Events of Default reliedupon by the Claimant

104. The Tribunal has in mind the test for establishment of materialbreach as identified in paragraphs 37-47 above. The Claimanthas particularised a number of different aspects of the conduct ofthe Respondents concentrating on the time frame from November2011 to February 2012. Each of the Claimant and the Respondentshave advanced detailed evidence and submissions on each of theseparticulars as addressed above. Nevertheless the breaches cannotbe treated in complete isolation. In many instance the breachescan be seen as forming part of a pattern of alleged conductinvolving the same witnesses and questions of their credibility asregards the rival evidence and rival “case theories.” This doesnot mean to say that the allegations all stand or fall together but afinding in relation to the credibility of the story advanced by oneside or other in relation to one allegation does impact on thecredibility of other parts of the story.

105. Therefore before turning to the individual allegations it isnecessary to say something about the chief witnesses on eachside and their credibility and demeanour, having reviewed andconsidered carefully once more the evidence advanced.

106. The Tribunal has no hesitation in reaching the conclusionthat the chief witnesses called by the Claimant were truthful, honestand whilst faced with a difficult and tense situation in Indiacontinued to try to resolve matters in accordance with theprovisions of the JVA.”

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AVIII. The Tribunal’s selective consideration ofcontemporaneous evidence

100. Dr. Singhvi then argued that the tribunal’s analysis ofcontemporaneous conduct is selective and perverse. Without going intoany further details in this ground, this argument must be rejected out ofBhand, as not falling within the parameters of Section 48. Equally, thetribunal’s consideration of evidence of key witnesses being selectiveand perverse, must be rejected on the same ground.

IX. The Tribunal appointed a conflicted valuer

101. Dr. Singhvi then contended that the tribunal appointed aCconflicted valuer, which prevented the Appellants from participating inthe valuation exercise. This has been dealt with in the Final Award dated11.04.2017 by the learned arbitrator as follows:

“II. Deloitte Valuation Report and the Respondents’Challenge to Deloitte D

4. It is important at this stage to record one specific matter herewhich is referred to and set out in the Claimant’s submissions(see paragraph 24 and Annexure E thereto at pages 170-172) andnot contradicted by the Respondents in its submissions. On 14October 2014 (Annexure E p. 171), Mr. Karia on behalf of theRespondents sent an email to the Claimant in response to theClaimant’s request dated 14 October 2014 (Annexure E p.170)that the Respondents do cause the Company in a timely fashionto execute the Engagement letter for Deloitte. On 14 October2014 (Annexure E p.171), Mr. Karia for the Respondents objectedto the engagement of Deloitte contending that they were conflictedout of acting as Valuer. This was a remarkable stance to take. On30 April 2013 the Respondents, via an email sent by their solicitors,had confirmed that the Respondents were agreeable to Deloitteor KPMG acting as independent Valuers under the JVA. TheTribunal noted and recorded this in the Preamble to ProceduralOrder No 12, albeit referring to the date as 30 April 2014. Therehad been no material change in circumstance since April 2013 orProcedural Order No 12, to justify this change of position. TheTribunal concludes that the Respondents took this position in anattempt to hinder, delay and frustrate the valuation exercise andconsequent transfer of shares. The Respondents advanced a series E

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of points in their email. Each was answered in the Claimant’ssolicitors’ email dated 15 October 2014 (see Annexure E p.170 tothe Claimant’s submissions). In summary, the Respondent wasnot in a position following Procedural Order No 12 and its prioragreement to Deloitte subsequently to withhold its agreement toor not to object to the appointment of Deloitte. It had been orderedfollowing the Respondents’ indication of agreement or non-objection to Deloitte.

5. The Respondents had not previously sought to identify anymatters which disentitled Deloitte from acting but instead hadagreed to their name being put forward to the Tribunal forappointment. Furthermore, the matters identified did not in anyevent impugn Deloitte’s independence or ability to act as Valuerin accordance with the provisions of the JVA. The fact that Deloittehad been approached by the Respondents to conduct anindependent valuation but had declined to act because of theimpending role for the Company as Valuer only serves to underlinenot undermine their independence. Also, the fact that theRespondents had asked Deloitte earlier in the arbitration toundertake some computer forensic exercise was not relied uponby the Respondents nor did it impugn their independence. Finally,the Respondents refer to Deloitte having acted as auditor of PowerPlus Cable Company LLC (“Power Plus”) a companyincorporated in the UAE and based in Dubai in which Ravin holdsa 49% shareholding, This is not the same entity as the Company,and did not impugn Deloitte’s independence and did not prohibitthem under the terms of Clause 17.3 of the JVA from beingappointed. Clause 17.3 only applied to a prohibition on the statutoryauditor of the Parties to the JVA acting as Valuer. It is not suggestedthat Deloitte was the statutory auditor of Ravin. Power Plus wasnot a Party to the JVA. Further, Clause 17.1 of the JVA expresslyidentified Deloitte as a suitable independent party to be appointedas Valuer. In any event, Deloitte’s role as auditor of Power Pluswas known to the Respondents and having agreed not to object toDeloitte in their 30 April 2013 email it was no longer open to theRespondents to advance this point. There was no breach of theJVA but even if there had been it was waived by the Respondents.

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A6. Thus following this exchange, Deloitte were in due courseengaged albeit through the default mechanisms provided for inProcedural Order No. 12.”

We are satisfied that the learned arbitrator has considered thispoint in some detail and dismissed it. This objection again does not fallBunder any of the grounds mentioned in Section 48.

X. Valuation ignores Ravin’s stake in Power Plus

102. Dr. Singhvi then argued that the valuation made by Deloitteignored a stake of 49% of Ravin in a company called Power Plus, whichstake has been valued by the Appellants’ valuer (one BDO) at INR 563Ccrores. Considering that this aspect was not taken into account by Deloitte,the valuation report ought not to have been accepted by the learnedarbitrator, also being contrary to the position taken by both parties. Thissubmission was dealt with by the learned arbitrator in great detail inparagraph 19 of the Final Award dated 11.04.2017. Among other things,the learned arbitrator referred to clause 17 of the JVA and stated thatDthe said clause together with the formula prescribed therein was followedby Deloitte. Since this was done, Deloitte cannot possibly be faulted andcannot further be asked to take into account the stake of Ravin in PowerPlus, as that would go outside the JVA. This again is a matter for thearbitrator to determine. This again is a ground wholly outside groundsEthat can attract challenge to foreign awards under Section 48.

XI. Valuation Date

103. Dr. Singhvi then argued that the tribunal acted contrary tothe parties’ submissions in arriving at a valuation date of 30.09.2014,much later on the date of the Final Award which is 11.04.2017, as theFparties had agreed that this date ought to be the date closest to the dateof actual sale of share and would be valid only until 31.12.2014. Thelearned arbitrator dealt with this objection in the Final Award dated11.04.2017 as follows:

“D. Valuation dateG

24. The Respondents also complain that whilst Procedural OrderNo. 12 provided for a valuation date of 30 September 2014, Deloitteinstead used data as at 31 July 2014. Respondents also complainedthat since the Report was only issued in November 2015, thevaluation was out of date.

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25. The Tribunal is unable to accept the validity of this criticismfor the following reasons:

1) Deloitte records that it did request data from the Company upto 30 September 2014, but this data was not provided to Deloite.The Tribunal has earlier in this Award recited the facts from whichthe Tribunal has reached the conclusion that the Company’s lackof cooperation with Deloitte was effectively controlled and directedby the Respondent. This was most notably the case with regardto the Company’s failure to issue the Engagement Letter to Deloittefollowing Procedural Order No. 12. The Tribunal thereforeconcludes that it is not open to the Respondents to complain ofthe lack of further data being proved to Deloitte. It was theRespondents who were in control of the provision or non-provisionof that data.

2) The Tribunal also concludes that the Respondents are not entitledto complain of the delay in the production of the Deloitte ValuationReport since that delay was materially contributed to by reasonof the Respondents’ complaint with regard to Deloitte’sinvolvement which is made to the LCIA. It is notable that theRespondents have not in their submission denied that they madesuch a complaint to the LCIA and have not contradicted theClaimant’s submission that this complaint materially contributedto the delay in the production of the Deloitte Report.

3) Furthermore, the Respondents are not entitled to complain thatDeloitte has used a valuation date of 30 September 2014. Thiswas the valuation date agreed to and requested by theRespondents. Furthermore, as is recorded in the Recital toProcedural Order No. 12 prior to the hearing in October 2014leading to the making of the order of the valuation date, theRespondents expressly accepted that the question of the Valuationdate was a matter properly within the jurisdiction of and for thedetermination of the Tribunal. The Tribunal then made an orderfor the valuation as requested by the Respondents.”

Having found that the delay in the valuation report was attributablelargely to the Appellants and that therefore the agreed date of 30.09.2014is the correct date, we find nothing in the award which can be said toeven remotely shock our conscience. This ground is also therefore A

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Arejected. Dr. Singhvi’s fervent plea to exercise our power under Article142 of the Constitution of India, so as to shift the valuation date from30.09.2014 to the date of our judgment must also be rejected given thelearned arbitrator’s finding. Quite apart from this, nothing in Section 48of the Arbitration Act would permit an enforcing court to add to or subtractfrom a foreign award that must either be enforced or rejected by reasonBof any of the grounds under Section 48 being made out to resistenforcement of such foreign award. This Court’s power under Article142 ought not to be used to circumvent the legislative policy contained inSection 48 of the Arbitration Act.

XII. Inconsistent AwardsC

104. Dr. Singhvi then argued that the tribunal’s ruling in the Firstand Second Partial Final Award, with regard to the interpretation ofclause 21, is inconsistent and irreconcilable. Apart from the fact that wedo not find anything in the said two awards with regard to clause 21being inconsistent and irreconcilable, this ground again does not, in anyDmanner, shock our conscience and is therefore rejected.

XIII. Violation of FEMA and the Rules thereunder

105. Dr. Singhvi then argued that in ordering the sale of shares ata 10% discount of the fair market value arrived at by Deloitte, FEMAEand the Rules made thereunder would be breached, resulting in the awardbeing contrary to the public policy of India, in that it would be against thefundamental policy of the Indian law. As pointed out hereinabove, forthe reasons given in paragraphs 79 to 84 of this judgment, this groundagain is bereft of any merit. In fact, the learned arbitrator awarded INR63.90 per share as per the Deloitte valuation, which was contractuallyFbinding under clause 17 of the JVA. Therefore, the lower valuation ofINR 16.88 per share as in the M/s Kalyaniwalla & Mistry valuationreport dated 04.03.2016 was not accepted.

XIV. Bias of the Tribunal

106. Lastly, Dr. Singhvi argued that the learned arbitrator wasGclearly biased in that the outcome of the Second Partial Final Awardwas clear to the Respondent No.1, inasmuch as its agent, one M/s GilbertTweed Associates, sent out an advertisement for recruiting employeesfor Ravin, two months before the Second Partial Final Award, therebyshowing that this agent was clear as to the outcome of the proceedings.HThis was strongly refuted by the Respondent, stating that at no time had Gilbert Tweed Associates been retained by them. As a matter of fact,an agency called M/s Key2People was engaged by Respondent No.1 toidentify potential candidates who could be recruited for the company indue course. M/s Key2People, in turn, appointed M/s Gilbert TweedAssociates. In any case, the Respondent undertook to terminate theengagement of M/s Key2People by its email of 28.10.2013. The allegationof bias thus made was clearly a desperate afterthought. The contentionthat the arbitrator was otherwise biased was dealt with in the Final Awardas follows:

“16. The Respondents have also made a repeated reference toan allegation that the Tribunal lacked independence and that theRespondents have lost faith in the Tribunal continuing to give animpartial determination of the matters which remain in dispute.

17. These allegations have already been raised by the Respondentsand rejected by the LCIA Court. Furthermore, the Respondentshave not sought to invoke any procedure in the English Court,which is the court of the seat with supervisory jurisdiction. If theRespondents wished to challenge the ruling of the LCIA Courtand challenge the further involvement of the Tribunal in the process,the Respondents had to bring a challenge within the strict timelimits provided for in the English Arbitration Act 1996, but theyhave not done so. It is regretted that the Respondents continuedto advance this unfounded and unparticularised allegation. TheTribunal has in the past pointed out the distinction betweenindependence and impartiality on the one hand and on the otherthe role of an arbitrator who has to decide between rival arguments,diametrically opposed and irreconcilable positions adopted beforeit and direct clash of evidence before it and then apply such findingsto the disputes before it. It is an inherent and an inevitable part ofthe arbitral process that where parties, as indeed has been thecase in this arbitration, have taken radically opposing positions onthe evidence and the law that multiple decisions will have to bemade that will ultimately disappoint one of the parties. This hasbeen exactly such a dispute. It has, however, been a distinct featureof this process that the Respondents have not only voiced theirdisappointment but have not complied with the orders of theTribunal to protect the Parties’ rights during the course of theArbitration and not complied with the terms of the JVA as has A

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Abeen found and determined by the Tribunal in its prior Awards. Ina dispute such as the present where it has been necessary torender a series of Awards, it is necessary for the Tribunal to applythe prior findings in any subsequent Award.”

107. Having answered each of the submissions of Dr. Singhvi onBbehalf of the Appellants, we cannot help but be left with a feeling thatthe Appellants are indulging in a speculative litigation with the fond hopethat by flinging mud on a foreign arbitral award, some of the mud soflung would stick. We have no doubt whatsoever that all the pleas takenby the Appellants are, in reality, pleas going to the unfairness of theconclusions reached by the award, which is plainly a foray into the meritsCof the matter, and which is plainly proscribed by Section 48 of theArbitration Act read with the New York Convention. We have read, indetail, the four awards passed by the learned sole arbitrator and aresatisfied that he has exhaustively discussed the evidence and arrived atdetailed findings for each of the issues, claims and counter-claims, andDfinally accepted the Respondent’s case and rejected the Appellants’.Given the fact that our jurisdiction under Article 136 of the Constitutionis itself limited, and given the fact that this Court’s time has unnecessarilybeen taken by a case which has already been dealt with by four exhaustiveawards on merits and also by the impugned judgment of the BombayHigh Court, we dismiss these appeals with costs of INR 50 lakhs, to beEpaid by the Appellant to Respondent No.1 within 4 weeks from today.

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Devika Gujral

Appeals dismissed.

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