India High Court Enforces Award And Directs Payment Of Deposit

In Glencore International AG v. Indian Potash Limited & Anr. (Ex. P. 99/2015), the Delhi High Court recognised an award delivered by a sole arbitrator under the SIAC Rules and directed the judgment debtor to deposit the underlying sum. Enforcement was resisted on a number of grounds, all of which were rejected by the Court.

First, the judgment debtor argued that the awards (which included the final award and the cost award) were not stamped. The Court found that foreign awards are not required to be stamped under the Stamp Act, holding that it was not the legislative intent to insist on the stamping of a foreign award under the Indian stamp laws as states in India have different rates for stamp duty and it would have been impossible for the enforcer to pay stamp duty in every state before seeking enforcement of a foreign award. The Court stated [21]:

“it could not be the intention of the legislature under the 1996 Act to insist on the stamping of a foreign award under the Stamp Act laws prevailing in India— as states in India have different rates for stamp duty, it would be well nigh impossible for the enforcer to pay stamp duty in every State before seeking enforcement of a foreign award. The fundamental premise which sustains enforcement proceedings pertaining to foreign award is that an enforcer can indulge in forum shopping and thus seek satisfaction of the award wherever the assets of the judgment debtor are found provided the foreign award gains the recognition of courts within whose jurisdiction assets of the judgement debtor are situate.”

Second, that the parties had not agreed to the arbitration proceedings being conducted under the SIAC Rules. While the arbitration agreement referred to the rules of a non-existent arbitral institution, the Court found that the arbitrator correctly adopted the interpretative route and construed the applicable rules as SIAC Rules, finding that the procedure followed under the SIAC Rules had not caused any prejudice to the judgment debtor and that, in any event, procedural defects which did not lead to a failure of justice would not render the award unenforceable. The Court stated:

“The arbitral tribunal, in my opinion correctly, took recourse to an interpretative route and thereby reached to a reasonable conclusion which caused no prejudice…” [24]

“…even if one were to assume for the moment that it was as contended on behalf of IPL, a procedural defect, it could not, in my view, form the basis for refusing the recognition and/or enforcement of the awards as either way this defect would not have altered the result reached in the arbitration proceedings.” [30]

Third, that the arbitrator failed to preliminarily decide its jurisdictional objections, thereby depriving the judgement debtor of the opportunity to file an appeal. The Court considered the objection “completely flawed” [31] stating that there was no fundamental policy in Indian law that adjudicating authorities should mandatorily render a decision on jurisdictional issues before hearing the matter on merits. The court stated [31.1]:

“There is… no such fundamental policy in Indian law that adjudicating authorities should mandatorily render decision on jurisdictional issues before hearing the matter on merits. The discretion in this behalf lies with the adjudicating authority. In case the adjudicating authority hears the matter both with regard to jurisdictional issues as well as on merits together, it would logically not give its views on merits if it were to sustain an objection ousting its jurisdiction in the matter.”

Finally, enforcement was challenged on the basis that the awards were vitiated for breach of principles of natural justice, since the judgment creditor was permitted to amend its pleadings during the final hearing without allowing the judgment debtor to contest the amendments. The Court had no trouble disposing of this ground, finding that the arbitrator exercised his discretion to allow amendment of pleadings under the SIAC Rules, finding that the judgment debtor had been given a sufficient opportunity to the amendments but that it failed to respond to the amendments.

The Court ordered the judgment debtor to deposit the awarded amounts with the Court registry within 4 weeks of the Judgment.

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About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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