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Judgment
S. Rajeswaran, J.—Original Petition No. 672/2003 has been filed to recognise and enforce the award dated 3.6.1999 passed by Association of Food Industries inc., New Jersey USA, the arbitrators 1) Arthur Coussa 2) Mordi Dicker and 3) Earnest Miller, directing the 1st respondent to pay to the petitioner US Dollars 79,875 equivalent to Indian Rupees 36,34,312/- with interest at 18% per annum from 3.6.1999 till the date of realisation and for cost to be paid by the 1st respondent.
Original Petition No. 673/2003 has been filed to recognise and enforce the award dated 31.8.1999 passed by the Association of Food Industries Inc., New Jersey, USA, the arbitrators l) Gary Cochrane 2) Mahdi Kazemi and 3) William Madehberg, consequently, directing the 1st respondent to pay to the petitioner U.S. Dollars 29,500 equivalent to Indian Rupees 13,54,050/- with interest at 18% per annum from 31.8.1999 till the date of realisation and for cost to be paid by the 1st respondent.
Application Nos. 4941 and 4942 of 2003 have been filed by the Applicant/petitioner to direct the respondent to furnish securities to the satisfaction of this Court to meet the liability that would arise on recognition of the foreign award and enforcement thereof to the tune of US $29,500 equivalent to Indian Rs. 13,54,050/- and US $79,875 equivalent to Indian Rs. 36,34,312/- respectively as per schedule mentioned in the Judge''s summons.
As the parties and the issues involved are one and the same, a common order is being passed in the above two Original Petitions.
Both the petitions have been filed by the same petitioner against the very same first respondent praying to recognise and enforce the award dated 3.6.1999 in O.P. No. 672/2003 and to enforce the award dated 31.8.1999 in O.P. No. 673/2003, both passed by the arbitral tribunal consisting of 3 arbitrators at the intervention of the Association of Food Industries Inc., New Jersey, USA.
In O.P. No. 672/2003, the petitioner and 1st respondent entered into a contract on 15.12.1998 under contract No. G.151298 and another contract on 26.1.98 under contract No. U.26199 for supply of Indian Blanched Cashew Kernels.
In O.P. No. 673/2003, the petitioner and 1st respondent entered into a contract on 27.2.1998 in contract No. G.27298 for the supply of Indian Blanched Cashew Kernels-Fancy butts quality. They have also entered into an another contract on 8.4.1998 under contract No. 3026 JFB for the supply of Indian Fancy 320 CT whole cashews.
Each of the contracts contained an arbitration clause by which any dispute shall be settled in New York by arbitration by the Association of Food Industries Inc.
On account of default in shipment caused by 1st respondent, petitioner made a claim before the arbitrators and two awards were passed in favour of the petitioner and against 1st respondent. As 1st respondent did not challenge the said two awards in accordance with law, for enforcing the same, the above petitions have been filed under Sections 46, 47 and 49 of the Act, 1996.
The petitioner also filed two applications namely, Application No. 4942/2003 and 4941/2003 in both the above O.Ps., u/s 9 of the Act, 1996 for directing 1st respondent to furnish security to meet the liability that would arise on recognition of the foreign award and the enforcement thereon to the value of the awards.
Heard the learned Counsel for the petitioner and the learned Counsel for 1st respondent. I have also perused the documents filed and the judgments referred to in support of their submissions.
The learned Counsel for the petitioner submitted that as both the awards were not challenged in a manner known to law, they are to be enforced as it was a decree of this Court u/s 49 of the Act, 1996. He relied on the decision of Hon''ble Supreme Court reported in 2001 (6) SCC 355 (Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.) to submit that the Act, 1996 provides for a single proceeding for deciding enforceability and execution of a foreign award.
Per contra, the learned Counsel for 1st respondent submitted that the enforcement of the two foreign awards is to be refused as the enforcement of the award would be contrary to the public policy of India. The learned Counsel further submitted that 1st respondent was not given adequate opportunity before the arbitral tribunal and denial of a reasonable opportunity by the arbitral tribunal is a valid ground for refusing enforcement of a foreign award u/s 48 of the Act, 1996. He relied on an unreported judgment of this Court delivered by me on 12.4.2006 in O.P. No. 197/2001 (Saraswathi Chemicals v. Balmer Lawrie & Co. Ltd.) in this regard.
I have considered the rival submissions with regard to facts and citations.
Part II of the Act, 1996 deals with enforcement of certain foreign awards. Chapter I of part II deals with New York Convention Awards. Section 44 defines what is a foreign award and Section 46 contemplates when a foreign award is binding between the parties. u/s 47, the party applying for enforcement of a foreign award shall produce evidence to the satisfaction of the court then there is an agreement for arbitration and an award has been passed on the basis of such agreement. After going through the evidence produced by the person applying for the enforcement of the foreign award, if the court is satisfied that a foreign award is enforceable, the award shall be deemed to be a decree of the court.
However, Section 48 of the Act prescribes certain conditions for enforcement of foreign awards and the court may refuse enforcement at the request of the other party if proof is produced as per Section 48(1)(a)(b)(c)(d)(e) and Section 48(2)(a)(b) and Section 48(3).
For better appreciation, Section 48 is extracted below:
Conditions for enforcement of foreign awards: (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that-
(a) the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by nor not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or
(d) the composition of arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that-
(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public policy of India.
Explanation: Without prejudice to the generality of Clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.
(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to Clause (e) of Sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.
COMMENTS
For enforcement of a foreign award, there is no need to take separate proceedings such as one for deciding enforceability of award to make rule of court or decree and other to take up execution thereafter. M/s. Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd., .
In the present case it is not in dispute that the parties entered into four contracts containing arbitration clause, to be settled in New York by the Association of Food Industries Inc. The genuineness of the awards is also not disputed by 1st respondent. Their only contention is that the enforceability is to be refused u/s 48 of the Act as the enforcement of the award would be contrary to the public policy of India. Their particular contention is that adequate opportunity was not given to them and denial of adequate opportunity to 1st respondent by the arbitral tribunal is a valid ground for refusing the enforceability of the two awards.
I am unable to accept this contention made on behalf of 1st respondent;
Section 43(1) of the Act, 1996 makes it very clear that an enforcement of a foreign award may be reused if the other party produces proof to the court to the conditions contemplated u/s 48(1)(a)(b)(c)(d)(e), Section 48(2)(a)(b) and Section 48(3). When the party fails to furnish proof to support their contention, this Court cannot refuse enforcement of the foreign award.
In the present case, no concrete proof was furnished before this Court for seeking refusal of the enforcement of the awards. Even though a vein attempt was made to submit that there was no sufficient time between the receipt of the notice and the hearing date of the arbitral tribunal, it was not explained as to why 1st respondent did not ask for an adjournment of the arbitral proceedings after receiving the notice. In such circumstances, it is not for 1st respondent to contend that enough opportunity was not given to them by the arbitral tribunal.
Further, the other grounds raised by 1st respondent to refuse enforcement of the award are all on merits and they should have been raised in a proceeding challenging the validity of the award before the competent forum. In an enforceability of a foreign award, the refusal could be resorted to only when the conditions as set out u/s 48 of the Act, 1996 are shown with acceptable proof.
As 1st respondent did not furnish proof to satisfy the conditions as set out u/s 48 of the Act, 1996, I am not inclined to refuse the enforcement of the two foreign awards. Further, as I am satisfied that the two awards are enforceable under Chapter I of part II of the Act, 1996, both the awards in O.P. Nos. 672 and 673 of 2003 are deemed to be the decrees of this Court.
In the result, both the O.Ps., are allowed as prayed for and post the petitions before the Master for further course of action.
Consequent upon the order passed in the above O.Ps., both the above Applications are dismissed and it is open to the petitioners to take out appropriate petitions before Master in execution of the awards.