M/s Concilium Marine Group A B vs Sharath Thazhathe Veedu

S.Manu, J

Enforceability of an award for payment of costs rendered by an Arbitral Tribunal in Sweden is the issue arising for consideration in this case.

Petitioners are the respondents in Annexure 1 award. The respondent instituted arbitral proceedings against them before an Arbitral Tribunal in Sweden, consisting of three members.  The Tribunal concluded that no  arbitration  agreement had come into existence and rejected the claims of the respondent. Nevertheless, the Tribunal directed that the respondent  shall  bear  100%  of  the  costs  of  the  arbitration. In this  E.P.(ICA)  the  petitioners  are  seeking  to  execute  the  award, contending that the respondent is liable to pay Rs.10,51,23,485/- along with interests and costs under the award.

The respondent entered appearance. He contends that  the  E.P.  is  not  maintainable  and  even  if  it  is  assumed  that the same is maintainable, the award is unenforceable.

Arguments advanced on behalf of the Respondent, objecting enforcement

The learned Counsel for the respondent Sri.Saiby Jose Kidangoor,  raised  serious  objections  regarding  maintainability  of this execution petition. The learned Counsel made extensive reference to the provisions of the Arbitration and Conciliation Act, 1996. He made specific reference to various provisions in Part-II  Chapter I.  The learned  Counsel  referred  to  Section  47 of the  Act  and  contended  that  the  party  applying  for  enforcement of a foreign award shall, at the time of application, produce before the Court the original award or a duly authenticated copy thereof, in the manner required by law of the country in which it was made. As provided under Section 47(1)(b), the original agreement  for  arbitration  or  a duly  certified  copy  thereof  shall also be necessarily produced before the Court. The learned Counsel pointed out that the language of Section 47(1) makes it clear that, the production of the original award or duly authenticated copy thereof as well as original agreement or a duly certified copy thereof are mandatory and they shall be produced  at  the  time  of  filing  of  the  application.  He  submitted that, if the application is filed without producing the key documents stipulated under Section 47(1)(a) and (b) at the time of filing of the application, the application shall be treated as not supported by evidence contemplated under Section 47 of the Act.

As an extension of the said contention, the learned Counsel submitted that production of the original arbitration agreement or a duly certified copy has been made mandatory under Section 47 of the Act with a specific purpose. The learned Counsel  made  reference  to  the  provisions  of  the  First  Schedule in this regard. He contended that, in the instant case, the finding of the Arbitral Tribunal is that there was no valid agreement between  the  parties  for  arbitration.  He  further  pointed  out  that the said contention was raised by the petitioner herein in it’s defense before the Arbitral Tribunal. The said contention was analyzed  by  the  Arbitral  Tribunal  in  detail.  The  learned  Counsel referred to Paragraph Nos.71 to 90 of Annexure 1 award. He made  specific  reference  to  the  decision  of  the  Tribunal  reflected in paragraph No.90. The learned Counsel submitted that, the Arbitral Tribunal entered into a categorical finding that there was no valid agreement. He reiterated that the said finding was actually invited by the petitioner. According to the learned Counsel, the petitioners cannot be permitted to contend that there was a valid arbitration agreement, differing with the finding of the Arbitral Tribunal in the award sought to be executed. He  submitted  that  the  award  has  become  final  as  it was not challenged under the Swedish law. Since the award has attained  finality,  the  finding  of  the  Tribunal  regarding  existence of a valid agreement has also undeniably become final. That being so, the learned Counsel submitted that the petitioner cannot be permitted to contend that there was a valid arbitration agreement. The learned Counsel further contended that, if there was  no valid agreement then the petitioner  cannot satisfy  this Court  regarding  the  existence  of  essential  conditions  mentioned under  Section  47  of  the  Act.  If  the  application  for  execution  is not supported by evidence as contemplated under Section 47 of the  Act,  then  the  application  cannot  be  treated  as  maintainable by this Court. The learned Counsel made reference to Section 44 of the Act. He pointed out that, ‘foreign award’ has been defined as  an  arbitral  award  on  differences  between  persons  arising  out of  legal  relationship,  whether  contractual  or  not,  considered  as commercial under the law in force in India.

The learned Counsel pointed out that as provided under  Section  44(a),  the  foreign  award  shall  be  one  passed  in pursuance of an agreement in writing for arbitration to which the Convention set forth in First Schedule applies. He submitted that in order to invoke the provisions of Part II, Chapter I of the Act, the  award  sought  to  be  executed  shall  satisfy  the  definition  of the foreign award under Section 44 of the Act. The learned Counsel  hence  submitted  that  unless  there  is  an  agreement  in writing for arbitration, as clearly stipulated under Section 44(a), an arbitral award cannot be treated as a foreign award as defined  under  Section  44.  He  therefore  submitted  that  such  an award, that would not satisfy the requirements mentioned in Section 44 of  the Act, cannot be sought to be enforced under Part  II of Chapter I of  the  Act.  The learned  Counsel pointed  out that  the  finding  of  the  Arbitral  Tribunal  regarding  non-existence of  a valid  arbitration  agreement  would  stand  in  the  way  of  the petitioner. The learned Counsel submitted that in view of the requirements under Section 44 and 47 of the Act, this execution petition is not legally maintainable.

Further, the learned Counsel submitted that, the contention of the respondent in this case would fall under Section 48 (1) (a). If the agreement was not valid under the law to which the parties had subjected it, the same can be raised as a valid  ground  under  Section  48  of  the  Act  against  enforcement of the foreign award. Learned Counsel submitted that, in the case at hand, the arbitration proceedings were conducted in Sweden and Swedish law was applicable. Tribunal concluded the proceedings by passing Annexure 1 award, holding that there was no valid agreement. Therefore, the learned Counsel submitted that as provided under Section 48(1)(a), the agreement was not valid under the law to which the parties had subjected it and therefore, the foreign award cannot be enforced in India.

The  learned  Counsel  also  submitted  that  the  primary inquiry  to  be  conducted  by  a court  in  India  enforcing  a foreign award is as to whether the foreign award falls within the parameters laid down in Part II Chapter I of the Act. He submitted that the award may be enforceable under Swedish law.  However,  the award, to  be enforced in India,  should satisfy the specific conditions mentioned in the provisions under Part II Chapter I of the Act. Therefore, he submitted that the award though has become final and may be enforceable under Swedish law, does not satisfy the basic requirements for enforcement under  the  provisions  of  Part  II  Chapter  I of  the  Arbitration  and Conciliation Act, 1996.

The learned Counsel made reference to Article II (1) of the first schedule of Arbitration and Conciliation Act, 1996. The said provision is extracted herein: -

“1. Each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration.”

He also made reference to Article IV (1):-

“1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:—

(a)the duly authenticated original award or a duly certified copy thereof;

(b) the original agreement referred to in article II or a duly certified copy thereof.”

He also made reference to Article V(1) which reads as under:-

“1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that—(a) the parties to the agreement referred to in article II 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 arbitration proceedings or  was otherwise unable to  present his case; or

(c) the award deals with a difference not contemplated by or 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 recognised and enforced; or

(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.”

The learned Counsel pointed out that Article II specifically deals with an agreement in writing. An agreement in writing shall include an arbitral clause in a contract or an arbitration  agreement  signed  by  the  parties,  or  contained  in  an exchange of letters or telegrams. He submitted that requirement of production of original agreement referred to in Article II, or a duly  certified  copy  thereof,  is  specified  in  Article  IV(1)(b). The learned Counsel further submitted that, in view of Section 44 of the Act read in conjunction with the First Schedule, it clearly appears  that  the  existence  of  a valid  agreement  and  production of the same are two essential conditions for maintaining an application  for  execution  of  the  foreign  award  under  Indian  law, and the instant application fails to satisfy those essential requirements.

The learned counsel further contended that the petitioners did not purposely produce before this Court statement of defence filed before the Arbitral Tribunal. The respondent has produced the same as Annexure-R1(a). Referring to paragraphs 296 to 299 of the statement of defence, the learned counsel submitted that the petitioners pleaded before  the  Arbitral  Tribunal  that  they  would  not  be  able  to  seek enforcement in India in case a cost award is passed in their favour. Further,  they  categorically  stated  in  paragraph  297  that as there is no arbitration agreement between the parties, let alone a signed agreement, they cannot successfully seek enforcement under the New York Convention. They also stated, with  reference  to  the  various  provisions  of  the  convention,  that the principles apply under Indian and UAE National Laws and the party applying for enforcement must supply the arbitration agreement to obtain enforcement. They specifically pleaded that consequently, it is highly unlikely that they can obtain enforcement of a cost award in their favour both under National and International Law. He therefore submitted that the petitioners were well aware even during the pendency of the arbitral  proceedings  that  they will  not  be in  a position  to  seek enforcement  of  an  award  in  India  for  want  of  an  agreement  in writing. He hence argued that the petitioners are actually taking this Court for a ride in the Execution Petition. He submitted that the principles of estoppel will  undoubtedly  apply in the situation and the petitioners are precluded from taking a position contrary to their pleadings before the Arbitral Tribunal. The learned counsel  also  contended  that  the  non-production  of  the  defence statement before this Court is a material suppression. He contended  that  the  petitioners  shrewdly  omitted  to  produce  the same as the pleadings therein would cut at the root of their case in the Execution Petition.

The learned Counsel submitted that the petitioners who disputed the validity of the agreement and got a favourable finding in that regard from the Arbitral Tribunal cannot be permitted  to  contend  that  the  arbitral  award  is  enforceable  and it should be presumed that there was yet another agreement, limited in nature, to proceed with the arbitration in order to decide on the procedural issues.

The learned counsel disputed the contention of the learned Senior Counsel for the petitioners that the production of the agreement along with the Execution Petition is not mandatory  to  proceed  with  the  enforcement  of  the  award. The learned  counsel  contended  that  even  the  judgment  cited  by  the learned counsel in this regard will not come to the aid of the petitioners. He sought to draw a distinction between the requirement of producing the agreement under Section 47 of the Act and recognition of the award under the New York Convention. He also submitted that the judgment of the Hon'ble Supreme Court in PEC Limited v. Austbulk Shipping SDN BHD [(2019) 11 SCC 620] relied on by the learned Senior Counsel was rendered in a case where there was no dispute regarding  existence  of  the  agreement. The  only  issue  decided was  as  to  whether  the  production  of  the  agreement  at  the  time of  filing  is  mandatory. He  submitted  that  the  Hon'ble  Supreme Court  has  not  held  that  the  production  of  the  agreement  is  not necessary for the enforcement of the award. He hence contended  that  the  award  cannot  be  enforced  under  part II  of the Act unless the agreement is produced, even though the requirement can be excused at the time of the filing of the Execution Petition.

The learned counsel also submitted that the enforcement  of  the  award  may  be  refused  also  for  the  grounds under S.48(2) also. The dispute was not arbitrable under Indian law  if  there  is  no  agreement.  Further,  award  passed  without  an agreement  would  be  contrary  to  the  public  policy  of  India. He submitted  that  in  view  of  the  provisions  of  Section  7(2)  of  the Act, an agreement in writing is essential to resort to arbitration. Therefore, it is a fundamental requirement of the policy of Indian  law  that  there  shall  be  an  agreement  in  writing. In  the instant  case  the  Arbitral  Tribunal  having  found  that  there  is  no valid agreement under the Swedish law, enforcing an award arising from the same arbitral proceeding by a court in India will be in conflict with the public policy of India. The learned counsel made some further submission to distinguish the judgments cited by the learned Senior Counsel for the petitioners. He contended  that  the  principles  laid  down  therein  actually  support the case of the respondent.

Arguments advanced on behalf of the petitioners

Sri.Anil Xavier, the learned Senior Counsel for the petitioners refuted the submissions of the learned counsel for the respondent. He asserted that none of the contentions of the respondent would constitute valid objections under Section 48 of the Arbitration and Conciliation Act and hence the award is enforceable.  The  learned  Senior  Counsel  further  submitted  that the  endeavor  of  the  Court  shall  be  to  give  effect  to  the  award and hence it should be enforced unless any of the inhibiting features under S.48 is established.

Regarding the contention of the respondent that the original copy of the arbitration agreement has not been produced, the learned Senior Counsel submitted that the production of the same at the time of filing is not mandatory. The agreement was subsequently produced as Annexure-A2. The Stockholm Chamber of Commerce forwarded all associated documents including the arbitration agreement to the petitioners when  the  respondent  initiated  arbitral  proceedings.  A true  copy of  the  agreement  forwarded  by  the  Chamber  of  Commerce  has been produced as Annexure-A2. The learned Senior Counsel submitted that production of copy of the agreement is not mandatory at the stage of filing of the execution proceedings as held by the Hon'ble Supreme Court in PEC Limited v. Austbulk Shipping SDN BHD [(2019) 11 SCC 620].

With respect to the contention regarding lack of a valid arbitration agreement, the learned Senior Counsel submitted  that  when  the  Chamber  of  Commerce  forwarded  the matter  to  the  petitioners,  they  objected  on  the  ground  that  the agreement was invalid as it was not signed by the parties. Under  the  Swedish  law  even  an  unsigned  arbitration  agreement can be considered as valid, but the Arbitral Tribunal must adjudicate on it. In the agreement involved in the case on hand there is a specification that the agreement will become valid only when signed by the parties. However, the petitioners also appointed an Arbitrator and sought bifurcation to decide the validity of the arbitration agreement as a preliminary issue. The respondent opposed the request contending that unsigned agreements  are  also  valid  under  the  Swedish  law  and  the  issue can  be  decided  only  on  the  basis  of  the  evidence. The  request for bifurcation was rejected by the Tribunal and it entered into a full-fledged arbitration. The learned Senior Counsel submitted that though the arbitration clause forms part of a larger unsigned  agreement,  subsequently,  the  petitioners  entered  into a limited  arbitration  agreement  by  giving  the  Tribunal  authority to decide on procedural issues under Swedish law without which Swedish law would not apply. The said limited arrangement itself constituted a valid arbitration agreement. According to the learned Senior Counsel, there are two arbitration agreements, one for  substantive disputes  and  another  limited  to procedural issues. Petitioners authorised only procedural adjudication.

The learned Senior Counsel further submitted that the Tribunal found that even for deciding procedural issues examination of evidence was essential. In arbitration proceedings, where a party is compelled to participate despite contending that no arbitration agreement exists, it is permissible to award costs to such a party, notwithstanding the Tribunal’s finding that there was no arbitral agreement. Therefore, the Tribunal was correct in granting costs to the petitioners. According to the learned Senior Counsel, the respondent resisted the application filed by the petitioners before the Tribunal to pass an order for security for costs, by stating that a cost award is also enforceable in India and that he owns sufficient assets in India to satisfy such an award. The respondent is therefore estopped from taking a contrary stand in the execution proceedings. The learned Senior Counsel therefore submitted  that  none  of  the  objections  raised  by  the  respondent is valid and hence the award may be declared as enforceable.

Further elaborating on the nature of the award the learned Senior Counsel submitted that the Tribunal proceeded to decide on costs of arbitration as per the Swedish Law. He referred to Section 37 of the Swedish Arbitration Act which reads as under:-

"Section 37 - The parties shall be jointly and severally  liable  to  pay  reasonable  compensation  to  the arbitrators for work and expenses. However, if the arbitrators have stated in the award that they lack jurisdiction to determine the dispute,  the party that did not request  arbitration  shall  be liable  to  make  payment only insofar as required due to special circumstances.

In  a final  award,  the  arbitrators  may  order  the  parties to pay compensation to them, together with interest from the date occurring one month following the date of the announcement of the award. The compensation shall be stated separately for each arbitrator."

He also made reference to Section 42 of the Swedish Arbitration Act which provides power to Arbitral Tribunal to order compensation of costs. Section 42 of the Swedish Arbitration Act reads as under:-

"Section 42- Unless otherwise agreed by the parties,  the  arbitrators  may,  upon  the  request  of  a party, order the opposing party to pay compensation for the party's costs and determine the manner in which the compensation to the arbitrators shall be finally allocated between the parties. The arbitrators' order may also include interest, if a party has so requested."

He therefore submitted that the Arbitral Tribunal passed  the  impugned  award  granting  costs  to  the  petitioners  in accordance  with  the  Swedish  Arbitration  Act.  He  also  submitted that in International Arbitration, Arbitral Tribunals routinely award  costs  when  they  lack  jurisdiction  on  merits  of  a dispute, which are called as ‘negative costs awards’. He further submitted that the Arbitral Tribunal gets the authority to pass such awards mainly from three sources;i) specific agreements between the parties to arbitrate costs ii) the competence- competence principle or iii) the national arbitration laws.

The learned Senior Counsel, in response to the contention  of  the  learned  counsel  for  the  respondent  regarding the pleadings in the statement of defence filed before the Arbitral Tribunal, submitted that there was no admission as alleged. Contents of paragraphs 296 to 299 of the statement of defence reflect the apprehension of the petitioners and it cannot be construed as admissions. He referred to Annexure A6, decision  on  the  application  for  security  for  cost.  He  pointed  out that in paragraph 4 of the decision, the apprehension of the petitioners was taken note of by the Tribunal. In paragraph 14, the Tribunal noted the submission of the respondent that he has access to adequate resources to satisfy any adverse costs award.  In  paragraphs  22  and  23, the  Tribunal  considered  as  to whether the respondent lacks funds and ability to satisfy an adverse cost award. The Tribunal accepted the contention of the respondent in this regard and rejected the request to direct furnishing of security. The learned Senior Counsel submitted that the  respondent  had  thus  submitted  before  the  Arbitral  Tribunal that  in  case  of  a cost  award  being  passed,  the  enforcement  of the same will not be defeated for want of funds.

The learned Senior Counsel submitted that the principle  of  estoppel  would  not  apply  against  the  petitioners  as contended by the learned counsel for the respondent. He submitted that the essential element of obtaining any gain by adopting a contention is absent in the instant case and hence the  doctrine  of  estoppel  has  no  application  to  the  facts  of  this case. Regarding the contention of the learned counsel for the respondent that the petitioners did not raise any challenge against the arbitral award, the learned Senior Counsel submitted that the award is in favour of the petitioners as the claims against them raised by the respondent were not allowed and on the other hand cost was imposed on the respondent.

Precedents cited by both sides

Having narrated the contentions raised by both sides, I shall now refer to the judgments cited.

Learned Senior Counsel for the petitioners relied on the following judgments in support of their arguments;

i) PEC Limited v. Austbulk Shipping SDN BHD [(2019) 11 SCC 620].

ii) B.L. Sreedhar and Others v. K.M. Munireddy(Dead) and others (2003) 2 SCC 355.

iii) Shri Lal  Mahal  Ltd.  v.  Progetto  Grano  Spa [(2014) 2SCC 433].

iv) Government of India v. Vedanta Limited (Formerly Cairn India Ltd.) & Others [(2020) 10 SCC 1]

v) Commonwealth Development Corp (UK) v. Montague [[2000] QCA 252]

vi) Ravfox  Limited  v.  Bexmoor  Limited [2025 EWHC 1313 (Ch)]

In PEC Limited v. Austbulk Shipping SDN BHD [(2019) 11 SCC 620], the Hon'ble Supreme Court held as under;

“11. The points that arise for our consideration in this case are:

11.1.  Whether  an  application  for  enforcement  under Section 47 of the Act is liable to  be dismissed  if it is not accompanied by the arbitration agreement?

11.2.  Whether there is  a valid arbitration agreement between the parties and what is the effect of a party not signing the charterparty?

The Foreign Awards (Recognition and Enforcement) Act, 1961 was repealed by the Act. Part  II  of  the  Act  deals  with  enforcement  of  foreign awards.  An  arbitral  award  made  in  pursuance  of  an agreement in writing for arbitration, to which the Convention on the Recognition & Enforcement of Foreign Arbitration Awards, 1958 (hereinafter referred  to  as  “the  New  York  Convention”)  set  forth in  the  First  Schedule  of  the  Act  applies  is  defined  to be a “foreign award”. Section 47 of the Act postulates that the party applying for the enforcement of a foreign award “shall” produce before the Court at the time of application the following:

“47. (a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;

(b)  the  original  agreement  for  arbitration  or a duly certified copy thereof; and

(c) such evidence as may be necessary to prove that the award is a foreign award.”

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Admittedly, an authenticated copy of the arbitration agreement was not placed on record by the respondent at the time of filing of the application for  enforcement.  It  is  clear  from  the  record  that  the appellant placed the arbitration agreement along with its  reply  and  thereafter  the  respondent  also  filed  the original arbitration agreement in the Court. The submission  made  by  the  appellant  is  that  production

of the arbitration agreement at the time of filing of the application is mandatory, the non-compliance of which  ought  to  have  resulted  in  the  dismissal  of  the application. The appellant sought support for this submission from the word“shall”appearing in Section 47. We do not agree with the submission made by the learned counsel for the appellant. We are of the opinion that the word “shall” appearing in Section 47 of the Act relating to the production of the evidence as specified in the provision at the time of application has to be read as “may”.

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The Object and Purpose of the New York Convention is to facilitate the recognition of the arbitration agreement within its purview and the enforcement of the foreign arbitral awards. This Object  and  Purpose  must,  in  the  first  place,  be  seen in the light of enhancing the effectiveness of the legal regime governing international commercial arbitration [Dardana Ltd. v. Yukos Oil Co., 2002 EWCA Civ 543 : (2002) 1 ALL ER (Comm) 819].”

[Emphasis added]

In B.L.Sreedhar and Others v. K.M.Munireddy (Dead)  and  others  [(2003)  2 SCC  355]  the  Hon'ble  Supreme Court held thus;

“30. If a man either by words or by conduct has intimated that he consents to an act which has been done  and  that  he  will  not  offer  any  opposition  to  it, although it could not have been lawfully done without  his  consent,  and  he  thereby  induces  others to do that which they otherwise might have abstained from, he cannot question the legality of the  act  he  had  sanctioned  to  the  prejudice  of  those who  have  so  given  faith  to  his  words  or  to  the  fair inference to be drawn from his conduct.”

In Shri Lal Mahal Ltd. v. Progetto Grano Spa [(2014) 2 SCC 433], the three Judge bench of the Hon'ble Supreme Court made the following observations;

“19. Having regard to clause (b) of sub-section (2) of Section 48 of the 1996 Act, we shall immediately examine what is the scope of enquiry before the court  in  which  foreign  award,  as  defined  in  Section 44, is sought to be enforced. This has become necessary as on behalf of the appellant it was vehemently contended that in light of the two decisions  of  this  Court  in  Saw  Pipes  [ONGC  Ltd.  v. Saw  Pipes  Ltd.,  (2003)  5 SCC  705]  and  Phulchand Exports [Phulchand Exports Ltd. v. O.O.O. Patriot, (2011)  10  SCC  300  : (2012)  1 SCC  (Civ)  131],  the Court  can  refuse  to  enforce  a foreign  award  if  it  is contrary to  the  contract between the parties  and/or is  patently  illegal.  It  was  argued  by  Mr  Rohinton  F. Nariman,  learned  Senior  Counsel  for  the  appellant, that the expression “public policy of India” in Section 48(2)(b) is an expression of wider import than the expression “public policy” in Section 7(1) (b)(ii) of the Foreign Awards (Recognition and Enforcement) Act, 1961. The expansive construction given by this Court to the term “public policy of India”  in Saw  Pipes [ONGC  Ltd.  v. Saw  Pipes Ltd., (2003) 5 SCC 705] must also apply to the use of the same term “public policy of India” in Section 48(2)(b).

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In our view, what has been stated by this Court in  Renusagar  [Renusagar  Power  Co.  Ltd.  v.  General Electric Co., 1994 Supp (1) SCC 644] with reference to Section 7(1)(b)(ii) of the Foreign Awards Act must apply equally to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it has been expressly exposited that the expression “public policy” in Section  7(1)(b)(ii)  of  the  Foreign  Awards  Act  refers to  the  public  policy  of  India.  The  expression  “public policy” used in Section 7(1)(b)(ii) was held to mean“public policy of  India”. A distinction in  the rule of public policy between a matter governed by the domestic law and a matter involving conflict of laws has  been  noticed  in  Renusagar.  For  all  this  there  is no reason why Renusagar should not apply as regards the scope of inquiry under Section 48(2)(b). Following Renusagar, we think that for the purposes of Section 48(2)(b), the expression “public policy of India” must be given a narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to the public policy of India if it is covered by one of the three categories enumerated in Renusagar. Although the same expression “public policy of India” is used both in Section 34(2)(b)(ii) and Section 48(2)(b) and the concept of “public policy in India” is same in nature in both the sections but, in our view, its application differs in degree insofar as these two sections are concerned. The application of “public policy of India”doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award.”

[Emphasis added]

In Government of India v. Vedanta Limited (Formerly Cairn India Ltd.) & Others  [(2020) 10 SCC 1] the Hon'ble  Supreme  Court  referred  to  the  law  laid  down  in  Shrilal Mahal  Ltd.  (Supra). The  Hon'ble  Court  surveyed  a number  of Indian and foreign judgments and held that the expression public policy in Section 48  of  the Act  is  to  be  understood in  a narrow  sense  and  the  Court  enforcing  the  award  cannot  review the award on merits. It was clarified that the review on merits is a matter within the domain of the Courts at the seat of arbitration.

In Commonwealth Development Corp (UK) v. Montague [[2000] QCA 252], the Court of Appeal of Queens Land held that the Arbitral Tribunal’s decision with respect to costs could be enforced in Queens Land in the same manner as a judgment of a Queens Land Court.

In Ravfox Limited v. Bexmoor Limited [2025 EWHC 1313 (Ch)], the High Court of Justice of England and Wales considered the jurisdiction of the arbitrator to award costs. It  is  relevant  to  refer  to  the  following  paragraph  of  the judgment:-

“22. I was not referred to the Queensland case or the journal article. As I have indicated, I do not consider that the Crest Nicholson case is authority for such a general proposition as is stated by Chitty. However, section 30 is highly material, in my view, because it confers jurisdiction on the tribunal to rule on its own jurisdiction. Section 31 confirms that it may do so by an award on jurisdiction. The proceedings on the jurisdictional  challenge  are  therefore  valid  proceedings. There is thus no logical reason why a costs award in respect of those proceedings should be incapable of being made. The argument mentioned in footnote 699 in para 35-152 of Chitty, based on section 30, seems to me to have merit. Further, section 61 confers on the tribunal an express power to “make an award allocating the  costs  of  the  arbitration  as between  the  parties".  It might be  said  that,  where  there  is  no  jurisdiction,  there is  no  "arbitration",  so  that  section  61  does  not  apply.  I do not consider it necessary to reach that conclusion. "Arbitration" is not itself a defined word in the 1996 Act, but section 59  defines "the costs  of the arbitration" and does  so  in  terms  that  are,  in  my  view,  wide  enough  to cover the costs of the parties in respect of a jurisdictional challenge.”

The Court referred to a consultation paper of Law Commission wherein the Law Commission opined as under:-

“23. The Law Commission Consultation Paper 257. Review of the Arbitration Act 1996, considered this issue in the following paragraphs, reaching (albeit tentatively) the same conclusion as I have reached:

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8.69 We think the latter proposition is unattractive. If the arbitral tribunal rules that it does have jurisdiction, the successful party would ordinarily recover its costs of meeting the  challenge.  If  the  arbitral  tribunal  rules  that it does not have jurisdiction, the successful party would get nothing. Instead, the party who wrongly initiated arbitral proceedings would otherwise walk away free of consequences, in circumstances where it has triggered the costs of bringing arbitration proceedings in the first place and progressing them  to  the  point  of  an  award.  That  imbalance seems unfair.

……………………………………………………………………."

The Court further examined the issue as to whether a cost award can be considered as an award under the Arbitration Act, 1996. It was held as under:-

“29. The second task, however, is to identify the "award" out of which the question of law arises. The claim form identifies only the Main Award. However, the case  was  presented  to  me  on  the  basis  that  the  Costs Award  was  the  relevant  award.  But  is  the  Costs  Award an award for the purposes of the 1996 Act? This is a major  issue  between  the  parties.  Russell  on  Arbitration (24th edition) states at para 6-002 (footnotes omitted):

"There is no statutory definition of an award in English arbitration law despite the important consequences  which  flow  from  an  award  being made in principle an award is a final determination  of  a particular  issue  or  claim  in the arbitration. It may be contrasted with orders and directions of the tribunal which address the procedural mechanisms to be adopted in the reference. Such procedural orders and  directions  are  not  necessarily  final in that the tribunal may choose to vary or rescind them altogether. Thus, questions concerning the jurisdiction of the tribunal or the choice of the applicable substantive law are suitable for determination by the issue of an award, whereas rulings on the nature and timing of procedural steps to be taken in the arbitration or the extent of disclosure of documents are procedural in nature and are determined by the issue of an order or direction  and  not  by  an  award.  The  distinction is important because an award can be the subject of a challenge or an appeal to the court,  whereas  a procedural  order  or  direction in itself cannot be so challenged. A preliminary decision, for example of the engineer or adjudicator under a construction contract, which is itself subject to review by an arbitration tribunal, is not an award."

The  second  sentence  of  that  paragraph  reflects  section 47 of the 1996 Act.

The informality of what I have called the Costs Award is not itself determinative. Section 52 of the 1996 Act makes provision for the form of an award. However, the consequence of a failure to comply with the  requirements  as  to  the  form  of  an  award  is  simply that it may give rise to a ground of challenge to the award under section 68. Such challenges will be rare, because a failure to comply with the requirements as to form will only amount to a serious irregularity for the purposes of section 68 if it "has caused or will cause substantial injustice to the applicant": section 68(2). See Russell on Arbitration, para 6-046.”

Learned counsel for the respondents on the other hand relied on the following judgments to buttress his contentions:-

i) Agritrade International Pte. Ltd v. National Agricultural Co-operative Marketing Federation of India Ltd. [2012 SCC OnLine Del 896].

ii) Cinergy Corporation Pte Ltd. v. National Agricultural Co-Operative Marketing Federation of India Ltd.[2012 SCC OnLine Del 4956].

iii) Kalmart Systems (M) SDN BHD v. National Agricultural Co-Operative Marketing Federation of India Ltd.[2015 SCC OnLine Del 7811].

iv) Virgoz  Oils  & Fats  Pte.  Ltd.  v.  National Agricultural Co-Operative Marketing Federation of India Ltd. [2018 SCC OnLine Del 12780].

v) Pari Agro Exports v. Soufflet Alimentaire and Another [2019 SCC OnLine P&H 1351].

vi) Pasl Wind Solutions Private Limited Vs. GE Power Conversion India Private Limited. [(2021) 7 SCC 1].

vii) Jaldhi Overseas Pte Ltd. v. Steer Overseas Pvt. Ltd. [2023 SCC OnLine Cal 1628].

viii) Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd. and others [(2022) 1 SCC 753].

ix) Smita Conductors Ltd. v. Euro Alloys Ltd. [(2001) 7 SCC 728].

x) National Thermal Power Corporation v. The Singer Company and Ors. [(1992) 3 SCC 551]

xi) Olam International Ltd. v. Manickavel Edible Oils Pvt. Ltd. and Olam International Ltd. v. YENTOP Manickam  Edible  Oils  Pvt.  Ltd. [(2025) SCC OnLine Mad 11018]

In Agritrade International Pte. Ltd (Supra) Delhi High Court made the following observations;

“16. The first issue concerns the non-compliance with Section 47(1)(b) of the Act which requires a party applying for enforcement of a foreign award to mandatorily produce before the Court“atthe time of the application”, “the original agreement for arbitration or a duly certified copy thereof.” In Austbulk  Shipping  SDN  BHD  v.  P.E.C.  Ltd.,  (2005)  2 Arb LR 6 (Del) it was observed that an application for enforcement not accompanied by the arbitration agreement may be returned to the applicant for filing a fresh application and  further that  the  failure to  file the agreement was not one of the grounds set out under Section 48 of the Act for rejection of the prayer for enforcement. However, in the present case even that stage has been crossed. Even while issuing notice on 30th March 2009 it was noticed that Agritrade had not filed a copy of the arbitration agreement. Agritrade was given an opportunity to file additional documents. None of the documents filed by Agritrade include an ‘arbitration agreement’between it and NAFED within the meaning of Section 7 of  the  Act.  What  is  sought  to  be  relied  upon  is  a combination of documents beginning with the document  dated 11th  May  2004, which  was  neither addressed to nor signed by NAFED, and correspondence between Global Commodities and Agritrade to plead that there was an ‘implied’agreement between the parties. For reasons to be discussed, the fact remains that there was in fact no arbitration  agreement  within  the  meaning  of  Section 7 of the Act. Consequently, the inescapable conclusion is that Section 47(1)(b) of the Act had not been complied with.

It  is  not  that  there  are  no  consequences  for  the failure of a party to file a copy of the arbitration agreement. Section 48(2)(a) of the Act states that enforcement of an award may be refused if the Court finds that “the subject matter of the difference is not capable of settlement by arbitration under the law of India.” The question to be asked is whether in terms of the law of India, the dispute between Agritrade and NAFED, in the absence of an arbitration agreement, was capable of settlement by arbitration? The obvious answer has to be in the negative. A reading of Sections 7 and 16(1) of the Act show that the existence of an arbitration agreement is what confers jurisdiction on the arbitral tribunal. At the threshold where a party is able to demonstrate to the satisfaction of the arbitral tribunal under Section 16(1) of the Act that an arbitration agreement does not exist or where it does it is not valid, that brings the arbitration proceedings to a close. Such dispute is therefore “not capable of settlement by arbitration”under Indian law in terms of Section 48(2)(a) of the Act. This is therefore one ground on which the enforcement of the foreign Award in question can be refused in the instant case.”

[Emphasis added]

In Cinergy Corporation Pte Ltd. (Supra), the Delhi High Court made the following observations;

“17. In addition to reiterating the above contentions, Mr.  T.K.  Ganju,  learned  Senior  counsel  appearing  for NAFED, referred to Section 47(1)(b) read with Section  48(1)(a),  Section  48(2)(a)  and  Section  7 of the  Act.  He  submitted  that  in  terms  of  the  definition of “arbitration agreement” under Section 7 of the Act, even if there was no arbitration agreement in writing as such signed by the parties, such agreement had to be contained in a document signed by the parties or in an exchange of letters, telegraph, telex or other means of communication between them.  He  pointed  out  that  in  the  instant  case  at  no time did Cinergy get in touch with the officers of NAFED. There was no correspondence between NAFED and  Cinergy which would prove the existence of an arbitration agreement between the parties.

……………………………………………………………………………………..

In conclusion, the Court is satisfied that there was no valid arbitration agreement between the parties within the meaning of Section 7 read with Section 47(1)(b) of the Act. Consequently, the First Tier Award, the Appellate Award and the Final Foreign Arbitration Award cannot be enforced in terms of Section 47(1) read with Sections 48(1)(a) and 48(2)(a) of the Act.”

[Emphasis added]

In Kalmart Systems (M) SDN BHD(Supra), the following observations were made by the Delhi High Court:

“1. The petitioner, by virtue of the instant petition seeks  to  enforce  an  award  dated  14.04.2010,  under the provisions of Section 48 of the Arbitration and Conciliation Act, 1996 (in short the Act). The ancillary provisions to which reference has been made is, Section 47 of the Act and Section 11 read with Order 21,  Rule  10  of  the  Code  of  Civil  Procedure,  1908  (in short the Code).

1.1 The petitioner avers that the aforementioned award  is  a foreign  award  passed  qua  the  respondent herein and, therefore, the award being a decree should  be  enforced  in  the  terms  set  out  therein.  The petitioner thus, claims to be a decree holder, seeking recovery of moneys awarded to it.

1.2 On the other hand, the central issue raised by the respondent in defence of the captioned petition, is that, the purported agreement based on which the arbitration proceedings were triggered is, not an agreement  to  which  it  is  a signatory,  and  hence,  no legal obligations can arise from the said agreement including the obligation to arbitrate. In sum, the respondent's stand is that, there is no arbitration agreement in existence.

……………………………………………………………………………………..

10.6  The  two  judgments  cited  by  the  petitioner,  i.e., Smita Conductors Ltd. and Shakti Bhog Foods Ltd., are clearly distinguishable on facts. One cannot quibble  with the  fact that  as  per,  Para  2,  Article II of the New York Convention the agreement in writing would  include  exchange  of  letters  and/or  telegrams. The point for consideration, in this particular case is : as to whether the respondent had conveyed its acceptance  to  the  offer of the petitioner contained  in the sales contract dated 05.06.2008. Having come to the conclusion that in the facts of this case, there was no acceptance of the offer made by the petitioner, in my opinion, no concluded contract came into existence and, therefore, by logical corollary, one could safely say that there was no binding arbitration agreement subsisting between the parties.

In view of the foregoing discussion, I am not inclined to grant the reliefs prayed for in the petition. The petition is accordingly dismissed. Parties shall, however, be left to bear their own costs.”

In  Virgoz Oils & Fats Pte. Ltd. (Supra),  the Delhi High Court recorded the following observations:

“9. Seeking enforcement of the aforementioned award, the Appellant filed Execution Petition No. 149/2015  in  this  Court.  One  of  the  central  questions addressed  by  the  learned  Single  Judge  was  whether there was an arbitration agreement between the parties.  It  was  held  that  from  the  plain  language  of Section  44(a)  of  the  Act,  for  recognition  of  a foreign Award, it should have been rendered in respect of differences between parties pursuant to an agreement in writing for arbitration to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the ‘New York Convention’ and mentioned in the First Schedule to the Act) applies.

The learned Single Judge also referred to Article- II of the New York Convention which states thus:

“2. The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.”

The learned Single Judge then held that factually in  the  present  case,  it  was  seen  that  the  Broker  had signed  the  contracts  in  his  own  capacity  and  not  for and on behalf of NAFED. Further, there was no correspondence between the Appellant and NAFED which  could  establish  a meeting  of  minds.  In  effect, there was no agreement on the part of NAFED to refer any dispute to arbitration. By the letter dated 29th July, 2008 NAFED had merely requested the Broker to take up the matter of deferment of shipment  with  the  seller  i.e.  the  Appellant.  However, this was not inconsistent with NAFED's contention that the bargain between the parties had not been finalized.the parties had not been finalized.

The  learned  Single  Judge  held  that  an  arbitration agreement  must  be  in  writing;  it  must  unequivocally indicate the intention of the parties to resolve their disputes by arbitration; it must be “signed by the parties or must be contained in exchange of letters or telegrams”. Notwithstanding that Part-I of the Act did not apply to Foreign Awards, Section 7 of the Act could be referred to for interpreting the expression ‘agreement  in  writing’.  Although  the  definition  under Section 7(4)  of the Act was  wider than Article - II of the  New  York  Convention, even  by  that  yardstick  in the present case, it was not possible for the Court to conclude that there was a valid arbitration agreement between  the  parties.  After  referring  to  the  case  law, the learned Single Judge upheld the objections of NAFED that with there being no concluded contract between the parties, a foreign award could not be enforced.”

In Pari Agro Exports (Supra), the Punjab and Haryana High Court proceeded to set out the following observations:

“39. By referring to CR No. 2471 of 2016 titled National Aluminum Co. Ltd. v. Subhash Infra engineers Pvt. Ltd., decided on 22.10.2016 and Indowind Energy Ltd. v. Wescare (I) Ltd., (2010) 5 SCC 306, learned Senior Counsel for the petitioner submitted that the term agreement in writing, as applicable to part II, has been defined in First Schedule of Article II of The Arbitration and Conciliation Act, 1996 (for short ‘the Act’). The definition is much narrower than Section 7 of the Act. Reference can be made to Virgoz Oils and Fats Pte Ltd. v. National Agricultural Co-operative Marketing Federation of  India  Ltd., 2017 (3) R.A.J. 627  (Delhi High Court). It is conceded position that incograin model contract which as per respondent No. 1 contained  arbitration clause was never signed  by the petitioner, nor the same was served upon the petitioner  by  way  of  exchange  of  letter/telegrams  or other means of E-mails. It cannot be treated to be concluded  arbitration  agreement  inter  se  the  parties by any legally conceivable manner. The award rendered by the Tribunal in such a scenario would be a nullity.

In the absence of any valid contract for arbitration, enforcement under Section 49 of the Act can be refused. Incograin  contract  No.  12  was  never easily available. The English copy of incograin contract  has  been  placed  on  record  for  the  first  time as Ex.I  with the  reply  to the  objections  filed  by  the petitioner. The aforesaid contract itself provides for its availability on www.incograin.com. The aforesaid website is in French language. It is accessible only to members of Paris Grain Trade Association. The confirmation of contract under the aforesaid incograin model contract provides that the contract form in force  on  the  date  of  signature  of  the  contract.  It  has been  provided  that  the  written  text  must  contain  all agreed conditions. Concededly, the contract was never signed, nor the agreed terms inter se the parties made part of the contract. Therefore, no valid arbitration agreement ever existed between the parties.

…........................................................................

In the instant case, incograin model contract had an arbitration clause, but the same was neither signed by the petitioner, nor the same was ever served upon the petitioner by way of any exchange of letter or telegram or exchange of E-mails. In the absence of any concluded arbitration agreement inter se the parties, the award passed on such alleged concluded agreement is a nullity in the eyes of law and Tribunal had no jurisdiction to arbitrate upon such an issue. The availability of incograin contract being a model contract on the website i.e. www.incograin.com would give rise to many questions  to  be  answered  by  respondent  No.  1.  The aforesaid  website  is  in  French  language.  The  website is accessible only by the member of Paris Grain Trade Association. The copy of screenshot of the website was placed before this Court which clearly reflected non-access by any private persons to the aforesaid website. In the heading of confirmation of contract in incograin  model  contract,  it  was  mentioned  that  the contract form in force on the date of signature of the contract. The written text must contain all agreed conditions. Since the contract was never signed by the petitioner nor any terms agreed inter se the parties, therefore, there was no valid arbitration agreement between the parties on the strength of incograin  contract  No.  12  which  was  vaguely  recited in general conditions in the draft E-mail dated 03.12.2012.”

In Pasl Wind Solutions Private Limited (supra), the Hon'ble Apex Court expounded the following principles:

“85.  It  will  thus  be  seen  that  where  the  law  of  India prohibits a certain act, the conflict of law rules as set down in Dicey's authoritative treatise will take care of this  situation  in  most  cases  as  the  arbitrators  would then apply these rules  on the ground of international comity between nations in cases which arise between two Indian nationals in an award made outside India, which would fall within the definition of “foreign award” under Section 44 of the 1996 Act.”

In Jaldhi Overseas Pte Ltd. (Supra), the Calcutta High Court held thus;

“21.  The following  principles can be derived from the judgments cited and discussed above:-

….............................................................………….

b) In circumstances wherein an arbitration agreement is evidently found lacking or there is no concluded contract, the enforcement of an award must be refused and shall fall prey to:—

(i) Section 48(2)(a) - for the subject matter not being capable of settlement by arbitration under the law  of India (as per the judgments in Agrigade International Pte. Ltd. [supra], Cinergy Corporation PTE Ltd. [supra] and Marina World Shipping Corporation Ltd. [supra]),

(ii)  Section  48(2)(b)  of  the  Act  - the  enforcement  of the  award  would  be  in  conflict  with  the  public  policy of India as unilateral imposition of a contract upon an unwilling and unrelated party would be against the‘most basic notions of justice’ and would shock the conscience of any court, as per the judgment in Ssangyong Engg. & Constriction Co. Ltd. (supra).

….....................................................................…

Keeping  in  mind  the  law  with  regards  to  Section 48 of the Act wherein my discretion is very limited,  I do not find there was no concluded contract or no arbitration  agreement  which  could  have  made  (i)  the matter being incapable of settlement by arbitration in India or (ii) shocked the conscience of the court in light  of  forceful  imposition  of  a contract  not  entered into by the respondent. Therefore, the respondent's challenge to the enforcement of the award must fail.

In view of the above, the objections raised by the respondent with regard to enforceability of the award are rejected and it is ordered that the award is enforceable and executable as a decree of this court. The  respondent  is  directed  to  disclose  its  affidavit  of assets within eight weeks from date. The petitioner shall be at liberty to seek further directions for execution of the award, in accordance with law.”

In  Gemini  Bay  Transcription  Pvt.  Ltd.(Supra)  the Hon'ble Supreme Court observed that Section 47 of the Arbitration and conciliation Act, 1996 is based on Article IV of the New York Convention. The Hon'ble Supreme Court also explained the necessary ingredients for an award being a foreign award under Section 44 of the Act.

In Smita Conductors Ltd.(Supra) the Hon'ble Supreme Court held as under:-

“3.……………………………………………………………………….

In the case under consideration, however, the arbitration agreement was contained and explicitly mentioned  in  the  sales  contract  itself.  The  reference had as sold object the procedural regulation of the arbitration and, therefore, validly completed the arbitral clause  mentioned  above as  it ascertained  the existence and the specific contents of that regulation. But the Supreme Court, however, held that the arbitral clause was null and void because it was signed only by the seller who invoked the clause. Shri.Venugopal referred to another decision of the Italian Court in Corte DI Cassazione in Begro B.V. vs. Ditta Voccia & Ditta Autonio Lamberti ((1978) 3 Yearbook Commercial Arbitration, 278). The court interpreted  Art.  II,  paras  1 and  2 of  the  Convention, as requiring a specific agreement to submit to arbitration signed by the parties or contained in an exchange of letters or telegrams. According to the court,  such  a specific  agreement  could  not  be  found in  an  arbitration  clause  printed  on  the  contract-form and signed by the parties and, therefore, held the arbitration clause to be without effect. Shri Venugopal next referred to the decision of Corte Di Cassazione in Societa Atlas General Timbers v. Agenzia Concordia [(1978)  3 Yearbook  Commercial  Arbitration,  267].  It was held therein that the validity of the arbitral clause in question  had to be  judged under the New York  Convention. According  to  Art. II,  para  2 of  the Convention, the arbitration clause in writing means 'an arbitral clause in a contract or an arbitration agreement,  signed  by  the  parties  or  contained  in  an exchange of letters or telegrams. This provision, therefore, requires clearly the signature as a minimum element for the effectiveness of the contract containing the arbitral clause. The Court concluded that not the arbitration clause itself, but the  contract  in  which  it  is  contained  must  be  signed by both parties under Art. II, para 2 of the Convention. The court examined whether the requirement  was  met  in  the  present  case  and  found that the signature of the agent of the carrier was not sufficient since his power of attorney was not in writing and  that the signature of the other party was also lacking and his endorsement does not replace the signature, since the former concerns only a transfer  of  title,  whilst  the  latter  is  necessary  for  the formation of the contract.

………………………………………………………………………………

What needs to be understood in this context is that the agreement to submit to arbitration must be in writing.  What  is  an agreement  in writing  is  explained by para 2 of "Article II. If we break down para 2 into elementary parts, it consists of four aspects. It includes an arbitral clause (1) in a contract containing an arbitration clause signed by the parties, (2) an arbitration agreement signed by the parties, (3) an arbitral clause in a contract contained  in exchange of letters or telegrams, and (4) an arbitral agreement contained in  exchange  of  letters or  telegrams. If  an arbitration clause falls in any one of these four categories, it must be treated as an agreement in writing.……………………………………………………………..”

In National Thermal Power Corporation (Supra) the Hon'ble Supreme Court held as follows:-

“37.  A 'foreign  award,  as  defined  under  the  Foreign Awards  Act,  1961  means  an award  made  on or after October 11, 1960 on differences arising between persons out of legal relationships, whether contractual or not, which are considered to be commercial under the law in force in India. To qualify as  a foreign  award  under  the  Act,  the  award  should have been made in pursuance of an agreement, in writing for arbitration to be governed by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, and not to be governed  by  the  law  of  India. Furthermore  such  an award should have been made outside India in the territory of a foreign State notified by the Government of India as having made reciprocal provisions  for  enforcement  of  the  Convention.  These are  the  conditions  which  must  be  satisfied  to  qualify an award as a 'foreign award’ (Section 2 read with Section 9).

……………………………………………………………………………….

A foreign award will not be enforced in India if it is  proved  by the  party  against whom  it  is  sought to be enforced that the parties to the agreement were, under the law applicable to them, under some incapacity, or, the agreement was not valid under the law to which the parties have subjected it, or, in the absence of any indication thereon, under the law of the place of arbitration; or there was no due compliance with the rules of fair hearing; or “the award exceeded the scope of the submission to arbitration; or the composition of the arbitral authority or its procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the place of arbitration; or  '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'. The award will not be enforced by a court in India if it is satisfied that the subject matter of the award is not capable of settlement by arbitration under  Indian  law  or  the enforcement  of the award is contrary to the public policy.”

In Olam International Ltd.(Supra)  a learned  Single Judge of the Madras High Court considered two cases for enforcement of two foreign arbitral awards. The respondent contended that there existed no valid, legal and enforceable arbitration  agreement.  The  said  contention  was  accepted  by  the learned Single Judge. The learned Single Judge finally held as under:-

“44.  A foreign  award,  which  upholds  the  existence  of an agreement based on surmises is, obviously, opposed to public policy and is not enforceable.

The jurisdictional pre-condition for reference to arbitration is the concluded contract between the parties and their intention to refer the dispute to arbitration. In the absence of such jurisdictional requirement, a foreign award passed by the Arbitral Tribunal would run contrary to the Public Policy of India.

In the light of the above findings rendered by this Court, it is not necessary for this Court to go into the other issue raised on the side of the respective respondent  to  the  effect  that  they  were  intentionally kept  in  lull  by  means  of  the  letter  received  from  the PORAM dated 01.10.2020 informing that the arbitration proceedings were kept on hold till 30.11.2020 and that the Arbitral Tribunal was to be constituted whereas simultaneously the petitioner invoked the jurisdiction of the FOSFA and managed to get an ex parte order against the respective respondent.

The discussion on this issue becomes academic since  this  Court  has  already  held  that  there  were  no concluded contracts between the parties and as a result, the jurisdictional pre-condition for reference to arbitration was missing and that therefore, the foreign awards become unenforceable under Section 48 of the Act.”

Pertinent provisions of the Arbitration and Conciliation Act, 1996

As  the  learned  Senior  Counsel  for  the  petitioner  and the learned counsel for the respondent have advanced arguments pertaining to the real import of the provisions of Chapter I it is necessary to refer to the relevant provisions. Part II of the Arbitration and Conciliation Act, 1996 provides for enforcement of certain foreign awards. Chapter I deals with New York Convention Awards. In the instant case the award sought to be executed is a New York Convention Award. Section 44 defines foreign award. The said provision is extracted hereunder:-

“44. Definition.- In this Chapter, unless the context otherwise requires, "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960—

(a)  in  pursuance  of  an  agreement  in  writing  for arbitration  to  which  the  Convention  set  forth  in  the First Schedule applies, and

(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.”

Section  47  deals  with  ‘evidence’.  For  the  purpose  of the present case reference to Section 47(1) is essential. The said provision is as under:-

“47. Evidence.—(1) The party applying for the enforcement  of  a foreign  award  shall,  at  the  time  of  the application, produce before the court—

(a) the original award or a copy thereof, duly authenticated  in  the  manner  required  by  the  law  of  the country in which it was made;

(b) the original agreement for arbitration or a duly certified copy thereof; and

(c)  such  evidence  as  may  be  necessary  to  prove  that the award is a foreign award.”

Section 48 lays down the conditions for enforcement of foreign awards. Section 48(1) delineates five situations wherein  enforcement  of  a foreign  award  may  be  refused  at  the request of the parties against whom it is invoked. Section 48(1) reads as under:-

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

(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said  agreement is not valid under the law to which the parties have subjected it or, failing any indication  thereon,  under  the  law  of  the  country  where the 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  or  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 the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent  authority of  the country  in  which, or  under the law of which, that award was made”.

Under Section 48(2), two more situations under which enforcement may be refused are provided which are as follows:-

“48. Conditions for enforcement of foreign awards.—

….….......................................................................

(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.”

In Gemini Bay Transcription Pvt. Ltd. v. Integrated  Sales  Service  Ltd.  and  Ors.  [(2022)  1 SCC  753] the Hon'ble Supreme Court pointed out that there are six ingredients to an award being a foreign award under Section 44. The relevant paragraph of the judgment is extracted hereunder:-

“30. A reading of Section 44 of the Arbitration and Conciliation Act, 1996 would show that there are six ingredients to an award being a foreign award under the  said  section.  First,  it  must  be  an  arbitral  award  on differences between persons arising out of legal relationships. Second, these differences may be in contract or outside of contract, for example, in tort. Third, the legal  relationship  so spoken of ought  to be considered “commercial” under the law in India. Fourth, the award must  be made on  or  after the 11th  day  of October, 1960. Fifth, the award must be a New York Convention award — in short it must be in pursuance of an agreement in writing to which the New York Convention applies and be in one of such territories. And sixth, it must be made in one of such territories which  the  Central  Government  by  notification  declares to be territories to which the New York Convention applies.”

[Emphasis added]

The  Hon'ble  Supreme  Court  further  held  in  the  same judgment regarding Section 47 as under:-

“35.  We  now  come  to  Section  47.  As  the  marginal  note indicates, this section provides that the prerequisites for the enforcement of a foreign award are : (1) the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it is made; (2) the original agreement for arbitration or a duly certified copy thereof, and; (3) such evidence as may  be  necessary  to  prove  that  the  award  is  a foreign award.

Section 47  is based on  Article IV  of the  New York Convention which is contained in Schedule I to the Arbitration Act, 1996. Article IV reads as follows:

“Article IV

To obtain the recognition and enforcement mentioned  in  the  preceding  article,  the  party  applying for recognition and enforcement shall, at the time of the application, supply:

(a) The duly authenticated original award or a duly certified copy thereof;

(b) The original agreement referred to in Article II or a duly certified copy thereof.

If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement  of  the  award  shall  produce  a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.”

Still further it was held regarding Section 48 as under:-

“39. We now come to Section 48 which deals with enforcement  of  a foreign  award  being  refused.  It  is important to notice that when enforcement of a foreign award is resisted, the party who resists it must prove to the Court that its case falls within any of  the  sub-clauses  of  sub-section  (1)  or  sub-section (2) of Section 48. Since some arguments were made as to the expression “proof” contained in Section 48(1), it is necessary to deal with the same. In Emkay Global Financial Services Ltd. v. Girdhar Sondhi [(2018) 9 SCC 49 : (2018) 4 SCC (Civ) 274], a question arose under the pari materia provision contained  in  Section  34  of  the  Arbitration  Act,  1996 as to what the expression “proof” means therein. After referring to a number of High Court judgments, and to an amendment that has now been made to Section  34,  in  which  the  expression  “furnishes  proof that”  is  now  substituted  by “establishes  on  the  basis of the record of the Arbitral Tribunal that”, this judgment held that the expression “proof” cannot possibly mean the taking of oral evidence as it will otherwise defeat the object of speedy disposal of Section  34  petitions.  This  was  so  stated  as  follows  : (SCC p. 63, para 21)

“21. It will thus be seen that speedy resolution of arbitral disputes has been the reason for enacting  the  1996  Act,  and  continues  to  be  the reason for adding amendments to the said Act to strengthen the aforesaid object. Quite obviously, if issues are to be framed and oral evidence taken in a summary proceeding under Section 34, this object will be defeated. It is also on the cards that if Bill No. 100 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. Given the current state of the law, we are of the view that the two early Delhi High Court judgments [Sandeep Kumar v. Ashok Hans, 2004 SCC OnLine Del 106 : (2004) 3 Arb LR 306], [Sial Bioenergie v. SBEC  Systems, 2004 SCC  OnLine Del 863 : AIR 2005 Del 95], cited by us hereinabove,  correctly reflect the position in law as to furnishing proof under Section 34(2)(a). So does the Calcutta High Court judgment [WEB Techniques & Net Solutions (P) Ltd.  v. Gati Ltd., 2012  SCC  OnLine  Cal  4271].  We  may  hasten  to add that if the procedure followed by the Punjab and Haryana High Court judgment [Punjab SIDC Ltd. v. Sunil K. Kansal, 2012 SCC OnLine P&H 19641] is to be adhered to, the time-limit of one year would only be observed in most cases in the breach. We therefore overrule the said decision. We are constrained to observe that Fiza  Developers  [Fiza  Developers  & Inter-Trade (P) Ltd. v. AMCI (India) (P) Ltd., (2009) 17 SCC 796 : (2011) 2 SCC (Civ) 637] was a step in the right direction as  its  ultimate ratio  is  that  issues need not be struck at the stage of hearing a Section 34 application, which is a summary procedure. However, this judgment must now be read in the light of the amendment made in Sections 34(5) and 34(6). So read, we clarify the  legal  position  by  stating  that  an  application for setting aside an arbitral award will not ordinarily require anything beyond the record that  was  before  the  arbitrator.  However,  if  there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross- examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading  of  the  affidavits  filed  by  both  parties. We,  therefore,  set  aside  the  judgment  [Girdhar Sondhi  v.  Emkay  Global  Financial  Services  Ltd., 2017  SCC  OnLine  Del  12758]  of  the  Delhi  High Court and reinstate that of the learned Additional District Judge dated 22-9-2016. The appeal is accordingly allowed with no order as to costs.”

Given that foreign awards in Convention countries need to be enforced as speedily as possible, the same logic would apply to Section 48, as a result of which the expression “proof” in Section 48 would only mean“established on the basis of the record of the Arbitral Tribunal” and such other matters as are relevant to the grounds contained in Section 48.

41.It is important to remember that the New York Convention, which our Act has adopted, has a pro- enforcement bias, and unless a party is able to show that its case comes clearly within Sections 48(1) or 48(2), the foreign award must be enforced. Also, the grounds contained in Sections 48(1)(   a ) to (   e) are not to be construed expansively but narrowly. Thus, in Ssangyong Engg. & Construction Co. Ltd.v.NHAI[(2019)  15  SCC  131  : (2020)  2 SCC  (Civ) 213][“Ssangyong”], it  was  held  : (SCC  pp.  172-74, para 45)

“45. After  referring  to  the  New York  Convention, this Court delineated the scope of enquiry of grounds under Sections 34/48 (equivalent to the grounds under  Section  7 of  the  Foreign  Awards Act, which was considered by the Court), and held : (Renusagar case [Renusagar Power Co. Ltd.v.General Electric Co., 1994 Supp (1) SCC 644] , SCC pp. 671-72 & 681-82, paras 34-37 & 65-66)

‘34. Under the Geneva Convention of 1927, in order to obtain recognition or enforcement of a foreign arbitral award, the  requirements  of  clauses  (a) to  (e) of Article  I had  to  be  fulfilled  and  in  Article II, it was prescribed that even if the conditions laid down in Article I were fulfilled recognition and enforcement of the award would be refused if the court was satisfied in respect of matters mentioned in clauses (a), (b) and (c). The  principles  which  apply  to  recognition and enforcement of foreign awards are in substance, similar to those adopted by the  English  courts  at  common law.  (See Dicey & Morris, The Conflict of Laws, 11th Edn., Vol. I, p. 578.) It was, however, felt that the Geneva Convention suffered from  certain  defects  which  hampered  the speedy settlement of disputes through arbitration. The New York Convention seeks to remedy the said defects by providing for a much more simple and effective  method  of  obtaining  recognition and enforcement of foreign awards. Under the New York Convention the party against  whom  the  award  is  sought  to  be enforced can object to recognition and enforcement 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  a foreign award  for  two  additional  reasons  set  out in sub-clauses (a) and (b) of clause (2) of Article V.None of the grounds set out  in sub-clauses (a)  to (e)  of  clause  (1) and sub-clauses (a)  and  (b)  of  clause  (2) of Article V postulates a challenge to the award on merits.

Albert Jan van den Berg in his treatise The New York Arbitration Convention  of 1958  : Towards  a Uniform Judicial Interpretation, has expressed the view:

“It is a generally accepted interpretation of  the Convention that the court before which the enforcement of the foreign award is sought may not review the merits  of  the  award.  The  main  reason  is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V does not include a mistake in fact or law by the arbitrator. Furthermore, under the Convention the task of the enforcement Judge is a limited one. The control exercised by him is limited to verifying whether an objection of a respondent on the basis of the  grounds  for  refusal  of  Article  V(1)  is justified and whether the enforcement of the award would violate the public policy of  the  law  of  his  country.  This  limitation must be seen in the light of the principle of international commercial arbitration that a national court should not interfere with the substance of the arbitration.” (p. 269)

Similarly, Alan Redfern and Martin Hunter have said:

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

In our opinion, therefore, in proceedings for enforcement of a foreign award under the Foreign Awards Act, 1961, the scope of enquiry before the court in which award is sought to be enforced  is  limited  to  grounds  mentioned in Section 7 of the Act and does not enable  a party  to  the  said  proceedings  to impeach the award on merits. * * *

65.This would imply that the defence of public policy which is permissible under Section 7(1)(b)(ii) should be construed narrowly. In this context, it would also be of relevance to mention that under Article I(e) of the Geneva Convention Act of 1927, it is permissible to raise objection to the enforcement of arbitral award on the ground that the recognition or enforcement of the award is contrary to the public policy or to the principles of the law of the country in which it is sought to be  relied  upon.  To  the  same  effect  is  the provision in Section 7(1) of the Protocol & Convention Act of 1837 which requires that the enforcement of the foreign award must  not  be  contrary  to  the  public  policy or  the  law  of  India.  Since  the  expression“public policy” covers the field not covered by the words “and the law of India” which follow the said expression, contravention of law alone will not attract the bar of public policy and something more than contravention of law is required.

Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b) (ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression“public policy” in Article V(2)(b) of the New  York  Convention  and  Section  7(1)(b) (ii) of  the  Foreign  Awards  Act  is  not  used in the  same sense  in which it was  used in Article I(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention  Act  of  1937.  This  would  mean that “public policy” in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something  more  than  the  violation  of  the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles of private international law, the expression “public policy” in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied  in the field of private international law. Applying the said  criteria it must be held that the enforcement of a foreign award would be refused on the ground that  it  is contrary  to public  policy  if  such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.’

[Emphasis in original]

In Pasl Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd. [(2021) 7 SCC 1] the Hon'ble Supreme Court held that Part I and Part II of the Arbitration and Conciliation Act are mutually exclusive. It was held as under:-

“Part I and Part II of the Arbitration Act are mutually exclusive

The Arbitration  Act  is  in four parts.  Part  I deals with  arbitrations  where  the  seat  is  in  India  and  has  no application to a foreign-seated arbitration. It is, therefore, a complete code in dealing with appointment

of  arbitrators,  commencement  of  arbitration,  making  of an award and challenges to the aforesaid award as well as execution of such awards. On the other hand, Part II is not concerned with the arbitral proceedings at all. It is concerned only with the enforcement of a foreign award, as defined, in India. Section 45 alone deals with referring  the  parties  to  arbitration  in  the  circumstances mentioned  therein.  Barring  this  exception,  in  any  case, Part II does not apply to arbitral proceedings once commenced in a country outside India.”

[Emphasis supplied]

Regarding  the  ingredients  of  Section  44  of  the  Act  it was held as under in the said judgment:-

“45. Under Section 44 of the Arbitration Act, a foreign award is defined as meaning an arbitral award on differences between persons arising out of legal relationships considered as commercial under the law in force in India, in pursuance of an agreement in writing for arbitration to which the New York Convention applies, and in one of such territories as the Central Government, by notification, declares to be territories  to  which  the  said  Convention  applies.  Thus, what  is  necessary  for  an  award  to  be  designated  as  a foreign award under Section 44 are four ingredients:

(i) the  dispute  must  be considered  to  be  a commercial dispute under the law in force in India,

(ii) it  must  be  made  in  pursuance  of  an  agreement  in writing for arbitration,

(iii) it must be disputes that arise between “persons”(without regard to their nationality, residence, or domicile),  and  the  arbitration  must  be  conducted  in  a country which is a signatory to the New York Convention. Ingredient (i) is undoubtedly satisfied on the  facts  of  this  case.  Ingredient  (ii) is  satisfied  given Clause 6 of the settlement agreement. Ingredients (iii) and  (iv) are  also  satisfied  on  the  facts  of  this  case  as the  disputes  are  between  two  persons  i.e. two  Indian companies, and the arbitration is conducted at the seat designated by the parties i.e. Zurich, being in Switzerland, a signatory to the New York Convention.”

Analysis

While analysing the facts of the instant case, it must be acknowledged that this case is unique with a rare factual backdrop. The respondent herein initiated the arbitral proceedings.  Reliefs  sought  are  discernible  from  paragraphs  68 and 69 of Annexure-1 award. The relevant paragraphs are extracted hereunder: -

“VI. CLAIMS FOR RELIEF

The  Claimant’s  requests,  as  finally  articulated,  are set  out  at  page  80  of  the  Reply,  at  which  the  Claimant requests that the Tribunal declare and order the following:

“a. DECLARE that the Respondents have breached the CME Shareholders Agreement by inter alia illegally appropriating the value of Mr Sharath’s shareholding in various companies including CME Holding and its subsidiaries and associated companies;

b. ORDER the Respondents to pay the Claimant compensation for damage in an amount of USD 25.2 million, including interest pendente lite at USD Treasury  Rate  +4%  per  annum  (calculated  as  on  28 February 2022) compounded quarterly;

c. ORDER the Respondents to pay interest on all amounts awarded, at a commercially reasonable rate or such other rate determined by applicable law, from the date of award until full payment of the award;

d. ORDER the Respondents to pay the costs incurred by Mr Sharath in relation to these proceedings, including all professional fees, attorneys’ fees and disbursements and the costs of the arbitration”

The Respondent’s requests, as finally articulated, are  set  out  at  paragraphs  362-365  of  the  Rejoinder,  at which the Respondents seek the following relief from the Tribunal:

“362. Respondents respectfully request the Tribunal to dismiss Mr Sharath’s claims against Respondents on the grounds of the Tribunal’s lack of jurisdiction over the dispute (Section 2 of the Swedish Arbitration Act).

Respondents respectfully request the Tribunal to dismiss Mr Sharath’s claim for declaratory relief as the prerequisites for declaratory judgments under Swedish law are not met (Chapter 13, Section 2 of the Code of Judicial Procedure).

Should the Tribunal not dismiss the claims, Respondents respectfully request the Tribunal to reject Mr Sharath’s claims against Respondents.

In  any event,  Respondents  respectfully  request the Tribunal to,

(i) order that Mr Sharath as between the parties shall bear the costs for arbitration including the fee to the SC and interest calculated in accordance with Section  6 of  the  Interest  Act  (1975:635),  from  the date  of  the  award  until  full  payment  of  the  award; and

(ii) order Mr Sharath to compensate Respondents for their costs and expenses incurred in the arbitration including interestncalculated in accordance with Section 6 of the Interest Act (1975:635) from the date of the award until full payment of the award.”

The petitioners  resisted  the claims  mainly  contending that  there  was  no  valid  arbitration  agreement. This  contention was accepted by the Arbitral Tribunal. The following paragraphs of Annexure-1 award are to be noted: -

“87.  For  the  foregoing  reasons,  the  Tribunal  concludes that  the  Shareholders  Agreement  was  not  entered  into by conduct, and that therefore there is no valid or effective arbitration agreement between the Claimant and the First Respondent.

......................................................................

All  of  the  foregoing  agreements  provide  for  ad  hoc arbitration,  with  the  SCC  designated  as  the  appointing authority. None of these agreements provide for arbitration  to  be  administered  by  the  SCC  pursuant  to the  SCC  Rules,  which  is  what  is  provided  for  at  Clause 6.4  of  the  Shareholders  Agreement.  It  follows  that  the Claimant  has  not  been  able  to  show  that  there  is  any established usage between the Parties for arbitration pursuant to the SCC Rules. The Claimant’s argument that it was the Respondents who proposed the arbitration agreement in the Shareholders Agreement which calls for SCC arbitration does not assist the Claimant’s  position,  as it  appears  that  this  is  the  first time that such a dispute resolution provision was proposed for use in an agreement between the Claimant and any of member of the Concejo Group.

Even if the Tribunal were to accept that the purported usage relied on by the Claimant conferred jurisdiction on the Tribunal – an issue which the Tribunal  does  not  rule  on–the  Claimant  has  failed  to establish that any such usage did in fact exist. As a consequence,  no  arbitration  agreement  has  come  into existence by virtue of the purported usage.

….....................................................................

As  the  Tribunal  has  already  determined  that  there is  no  arbitration  agreement  in  the  first  place,  and  that the  First  Respondent  is  not  therefore  bound  by  it,  the Second Respondent cannot be bound by the arbitration agreement on the basis of the theory of piercing the corporate veil.”

The  Arbitral  Tribunal  held  against  the  respondent  on the pertinent aspect as noted above and then dealt with the issue of cost. It was observed in paragraph 114 as under:-

“114. It is unequivocal that the Respondents have been victorious in these proceedings, as they have succeeded on their jurisdictional objections and the Claimant’s claims for relief have been dismissed. On the  basis  of  the  foregoing  principles,  the  Respondents are  entitled  to  recover  their  reasonable  costs.  Despite its  finding  on jurisdiction,  the Tribunal has  authority  to make  orders  as  to  costs  pursuant  to  Article  37  of  the Arbitration Act.”

Finally,  in  the  dispositive  section  of  the  award  it  was found and directed as under:-

“128. Based on the Final Award above, the Tribunal hereby finds, orders and directs:

A.  The  Tribunal  lacks  jurisdiction  over  the  Claimant’s claims, which are accordingly dismissed;

B.  The  Claimant  is  directed  to  pay  the  Respondents SEK 11,405,267 for their legal and other costs;

C.  The  Claimant  is  directed  to  pay  the  Respondents EUR 175,677.25, GBP 215.62 and SEK 289.50 for the Respondents’ payment towards the costs of arbitration;

D. The Claimant is directed to pay interest on the Respondents’ costs at paragraphs B. and C. above, such  interest  to  be  calculated  pursuant  to  Section  6 of the Swedish Interest Act as of the date of this award until the date of payment;

E. The Claimant is ordered to bear its own legal and other costs;

F. All other claims and requests for relief are dismissed.”

Thus,  the  Arbitral  Tribunal  entered  into  a firm  finding that  there was  no  arbitration  agreement  and  hence the Tribunal lacked jurisdiction over the respondent’s claims. Since the petitioners  emerged  victorious,  the  respondent  was  directed  to pay cost to them. Hence, Annexure-1 is virtually a cost only award. Peculiarity of this award is the fact that the same has been rendered with a finding that the Tribunal had no jurisdiction to entertain the claims as there was no valid arbitration agreement.

At this juncture it must be noted that the thrust of the entire arguments advanced on behalf of the respondent is regarding the conclusive findings of the Arbitral Tribunal that there was no valid arbitration agreement between the parties. It is also to be noted that the respondent did not challenge the arbitral award. In other words, as of now the award can be treated as concluded between the parties without any further challenge.

In view of the arguments raised by both sides pertaining to enforceability of the award, the primary task of the court at this juncture is to examine whether the award is enforceable under Part II of the Arbitration and Conciliation Act, 1996. The Hon'ble Supreme Court has highlighted the importance  of  recognizing  and  enforcing  valid  foreign  awards  in the judgment in Gemini Bay Transcription Pvt. Ltd. (Supra).

The approach of the court shall normally be in favour of enforcement of foreign awards. Nevertheless, it goes without saying  that  the  statutory  provisions  of  Part  II  of  the  Arbitration and Conciliation Act, 1996 shall be certainly followed. The Hon'ble Supreme Court has clarified that the provisions of Part I of the Act and those of Part II are mutually exclusive. Therefore,  the  scope  and  ambit  of  the  provisions  of  Part  II  are distinct from those dealing with domestic arbitration.

It is also well settled that the power of the court under  Part  II  is  restricted  in  nature.  It  has  no  authority  to  set aside a foreign award or to interfere with the findings of the Arbitral Tribunal in any manner. Review of the foreign awards on merits is not within the purview of the enforcement proceedings under Part II of the Arbitration and Conciliation Act, 1996. Scope of the enquiry is confined to the enforceability of the award under the Indian law.

Conjoint reading of Sections 44 to 49 of the Act would show that the court has to initially satisfy that the award sought to  be  enforced  is  a ‘foreign  award’  as  defined  under  Section  44 of the Act. Unless the award satisfies the ingredients of the definition, obviously the jurisdiction under Part II cannot be invoked.  Further,  the court  should satisfy that the party  seeking enforcement of the award has produced evidence as contemplated under Section 47. If the party resisting enforcement  furnishes  proof  to  the  court  with  respect  to  any  of the factors mentioned in sub-sections (1) and (2) of Section 48, enforcement may be refused.

Having said that courts must lean in favour of enforcing awards rather than refusing to do so on technical grounds,  it  cannot  be  overlooked  that  enforcement  of  a foreign award  under  Part  II  can  be  resorted  to  only  if  the  requirements of the provisions of that Part are fulfilled. Therefore, it is incumbent on the court to forensically analyse, when enforcement of a foreign award is sought, as to whether the requirements of Part II of the Arbitration and Conciliation Act, 1996  are  satisfied  before  proceeding  to  enforce  the  award  as  a decree of the court. The said analysis is indispensable when an award stated to be passed under another legal regime is sought to be executed under the Indian law as the conditions under the provisions of Part  II are carefully and  consciously  fused  into the Arbitration and Conciliation Act by the legislature with the obvious  objective  of  preventing  abuse  of  the  process  of  Indian law. Notwithstanding the transnational commitments of reciprocity, the legislature has not contemplated that every foreign award shall be impulsively acknowledged and enforced by  the  Indian  courts.  Hence  it  is  crucial  that  the  award  should pass the muster of Part II.

In this regard it is pertinent to refer to Article V of the New York convention extracted hereunder:-

“ARTICLE V

Recognition  and  enforcement  of  the  award  may be refused, at the request of the party against whom  it  is  invoked,  only  if  that  party  furnishes  to the competent authority where the recognition and enforcement is sought, proof that-

(a)  the  parties  to  the  agreement  referred  to  in article  II  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  arbitration proceedings or was otherwise unable to present his case, or

(c) the award deals with a difference not contemplated  by  or  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 recognised and enforced; or

(d)  the  composition  of  the  arbitral  authority  or the  arbitral  procedure  was  not  in  accordance  with the agreement of the parties, or, failing such agreement,  was  not  in  accordance  with  the  law  of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent  authority  of  the  country  in  which,  or under the law of which, that award was made.

Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that-

(a) the subject-matter of the difference is not capable  of  settlement  by  arbitration  under  the  law of that country; or

(b) the recognition or enforcement of the award would be contrary to the public policy of that country.”

A reading of Article V would reveal that the same also envisages retention  of  discretion  by  the  signatory  states  in  the  matter  of enforcing foreign awards. Hence the signatory states definitely have the freedom to enact laws providing for enforcement, however with  thresholds,  traversing  of  which would be essential to secure endorsement by the domestic courts of the State concerned. Needless to say, such riders cannot be irrationally stringent  in  that  way  frustrating  the  objects  of  the  Convention. Provisions of Chapter I under Part II of the Arbitration and Conciliation  Act,  1996  are framed  ostensibly  in  tune  with  Article V.

Keeping  the  above  principles  in  mind,  I shall  analyse the  objections  raised  by  the  learned  counsel  for  the  respondent in seriatim. The learned counsel had raised a preliminary contention that the execution petition was filed without producing any evidence as contemplated under Section 47 of the Act. He argued so for the reason that no copy of the original agreement  was  produced  along  with  the  execution  petition. He further contended that Annexure-1 was not an original of the award or a duly authenticated copy thereof.

Scope  and  intent  of  the  expression  “evidence”  under Section 47 of the Act cannot be understood like that of the standards of the Evidence Act. The apparent purpose of insisting that the original of the award, or a copy thereof duly authenticated  in  the  manner  required  by  the  law  of  the  country in which it was made, as well as the original arbitration agreement or a duly certified copy thereof, shall be produced, is to convince the court that what is sought to be enforced is a genuine foreign award pursuant to a valid arbitration agreement. Beyond  the  said  requirement,  no  further  necessity  can  be  read into  the  provisions  of  Section  47  of  the  Act.  If  there  is  dispute regarding the genuineness of the award or agreement, of course the  court  may require to  insist  for convincing evidence. Hence the standards of “evidence” may vary according to the facts and circumstances of each case. The avowed purpose of the Act is to ensure speedy resolution of the disputes. As a sequel, in the case of enforcement of foreign awards, making the process cumbersome  would  be  against  the  goals  of  the  law  relating  to arbitration. Review of  the foreign award on  merits is not  within the province of the court called upon to enforce the award. Court is  exercising  only  a constricted  jurisdiction  under  Part  II  of  the Act. Therefore, if the expression ‘evidence’ in Section 47 is reckoned as an expression signifying evidence of a high standard as required in criminal trials or in pure civil proceedings, it will be against the prime objectives of the arbitration law. The expression “evidence” ought to be understood in the particular context of the provisions under Part II as well as the general scheme of the Act.

In the case at hand, the authenticated copy of the agreement  was  not  produced  along  with  the  execution  petition, but was produced later. As held by the Hon'ble Supreme Court in PEC Limited (Supra), it is not a reason to hold that the execution petition was defective and not liable to be entertained. Moreover, the said agreement was actually relied on by the respondent before the Arbitral  Tribunal.  Likewise,  before hearing  concluded, a certified  copy  of  the  award  was  also  produced. The  learned Senior Counsel for the petitioners clarified that the copies produced at the time of filing were those forwarded to the petitioners  by  e-mail  from  the  arbitral  institution,  and  that  the said  method  is  the  normal  mode  of  serving  copies  of  pleadings and  documents,  as  well as  orders  and  the final  award.  This was not disputed by the learned counsel for  the respondents. That being so I am of the view that the requirements of Section 47 of the Act have been satisfactorily complied in this case. The materials produced are sufficient for the court to be satisfied that  there  was  an arbitral  proceeding  between the parties and that the award produced is its outcome, since there is no dispute regarding the legitimacy of the documents. Hence, I hold that the objection raised by the respondent with reference to Section 47 of the Act is not sustainable.

Be  that  as  it  may,  the  next  contention  pertaining  to Section 48(1)(a) that no valid arbitration agreement existed between  the  parties  as  found  by  the  Tribunal  and  the  same  is  a sufficient reason to refuse enforcement deserves to be considered  independently. At  the  risk  of  repetition,  it  must  be noted that the unequivocal finding of the Arbitral Tribunal was that there was no valid arbitration agreement. The said conclusion of  the Tribunal is  binding  on both sides. The award has become final as no challenge was raised against it. The principles of resjudicata and fairness would demand that the parties shall not contend that there was a valid agreement after having accepted the findings of the Tribunal to the contrary. The contention raised by the learned Senior Counsel for the petitioners  that  there  was  an  agreement  between  the  parties  to the extent they agreed for adjudication by the Tribunal needs to be  examined  in  this  background.  It  is  not  impossible  that  such an agreement may also evolve. Nonetheless, even if the said contention is acknowledged for the sake of arguments, the crucial question is as to whether the same would be sufficient to satisfy the requirement of Section 48(1)(a).

It is relevant to note that in Section 48(1)(a) the opening words employed are, “the parties to the agreement referred to in Section 44”. Therefore, the expression ‘agreement’in Section 48(1)(a) shall be understood as stated in Section 44. Under Section 44(a), the agreement for arbitration shall essentially be in writing. Therefore, it is imperative that the agreement for arbitration shall be ‘in writing’ to satisfy the requirements of the provisions of Part II of the Act, especially of Section 48(1)(a). To put it plainly, unless there is an agreement for arbitration in writing there cannot be a ‘foreign award’ as defined under Section 44 of the Act. Likewise, to satisfy the requirement of Section 48(1)(a), such an agreement shall not be invalid under the law to which the parties have subjected it. Hence, the requirements are two-fold; 1) the agreement for arbitration shall be in writing and 2) the same shall not be invalid under the curial law.

It  was  the  case  of  the  petitioners  before  the  Arbitral Tribunal that there was no agreement for arbitration, binding on the parties. They effectively established the same before the Tribunal.  The  Tribunal  refused  reliefs  to  the  respondent  holding that it had no jurisdiction in the absence of valid arbitration agreement. Hence, it is no longer open to the petitioners to rely on the agreement produced in this execution petition. Similarly, the  contention  of  the  learned  Senior  Counsel  for  the  petitioners that from the conduct of the parties, an agreement for arbitration can be inferred also cannot save the case for the petitioners as the unequivocal requirement under the Indian law is ‘agreement for arbitration in writing’. An agreement, admittedly not in black and white, but sought to be inferred from the conduct of the parties, cannot fulfil the requirements of the  provisions  of  Part  II  of  the  Arbitration  and  Conciliation  Act, 1996. Though an agreement contained in an exchange of letters or  telegrams  can  also  satisfy  the  requirement  in  this  regard,  no such agreement exists even for the purpose of a limited adjudication by the Arbitral Tribunal.

It is germane to note that, under the various Articles of  the  Convention  incorporated  under  the  First  Schedule  to  the Act, the existence of an agreement in writing by which the parties undertake to submit to arbitration is essential. It is also necessary that the subject matter shall be capable of settlement by arbitration. Further,  the agreement  shall  be in writing.  Under Article II(2), the term “agreement in writing” includes an arbitral clause  in  a contract  or  an  arbitration  agreement  signed  by  the parties or contained in an exchange of letters or telegrams. Therefore, in the case on hand, the requirements of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as incorporated in the First Schedule of the Act, are also not satisfied.

I find substantial merit in the contention of the learned counsel for the respondent that the petitioners were well aware that the award would not be enforceable in India. In their statement  of  defence  before  the  Arbitral  Tribunal,  it  was  plainly stated that they would not be in a position to seek enforcement under the New York Convention as there is no arbitration agreement between the parties. Relevant submissions of the petitioners in this regard are found in paragraphs 296-299 of the defence statement produced by the respondent as Annexure- R1(a). It is apposite to extract the same hereunder: -

“296.  While both India and the UAE are party to the New York Convention - meaning that the countries must recognize  arbitral  awards  as  binding  and  enforce  them in accordance with the convention - the Respondents would not be able to seek enforcement under the convention  in  the case of a costs  award  in their  favour. The reason being that, under to the New York Convention, the arbitration agreement must be supplied to  obtain  enforcement,  (Article  IV),  and  the  agreement must be in writing and signed by the two parties (Article II).

As  there  is  no  arbitration  agreement  between  the parties, let alone a signed agreement, Respondents cannot successfully seek enforcement under the New York Convention.

The  same  principles  apply  under  Indian  and  UAE national law. According to the Indian Arbitration and Conciliation Act, 1996, the party applying for enforcement  must  supply  the  arbitration  agreement  to obtain  enforcement  (Article  47.1.b),  and  an  arbitration agreement shall be in writing and signed by the two parties (7.3 and 7.4a). Likewise, under Federal Law No. (6) of 2018 on Arbitration in the UAE, the party applying for enforcement must supply the arbitration agreement to obtain enforcement (55.1.b), and the agreement shall be in writing and signed by the two parties (7.1 and 7.2.a).

Consequently, it is highly unlikely that the Respondents  can  obtain  enforcement  of  a costs  award in their favour, both under national and international law. Respondents thus stand a great financial risk regardless of the outcome of the arbitration initiated by Mr.Sharath. This alone constitute exceptional circumstances under Article 38 of the SCC Rules.”

The learned Senior Counsel for the petitioners attempted to defend the above-mentioned contention by stating that  the  pleadings  extracted  above  reflected  the  apprehensions of  the  petitioners  and  the  same  are  not  liable  to  be  considered as  admissions. In  the  nature  of  the  pleadings  extracted  above, the said contention of the learned Senior Counsel cannot be accepted. The pleadings in paragraphs 296-299 of Annexure- R1(a) are unambiguous and would show that the petitioners were well aware during the pendency of the arbitral proceedings that for enforcement of a foreign award under the Indian Arbitration and Conciliation Act, 1996 the party applying for enforcement  must  supply  the  arbitration  agreement  and  it  shall be necessarily in writing and signed by the parties. They candidly  submitted  so  before  the  Tribunal  and  sought  reliefs  on the said premises. It must be said that the contentions raised in this Execution Petition, in entirety, are inconsistent with the pleadings extracted above.

The learned Senior Counsel pointed out that, while resisting the plea before the Tribunal to insist on furnishing security, the respondent contended that he had sufficient assets in  India  to  satisfy  any  award  passed  against  him.  He  raised  no objection regarding the enforceability of the award, even if it were a cost award, before the Tribunal. The learned Senior Counsel hence argued that the respondent’s contentions regarding enforceability are liable to be rejected for this sole reason. True that the pleadings of the parties before the Tribunal produced before this Court do not reveal that the respondent had contended that the award would not be enforceable in India and on the other hand, he maintained that he has sufficient assets to satisfy if an award is passed against him. But from the point of view of the court,  what requires to be examined first is as to whether the award is enforceable under Part II of the Act. The said analysis cannot be compromised even if the party resisting enforcement had taken a stand at variance with that adopted  before  this  Court.  In  that  analysis,  within  the  contours of the provisions of Part II, this Court has concluded that the award does not satisfy the requirements under Part II. Hence this contention is also of no help to the petitioners.

Relying on S.42 of the Swedish Arbitration Act and the judgments  reported  in  Commonwealth Development  Corp (UK) v.  Montague  [[2000]  QCA  252]  and  Ravfox  Limited  v.  Bexmoor Limited [2025 EWHC 1313 (Ch)], the learned Senior Counsel submitted that it was well within the authority of the Tribunal to pass a cost award and hence there is no illegality or impropriety and a cost award is also enforceable like any other award. Appraisal of S.42 of the Swedish Arbitration Act would show that the  Arbitral  Tribunals  under  the  Swedish  law  are  competent  to grant  costs  and  to  pass  cost  awards.  Learned  Senior  Counsel  is right in contending that cost only awards are recognized in international commercial arbitrations. Nevertheless, the concern of the enforcing court under the Indian law, as already stated, is as to whether the award is enforceable under Part II of the Arbitration  and  Conciliation  Act,1996.  For  the  reasons  stated  in the foregoing paragraphs, though a cost award may also be enforceable under the Indian law, the award in the instant cannot be enforced as it does not satisfy the requirements of Part II of the Arbitration and Conciliation Act,1996

A valid arbitration agreement is a baseline for a lawful arbitral proceeding in India. Agreement-less arbitration is inconceivable in Indian law. S.48(2)(a) stipulates that enforcement of an arbitral award can be refused if the court finds that the subject matter of difference is not capable of settlement by arbitration under the law of India. As the Arbitration and Conciliation Act, 1996 does not envisage a lawful arbitration without an agreement as articulated under S.7, for want of a binding agreement, the differences between the petitioners  and  the  respondent  in  this  case  were  not  capable  of settlement by arbitration under the Indian law. Consequently, the award is hit by S.48(2)(a). For the same reason, in my view it attracts the disqualification under S.48(2)(b) too even  though the expression “public policy of India” is understood in a restricted sense.

Conclusions

As noted supra, the Hon'ble Supreme Court has clarified the ingredients of the definition of “foreign award” in the judgment in Pasl Wind Solutions (P) Ltd.(Supra). An essential characteristic of a foreign award, as per Section 44(a), is that it must be passed in pursuance of an agreement in writing  for  arbitration  to  which  the  Convention  set  forth  in  the First Schedule applies. The first part of Section 44(a) states about ‘anagreement  in  writing,’  for  arbitration.  In  the  case  on hand,  as  already  observed,  the  Arbitral  Tribunal  entered  into  an absolute conclusion that there was no valid arbitration agreement binding the parties. Hence, the award cannot be treated  as  a foreign  award  as  defined  under  Section  44  of  the Act  and  therefore  the  enforcement  of  the  same  under  Part  II  of the Act is impermissible. The parties had subjected the agreement  and  arbitral  proceedings  to  Swedish  law.  Under  the said law, the Tribunal concluded that there was no valid agreement. Therefore, the same is a valid ground to resist enforcement under Section 48(1)(a). The award sought to be executed  itself  can  be  considered  as  a sufficient  proof  available to the respondent in this regard.

Since  it  is  essential  under  Indian  law  to  have  a valid arbitration agreement as the foundational prerequisite for arbitral  proceedings,  the  enforcement  of  the  award  in  the  case on hand, in the absence of a valid arbitration agreement, deserves to be refused in view of the provisions of Section 48(2) (a) as well as Section 48(2)(b). The subject matter of difference is not capable of settlement by arbitration under the law of India and an award passed without a valid arbitration agreement is against the public policy of India, even within a restricted sense of the said expression.

In the result, I hold that the award sought to be executed is not  enforceable  under  Part  II  of  the  Arbitration  and  Conciliation Act, 1996. Consequently, the E.P.(ICA) is dismissed.