ITL Project 2
ITL Project 2
ITL Project 2
PROJECT TOPIC: -
SUBMITTED BY- SUBMITTED TO-
ABHIJEET KASHYAP Dr. Monica Raje
2018B.A.L.L.B.(HONORS)01 International Trade Law
TABLE OF CONTENTS
CERTIFICATE........................................................................................................................3
ACKNOWLEDGEMENT.......................................................................................................4
INTRODUCTION....................................................................................................................5
CITATION.............................................................................................................................5
BRIEF BACKGROUND.......................................................................................................5
BENCH..................................................................................................................................6
ADVOCATES........................................................................................................................6
MATERIAL FACTS................................................................................................................7
ISSUES RAISED......................................................................................................................8
ARGUMENTS ADVANCED..................................................................................................9
APPELLANT............................................................................................................................9
RESPONDENT.........................................................................................................................9
DOMESTIC CASES.................................................................................................................13
FOREIGN CASES....................................................................................................................14
CONCRETE JUDGEMENT.................................................................................................17
RATIO DECIDENDI.............................................................................................................18
CONCLUSION.......................................................................................................................19
BIBLIOGRAPHY..................................................................................................................21
This is to certify that the case comment on CENTROTRADE MINERALS AND METALS
INC. VS. HINDUSTAN COPPER LTD - has been prepared and submitted by Abhijeet
Kashyap who is currently pursuing their BA LLB(Hons.) at National Law Institute
University, Bhopal in fulfilment of International Trade law course. It is also certified that this
is an original research report and this paper has not been submitted to any other university,
nor published in any journal.
Date-
This paper has been made possible by the unconditional support of many people. I would like
to acknowledge and extend my heartfelt gratitude to Vice Chancellor (Dr.) V. Vijaykumar
and Mrs. Monica Raje for guiding me throughout the development of this project into a
coherent whole by providing helpful insight and sharing their brilliant expertise. I would also
like to thank the official of Gyan mandir, library, NLIU BHOPAL for helping me to find the
appropriate research material or this study. I am deep indebted to my parent, senior and friend
for all the moral support and encouragement.
INTRODUCTION
CITATION
2020 SCC OnLine SC 479
Judgment Date
02.06.2020
BRIEF BACKGROUND
The present case is the third instance, the same parties have approached the Supreme Court
seeking a remedy in the same matter. The dispute arose between an U.S. and an Indian
Corporation who entered into a contract for supply of copper. The dispute was to be settled
under a two-tier arbitration clause, one to be held in India and other in London. After the two-
tier arbitration the award was given in favour of the Appellant, against which the Respondent
approached the Calcutta High Court under section 48 of the Act of 1996. High Court
dismissed the petition rendering the award enforceable in India. Respondent went to appeal
the decision before a 2-judge bench of the Supreme Court. To further complicate the matters,
both the respected judges of the Supreme Court delivered two different judgement, each in
different direction, i.e. one holding the foreign award valid and other holding it
unenforceable.
In the light of discordant view taken by the division bench of the Supreme Court, the matter
was put up before a full bench. They were tasked with the duty to decide on the first issue in
the case that was relating to validity of two-tier arbitration agreement in the light contract
laws in India. This question was answered by the Full bench in affirmative. Finally, the case
came to be heard by another full bench of the Supreme Court which was to decide on the
enforceability of a foreign award delivered in the second stage of two-tier arbitration.
BENCH AND ADVOCATES
BENCH- FULL
Rohinton Fali Nariman- delivered the judgement
Justice S. Ravindra Bhat
Justice V. Ramasubramanian.
THE SUPREME COURT OF INDIA
ADVOCATES
For the Petitioner:
Mr S. Sarkar, Senior Counsel
Following set of facts form the basis of the factual matrix on which the bench has relied
while approaching to the decision in the present case-
1. Appellant, (Centrotrade Minerals and Metals Inc.) an U.S. corporation entered into a
contract of sale of copper concentrate with the Respondent, Hindustan Copper Ltd. (HCL).
2. Contract contained a two-tier arbitration clause according to which, in first tier the matter
was to be settled in India and in case any party was not satisfied, they would have the right
to appeal to second tier arbitration that would be held by ICC in London.
3. Dispute arose between the parties relating to the weight of delivered copper and
Appellants invoked the arbitration clause.
4. In first tier arbitration conducted in India, the arbitrator declared a nil award. Appellant
invoked the second tier of arbitration, in which the arbitrator appointed by ICC gave an
award in favour of the Appellant.
5. Single Judge Bench of the Calcutta High Court dismissed the petition filed by the
Respondent under Section 48 of the Arbitration and Conciliation Act, 1996 (the Act),
thereby making the award executable in India.
6. Division Bench of the same court while allowing an appeal to the Respondent, set aside
the judgement passed by the single judge as the Indian award and the London Award,
being arbitration awards by arbitrators who had concurrent jurisdiction, were mutually
destructive of each other, neither could be enforced.
7. Matter came before a division bench of the Supreme Court, that delivered two separate
judgements. This has brought the matter before a 3-judge bench of the same court.
ISSUES RAISED
Appellant
1. Contended that ample opportunity had been given by the arbitrator to HCL to present its
case, but that HCL, having an Indian award in its pocket, wanted somehow to abort the
London arbitration proceedings.
2. Submitted that in a two-tier arbitration, the second arbitration proceedings having taken
place in London, the award of Mr. Cooke was a foreign award within the meaning of
Section 44 of the Act.
3. Submitted that the learned Single Judge was satisfied that the HCL was not unable to
present his case in the arbitration proceedings within the meaning of Section 48(1)(b) of
the Act which finding having not been reversed by the Division Bench, no case has been
made out for setting aside the award. Even otherwise refusal of an adjournment by an
Arbitrator is not a ground for challenging an arbitral award.
Respondent
1. Submitted that the definition of an award as contained in Section 2(2) of the Act must be
read with the other provisions thereof, viz., Sections 2(5), 2(6) and 2(7) as also Section 42
thereof in view of the fact that the Indian law was applicable in relation to the contract in
question.
2. Submitted that Indian law in relation to enforcement of the terms and conditions of the
contract being applicable, both the awards are governed by the Indian law.
3. Contended that the second part of the arbitration agreement contained in Clause 14 of the
agreement is void and of no effect being opposed to public policy. Having regard to the
fact that the first award was made in terms of the Indian law, reference to the second
arbitrator was impermissible inasmuch as the Act envisages only one award.
4. Submitted that the object of the Act being to provide an integral framework and the parties
having chosen Indian law, even assuming that Part II of the Act applies, Section 44 clearly
makes an exception therefore in view of the decision of this Court in Bhatia International
v. Bulk Trading S.A. and Anr.1
5. Contended that in any event, the Arbitrator did not give adequate opportunities of hearing
and as the procedures prescribed under the ICC Rules were not followed, the award is
liable to be set aside. The Arbitrator, having proceeded to prepare an award without the
1
Bhatia International v. Bulk Trading S.A. and Anr. [2002] 2 SCR 411
pleadings of the parties before him and considering only the first part of the written
statement without waiting for the second part, misconducted himself at the proceeding.
Had an opportunity been given, HCL could have cross-examined the expert on whose
report, the award has been made.
6. Contended that neither any issue was raised, nor any date was fixed for hearing and, as the
parties were not given an opportunity to examine the witnesses, the award is liable to be
set aside in terms of Section 48(1)(b) of the 1996 Act.
7. Contended that the judgment of the High Court to the extent that the arbitration clause has
been held to be valid is erroneous.
STATUTORY RULES AND FRAMEWORKS RELIED UPON IN ADJUDICATION
Following Statutory provisions and government notifications were relied upon by the parties
in the present case:
1. Section 48 of The Arbitration and Conciliation Act, 1996- This provision lays down the
conditions that needs to be fulfilled by the foreign award holder in order to render his
award enforceable in India. Failing to satisfy any of these conditions would render the
foreign award inexecutable in the territory of India.
In the present case the Respondent has filed a petition under section 48 challenging the
award issued by the arbitrator in London. It was stated that the said award is not
enforceable in India on the grounds that it violates public policy as it was delivered against
the basic notions of justice. It was contented that the Respondent did not receive the
required opportunity to present his case which is a fundamental right guaranteed to the
parties to a proceeding.
2. Section 50 of The Arbitration and Conciliation Act, 1996- This provision of the act entitles
that parties to a foreign arbitration to take the matter to appeal if they are not satisfied with
the award passed by the institution situated on foreign land.
In the present case, contract between the parties contained a two-tier arbitration clause
wherein the first stage was to be held in India and the second stage in London infront of a
foreign arbitrator. On an appeal under Section 50, against the foreign award, it was held by
the court the second-tier arbitral award given by the arbitrator in London cannot be
considered as a foreign award and thus no appeal lies under section 50 of the Act.
3. Section 37 of The Arbitration and Conciliation Act, 1996- This provision lays down the
grounds on which an appeal can be filed against a domestic award or for the purpose of
setting aside of an arbitral award.
This provision came to be mentioned in the present case as the court tried to draw a line
difference between the appealable orders under section 37 and section 48 of the Act. Court
while comparing the two provisions held that unlike appeals under section 37, legislative
policy so far as recognition and enforcement of foreign awards is that an appeal is
provided against a judgment refusing to recognise and enforce a foreign award but not the
other way around (i.e. an order recognising and enforcing an award). This idea was
explained by the court by contending that only one opportunity should be given to a party
who has challenged a foreign award under section 48 and failed, as India is a signatory to
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958
(hereinafter referred to as "New York Convention") and thus the notion is to ensure
enforcement of an award given in another country to be enforced in India as soon as
possible.
4. Section 103(2) (c) of the Arbitration Act 1996- This provision is a part of Part III of the
Arbitration Act of England dealing with recognition and enforcement of foreign awards.
England being a signatory to the New York convention has drafted this act in accordance
to the provisions of the convention.
Under section 103(2)(c), enforcement of a foreign award can be denied on the ground if
the party was not given an opportunity to present its case. In the present case, court while
deciding on the enforceability of the foreign award attempted to draw a parallel between
section 47 of the Indian arbitration act and section 103 of England’s arbitration act.
Arbitration Act of England states that inability to present a case to arbitrators within
Section 103(2)(c) contemplates at least that the enforcee has been prevented from
presenting his case by matters outside his control. This will normally cover the case where
the procedure adopted has been operated in a manner contrary to the Rules of natural
justice. Where, however, the enforcee has, due to matters within his control, not provided
himself with the means of taking advantage of an opportunity given to him to present his
case, he does not in my judgment, bring himself within that exception to enforcement
under the convention.
5. Article V(1)(b) of the New York Convention- Article V belongs to the chapter of New
York Convention dealing with recognition and arbitrability of foreign awards. Clause 1 of
article V lays down the condition based on which enforceability of a foreign award can be
barred.
In the present case sub clause b of the said provision became important. Court while
dealing with the submission presented by the Respondent challenging the foreign awards
on the ground of violation of public policy, went into the very origin of right of every
party to present its case. In doing so, the court went onto draw a parallel between the
Indian law and the New York Convention. Under sub clause b, the drafter of the
convention have included that if the party to the arbitration is not able to present his case
then award arising out of such arbitration would not be enforceable under the convention.
JUDICIAL PRECEDENTS RELIED UPON IN THE JUDGMENT
Following are the judgements relied upon by the Hon’ble High Court of Delhi while coming
to a conclusion in the present case:
Domestic Cases
1. Vijay Karia v. Prsymian Cavi E Sistemi SRL2
This judgment was delivered by a full bench of the Supreme Court of India. Court in this
case while dealing with the law on the subject matter of Section 48(1)(b) of the Act, set
out the parameters of a Section 48. In this regard the court stated that the legislative
policy so far as recognition and enforcement of foreign awards is that an appeal is
provided against a judgment refusing to recognise and enforce a foreign award but not
the other way around (i.e. an order recognising and enforcing an award).
This is because the policy of the legislature is that there ought to be only one bite at the
cherry in a case where objections are made to the foreign award on the extremely narrow
grounds contained in Section 48 of the Act and which have been rejected. This is in
consonance with the fact that India is a signatory to the New York Convention and
intends through this legislation to ensure that a person who belongs to a Convention
country, and who, in most cases, has gone through a challenge procedure to the said
award in the country of its origin, must then be able to get such award recognised and
enforced in India as soon as possible.
2
Vijay Karia v. Prsymian Cavi E Sistemi SRL 2020 (3) SCALE 494.
3
Sohan Lal Gupta v. Asha Devi Gupta (2003) 7 SCC 492
4
Montrose Canned Foods Ltd. [(1965) 1 Lloyd's Rep 597]
5
British Oil and Cake Mills Ltd. v. Horace Battin & Co. Ltd. [(1922) 13 LI L Rep 443]
Foreign Cases
3. Minmetal Germany GmbH v. Ferco Steel Ltd.6
This is a landmark judgement in the field of arbitration delivered by the High Court of
England and Wales. Court in this case dealt with the enforceability of a foreign award
under the England’s Arbitration Act and also the New York convention. The matter
before the court concerned inability of one party to present its case before the arbitrator
based on which it sought bar on the enforcement of such award. While deciding the issue
the court held that each party complaining violation of natural justice will have to prove
the misconduct of the Arbitration Tribunal in denial of justice to them. The Appellant
must show that he was otherwise unable to present his case which would mean that the
matters were outside his control and not because of his own failure to take advantage of
an opportunity duly accorded to him.
This case came to be recognised for laying down a test to decide whether the party
claiming non enforceability has been given adequate opportunity to present his case.
Court stated that the test of matters outside one's control, must be followed. This means
that the award would only become unenforceable on the request of one party if he shows
that he was not able to present his case due to the functioning of factors that were outside
its reasonable control.
9
Consorcio Rive v. Briggs of Cancun 134 F. Supp 2d 789
10
Dean v. Sullivan, 118 F. 3d 1170, 1173 (7th Cir. 1997).
11
Parsons & Whittemore Overseas Co. v. Societe Generale de L'Industrie du Papier, 508 F. 2d 969, 975 (2d
Cir.1974).
12
Nanjing Cereals v. Luckmate Commodities XXI. Y.B. Com. Arb. 542 (1996)
This judgement was delivered by the Supreme Court of Hong Kong, which was faced
with similar factual scenario as in the present case. Court while answering to the
submissions made by the Respondent stated that it is not accepted that the Defendant had
no opportunity to present its case. On the contrary, the Defendant made full use of the
ample opportunity given and only complained after the proceedings had finally been
closed, having foregone the opportunity of asking for an extension of those proceedings.
All proceedings must have a finite end. this is a classic case where a court should
exercise its discretion to refuse to set aside an award, due to the failure of the Defendants
to prosecute their own case properly by submitting their own evidence to the Tribunal.
CONCRETE JUDGEMENT
The Hon’ble Supreme Court of India after considering the point of contentions presented
before it by both the parties and imposing full reliance on the judicial precedents presented
before it, dismissed the appeal filed by the Respondent. Further it directed that the foreign
award passed in favour of the Appellant should be enforced.
The court further held that the judgement passed by Justice Chatterjee, member of the
division bench of the Supreme Court that heard the matter of the present parties, cannot be
sustained. Judgement passed by Justice Chatterjee in favour of the Respondent, denying
enforcement of foreign arbitral award on the ground that proper opportunity was not given to
the Respondent to present his case, has no ground to stand on.
RATIO DECIDENDI
Three Judge Bench in the present case stated that courts intervention in enforcement of
foreign arbitral award should be minimal and sporadic. A foreign arbitrator should not be
question based on factual grounds that he has looked into during the proceedings. Based on
the authorities cited before the court, the arbitrator is in control of the arbitral proceedings
and procedural orders which give time limits must be strictly adhered to.
CONCLUSION
In the present case, judgement is delivered by Justice Rohington Fali Nariman. In a learned
opinion, Justice Nariman revisits the Vijay Karia v. Prsymian Cavi E Sistemi SRL as the
defining law on the subject. True to his style, the judgment is a progressive one, and justified
by a rigorous reading of precedents and statutory norms. It is rare to see a sound legal
judgment, which does not rely upon anecdotal evidence and platitudes. Given the workload
on Supreme Court judges, the rarity is understandable, yet these rare judgments are
commendable. The judgment in the present case can be considered as yet another significant
step which takes us closer to justice and equity. It does not lay down something very
innovative, but interprets and uses the conditions laid down in various cases in a pragmatic
manner- different from the way in which it has been interpreted by the courts so far. It
interprets the applicability and conditions required for enforcing an award under Section 48
of the Arbitration and Conciliation Act, 1996.
Court in the present case was faced with the question of applicability of section 48 of the Act
in case where the arbitral award has been delivered as a result of two-tier arbitration clause.
The dispute in the present case is a long drawn one that has went through two stages of
arbitration, High Court and also has been considered by the Supreme Court at three instances.
The main point of contention that arose before the court related to the violation of principles
of natural justice that can also be said to be in violation of public policy in India. Respondent
contented that he did not receive the proper opportunity to present its case before the foreign
arbitrator. Supreme court after holding the two-tier arbitration clause valid under the contract
laws of India, went on to look into the very purpose for which parties choose arbitration over
litigation.
Court in the present case relied on various domestic and foreign cases dealing with
enforceability of foreign arbitral award. Reliance given by the judges on these cases and the
interpretation drawn, are the ones that must be applauded. Judges went into the very source
that makes enforceability of foreign awards so important. In this regard, the court read and
analysed the provisions of the New York Convention, which they opined, must be respected
and followed in majority of cases as India is a signatory to the said convention. Under the
convention, one of the primary grounds on which the enforcement of a foreign award could
be refused, is if the party to the arbitration is not given proper opportunity to present its case.
A parallel to this provision was drawn by the court by relying on the judgements dealing with
the Arbitration Act of United Kingdom that was also drafted on the similar lines as the
convention.
Concurring with the view held by foreign courts of various jurisdictions in numerous cases
dealing with the same matter, the Supreme Court held that the defence or ground of natural
justice or public policy must be strictly given a narrow interpretation. This means that the
party claiming violation of natural justice must prove a prima facie case that the factors that
stopped him from presenting his part of the case were out of his reasonable control.
On these grounds the court was of the opinion that a party must not be allowed to take
advantage of his own wrong. Reading some logic into this point, the court stated that refusal
or indifference by a party to the arbitration to present his case cannot be remedied under
violation of natural justice. Court went onto hold a firm view that a foreign arbitral award
must be enforced in all the cases except in those sporadic cases in which intervention of the
court is necessary to protect the very notions of justice. This was supported by the point that a
party must be given only one opportunity to hinder the award rendered by an institution so as
to let the award holder enjoy the fruit arising out of justice.
As a person who has followed the matter across benches, author of this paper is of the
opinion that the three judge bench of the Supreme Court in this case, has decided and
rendered the much needed end to the dispute that has gone to various forums depriving the
rightful beneficiary of the award, his part of the contract. Author believes that the court was
right in upholding the very reason for which the arbitration is promoted over litigation i.e.
speedy resolution. Court in this case by dismissing the appeal filed by the Respondent upheld
the position that the provision of the Act must not be misused to hamper speedy process that
is arbitration. It was also applaudable on the part of the court to hold that an award once
passed by the arbitrators must only be interfered by the courts sporadically. As in an
arbitration proceedings the time limit fixed are the once that are decided on the discretion of
the arbitrators and the parties cannot act against these orders and later on claim misconduct
on the part of the arbitrator thereby challenging the validity of the whole process.
BIBLIOGRAPHY
Books
1. Redfern and Hunter on International Arbitration 6th Edn
2. Merkin and Flannery on the Arbitration Act, 1996
3. P. Ramanatha Aiyar's Advanced Law Lexicon