2020 Supreme(SC) 543

SUPREME COURT OF INDIA
S. ABDUL NAZEER, INDU MALHOTRA, ANIRUDDHA BOSE, JJ.
Government of India – Appellant
Versus
Vedanta Limited (Formerly Cairn India Ltd.) & Ors. – Respondents
Civil Appeal No. 3185 of 2020 (Arising out of SLP (Civil) No.7172 of 2020)
Decided On : 16-09-2020

IMPORTANT POINTS
(1) A foreign award is not a decree by itself which is executable as such under Section 49 of Indian Arbitration Act, 1996 – Enforcement of foreign award takes place only after court is satisfied that foreign award is enforceable under Chapter 1 in Part II of Indian Arbitration Act, 1996.
(2) Law governing arbitration agreement must be determined separately from law applicable to substantive contract.
(3) Limitation period for filing enforcement / execution petition for enforcement of a foreign award in India, would be governed by Indian law.
(4) Procedure for enforcement of a foreign decree is not covered by 1996 Act, but is governed by provisions of Section 44A read with Section 13 of CPC.
(5) Enforcement Court cannot set aside a foreign award, even if conditions under Section 48 of Indian Arbitration Act, 1996 are made out. Power to set aside a foreign award vests only with court at seat of arbitration, since supervisory or primary jurisdiction is exercised by curial courts at seat of arbitration.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Sections 47, 48 and 49 – Limitation Act, 1963 – Articles 136 and 137 read with Section 43 – Enforcement/ execution petition of a foreign award – Limitation – Foreign awards are not decrees of an Indian civil court – Limitation period for filing enforcement / execution petition for enforcement of a foreign award in India, would be governed by Indian law – Indian Arbitration Act, 1996 does not specify any period of limitation for filing application for enforcement / execution of a foreign award – Article 136 of Limitation Act would not be applicable for enforcement / execution of a foreign award, since it is not a decree of a civil court in India – However, Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court – Limitation Act, 1963 does not contain any specific provision for enforcement of a foreign award – Article 137 is residuary provision in Limitation Act which provides that period of limitation for any application where no period of limitation is provided in the Act, would be three years from when right to apply accrues – Arbitral Tribunal cannot be considered to be a court and arbitral proceedings are not civil proceedings – Deeming fiction is restricted to treat award as a decree of court for the purposes of execution even though it is, as a matter of fact, only an award in an arbitral proceeding. [Paras VII(v)]

(B) Arbitration and Conciliation Act, 1996 – Sections 47, 48 and 49 – Limitation Act, 1963 – Section 5 read with Articles 136 and 137 – Civil Procedure Code, 1908 – Order XXI – Enforcement/ execution petition of a foreign award – Limitation – Arbitration Act is a self-contained code – Application under Section 47 is not an application filed under any of provisions of Order XXI of CPC, 1908 – Application under Sections 47 and 49 for enforcement of foreign award, is a substantive petition filed under Arbitration Act, 1996 – Application is filed before appropriate High Court for enforcement which would take recourse to provisions of Order XXI of CPC only for the purposes of execution of foreign award as a deemed decree – Bar contained in Section 5 which excludes application filed under any of provisions of Order XXI of CPC, would not be applicable to a substantive petition filed under Arbitration Act, 1996 – A party may file an application under Section 5 for condonation of delay, if required in facts and circumstances of case. [Paras VII (xv)]

(C) Civil Procedure Code, 1908 – Section 44A read with Section 13 – Arbitration and Conciliation Act, 1996 – Sections 47, 48 and 49 – Enforcement/ execution petition of a foreign award – Procedure for enforcement of a foreign decree is not covered by 1996 Act, but is governed by provisions of Section 44A read with Section 13 of CPC – A foreign award is not a decree by itself which is executable as such under Section 49 of Act – Enforcement of foreign award takes place only after court is satisfied that foreign award is enforceable under Chapter 1 in Part II of 1996 Act – Under 1996 Act, there is no requirement for foreign award to be filed before seat court and obtain a decree thereon, after which it becomes enforceable as a foreign decree – Applicant is not required to obtain leave from court of seat in which or under laws of which, award was made – Award holder is entitled to apply for recognition and enforcement of foreign award by way of a common petition. [Paras V(ix)]

(D) Arbitration and Conciliation Act, 1996 – Sections 47, 48 and 49 – Civil Procedure Code, 1908 – Order XXI – Enforcement/ execution petition of a foreign award – Enforcement Court cannot set aside a foreign award, even if conditions under Section 48 are made out – Power to set aside a foreign award vests only with court at seat of arbitration, since supervisory or primary jurisdiction is exercised by curial courts at seat of arbitration – Enforcement court may refuse enforcement of a foreign award, if conditions contained in Section 48 are made out – If Court is satisfied that application under Section 48 is without merit and foreign award is found to be enforceable, then under Section 49, award shall be deemed to be a decree of that Court – Limited purpose of legal fiction is for the purpose of enforcement of foreign award – Concerned High Court would then enforce award by taking recourse to provisions of Order XXI of CPC. [Paras Part B (i)]

(E) Arbitration and Conciliation Act, 1996 – Sections 47, 48 and 49 – Malaysian Arbitration Act, 2005 – Section 37 – Enforcement/ execution petition of a foreign award – Law governing arbitration agreement must be determined separately from law applicable to substantive contract – Curial law of arbitration is determined by seat of arbitration – In an international commercial arbitration, it is necessary that conduct of arbitral proceedings are connected with law of seat of arbitration which would regulate various aspects of arbitral proceedings – Enforcement of award is a subsequent and distinct proceeding from setting aside proceedings at the seat – Enforcement court would independently determine issue of recognition and enforceability of foreign award in India, in accordance with provisions of Chapter 1 Part II of Indian Arbitration Act, 1996 – Seat of arbitration is a legal concept – Legal seat must not be confused with a geographically convenient venue chosen to conduct some of hearings in arbitration – Malaysian Courts being seat courts were justified in applying Malaysian Act to public policy challenge raised by Government of India – However, merely because Malaysian Courts have upheld award, it would not be impediment for Indian courts to examine whether award was opposed to public policy of India under Section 48 of Indian Arbitration Act, 1996 – If award is found to be violative of public policy of India, it would not be enforced by Indian courts – Enforcement of foreign award does not contravene public policy of India, or that it is contrary to basic notions of justice – Judgment of High Court affirmed and appeal dismissed. (Paras Part C)

Facts of the case:

Present Civil Appeal has been filed by Government of India to challenge Judgment and Order dated 19 February 2020 passed by Delhi High Court, wherein the application under Section 48 of Arbitration and Conciliation Act, 1996 filed by Government of India has been dismissed; Application filed under Section 47 read with 49 being O.M.P. (EFA) (Comm) 15 of 2016 for the enforcement of the foreign award by the Respondents, and the I.A. No. 20149 of 2014 for condonation of delay in filing the execution petition by the Respondents were allowed.

Findings of Court:

Interpretation of the terms of the PSC lies within the domain of the tribunal. It is not open for the Appellants to impeach the award on merits before enforcement court. The enforcement court cannot re-assess or re-appreciate the evidence led in the arbitration. Section 48 does not provide a de facto appeal on merits of the award. The enforcement court exercising jurisdiction under Section 48, cannot refuse enforcement by taking a different interpretation of terms of the contract. Term of the PSC has since been extended for a further period of 10 years, through the mutual agreement between the parties. This itself would reflect that the performance of the obligations under the PSC were not contrary to the interests of India.

Result : Civil Appeal dismissed.