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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
SURAJ GOVINDARAJ, J.
CTI Future Corporation – Appellant
Versus
Ducgiang Chemical And Detergent Powder Joint Stock Company – Respondent
Arbitration Petition(Enforcement Of Foreign Arbitral Award) No. 1 of 2022
Decided on : 11-08-2022
Arbitration and Conciliation Act, 1996 - Section 2 (e) (ii), 2 (f), 44, 44(b) - Arbitration - Foreign awards - International commercial arbitration - Whether a proceeding for the enforcement of a foreign award is maintainable before this Court as against a respondent, who is neither resident of, registered in or does not normally carry on business within the jurisdiction of this Court - Whether once a proceeding for the enforcement of a foreign award is filed before this Court could any other proceeding be filed during the pendency of this matter within the jurisdiction of the Court where respondent is registered or carries on his business - Whether this Court can exercise jurisdiction under Arbitration and Conciliation Act, 1996 against the respondent merely because the award passed in Singapore is recognized by Republic of India to be enforceable in terms of Section 44(b) of the Arbitration and Conciliation Act, 1996 when there are no properties of the judgment debtors situated within the jurisdiction of this Court - Holding that a proceedings for enforcement of a foreign award is maintainable before this Court as against a respondent, who is neither resident of, registered in or does not normally carry on business within the jurisdiction of this Court, if award is passed by an Arbitral Tribunal seated in a country which is party to the New York convention and the said country has been recognized by way of a gazette notification to be a reciprocating country. (Para 11.18)
Finding of the Court: Sine qua non for execution of an award is the existence of properties against which an order could be passed by this Court. If there were no properties of the Judgment debtor situated within the jurisdiction of this Court, no order could be passed by this Court, since no jurisdiction could be exercised by this Court. However, having recognized that the Arbitral Award is enforceable within the jurisdiction by this Court, in the event of any property of the respondent comes within the jurisdiction of this Court and the decree holder being in a position to establish that the said properties are the properties of the Judgment debtor with sufficient documentary evidence, then in such an event this Court would have the power to execute the arbitral award against such properties and as such, the non-existence of the properties when the decree holder approaches this Court for recognition of an award, in Court considered opinion would not be relevant for the purposes of such recognition that the award is enforceable in India.
Result: Petition disposed.
ORDER :
1. The petitioner is before this Court seeking for the following reliefs:
b. Pass such other order as this Hon’ble Court may deem fit and proper in the interest of justice.
2. The petitioner claims to be incorporated under the laws of South Korea and involved in the business of trading chemicals and the respondent is incorporated under the laws of Vietnam being involved in the business of manufacturing wholesale materials and chemicals for agricultural industry.
3. The petitioner and the respondent entered into a Supply Agreement dated 30.05.2018 with the petitioner as a seller and respondent as a buyer which is governed by an Arbitration clause which reads as under:
Any dispute in the interpretation and/or execution of this contract to be settled in and amicable way. If an amicable solution of the problem is impossible, both parties agree to refer the dispute for settlement by arbitration at Singapore in accordance with the rules of Singapore International Arbitration Centre (SIAC). The arbitration shall be conducted in accordance with the rules of Singapore International Arbitration Centre (SIAC) current at the time when the arbitration proceedings are commenced.”
4. There being dispute which had arisen, arbitral proceedings were initiated before the Singapore International Arbitration Centre (SIAC). The Arbitral Tribunal passed an award in favour of the petitioner and awarded a sum of US$ 47,112.00 being the demurrage incurred under the Supply Agreement, interest at US$ 2,545.46 and cost of arbitration in Singapore Dollars SG$12,656.82, filing fee of SG$2000 with claimant’s legal cost of US$ 15,000.00.
5. The arbitral award being rendered by an Arbitral Tribunal seated in Singapore which is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards i.e. New York Convention. Singapore being a reciprocating country and recognized as such by the Republic of India in terms of an Official Gazette issued, the petitioner is before this Court seeking for enforcement of the aforesaid award which is a foreign award within the meaning of Section 44 of the Arbitration and Conciliation Act, 1996 (‘A&C Act’ for short).
6. This Court vide its order dated 18.02.2022 taking into consideration the various aspects relating to the matter has held that the above petition is maintainable. In view of the reasoning already provided in the aforesaid order, the award, subject matter of the above proceedings is required to be recognized by this Court and be capable of being enforced within the territorial limits of this Court and as such, the award dated 18.08.2021 passed by the Arbitral Tribunal in SIAC.ARB.903/2020 is recognized.
7. This Court had on 27.06.2022 formulated the following points for consideration:
ii. Whether once a proceeding for enforcement of a foreign award is filed before this Court could any other proceedings be filed during the pendency of this matter within the jurisdiction of the Court where respondent is registered or carries on his business?
iii. Whether this Court can exercise jurisdiction under Arbitration and Conciliation Act, 1996 against the respondent merely because the award passed in Singapore is recognized by Republic of India to be enforceable in terms of Section 44(b) of the Arbitration and Conciliation Act, 1996 when there are no properties of the judgment debtors situate within the jurisdiction of this Court?
iv. What order?
8. It is the above points which would be requir
Sine qua non for execution of an award is existence of properties against which an order could be passed by Court.
The court emphasized the narrow scope of grounds available under Section 48 of the Arbitration Act for resisting enforcement of a foreign arbitral award and the need for a high threshold to successfu....
The existence of a valid arbitration agreement is a prerequisite for the enforcement of a foreign award, but the Court cannot substitute its own view for that of the arbitrator on the issue of the ex....
Enforcement of foreign arbitration awards is governed by specific provisions under the Arbitration and Conciliation Act, with the resisting party bearing the burden of proof to establish grounds for ....
The court emphasized the 'pro-enforcement bias' in the New York Convention of 1958 and the need to enforce foreign arbitral awards as a rule, denying enforcement only as an exception.
A foreign arbitration award cannot be enforced where the tribunal conclusively finds no valid arbitration agreement exists, as per Sections 44 and 48 of the Arbitration and Conciliation Act, 1996.
Once an award is found to be enforceable under Section 49, it is deemed to be a decree from the date of the foreign award. Only broader principles of CPC apply to Part II of the Act.
Section 47 provides for definition of ‘Court’ under which means High Court having original jurisdiction to decide questions forming subject-matter of arbitral award.
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