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2014 Supreme(Bom) 209
High Court of Judicature at Bombay
R.D. DHANUKA, J.
Mitsui OSK Lines Ltd., (Japan)
Versus
Orient Ship Agency Pvt. Ltd. (India)
Arbitration Petition No. 842 of 2009
Decided On: 28-01-2014
For the Petitioner:Dara Zaiwala, Senior Advocate, along with Zuben Behramkamdin, Abhishek Singh i/b M/s. Mulla & Mulla, Advocates.
For the Respondents:Ashish Kamat, along with Ms Pooja Kshirsagar i/b M/s Kartikeya & Associates, Advocates.
Headnote:
Petitioner, a Japanese company, and respondent, an Indian company, entered into an agency agreement in 1964, which was amended several times. Disputes arose between the parties, and petitioner invoked arbitration in 2002. Respondent did not appoint an arbitrator, so petitioner applied to the Supreme Court of India, which held that Indian courts did not have jurisdiction and that arbitration should be conducted in Tokyo, Japan, in accordance with Japanese law. Petitioner applied to the Tokyo District Court, which appointed an arbitrator on behalf of respondent. Respondent challenged the appointment of the arbitrator and the arbitration proceedings in the Tokyo High Court and Supreme Court of Japan, but was unsuccessful. The arbitral tribunal rendered an award in favor of petitioner in 2009. Petitioner filed a petition in the Bombay High Court to enforce the award under the Arbitration and Conciliation Act, 1996. Respondent objected to the enforcement of the award on various grounds, including that petitioner had filed a suit in India for the same relief, that the arbitral tribunal lacked jurisdiction, and that the award was contrary to public policy. The Bombay High Court held that petitioner had complied with the requirements for enforcement of the foreign award under the Act, that the objections raised by respondent were not covered by any of the grounds of objections under section 48 of the Act, and that none of the grounds raised by respondent indicated that the enforcement of the award would be contrary to the public policy of India. The court therefore granted the petition and ordered enforcement of the award.
Fact of the Case:
Petitioner, a Japanese company, and respondent, an Indian company, entered into an agency agreement in 1964, which was amended several times. Disputes arose between the parties, and petitioner invoked arbitration in 2002. Respondent did not appoint an arbitrator, so petitioner applied to the Supreme Court of India, which held that Indian courts did not have jurisdiction and that arbitration should be conducted in Tokyo, Japan, in accordance with Japanese law. Petitioner applied to the Tokyo District Court, which appointed an arbitrator on behalf of respondent. Respondent challenged the appointment of the arbitrator and the arbitration proceedings in the Tokyo High Court and Supreme Court of Japan, but was unsuccessful. The arbitral tribunal rendered an award in favor of petitioner in 2009.
Finding of the Court:
The Bombay High Court held that petitioner had complied with the requirements for enforcement of the foreign award under the Act, that the objections raised by respondent were not covered by any of the grounds of objections under section 48 of the Act, and that none of the grounds raised by respondent indicated that the enforcement of the award would be contrary to the public policy of India.
Issues: Whether the petitioner had complied with the requirements for enforcement of the foreign award under the Act. Whether the objections raised by respondent were covered by any of the grounds of objections under section 48 of the Act. Whether the enforcement of the award would be contrary to the public policy of India.
Ratio Decidendi: The court held that petitioner had complied with the requirements for enforcement of the foreign award under the Act, that the objections raised by respondent were not covered by any of the grounds of objections under section 48 of the Act, and that none of the grounds raised by respondent indicated that the enforcement of the award would be contrary to the public policy of India. The court therefore granted the petition and ordered enforcement of the award.
Final Decision: Petition granted and enforcement of the award ordered.
1. By this petition filed by the petitioner under Sections 46 to 49 of the Arbitration & Conciliation Act, 1996, petitioner seeks a declaration that the award dated 2nd February 2009 is enforceable within the meaning of the Arbitration and Conciliation Act, 1996 and is accordingly a decree of this Court and seeks direction against the respondent to pay to the petitioner the total amount of Rs.39,28,91,751.67/- and USD 1,89,342.19 and Rs.92,15,284.38/- with interest and costs. Some of the relevant facts for the purpose of deciding this petition are as under.
2. The petitioner company is incorporated under the laws of Japan and is engaged in shipping business. Respondent Company is carrying on business of agency of ocean transportation. On or about 1st April 1964, petitioner and the respondent entered into an agency agreement by which the petitioner appointed the respondent as an agent of ship's business, cargo business, passenger business and other related activities and duties in the Western Coast of India and in North Calicut. Article 17 of the said agreement provided for disputes being adjudicated upon by arbitration. Article 17 of the said agreement is extracted as under:-
“Article 17: any difference of opinion or any claim or dispute arising out of this Agreement shall be settled by arbitration in Tokyo. Each party shall appoint one arbitrator with power to such arbitrators to appoint, if necessary, an umpire. Any such arbitration shall be deemed a reference to arbitration under the provisions of the 'Code of Civil Procedure of Japan 1890 regarding Arbitration Proceedings' or any statutory modification or reenactment thereof for the time being in force.”
3. The said agency agreement dated 1st April 1964 was amended in the years 1972, 1973, 1974, 1975, 1987, 1993 and 1997 for the purpose of altering agency fee, commission and retainer fee. All other terms of the said agency agreement remained unchanged.
4. It is the case of petitioner that in the month of January 2001, petitioner noticed various irregularities in the General Statement of Account prepared by the respondent and the petitioner therefore called upon the respondent for explanation and for correcting the irregularities. Dispute arose between the parties. On 2nd January 2002, petitioner called upon the respondent to pay various amount. Vide letters dated 5th April 2002 and 5th June 2002, petitioner terminated the agency agreement. Petitioner thereafter filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 in this Court inter alia praying for injunction against the respondent from operating the bank account bearing No.44000531 with the Sumitomo Mitsui Banking Corporation. By an order dated 1st November 2002, the said arbitration petition was disposed of by this Court.
5. On 10th June 2002, petitioner invoked arbitration clause and nominated Mr. Mitsuhiro Toda as arbitrator and called upon the respondent to appoint their arbitrator. Respondent did not appoint any arbitrator. Petitioner filed an application under Section 11 of the Arbitration Act before the Supreme Court. In those proceedings, it was contended by the respondent that Section 11(6), (8) and (12) of the Arbitration Act would not be applicable as the arbitration agreement provided that arbitration was to be conducted in Tokyo (Japan) and was governed by law of arbitration applicable in Japan, particularly Code of Civil Procedure of Japan, 1890. By an order dated 24th July 2002, the Supreme Court held that the proposed arbitration was to be governed by Japanese law and the place of arbitration was also Tokyo and thus Indian Courts did not have jurisdiction to pass any orders for appointment of arbitrators. By letter dated 14th August 2002, petitioner informed the respondent that they would apply to Japanese Court for nomination of an arbitrator on behalf of the respondent. Since respondent did not appoint any arbitrator, petitioner applied to the Tokyo District court for no
