Introduction

1. Agritrade International Pte. Ltd. (‘Agritrade’) has filed the present petition under Sections 47, 48 and 49 of the Arbitration & Conciliation Act, 1996 (‘Act’) seeking enforcement of an Award dated 12th March 2007 and 14th January 2008 passed by the Arbitral Tribunal under the auspices of the Palm Oil Refiners Association of Malaysia (‘PORAM’) whereby the Respondent, National Agricultural Cooperative Marketing Federation of India Limited (‘NAFED’), has been directed to pay Agritrade a sum of US Dollar (‘USD’) 580,000 together with interest at the rate of 8% from 7th October 2004 till the date of the Award and further interest at 8% from the date of the Award till the date of payment together with costs of arbitration as assessed by PORAM.

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Background facts

2. Agritrade is engaged in the business of buying and selling crude palm oil (`CPO’) in bulk in the international market. It is stated that the sale and purchase of CPO oil is usually concluded through brokers. It is the case of Agritrade that a contract dated 11th May 2004 was entered into between it and NAFED, concluded and issued through M/s. Global Commodities (M) Sdn. Bhd. of Kuala Lumpur, Malaysia (‘Global Commodities’), whereby NAFED agreed to buy 5000 metric ton (MT) of CPO (in bulk) at the price of USD 541 per MT CIF Kolkata. According to Agritrade the shipment was to take place in May 2004 and payment was to be made by 100% irrevocable, unrestricted and confirmed Letter of Credit (‘L/C’) at site with TT reimbursement clause.

3. Agritrade states that the terms of the contract were to be in accordance with PORAM/FOFSA 81. Disputes arising out of the said contract were to be resolved in accordance with PORAM Rules of Arbitration and Appeal in force on the date of the contract. Agritrade states that in terms of the contract it nominated a vessel, MT Chem Adriatic/Sub with Laycan which was to sail between 18th and 23rd May 2004 through a broker, Global Commodities, on 12th May 2004. An L/C was to be established by NAFED within two days of the nomination of the said vessel, i.e., 14th May 2004. However, NAFED failed to do so.

4. Agritrade further claims that on 20th May 2004 it substituted the said vessel with MT Andreas III/Sub with Laycan which was to sail between rd May and 28th May 2004 and agreed to change the discharging port to Kandla at the request of NAFED. Again, despite reminders, NAFED failed to take steps to open the L/C. It is then claimed that on 24th May 2004 the representatives of Agritrade met the representatives of Earthtech Enterprises Ltd. (‘Earthtech’) at New Delhi. It is stated that Earthtech was the agent of NAFED for performance of the contract. It is further stated that as a result of the said meeting, Earthtech agreed to open the L/C for CPO 6000 MT on behalf of NAFED in early shipment. It also agreed to open LC for the months of July, August and September 2004. However, the L/C was not established. Consequently, Agritrade wrote a letter dated 7th October 2004 declaring NAFED to be in breach of the contract. On 15th April 2005 Agritrade invoked the arbitration clause and appointed Mr. Lim Lee Hock as its Arbitrator. However, NAFED failed to appoint its Arbitrator even after a request in this behalf was made by PORAM. Consequently, the Chairman of PORAM nominated Mr. P.R. Thakore on behalf of NAFED as Arbitrator and Mr. Tan Boon Kenj was appointed as the Umpire. The said arrangement was communicated to the parties by PORAM by letter dated 5th July 2005.

Proceedings before the Arbitral Tribunal

5. On 18th July 2005, Agritrade submitted its claim petition to PORAM. This was forwarded to NAFED on 26th July 2005 and it was required to file its statement of defence. A defence statement was filed by NAFED on th August 2005 to which a reply was filed by Agritrade on 9th November 2005. NAFED filed an Additional Statement of Defence on 23rd November 2005. In its defence, NAFED raised a prelimin