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2016 Supreme(Del) 4021
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
XSTRATA COAL MARKETING AG - Decree Holder
Versus
DALMIA BHARAT (CEMENT) LTD. - Judgement Debtor
EX.P. 334 of 2014
Decided On : 07-11-2016
For the Decree Holder : Mr. Gourab Banerji with Mr. Prashant Pakiddey, Ms. Shivi Sethi, Mr. Sahil Tagotra and Ms. Vaidehi Misra
For the Judgment Debtor : Mr. A.S. Chandhiok with Mr. Ashish Dholakia, Mr. Abhimanyu Mahajan, Mr. Ankur Mahindroo, Mr. D. Kishore Kumar, Mr. Gautam Bajaj, Ms. Smita Mohan and Ms. Esha Mehta
The main legal point established in the judgment is that the enforcement of foreign awards may be refused only if it is found to be contrary to the fundamental policy of Indian law, and objections to the enforcement of the awards should not entail a review on the merits of the disputes.
Headnote:
Arbitration - Enforcement of Foreign Awards - Arbitration and Conciliation Act, 1996 - Section 48 - Dalmia Cement (Bharat) Limited - South African steam coal - LCIA Arbitration Rules - London Court of International Arbitration - Section 44 - Public Policy of India
Fact of the Case:
Dalmia Cement (Bharat) Limited filed an application under Section 48 of the Arbitration and Conciliation Act, 1996, seeking to decline enforcement of the arbitral awards dated 31.01.2014 and 30.04.2014. The awards were rendered in respect of disputes arising from an agreement dated 09.02.2011 for the supply of South African steam coal. Dalmia contested the enforcement of the awards on various grounds, including that the awards were contrary to the public policy of India.
Finding of the Court:
The court found that the objections raised by Dalmia were not sustainable, as the awards were within the jurisdiction of the Arbitral Tribunal and did not violate the fundamental policy of Indian law. The court held that the measure of damages, award of interest, and allocation of costs were all within the discretion of the Arbitral Tribunal and did not contravene the public policy of India.
Issues: The issues involved in the case included the measure of damages, entitlement to damages, award of interest, and allocation of costs.
Ratio Decidendi: The court held that the objections raised by Dalmia were not sustainable, as the awards were within the jurisdiction of the Arbitral Tribunal and did not violate the fundamental policy of Indian law. The court emphasized that the measure of damages, award of interest, and allocation of costs were all within the discretion of the Arbitral Tribunal and did not contravene the public policy of India.
Final Decision: The court dismissed the application seeking to decline enforcement of the arbitral awards.
VIBHU BAKHRU, J
EA(OS) No.257/2016
1. Dalmia Cement (Bharat) Limited (hereafter 'Dalmia'), the Judgment Debtor/Objector, has filed the present application under Section 48 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), inter alia, praying that enforcement of the arbitral award dated 31.01.2014 (hereafter 'first award') and the final award dated 30.04.2014 (hereafter 'final award'), be declined. Both, the first award and the final award are collectively referred to as 'the impugned awards'.
2. By the first award, the Arbitral Tribunal has awarded a sum of US$393,500 along with interest quantified at US$ 45,980.20 till the award dated 31.01.2014, that is, till the date of passing of the first award. In addition, the Arbitral Tribunal has also awarded post-award interest at the rate of 5% per annum (compounded annually) from 28.02.2014 till the receipt of payment by the Decree Holder (hereafter 'Xstrata'). Admittedly, the first award is final amongst the parties in relation to the merits of all claims made by Xstrata, other than the claim of costs. The final award rendered by the Arbitral Tribunal on 30.04.2014 is limited to award of costs, whereby the Arbitral Tribunal has awarded costs amounting to GB £53,985.46.
3. The impugned awards were rendered in respect of the disputes that had arisen between the parties in relation to an agreement dated 09.02.2011(hereafter 'the Contract') whereby Xstrata had agreed to supply and Dalmia had agreed to purchase 1,00,000 to 1,20,000 metric tons +/-10% of South African steam coal. The Contract included an arbitration clause and the parties had agreed that the Contract as well as the arbitration clause would be construed in all respects according the laws of England. In terms of the arbitration clause, the arbitration proceedings were held in London, United Kingdom and the arbitration was conducted under the LCIA Arbitration Rules of the London Court of International Arbitration.
4. Xstrata is a company incorporated under the laws of Switzerland; thus, the impugned awards are foreign awards within the meaning of Section 44 of the Act.
5. Dalmia claims that enforcement of the impugned awards ought to be declined under Section 48(2)(b) of the Act as according to it such enforcement would be contrary to the public policy of India. It is contended on behalf of Dalmia that the award of damages in favour of Xstrata is without any material evidence. It is contended that although the Arbitral Tribunal had rejected the basis on which Xstrata had quantified its claim for damages but, nonetheless, awarded damages on a completely new basis, which was neither pleaded nor urged by Xstrata. It is further contended that the final award is also perverse and beyond the claims made by Xstrata inasmuch as the Arbitral Tribunal has awarded interest from the date prior to the date of breach of the Contract as claimed by Xstrata. Dalmia also contested the enforcement of the final award on the ground that the award of costs is unreasonable and perverse and contrary to the settled principles. Dalmia urges that since the Arbitral Tribunal had substantially rejected Xstrata's claim for damages, it could not have awarded costs in favour of Xstrata for pursuing such claim.
6. Briefly stated, the relevant facts necessary to address the aforesaid controversy are as under:-
6.1 Xstrata and Dalmia entered into the Contract dated 09.02.2011, in terms of which Xstrata agreed to supply:
"SOUTH AFRICAN STEAM COAL IN BULK:
100,000 to 120,000 metric tons +/-10% shipping tolerance to be shipped in 2 liftings of 50,000 to 60,000 MT +/-10% each. (the plus/minus 10% option is to take account of vessel configuration only and is in Vessel Owner's option and is not cumulative )"
6.2 The aforesaid coal was to be shipped in accordance with the schedule appended to the Contract. The purchase price was agreed to as US$110.50 per metric ton FOB, Richards Bay Coal Terminal, South Africa. The shipment was to be in two tra
