The existence of an arbitration agreement is crucial for the recognition of a foreign award, and a trader is entitled to damages based on the difference between the market value and the contracted price of goods.

VIBHU BAKHRU, J.

EX.APPL.(OS) 582/2014

1. The above captioned petition has been filed by Falcon Progress Limited (hereafter 'FPL'), a company registered under the laws of Hong Kong, for enforcement of the foreign award dated 22.11.2012 as corrected by the award dated 21.12.2012 (hereafter 'the impugned award'). The impugned award was rendered by the sole arbitrator pursuant to arbitration proceedings conducted under the rules of Singapore International Arbitration Centre (SIAC) in respect of disputes between FPL and Sara International Ltd. (hereafter 'Sara'), the Judgment Debtor.

2. Sara 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 impugned award be declined.

3. In the present application, Sara has pleaded that the recognition and enforcement of the impugned award be declined on several grounds; but, Mr Sethi, learned senior counsel appearing for Sara has broadly canvassed only two reasons in support of the relief sought.

4. First of all, he submitted that there was no agreement between FPL and Sara and, therefore, the impugned award could not be enforced as a foreign award. He submitted that although the parties had exchanged a signed agreement -in electronic form -on 24.04.2009, the said agreement was not a concluded contract but was only an agreement to agree. Consequently, the same was not binding on the parties. He submitted that, therefore, the arbitration clause contained in the said agreement was also not binding on the parties. He earnestly contended that the signed copy of the agreement was forwarded on behalf of FPL on 24.04.2009 as an attachment to an e-mail but in the body of the e-mail, FPL had requested Sara to nominate a vessel and indicate the quantity so that the Letter of Credit (LC) quantity and amount could be determined. He submitted that the demand to nominate a vessel as a pre-condition for opening the LC was contrary to the terms of the agreement attached with the email and, therefore, the attached agreement could not be considered as a concluded contract. He also referred to Article 7 of the agreement in question and contended that one of the essential terms regarding the port of discharge had not been agreed to between the parties. Thus, the alleged agreement could only be considered to be an agreement to agree and not a concluded contract.

5. Secondly, Mr Sethi submitted that there was no evidence of any damages suffered by FPL and, therefore, the damages awarded in favour of FPL were unsustainable. He stated that FPL was a trader and had been awarded damages on the basis of difference between the market value of product and the contracted price of the product under the agreement. He submitted that although the measure of damages accepted by the Arbitral Tribunal was apposite and in accordance with Section 51 of the Sale of Goods Act, 1979 (United Kingdom), nonetheless FPL had to prove that it had incurred such damages. He submitted that since there was no evidence that FPL had procured the contracted quantity of the product from a third party at higher rates, it was not entitled to any damages. He submitted that in the given circumstances, the award of damages was contrary to the fundamental policy of India law.

6. The learned counsel for FPL countered the submissions made by Mr Sethi. He submitted that the Arbitral Tribunal had considered the question whether there existed a concluded contract and had rejected the submissions now urged before this court. He contended that the impugned award was binding and Sara could not be permitted to re-agitate the matter in these proceedings.

7. I have heard the learned counsel for the parties.

8. The contention advanced on behalf of FPL that the question as to the existence of a contract cannot be agitated in these proceedings as the same had been considered by the Arbitral Tribunal, is unmerited. The existence of an arbitration agreement is s