2023 Supreme(Del) 1784
IN THE HIGH COURT OF DELHI AT NEW DELHI
C. Hari Shankar, J.
The Union of India – Appellant
Versus
Reliance Industries Ltd. & Anr. – Respondents
O.M.P.(EFA)(COMM.) 1 of 2019 & EX.APPL.(OS) 583 of 2019, EX.APPL.(OS) 1012 of 2020, EX.APPL.(OS) 1411 of 2021, I.A.3665 of 2019, I.A.3668 of 2019
Decided On : 02-06-2023
Subject
Arbitration - Enforcement of Foreign Awards
Headnote
(B) Legal Interpretation - The absence of a definitive monetary determination in the FPA renders it unenforceable - Public policy considerations emphasized; speculative claims cannot underpin execution actions - The executing court may only execute orders that are clear and capable of execution without further determination. (Paras 53-74)
Facts of the case:
The Union of India sought to enforce a Final Partial Award from an Arbitral Tribunal, asserting an amount due from the respondents based on claims exceeding their entitlement under certain contracts regarding petroleum production.
Findings of Court:
The Court found that the claim was inseparable from the ongoing arbitration concerning the CRL, necessitating further proceedings before execution could be valid.
Issues: Whether an execution petition seeking a monetary claim under a foreign award is maintainable where the award lacks a clear financial directive.
Ratio Decidendi: The Court emphasized that enforcement requires clarity in liabilities, which the current circumstances lack due to outstanding evaluations regarding the CRL, making such execution untenable at this stage.
Result: The execution petition was dismissed as premature and not maintainable.
Mr. Sanjay Jain, ASG with Ms.Mamta Tiwari, Ms. Swati Sinha, Mr.Vijay Kumar, Mr. Debesh Panda, Mr. Anurag Ahluwalia, Mr. Padmesh Mishra, Mr. Arkaj Kumar, Advocates, for the Decree Holder.
Mr. Harish N. Salve, Senior Advocate assisted by Mr.Sameer Parekh, Ms.Sonali Basu Parekh, Mr.Abhiram Naik, Mr.Ishan Nagar, Mr.Manu Bajaj and Mr.Prateek Khandelwal, Ms.Chetna Rai, Ms. Madhuri and Mr. Aruj Mal, Advocates, for R-1 & 2.
| Table of Content |
|---|
| 1. petition initiated for enforcement of 2016 fpa (Para 1 , 2) |
| 2. court's position on execution maintainability (Para 4 , 5) |
| 3. details regarding petroleum contracts and frameworks (Para 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 4. recognition of contractual obligations in arbitration (Para 13 , 14 , 15 , 16 , 21 , 24 , 27) |
| 5. fpa issues and their relevance to execution (Para 19 , 20 , 26 , 28) |
| 6. petitioner asserts rights to profit petroleum (Para 36 , 37) |
| 7. final judgment concluding executability of 2016 fpa (Para 74 , 75 , 76 , 77) |
JUDGMENT
| ACRONYMS USED IN THIS JUDGEMENT, | |
| AT | Arbitral Tribunal |
| CI | Cumulative Investment |
| CNCI | Cumulative Net Cash Income |
| CP | Cost Petroleum |
| CRL | Cost Recovery Limit |
| DC | Development Cost |
| EC | Exploration Cost |
| EPOD | Expanded Plan Of Development |
| FPA | Final Partial Award |
| IM | Investment Multiple |
| IPOD | Initial Plan Of Development |
| MC | Management Committee |
| NIA | Notice Invoking Arbitration |
| NIT | Notional Income Tax |
| PC | Production Cost |
| PO | Procedural Order |
| PSC | Production Sharing Contract |
| PP | Profit Petroleum |
| RIL | Reliance Industries Ltd. |
| SOC | Statement of Claim |
1. This judgment adjudicates EA (OS) 583/2019, EA (OS) 1012/2020, EA (OS) 1411/2021, IA 3665/2019 and IA 3668/2019, in the present Execution Petition OMP (EFA) (Comm) 1/2019, preferred by the Union of India under Section 481[48. Conditions for enforcement of foreign awards. -(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the Court proof that-(a) the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.(2) Enforcement of an arbitral award may also be refused if the Court finds that -(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or(b) the enforcement of the award would be contrary to the public policy of India. Explanation 1. - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if, -(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or(ii) it is in contravention with the fundamental policy of Indian law; or(iii) it is in conflict with the most basic notions of morality or justice.Explanation 2. - For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party c