17 January, 2016
In Armada (Singapore) Pte. Ltd. v Ashapura Minechem Ltd., a single judge of the Bombay High Court heard a petition for enforcement of foreign arbitral awards and harmoniously interpreted the provisions of the Arbitration and Conciliation Act 1996 (the "Arbitration Act") with those under the Sick Industrial Companies (Special Provisions) Act 1985 ("SICA"). Section 22 of SICA provides for suspension of legal proceedings against (among others) property of a qualifying "industrial company", such that enforcement cannot be pursued without the consent of the Board for Industrial and Financial Reconstruction (the "Board").
The petition sought a declaration that the foreign awards in question were enforceable as decrees under Section 48 (under Part II) of the Arbitration Act, as well as an order for execution of the foreign awards.
During the pendency of the petition in this case, the respondent had applied to the Board, seeking relief on various grounds. The petitioner was also a party to the proceedings before the Board.
The Court considered its prior decision in Tropic Shipping Co. Ltd. v Kothari Global Limited, and held that Section 22 of SICA does not prevent the court from declaring that a foreign arbitral award would be enforceable as a decree. However, the Court also held that in view of pending proceedings under SICA before the Board, the foreign awards could not be executed without permission from the Board.
The Court also rejected the respondent's attempts to challenge the awards under section 34 of the Arbitration Act (on the basis that it did not apply to arbitrations seated outside India) and on public policy grounds, under section 48 (on the basis that a "simpliciter" violation of Indian law was not a valid ground for doing so). In doing so, the Court noted that the scope for objecting to enforcement of a foreign award is "very limited" under the Arbitration Act.
For further information, please contact:
Nicholas Peacock, Partner, Herbert Smith Freehills
nicholas.peacock@hsf.com
