Case Law
India / 11 May 2010 / India, High Court of Delhi / Fittydent International GmbH v. Brawn Laboratories Ltd / CS (OS) 2447/2000 & IA 12332/2008
Country | India |
Court | India, High Court of Delhi |
Date | 11 May 2010 |
Parties | Fittydent International GmbH v. Brawn Laboratories Ltd |
Case number | CS (OS) 2447/2000 & IA 12332/2008 |
Source |
http://www.judis.nic.in (website of the decisions of the Supreme Court as well as several High Courts) |
Languages | English |
Summary | Fittydent International GmbH (“Fittydent”) entered into a contract with Brawn Laboratories Ltd (“Brawn”) licencing Brawn to manufacture and sell Fittydent’s products in India, which provided for arbitration under the rules of the International Chamber of Commerce (“ICC”). A dispute arose between the parties and Fittydent initiated an arbitration proceeding which culminated in an award in its favour. Fittydent sought to enforce the award in India, a motion which Brawn resisted by arguing that, pursuant to Section 48 of the Arbitration and Conciliation Act 1996 (the “1996 Act”) (mirroring Article V NYC), the enforcement of the award would be contrary to public policy. According to Brawn, enforcement would be contrary to public policy for three reasons: (i) because the contract between the parties on which the award was based was expressed to be subject to the approval(s) by the Government of India and/or the Reserve Bank of India and, such approval(s) not having been obtained, the contract was void and did not give rise to any legal obligations; (ii) because the award ordered damages to be paid to Fittydent reflecting the entire consideration under the contract in circumstances where Fittydent had not performed some of its obligations under the contract; and, finally, (iii) because the damages which had been awarded included a licence fee which had not been triggered on the terms of the contract. Finally, Brawn argued that the 8.5% rate of interest imposed by the arbitrator had been usurious and excessive. The High Court of Delhi refused to stay the enforcement of the award, finding that none of the arguments advanced by Brawn showed that enforcement would be contrary to public policy, but nonetheless adjusted the rate of interest to 2%. The High Court found that it was Brawn’s obligation to obtain the said approval(s) and, on that view, a party in breach could not benefit from its own wrong. The learned judge stressed that the arbitrator had made a finding of fact that Brawn had breached its contractual obligations by failing to secure the necessary approval(s). The Court considered the arbitrator’s view to be plausible, and, moreover, held that an enforcing court was precluded by Section 48 of the 1996 Act from interfering with the arbitrator’s views. Turning to the concept of public policy, the judge remarked that it is to be narrowly construed as representing the fundamental policy of the law of India. An expansive construction of the concept of public policy, the judge opined, would vitiate the NYC’s “basic intent of removing obstacles to enforcement”. The High Court also rejected the second and third of Brawn’s arguments, again finding that the arbitrator had considered the matters raised by Brawn and, according to the arbitrator’s construction of the contract, he had found against Brawn. In the Court’s view these were questions of fact, beyond the scope of the enforcing court when dealing with proceedings filed under Sections 48 and 49 of the 1996 Act. The learned judge did deem it appropriate to adjust the rate of interest to 2% and declared the award to be enforceable with the reduced rate of interest. |
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Attachment (1)
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