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Summary
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International Investor KCSC (“KCSC”) entered into a contract with Sanghi Polyesters Ltd (“SPL”) for the purchase of goods from SPL, which provided for arbitration in London under the auspices of the International Chamber of Commerce (“ICC”). The contract was to be governed by English law, but only to the extent that English law did not conflict with Shari’a law. A dispute arose between the parties and KCSC initiated arbitration in London, obtaining a favourable award. SPL sought, unsuccessfully, to annul the award before the High Court in London. KCSC sought to enforce the award in India and seized the Principal District Judge of the Ranga Reddy District to that effect. The District Judge granted enforcement of the award but found that KCSC would have to file a separate petition for the execution of the award. It denied KCSC’s request to direct SPL to disclose its properties. SPL appealed to the High Court of Andhra Pradesh against the decision. First, it argued that that the award should not be enforced under Section 48(1)(a) Arbitration and Conciliation Act 1996 (the “1996 Act”) (mirroring Article V(1)(a) NYC) because, according to SPL, KCSC was claiming for interest on the basis of an agreement governed by Shari’a law. Second, SPL argued that it had not been afforded an opportunity to present its case. KCSC also appealed against the decision to the High Court of Andhra Pradesh, arguing that a separate step was not needed for the execution of the award, and also that SPL should be ordered to disclose its properties.
The High Court of Andhra Pradesh allowed KCSC’s appeal and dismissed SPL’s appeal, ordering the enforcement of the award and finding that KCSC need not take a separate step to execute the award. The High Court rejected both grounds for non-enforcement advanced by SPL. It rejected SPL’s argument that “agreement” in Section 48(1)(a) of the 1996 Act refers to the purchase agreement, holding that the reference to “agreement” in Section 48(1)(a) is to the arbitration agreement entered into by the parties. Further, the High Court considered that SPL had already raised the argument that it had not been afforded an opportunity to present its case before the High Court in London, which had been rejected. Consequently, the High Court of Andhra Pradesh noted that the doctrine of res judicata prevented SPL from relying on the same ground. In reaching these conclusions, the Court remarked that Sections 44 and 48 of the 1996 Act are “substantially a reproduction” of Articles II and V NYC. The Court stated that the arbitral award in question was “a foreign award, governed by the New York Convention”, an expression defined in Section 44 of the 1996 Act, and also placed burden of proof on the party challenging enforcement, as provided by Section 48 of the 1996 Act.
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Refine your searchIndia / 22 December 2017 / India, High Court of Andhra Pradesh / Thota Gurunath Reddy v. Continental Hospitals Private Limited / Civil Revision Petition No. 6610 of 2017
