India / 09 May 2006 / India, Supreme Court / M/S Centrotrade Minerals & Metal. Inc. v. Hindustan Copper Ltd / Appeal (Civil) 2562 of 2006
| Country | India |
| Court | India, Supreme Court |
| Date | 09 May 2006 |
| Parties | M/S Centrotrade Minerals & Metal. Inc. v. Hindustan Copper Ltd |
| Case number | Appeal (Civil) 2562 of 2006 |
| Source |
http://www.judis.nic.in (website of the decisions of the Supreme Court as well as several High Courts) |
| Languages | English |
| Summary | M/S Centrotrade Minerals & Metal. Inc. (“Centrotrade”) entered into a contract with Hindustan Copper Ltd (“HCL”) for the sale goods which provided for arbitration before the Indian Council of Arbitration (“ICA”) and, if either party was in disagreement with the award rendered by the ICA, to appeal the award in a second arbitration under the rules of the International Chamber of Commerce (“ICC”) in London. A dispute arose between the parties and was referred to the ICA for arbitration leading to an award in favour of HCL. Centrotrade then initiated arbitral proceedings in London, before the ICC, appealing the ICA’s award. HCL maintained that the part of the dispute resolution clause providing for the appeal of an award by the ICA’s to the ICC was contrary to public policy. Initially HCL refrained from submitting argument before the arbitrator appointed by the ICC but eventually did so. The ICC arbitrator rendered an award in favour of Centrotrade, which, inter alia, provided that (i) the dispute resolution clause was neither unlawful nor invalid; and, (ii) the ICA award had been wrongly decided. Centrotrade sought to enforce the award in India and applied to the Court of the District Judge in Alipore. HCL resisted the enforcement application on the basis of Section 48 of the Arbitration and Conciliation Act 1996 (the “1996 Act”). The District Judge found for Centrotrade, a decision which HCL appealed to the High Court. The High Court held that although successive arbitrations were not permissible in India, the two awards cancelled each other out. Both Centrotrade and HCL appealed the High Court’s decision to the Supreme Court. The Supreme Court allowed HCL’s appeal, granting an order to stay the enforcement of the award, as it held that the part of the dispute resolution clause concerning the appeal of the ICA’s award was void ab initio and did not have effect. The Supreme Court held that serious procedural defects in the arbitral proceedings would be contrary to public policy, as the concept is understood in Indian law, and could therefore constitute a ground for refusing an award’s enforcement. Turning to the clause at hand, the Supreme Court stressed that Indian law did not allow the parties to agree on whether an award could be appealed. Such a contractual arrangement, the Court held, would be void as contrary to public policy. The Supreme Court considered that if a court has the power, under Section 45 of the 1996 Act (which mirrors Article II(3) NYC) to determine whether an agreement to arbitrate is valid for the purpose of referring the parties to arbitration, a court should also have the power to arrive at a finding with respect to the validity of an arbitration agreement in the context of enforcement of an award. |
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