Telangana High Court
St Frosso Shipping Corporation vs M/S Eastern Multitrans Logistics Pvt ... on 27 June, 2025
IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
***
EXEP.No.4 of 2022
Between:
St Frosso Shipping Corporation
Petitioner
AND
M/s Eastern Multitrans Logistics Pvt Ltd
Respondent
JUDGMENT PRONOUNCED ON: 27.06.2025
THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
EXEP.No.4 of 2022
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments? : Yes
2. Whether the copies of judgment may be
Marked to Law Reporters/Journals? : Yes
3. Whether Her Ladyship wishes to
see the fair copy of the Judgment? : No
_________________________________
MOUSHUMI BHATTACHARYA, J
2
* THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
+ EXEP.No.4 of 2022
% Dated 27.06.2025
# Between:
St Frosso Shipping Corporation
Petitioner
AND
M/s Eastern Multitrans Logistics Pvt Ltd
Respondent
! Counsel for the appellant: Sri Vikram Pooserla, learned Senior Counsel
representing Sri M.Abhinay Reddy, learned counsel for the petitioner.
^ Counsel for the respondent No.1: Sri T.Bala Mohan Reddy, learned
counsel appearing for the respondent.
< GIST :
> HEAD NOTE :
? Cases referred :
1. 2024 SCC OnLine SC 3219
2. 2017 8 SCC 377
3. 2020 20 SCC 760
3
HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
EXEP.No.4 of 2022
Sri Vikram Pooserla, learned Senior Counsel representing Sri M.Abhinay Reddy,
learned counsel for the petitioner.
Sri T.Bala Mohan Reddy, learned counsel appearing for the respondent.
ORDER:
1. The petitioner/Award Holder seeks execution of a Foreign
Award dated 03.05.2022 for a sum of USD 443,310.47 (equivalent
to INR 35,329,716.57) and £ 7,000 (equivalent to INR 638,487.97)
along with interest of USD 9,235.63 (equivalent to INR 736,035.38)
at pro-rata compoundable rates of interest.
2. The particulars of the reliefs prayed for are tabulated as part
of the Execution Petition filed under Form No.53 as per Rule 141
(2) of The Civil Rules of Practice and Order XXI Rule 11 of The
Code of Civil Procedure, 1908.
3. The petitioner has also filed several Interlocutory
Applications for directions pending adjudication of the main
Execution Petition. The details of these applications will be
discussed later in the judgment.
4. The petitioner is a Shipping Company registered in Liberia
and owner of the Vessel M.V. FROSSO K. The respondent/Award
Debtor is a Company registered in India and provides shipping
services for construction material, metals, minerals and chemicals.
5. The brief facts of the case are narrated below:
6. On 29.09.2021, the parties entered into a Fixture Recap for
chartering the petitioner's vessel to the respondent for a trip of 70
days via India and Madagascar or Mozambique. The vessel was
delivered to the respondent on 30.09.2021 at Paradip Port, India.
On 16.01.2022, the vessel was re-delivered to the petitioner at
Passing Port Durban, South Africa. On 17.01.2022, the petitioner
issued a Hire Statement until 16.01.2022 indicating that an
amount of USD 443,384.53 was due. On 25.01.2022, the
petitioner sent a letter to the respondent through their Lawyers
requesting remittance of the amount due. On 27.01.2022, the
respondent replied to the petitioner via an email confirming that
the amount due to the petitioner was USD 443,310.47 and
requested confirmation of the said amount. The petitioner
confirmed the amount on the same day.
7. On 02.02.2022, the petitioner nominated Mr.Alan Oakley as
the Arbitrator and invited the respondent to nominate its
Arbitrator within 14 days. The invocation was made in accordance
with the arbitration clause in the Charter Party. The respondent,
however, failed to nominate its Arbitrator and proposed to settle
the due amount which was rejected by the petitioner since the
respondent's offer was considerably lower than the petitioner's
claim. On 11.03.2022, the petitioner served their claim
submission on the respondent.
8. On 13.04.2022, the Arbitrator sent an order via email
directing the respondent to serve their defence submissions by
20.04.2022. The Arbitrator passed a final and peremptory order
on 21.04.2022 directing the respondent to serve their defence
submissions by 28.04.2022. The Arbitrator proceeded with the
Arbitration on 02.05.2022 since the respondent failed to comply
with the order and serve any defence submissions or correspond
with the Arbitrator. None of the parties requested for an oral
hearing. The Award was made on 03.05.2022 in favour of the
petitioner directing the respondent to pay a sum of USD
443,310.47 along with interest and costs of arbitration and the
Arbitrator's costs of £ 7,000 along with interest. The petitioner
sent an email to the respondent on 20.05.2022 seeking payment of
the awarded amount. The respondent failed to respond or comply
with the directions of the Award.
9. The present Execution Petition was filed on 02.12.2022.
10. The Fixture Recap dated 29.09.2021 and the Pro forma
Charter are collectively referred to as the Charter Party dated
29.09.2021. Clause 36 of the Fixture Recap dated 29.09.2021
executed between the parties provides for "Arbitration in London -
Rest as per CP " (CP stands for Charter Party). The proforma of
Time Charter is annexed to the Fixture Recap. Clause 17 of the
Charter Party provides for arbitration. The said clause is set out
below:
Clause 17:
'That should any dispute arise between Owners and
the Charterers, the matter in dispute shall be referred to
three Persons at London, one to be appointed by each of the
parties hereto, and the third by the two so chosen; their
decision or that of any two of them, shall be final, and for the
purpose of enforcing any award, this agreement may be
made a rule of the Court. The Arbitrators shall be commercial
men.'
11. Clause 30 provides for Arbitration. The relevant part of
Clause 30 is set out below:
'BIMCO Dispute Resolution Clause 2015 to apply (with small
claims arbitration procedure to apply for claims up to US$
100,000.00 excluding Legal costs. Bills of lading to be governed by
English law and English jurisdiction to apply. BIMCO Conwartime
2013 and BIMCO piracy clause 2008 to be incorporated into Charter
Party & bills of lading.
The recap and the signed Charter Party, the recap will take
precedence unless the parties have expressly agreed otherwise
between the conclusion of the fixture as recorded in the recap and
the signing of the Charter Party.'
12. Clause 22(a) of the BIMCO Terms, 2015 sets out the Dispute
Resolution Clause.
'(a) This Contract shall be governed by and construed in
accordance with English law and any dispute arising out of or in
connection with this his Contract shall be referred to arbitration in
London in accordance with the Arbitration Act 1996 or any statutory
modification or re-enactment thereof save to the extent necessary to
give effect to the provisions of this Clause.
The arbitration shall be conducted in accordance with the
London Maritime Arbitrators Association (LMAA) Terms current at
the time when the arbitration proceedings are commenced.
The reference shall be to three arbitrators. A Party wishing to
refer a dispute to arbitration shall appoint its arbitrator and send
notice of such appointment in writing to the other Party requiring the
other Party to appoint its own arbitrator within fourteen (14)
calendar days of that notice and stating that it will appoint its
arbitrator as sole arbitrator unless the other Party appoints its own
arbitrator and gives notice that it has done so within the fourteen
(14) days specified. If the other Party does not appoint its own
arbitrator and give notice that it has done so within the fourteen
(14) days specified, the Party referring a dispute to arbitration may,
without the requirement of any further prior notice to the other
Party, appoint its arbitrator as sole arbitrator and shall advise the
other Party accordingly. The award of the sole arbitrator shall be
binding on both Parties as if he had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to
vary these provisions to provide for the appointment of a sole
arbitrator'
13. Clause 10 of The London Maritime Arbitrators Association
(LMAA) Terms 2021, referred to in the Clause 22(a) of BIMCO
Terms, 2015, reiterates the same procedure as provided under
BIMCO Terms, 2015. Clause 10 of the LMAA Terms, 2021, is set
out below:
'A party wishing to refer a dispute to arbitration in
accordance with paragraph 8(b)(i) or paragraph 9(a) above
shall appoint its arbitrator and send notice of such
appointment in writing to the other party, requiring the other
party to appoint its own arbitrator within 14 calendar days of
the notice, and stating that the requesting party will appoint
its own arbitrator as sole arbitrator unless the other party
appoints its own arbitrator and gives notice that it has done so
within the 14 days specified. If the other party does not
appoint its own arbitrator and give notice that it has done so
within the 14 days specified in the notice, the party referring a
dispute to arbitration may, without the requirement of any
further prior notice to the other party, appoint its arbitrator as
sole arbitrator and shall advise the other party accordingly.
The award of a sole arbitrator appointed in this manner shall
be binding on both parties as if the sole arbitrator had been
appointed by agreement.'
14. Learned Senior Counsel appearing for the petitioner
contends that the petitioner nominated Mr.Alan Oakley as its
Arbitrator in accordance with the procedure agreed by the parties
in the Agreement and sent several communications to the
respondent for appointing its Arbitrator within the time frame
provided under Clause 22(a) of the BIMCO Terms 2015. The
respondent, however, failed to appoint its Arbitrator within 14
calendar days of the petitioner's notice and the petitioner
accordingly proceeded to appoint Mr. Alan Oakley as the Sole
Arbitrator for deciding the dispute upon notice to the respondent.
15. Senior Counsel submits that the respondent was kept
informed at all stages of the arbitration i.e., pre-arbitration, during
the arbitration proceeding as well as in the post-Award stage. The
respondent was also sent a Notice vide email requesting for
compliance of the Award in terms of making payment to the
petitioner. Senior Counsel submits that the grounds raised by the
respondent for refusing enforcement of the Award are contrary to
the admitted facts on record which would include the respondent's
admission and acknowledgment of the amount outstanding to the
petitioner. Counsel disputes that enforcement of the Award is
contrary to the public policy of India in view of the unilateral
appointment of the sole arbitrator. Counsel defends the Execution
Petition as being properly executed and signed by the authorized
representative of the petitioner.
16. Learned counsel appearing for the respondent/Award Debtor
argues that the impugned Award is in contravention of the
fundamental Policy of Indian Law and enforcement of the Award
should be refused under section 48(2)(b) of The Arbitration and
Conciliation Act, 1996 read with the Explanations 1 and 2 thereto.
Counsel submits that the fundamental policy of India has been
violated since the petitioner unilaterally appointed the sole
Arbitrator who consequently would be a Judge in the petitioner's
cause. Counsel submits that the Arbitration Agreement in the
Charter Party is invalid and offends the most basic notions of
morality and justice. According to counsel, the petitioner should
have approached a neutral forum for appointment of a sole
Arbitrator under section 18 of The English Arbitration Act, 1996
which is the counterpart of section 11 of The Indian Arbitration
and Conciliation Act, 1996.
17. The second ground urged on behalf of the respondent is that
the respondent was not given proper notice of the appointment of
the Arbitrator or of the arbitral proceedings and was not aware of
the emails sent by the petitioner. Counsel further argues that the
present Execution Petition suffers from defects since there is an
inconsistency between the affidavits in support of the E.P. and the
notarization document.
18. I have considered the competing submissions made on
behalf of the petitioner/Award Holder and the respondent/Award
Debtor in light of the documents filed along with the Execution
Petition. The decision is being rendered on the three grounds taken
by the respondent/Award Debtor for refusing enforcement of the
Award.
19. The Award dated 03.05.2022 is a 'Foreign Award' as defined
in Part II, section 44, of The Arbitration and Conciliation Act, 1996.
Under the said provision, a 'Foreign Award' means an arbitral
award on differences between persons arising out of legal
relationships, whether contractual or not, considered as
commercial under the law in force in India, made on or after
11.10.1960 which fulfills both the conditions under section 44 as
enumerated in clauses (a) and (b) thereunder. A Foreign Award
under section 44 falls within the scope of the New York Convention
Awards in the First Schedule to the Act and is an Award which is
not a domestic award in the State where recognition and
enforcement of the Award is sought. The Award in the present
case is a New York Convention Award amenable to the First
Schedule.
20. In the present case, Clause 36 of the Fixture Recap provides
for 'Arbitration in London' which is reiterated in Clause 17 of the
Charter Party. Clause 30 provides that the BIMCO Dispute
Resolution Clause 2015 shall apply and the Bills of Lading are to
be governed by English Law. The present Execution Petition has
therefore been filed under Part II of the 1996 Act for enforcement of
a Foreign Award. Further, the registered office of the respondent is
in Hyderabad and the respondent's related companies are also
registered in Hyderabad with assets within the jurisdiction of the
High Court. The particulars of properties of the respondent
available in the public domain, as per the audited financial
accounts of the respondent as on 31.01.2021, forms part of the
Schedule to the Execution Petition.
21. Before dealing with the two primary objections taken by the
respondent against enforcement of a Foreign Award, it is necessary
to decide whether the present Execution Petition has been properly
verified.
22. The Execution Petition has been signed by one Mr. Ioannis
Kefalas, who is the Authorised Representative of the petitioner-
company. The verification states that Mr.Ioannis Kefalas resides in
Greece and the Notary and Apostille were therefore carried out in
Greece, as evident from the Notary and Apostille attached to the
Execution Petition. The Court does not find any reason to
disbelieve the contention of Senior Counsel appearing for the
petitioner that the statement in the verification being done at
Liberia was through inadvertence and should not be seen as an
incurable or deliberate defect or mis-statement on the part of the
Award-holder. The Notary and Apostille speak for themselves,
specifically, that the Execution Petition is signed and verified in
Greece and not in Liberia. The translations of both the Notary and
Apostille have subsequently been brought on record by the
petitioner.
23. The Court has considered the relevant documents and finds
the same to be in order and is consequently of the view that there
is no defect in the verification of the Execution Petition - much less
any defect which would disentitle the petitioner from filing the
Execution Petition. Mr.Ioannis Kefalas is therefore entitled to file
the Execution Petition as the authorized representative of the
petitioner - company.
24. I.A.No.9 of 2022 is thus allowed and Mr. Ioannis Kefalas is
permitted to represent the petitioner.
25. The other Grounds of refusal raised by the Award-debtor are
being dealt with below:
The respondent/Award Debtor was not given proper Notice of the
Arbitrator's appointment or of the Arbitral Proceedings.
26. The admitted documents on record, forming part of the
correspondence between the parties, contradict the
objection/ground raised by the respondent for refusing
enforcement of the Foreign Award.
27. The petitioner's lawyers sent an email to the respondent on
03.02.2022 along with a Notice dated 03.02.2022 of
Commencement of Arbitration Proceedings and appointment of
Arbitrator on behalf of the petitioner. A copy of the email dated
03.02.0222 was also sent by the ACF - Operations Department
(brokers of the petitioner) to Lightship Chartering (brokers of the
respondent) forwarding the Notice dated 03.02.2022 for
commencement of the Arbitration. The petitioner's lawyers also
sent an email dated 22.02.2022 to the respondent with regard to
appointment of Mr.Alan Oakley as the sole Arbitrator. Lightship
Chartering (brokers of the respondent) sent an email dated
23.02.2022 to ACF - Operations Department (brokers of the
petitioner) informing that the email dated 22.02.2022 of the
petitioner's lawyers with regard to the appointment of the sole
Arbitrator has been passed on to the respondent. Lightship also
confirmed the respondent's email address as
"[email protected]".
28. The Award records that the petitioner's lawyers served their
submissions on the respondent on 11.03.2022 which was
confirmed by the respondent's broker. The Award also records
that the respondent/Charterer failed to serve its defence
submissions within the timeframe as required by the LMAA Terms.
On 11.04.2022, the petitioner requested the Arbitrator to pass a
final and peremptory order giving the respondent a short deadline
to serve its defence submissions. The Arbitrator, however, passed
an ordinary order for the Defence to be served latest by
20.04.2022. The order is set out in paragraph 6 of the Final
Arbitration Award.
29. The Award further records that the respondent failed to file
any Defence to the petitioner's Claim or correspond with the
Arbitrator. Therefore, on 21.04.2022, the Arbitrator passed a Final
and Peremptory Order directing the respondent to submit its
defence submissions latest by 28.04.2022. The order dated
21.04.2022 is extracted in paragraph 7 of the Award. Paragraph 8
of the Award records that the respondent again failed to comply
with the order or correspond with the Arbitrator. On 02.05.2022,
the Arbitrator took a decision to proceed with the Award.
30. The documents on record show that all the submissions and
proceedings in the arbitration were sent by the lawyers of the
petitioner as well as by the Arbitrator to the same email IDs of the
respondent which were used for correspondence during the
currency of the contract. Moreover, the preliminary counter
affidavit filed by the respondent to the Execution Petition on
08.02.2023, contains a Board Resolution referencing the same e-
mail ID i.e., '[email protected]'. The emails sent during course
of the arbitration were also sent to the aforesaid email IDs of the
respondent. As stated above, all the emails pertaining to the
arbitration were sent to the respondent via its brokers, Lightship
Chartering. The said broker confirmed that all the emails had been
forwarded to the respondent.
31. The documents referred to above are part of the records.
32. Counsel appearing for the respondent has not been able to
provide a credible defence to these documents. It is also relevant
that the respondent proposed a settlement even after the
commencement of arbitration, which has specifically been pleaded
in the Execution Petition.
33. Therefore, the respondent's ground/objection that the
respondent was not given proper notice of the arbitration or of the
Arbitrator's appointment is not only unsubstantiated but also
contrary to the records.
34. Significantly, the respondent has not denied any of the email
IDs to which the petitioner's and Arbitrator's emails were sent, but
simply states that the respondent did not 'see' the emails. Surely,
this is neither a credible defence nor one which would fall within
section 48(1)(b) of the 1996 Act; namely that the party against who
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 its case. The stubborn refusal of the
respondent to acknowledge the emails sent by the petitioner and
the Arbitrator and to participate in the Arbitration or to file its
defence submissions, demonstrates that the respondent
deliberately chose to avoid the arbitration process and refused to
participate in the same.
35. The respondent's first ground for refusal of enforcement is
hence rejected as being wholly without merit.
II. The Award is in contravention of the Fundamental Policy of
Indian law and is in conflict with the most basic notions of
Morality or Justice as the Sole Arbitrator was unilaterally
appointed by the petitioner.
36. The respondent/Award-debtor has objected to the
enforcement of the Foreign Award on the ground of unilateral
appointment of the Sole Arbitrator.
37. The relevant clause/Arbitration Agreement must be seen for
testing the legality of the respondent's argument.
38. The parties agreed to the mode and the manner of selection
of the Arbitrator which would be reflected from Clauses 17 and 30
of the Charter Party. Both these Clauses are being set out again
for ease of reference.
Clause 17:
'That should any dispute arise between Owners and
the Charterers, the matter in dispute shall be referred to
three Persons at London, one to be appointed by each of the
parties hereto, and the third by the two so chosen; their
decision or that of any two of them, shall be final, and for the
purpose of enforcing any award, this agreement may be
made a rule of the Court. The Arbitrators shall be commercial
men.'
Clause 30
'BIMCO Dispute Resolution Clause 2015 to apply
(with small claims arbitration procedure to apply for claims
up to US$ 100,000.00 excluding Legal costs. Bills of lading to
be governed by English law and English jurisdiction to apply.
BIMCO Conwartime 2013 and BIMCO piracy clause 2008 to
be incorporated into Charter Party & bills of lading.
The recap and the signed Charter Party, the recap will
take precedence unless the parties have expressly agreed
otherwise between the conclusion of the fixture as recorded
in the recap and the signing of the Charter Party.'
39. Clause 30 makes the BIMCO Dispute Resolution Clause,
2015 applicable to the dispute resolution. Clause 22(a) of the
BIMCO Terms, 2015 is set out below:
'(a) This Contract shall be governed by and construed
in accordance with English law and any dispute arising out
of or in connection with this his Contract shall be referred to
arbitration in London in accordance with the Arbitration Act
1996 or any statutory modification or re-enactment thereof
save to the extent necessary to give effect to the provisions of
this Clause.
The arbitration shall be conducted in accordance with
the London Maritime Arbitrators Association (LMAA) Terms
current at the time when the arbitration proceedings are
commenced.
The reference shall be to three arbitrators. A Party
wishing to refer a dispute to arbitration shall appoint its
arbitrator and send notice of such appointment in writing to
the other Party requiring the other Party to appoint its own
arbitrator within fourteen (14) calendar days of that notice
and stating that it will appoint its arbitrator as sole arbitrator
unless the other Party appoints its own arbitrator and gives
notice that it has done so within the fourteen (14) days
specified. If the other Party does not appoint its own
arbitrator and give notice that it has done so within the
fourteen (14) days specified, the Party referring a dispute to
arbitration may, without the requirement of any further prior
notice to the other Party, appoint its arbitrator as sole
arbitrator and shall advise the other Party accordingly. The
award of the sole arbitrator shall be binding on both Parties
as if he had been appointed by agreement.'
40. Incidentally, Clause 22(a) of the BIMCO Terms, 2015 is
equivalent to Clause 10 of the LMAA Terms, 2021, which also
provides for a similar mechanism of appointment of Arbitrator/s.
The LMAA Terms are relevant since Clause 22(a) of the BIMCO
Terms, 2015 specifically refers to the LMAA Terms with regard to
the conduct of the Arbitration.
41. Admittedly, the petitioner appointed Mr.Alan Oakley as the
Sole Arbitrator and the petitioner's lawyers, by an e-mail dated
03.02.2022, sent the notice of appointment to the respondent for
commencement of arbitration. By the said notice, the respondent
was also informed to appoint its Arbitrator within 14 days from the
date of the Notice i.e., by 17.02.2022 and the respondent
admittedly failed to appoint its arbitrator within 14 days from the
date of the Notice of Commencement of Arbitration Proceedings
i.e., from 03.02.2022. The petitioner's lawyers sent an email dated
22.02.2022 to the respondent informing the respondent that the
petitioner's Arbitrator, Mr.Alan Oakley, will act as the Sole
Arbitrator since the respondent did not appoint any Arbitrator
within 14 days as per the BIMCO Dispute Resolution Clause,
2015.
42. The e-mails and 'Notice of Commencement of Arbitration
Proceedings' are part of the Records and have not been disputed
by the respondent. The respondent's only argument, through
learned counsel, is that the petitioner should have approached a
neutral forum for appointment of the Sole Arbitrator on the
respondent failing to nominate its Arbitrator.
43. This Court is not inclined to accept the respondent's
argument on the unilateral appointment of the Sole Arbitrator for
the following reasons:
44. The appointment mechanism as provided under Clause 22(a)
of the BIMCO Terms, 2015 specifically provides that a party
wishing to refer the dispute to Arbitration shall appoint its
Arbitrator and send the notice of such appointment in writing to
the other party. Clause 22(a) specifically mentions the content of
the Notice, namely, that the first party shall require the second
party to appoint its own Arbitrator within 14 calendar days of that
Notice and further that the first party will appoint its arbitrator as
the Sole Arbitrator if the second party fails to appoint its own
Arbitrator and to give notice of such within 14 days.
45. The second part of Clause 22(a) provides for the
consequences if the second party does not appoint its own
Arbitrator or fails to give notice of the appointment to the first
party within 14 days. The Clause provides that in the event of
such failure, the first party may appoint its Arbitrator as the Sole
Arbitrator without requiring any further prior notice required to be
given to the second party. The first party shall also inform the
second party that the Arbitrator appointed by the first party shall
act as the Sole Arbitrator.
46. Clause 22(a) of the BIMCO Terms, 2015, clearly provides for
an equal say/right of both the parties to nominate its Arbitrator.
The clause provides for a Sole Arbitrator only where the second
party fails to appoint its Arbitrator or fails to give notice of such
appointment to the first party within 14 calendar days of the first
party's notice of appointment. Therefore, the provision of a Sole
Arbitrator to carry the Arbitration forward is a mechanism of
expediency and not of unilaterality. It is not a case where the first
party's appointment of the Arbitrator is a final and peremptory act
with the second party being denied of its right of participating in
the appointment process. The Sole Arbitrator's appointment is only
legitimised where the second party fails to act within the stipulated
timeframe. The silence or inaction of the second party is presumed
as acceptance of the first party's appointment of Arbitrator.
47. Unilateral appointments are appointments where the
other/complaining party is denied its right to participate in the
composition of the Arbitral Tribunal or is deprived of an
opportunity to object to the appointment. It is essentially a
question of natural justice where the deprived party loses the
valuable right to a level-playing field in terms of having a say in the
choice of Arbitrator. Unilateral appointments also carry with it the
spectre of bias and conflict where the presumption is that the
Arbitrator would act in the interest of the appointing party.
48. The protection against bias and conflict is weaved in several
strands of The Arbitration and Conciliation Act, 1996. Impartiality
and lack of independence can be used as a ground of challenge to
the appointment under section 12(1) of the 1996 Act. A party may
also have a recourse against an Arbitral Award on the ground of
absence of knowledge of the appointment of an Arbitrator (section
34(2)(a)(iii)) or that the composition of the Arbitral Tribunal or the
arbitral procedure was not in accordance with the agreement of the
parties (section 34(2)(a)(v)). The provisions under section 34 are
mirrored in section 48 in Part II of the 1996 Act as conditions for
refusal of enforcement of a Foreign Award. Section 48(1)(d) reflects
of section 34(2)(a)(v) in a transformed avatar. In other words, the
party seeking refusal of enforcement of a Foreign Award must
furnish proof that the composition of the Arbitral Tribunal or the
Arbitral procedure was not in accordance with the Arbitration
Agreement.
49. Notably, the respondent has not objected to the enforcement
of the Foreign Award under section 48(1)(d) of the 1996 Act which
is set-out hereunder;
'Section 48(1)(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;'
Rather, the respondent has raised the objection under
section 48(2)(b) - namely, that
'The enforcement of the award would be contrary to the
public policy of India.'
The respondent has also sought to rely on Clause (iii) of
Explanation 1 to section 48(2)(b) i.e., the Award is in conflict with
the public policy of India as it is in conflict with the most basic
notions of morality or justice. In essence, the respondent has
mounted its entire argument on section 48(2)(b) on the alleged
unilateral appointment of the Sole Arbitrator.
50. The Court has already expressed its view on the construction
of Clause 22(a) of the BIMCO Terms, 2015, which provides for
equal opportunity to both the parties for appointment of their
respective Arbitrators and thereby negates the charge of unilateral
appointments.
51. It may be said in this context that Arbitration Agreements
may be differently-worded in terms of the mechanism of
appointment of the Arbitrators, seat-venue selection and conduct
of the arbitration, among other aspects. The intention of the
parties must be gleaned from the express and implied
undertakings of the clause. It would be an ill-advised exercise to
make an argument of unilaterality solely based on a recent
decision of the Supreme Court where the Arbitration Clause was
entirely different to the one at hand. The respondent rests its
entire case on Central Organisation for Railway Electrification Vs.
ECI SPIC SMO MCML (JV) 1. This decision shall be dealt with in the
next few paragraphs.
2024 SCC OnLine SC 3219
52. Counsel for the respondent has relied on TRF Limited Vs.
Energo Engineering Projects Limited 2 , Perkins Eastman Architects
DPC Vs. HSCC (India) Limited 3 and on Central Organisation (supra)
to urge that unilateral appointments are fundamentally contrary to
the public policy of India. A comparative perusal of the Arbitration
Agreements in TRF and Perkins would however show that the
element of potential impartiality was writ large in the wording of
the Agreement itself. The relevant parts of the Arbitration
Agreements are extracted below.
TRF Limited Vs. Energo Engineering Projects Limited (supra):
'....this Agreement shall be referred to sole arbitration of the
Managing Director of Buyer or his nominee.'
Perkins Eastman Architects DPC Vs. HSCC (India) Limited (supra):
'...shall be referred for adjudication through arbitration by a
sole arbitrator appointed by the CMD, HSCC within 30 days
from the receipt of request from the Design Consultant. ... It
is also a term of this contract that no person other than a
person appointed by such CMD, HSCC as aforesaid should
act as arbitrator.'
2017 8 SCC 377
2020 20 SCC 760
53. The above clauses would show that the appointment was
starkly one-sided without giving any option to the other party to
nominate its Arbitrator.
54. The relevant part of the Arbitration Agreement in relation to
appointment of the Arbitrator in Central Organisation (supra) is set
out below:
'The Arbitral Tribunal shall consist of a panel of three
retired railway officers retired not below the rank of SAO
officer, as the arbitrator. For this purpose, the Railways will
send a panel of at least four names of retired railway
officer(s) empanelled to work as railway arbitrator indicating
their retirement date to the contractor within 60 days from
the day when a written and valid demand for arbitrators is
received by the GM.
Contractor will be asked to suggest to General
Manager at least two names out of the panel for appointment
as contractor's nominee within 30 days from the date of
dispatch of the request by the Railways. The General
Manager shall appoint at least one out of them as the
contractor's nominee and will, also simultaneously appoint
the balance number of arbitrators either from the panel or
from outside the panel, duly indicating the "presiding
arbitrator" from amongst the three arbitrators so appointed.
The GM shall complete this exercise of appointing the Arbitral
Tribunal within 30 days from the receipt of the names of
contract's nominees. While nominating the arbitrators, it will
be necessary to ensure that one of them has served in the
Accounts Department.'
55. In Central Organisation (supra), the inequality of
participation in the appointment process is not only embedded in
the clause itself but occurs at several stages therein. The panel of
Arbitrators was to be prepared only by one of the parties (Railways)
with the other party (Contractor) not having a voice in the selection
of names. The General Manager of the Railways was also given the
sole power to appoint one name from the panel as the Contractor's
nominee and to appoint the balance number of Arbitrators from
the panel or from outside the panel. The General Manager further
had the power to appoint the Presiding Arbitrator amongst the
three arbitrators so appointed. A majority of the 5 - Judge Bench
of the Supreme Court (speaking through Hon'ble Justice
D.Y.Chandrachud) accordingly found the Clause to be unequal and
in violation of Article 14 of the Constitution of India. Justice P.S.
Narasimha opined that all Arbitration Agreements which provide
for the unilateral appointment of the Arbitral Tribunal are not void
per se and the Court must examine the text of the clause as well as
the context of the Agreement.
56. There is little doubt that the Arbitration Agreement in the
present case is wholly dissimilar to TRF Limited, Perkins Eastman
and Central Organisation (supra) in text, context and spirit. The
Arbitration Agreement in the present case is democratically-worded
giving both parties the right to nominate its Arbitrator. The failure
of the second party to nominate its Arbitrator or communicate
such nomination to the first party within the stipulated timeframe
of 14 calendar days is not an instance of unequal treatment but
more a reflection of the need to proceed with the Arbitration
without further delay. In fact, the mechanism provided under the
Arbitration Agreement/BIMCO Dispute Resolution Clause can be
traced to section 17 of The English Arbitration Act, 1996 - 'Power
in case of default to appoint sole arbitrator'. Section 17(2) is set out
below:
'17(2): If the party in default does not within 7 clear days of
that notice being given -
(a) make the required appointment, and
(b) notify the other party that he has done so,
the other party may appoint his arbitrator as sole arbitrator
whose award shall be binding on both parties as if he had
been so appointed by agreement.'
57. The respondent's argument that the petitioner should have
approached a neutral forum to appoint the Sole Arbitrator is
undermined by the Arbitration Agreement itself as one which was
agreed to and signed by the respondent. There is no statutory or
legal infirmity in the said Arbitration Agreement.
58. As stated above, the respondent has chosen not to bring the
objection with regard to unilateral appointment within section
48(1)(d) of the 1996 Act but has instead resorted to section 48(2)(b)
of the 1996 Act on the enforcement being contrary to the public
policy of India. Notably, section 48(1) puts the onus entirely on the
party who objects to the enforcement of a Foreign Award to prove
that any of the five grounds under section 48(1) or the two grounds
under section 48(2) was present at the material point of time for
refusal of enforcement. The burden of proof is thus squarely on
the respondent to show by documentary evidence that the Sole
Arbitrator was unilaterally-appointed. The Arbitration Agreement/
Clause, taken together with the admitted failure on the part of the
respondent to appoint its Arbitrator, despite the petitioner's Notice
to the respondent in that regard, demolishes the objection. This
Court is hence of the considered view that the ground of unilateral
appointment of the Arbitrator for refusing enforcement of Foreign
Award is totally without any substance. The respondent's
argument is thus rejected.
Section 48 of The Arbitration and Conciliation Act, 1996.
59. Section 48(1) and (2) of the 1996 Act enumerates the
grounds on which enforcement of a Foreign Award may be refused.
The presence of one or more of the grounds must be brought to the
Court's notice by the party against who the Foreign Award is being
invoked and subject to the said party furnishing proof of the
presence of one or more of such grounds. It is important to note
that the words used in section 48(1) are as follows:
'Enforcement of a foreign award may be refused...'
60. This means that the enforcing Court retains a residual power
to accept or reject the case made out by the Award-debtor on the
absence/insufficiency of the proof furnished by the Award-debtor.
Section 48(1) does not envisage the Court being under any
obligation to accept the request of the party, against who the
Foreign Award is invoked, for refusing enforcement of the Foreign
Award on any of the conditions under section 48(1) or (2) of the
1996 Act.
Conclusion
61. The three grounds taken by the respondent/Award-debtor
for refusing enforcement of the Foreign Award have been
separately dealt with in the foreground of decisions pronounced by
the Supreme Court. The respondent has failed to furnish any
evidence of the presence of any of the grounds under section 48(1)
or (2) for refusing enforcement of a Foreign Award. It is crucial
that the final Arbitration Award (Foreign Award) specifically
records that the petitioner/owners are entitled to be paid the sum
of USD 443,310.47 by the Charterer (the respondent/Award-
debtor) together with interest payable at a commercial rate from
27.02.2022 when the Charterer/the respondent acknowledged that
they owed the owners/petitioners this sum. The Award further
records that the respondent's correspondence of 27.02.2022
together with a copy of its final accounting dated 17.01.2022
acknowledged that the respondent owes the petitioner a sum of
USD 443,310.47 by way of the final accounting for the Charter.
The Arbitrator accordingly found this sum to be undisputably due
and owing to the petitioner/owners as claimed.
62. Hence, even factually, the respondent has no defence to the
claim amount since the respondent unequivocally acknowledged
the same.
63. The petitioner/Award-holder has filed several IAs, inter alia,
for payment of the decretal amount, attachment of the movable
and immovable properties of the respondent, directing sale of those
properties and restraining the respondent from alienating these
properties.
64. Considering the clear view of this Court that none of the
conditions under section 48(1) and (2) of the 1996 Act exist or are
present for refusing enforcement of the Foreign Award and the fact that
the respondent has failed to made out a case for refusal of enforcement,
EXEP.No.4 of 2022 along with all I.As filed by the petitioner/Award-
holder is allowed and disposed of.
_________________________________
MOUSHUMI BHATTACHARYA, J
June 27, 2025.
VA/BMS
