The Supreme Court in, NOY VALLESINA ENGINEERING SpA, v. JINDAL DRUGS LIMITED & ORS, overruled the judgment of the division bench of Bombay HC and stated that a foreign award of arbitration whose seat is abroad can’t be challenged under Section 34 of Arbitration and Conciliation Act.
Facts
NV Engineering(appellant) and Jindal entered into a contract for setting a plant. Disputes arose and the appellant terminated the agreement and claimed damages. The matter was taken to the International Court of Arbitration in 1996. The tribunal in 2000, ordered partial award. Jindal approached Bombay HC(BHC) and post this final award was passed by ICA. The petition before BHC of partial damages was rejected as for a foreign award a challenge through a petition was not maintainable under Section 34 of the Act. Jindal approached the division bench of BHC and in the meanwhile, NV applied for enforcement of the partial and final award. This petition was allowed and Jindal’s contentions were overruled. The division bench however set aside the single judge’s order and held that that proceedings under Section 34 of the Act could be validly maintained to challenge a foreign award. The appellant approached this court.
Appellant’s Contention
The appellants contended that the judgment was unsupportable by law as a foreign award cannot be challenged under Section 34 of the Act and made reliance on several case laws. Learned counsel submitted that even the caveat in Bharat Aluminium Company vs Kaiser Aluminium Technical Services Inc(BALCO) that a class of foreign awards made prior to its pronouncement cannot aid Jindal’s essential argument with respect to the maintainability of a challenge under Section 34 and that such challenge under Part I is untenable. Secondly, the counsel argued upon the “Shashoua principle” and according to that principle, the designation of a “seat” of the arbitration would carry with it “something akin to an exclusive jurisdiction clause”. And lastly, according to Section 50, he argued that the order holding that the petition under Section 34 was not maintainable was not appealable.
Respondent’s Contention
The counsel argued that Section 34 operates in a field different from Section 48. The latter enables the enforcement of a foreign award, and the court may only refuse enforcement, whereas under Section 34, the legality of an award can be gone into and the court has the jurisdiction to set it aside. It was stated that the present case should not be dealt by BALCO rules.
Court’s Analysis & Conclusions
The court said that resort to remedies under Part I of the Act can be made in respect of foreign awards, despite the clear dichotomy in the enactment between domestic awards (covered by Part I) and foreign awards (covered by Part II) as held in previous cases. Further, strong reliance was made on BALCO as it was clear according to the agreement that the seat of arbitration was London. Thus, the provisions of Sections 47/48 were correctly invoked by NV Engineering, for enforcement of the awards. The judgment was thus set aside and it was concluded that
Case Details
CIVIL APPEAL NO. 8607 OF 2010
NOY VALLESINA ENGINEERING SpA, v. JINDAL DRUGS LIMITED & ORS,
Coram- Hon’ble S. RAVINDRA BHAT, J
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