Whether a settlement of disputes or differences through a two-tier arbitration procedure as provided for in Clause 14 of the contract between the parties is permissible under the laws of India? (2) Assuming that a two-tier arbitration procedure is permissible under the laws of India, whether the award rendered in the appellate arbitration being a “foreign award” is liable to be enforced under the provisions of Section 48 of the Arbitration and Conciliation Act, 1996 7 at the instance of Centrotrade? If so, what is the relief that Centrotrade is entitled to?

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2562 OF 2006
M/S. CENTROTRADE MINERALS AND
METALS INC. …APPELLANT
VERSUS
HINDUSTAN COPPER LTD. ...RESPONDENT
WITH
CIVIL APPEAL NO.2564 OF 2006
J U D G M E N T
R.F. Nariman, J.
1. This matter comes to this Bench after two previous forays to this Court.
2. The appellant before us, in Civil Appeal No.2562 of 2006, is a U.S.
Corporation who had entered into a contract for sale of 15,500 DMT of
copper concentrate to be delivered at the Kandla Port in the State of
Gujarat, the said goods to be used at the Khetri Plant of the respondent
Hindustan Copper Ltd. (hereinafter referred to as “HCL”/ “the
respondent”), who is the appellant in the other Civil Appeal No.2564 of
2006. After all consignments were delivered, payments had been made
in accordance with the contract. However, a dispute arose between the
2
parties as regards the quantity of dry weight of copper concentrate
delivered. Clause 14 of the agreement contained a two-tier arbitration
agreement by which the first tier was to be settled by arbitration in India.
If either party disagrees with the result, that party will have the right to
appeal to a second arbitration to be held by the ICC in London. The
appellant M/s Centrotrade Minerals and Metals Inc. (hereinafter referred
to as “Centrotrade”/ “the appellant”) invoked the arbitration clause. By
an award dated 15.06.1999 the arbitrator appointed by the Indian
Council of Arbitration made a Nil Award. Thereupon, Centrotrade
invoked the second part of the arbitration agreement, as a result of
which Jeremy Cook QC, appointed by the ICC, delivered an award in
London, dated 29.09.2001, in which the following amounts were
awarded:
“27. For the above reasons I THEREFORE AWARD
and ADJUDGE that
(1) HCL do pay Centrotrade the sum of $152,112.33,
inclusive of interest to the date of the Award in respect
of the purchase price for the first shipment.
(2) HCL do pay Centrotrade the sum of $15,815.59,
inclusive of interest to the date of this Award in respect
of demurrage due on the first shipment.
(3) HCL, do pay Centrotrade the sum of $284,653.53,
inclusive of interest to the date of this Award in respect
of the purchase price on the second shipment.
(4) HCL do pay Centrotrade their legal costs in this
arbitration in the sum of $82,733 and in addition the
3
costs of the International Court of Arbitration, the
Arbitrator's fees and expenses totalling $29,000.
(5) HCL do pay Centrotrade compound interest on the
above sums from the date of this Award at 6% p.a. with
quarterly rests until the date of actual payment.”
3. Even before Jeremy Cook QC could deliver his award, HCL, during the
pendency of the proceedings before the arbitrator in London, filed a suit
in the Court at Khetri, in the State of Rajasthan, challenging the
arbitration clause. By an Order dated 27.04.2000, in a revision petition
filed against the Order of the Khetri Court, the High Court at Rajasthan
restrained the appellant from taking further steps in the London
arbitration, pending hearing and disposal of the revision petition. This
ad interim ex parte stay granted by the High Court was ultimately
vacated by the Supreme Court only on 08.02.2001. Meanwhile, we are
reliably informed that Mr. Cook, the learned arbitrator, referred the
matter of stay of the parties from proceeding with the London arbitration
to the ICC Court, which then decided that the arbitrator could continue
with the arbitral proceedings.
4. When the said award dated 29.09.2001 was sought to be enforced by
Centrotrade in India, a learned Single Judge of the Calcutta High Court,
after considering the objections of HCL, dismissed the Section 48
petition filed by HCL, as a result of which the aforesaid foreign award
became executable in India. However, a Division Bench of the Calcutta
4
High Court, by its judgment dated 28.07.2004, held that an appeal would
be maintainable inasmuch as the London award could not be said to be
a foreign award, but that a two-tier arbitration clause would be valid.
However, since the Indian award and the London Award, being
arbitration awards by arbitrators who had concurrent jurisdiction, were
mutually destructive of each other, neither could be enforced, as a result
of which the appeal was allowed and the judgment of the learned single
Judge was set aside.
5. At this juncture, the matter came to a Division Bench of this Court. Two
separate judgments were delivered by S.B. Sinha, J. and Tarun
Chatterjee, J. reported in Centrotrade Minerals & Metals Inc. v.
Hindustan Copper Ltd. (2006) 11 SCC 245. After setting out the facts
of the case, S.B. Sinha,J. held that a two tier clause of the kind
contained in clause 14 of this agreement is non est in the eye of law and
would be invalid under Section 23 of the Indian Contract Act. In this view
of the matter, the foreign award could not enforced in India and
Centrotrade’s appeal was therefore dismissed, the appeal filed by HCL
being allowed. Tarun Chatterjee, J. set out four questions in paragraph
134 as follows:
“134. We have heard Mr Sarkar, learned Senior
Counsel appearing for Centrotrade and Mr Debabrata
Ray Choudhury, learned Senior Counsel for HCL. I
have also examined the entire material on record
including the arbitration agreement, the awards and
5
judgments of the Division Bench as well as the learned
Single Judge. Before us, the following issues were
raised by the learned counsel for the parties for decision
in the appeals:
(1) Whether the second part of clause 14 of the
agreement providing for a two-tier arbitration was valid
and permissible in India under the Act?
(2) If it is valid, on the interpretation of clause 14 of the
agreement, can it be said that the ICC arbitrator sat in
appeal against the award of the Indian arbitrator?
(3) Whether the ICC award is a foreign award or not?
(4) Whether HCL was given proper opportunity to
present its case before the ICC arbitrator?”
6. These questions were answered by stating that the two-tier arbitration
process was valid and permissible in Indian law; that the ICC arbitrator
sat in appeal against the award of the Indian arbitrator; that the ICC
award was a foreign award; but that since HCL was not given a proper
opportunity to present its case before the ICC arbitrator, Centrotrade’s
appeal would have to be dismissed and HCL’s appeal allowed.
7. The matter then came on a reference before a 3-Judge bench of this
Court and is reported in Centrotrade Minerals & Metal Inc. v.
Hindustan Copper Ltd. (2017) 2 SCC 228. The reference order was
referred to in paragraph 1 of the judgment of Lokur,J., as follows:
“These appeals have been referred [Centrotrade
Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006)
11 SCC 245] to a Bench of three Judges in view of a
difference of opinion between the two learned Judges
of this Court. The controversy is best understood by
referring to the proceedings recorded on 9-5-2006:
6
Hon'ble Mr Justice S.B. Sinha pronounced his
Lordship's judgment of the Bench comprising his
Lordship and Hon'ble Mr Justice Tarun Chatterjee.
Leave granted. For the reasons mentioned in the signed
judgment, civil appeal arising out of SLP (C) No. 18611
of 2004 filed by M/s Centrotrade Minerals and Metal
Inc., is dismissed and civil appeal arising out of SLP (C)
No. 21340 of 2005 (actually 2004) preferred by
Hindustan Copper Ltd. is allowed. In the peculiar facts
and circumstances of the case, the parties shall pay and
bear their own costs. Hon'ble Mr Justice Tarun
Chatterjee pronounced his Lordship's judgment
disposing of the appeals in terms of the signed
judgment. In view of difference of opinion, the matter is
referred to a larger Bench for consideration. The
Registry of this Court shall place the matter before the
Hon'ble the Chief Justice for constitution of a larger
Bench.
The decisions rendered by Sinha and Chatterjee, JJ.
are reported as Centrotrade Minerals & Metals
Inc. v. Hindustan Copper Ltd. [Centrotrade Minerals &
Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SCC
245]”
Paragraph 5 of the aforesaid judgment set out the two questions that
arose in this case as follows:
“5. The issues that have arisen for our consideration, as
a result of the difference of opinion between the learned
Judges, are as under:
(1) Whether a settlement of disputes or differences
through a two-tier arbitration procedure as provided for
in Clause 14 of the contract between the parties is
permissible under the laws of India?
(2) Assuming that a two-tier arbitration procedure is
permissible under the laws of India, whether the award
rendered in the appellate arbitration being a “foreign
award” is liable to be enforced under the provisions of
Section 48 of the Arbitration and Conciliation Act, 1996
7
at the instance of Centrotrade? If so, what is the relief
that Centrotrade is entitled to?
For the present, we propose to address only the first
question and depending upon the answer, the appeals
would be set down for hearing on the remaining issue.
We have adopted this somewhat unusual course since
the roster of business allowed us to hear the appeals
only sporadically and therefore the proceedings before
us dragged on for about three months.”
Since the first question was answered in the affirmative, the Court
concluded:
“Conclusion
48. In view of the above, the first question before us is
answered in the affirmative. The appeals should be
listed again for consideration of the second question
which relates to the enforcement of the appellate
award.”
8. This is how the appeals have been listed again for consideration of the
second question, which relates to enforcement of the London award.
9. Shri Gourab Banerjee, learned senior counsel appearing on behalf of
Centrotrade, has taken us through the record and has relied strongly on
this Court’s recent judgment in Vijay Karia v. Prsymian Cavi E Sistemi
SRL 2020 (3) SCALE 494. He then referred in detail to the portions of
the award which dealt with the natural justice aspect of the case, as well
as the judgment of the Single Judge of the Calcutta High Court which
dealt with the same. He then read out to us Chatterjee J’s views
contained in Centrotrade [2006] (supra) and contended that ample
opportunity had been given by the arbitrator to HCL to present its case,
8
but that HCL, having an Indian award in its pocket, wanted somehow to
abort the London arbitration proceedings. It first filed the suit that has
been referred to, and obtained ex parte ad interim stay against parties
from proceeding in the arbitration on 27.04.2000, which was vacated by
the Supreme Court only on 08.02.2001. Jeremy Cook QC afforded as
many as six opportunities to HCL to present its case and bent over
backwards by extending time for filing of submissions and documents
several times, and even considered documents that were filed by HCL
after the last deadline had been extended, and then passed the award.
He, therefore, attacked Chatterjee J’s judgment, stating that it was
factually incorrect when it stated that a fair opportunity had not been
given to HCL to present its case. Several other judgments both Indian
and foreign were cited by Shri Banerjee in support of his submission.
Apart from relying heavily on the judgment in Vijay Karia (supra), he
relied upon the approach to a Section 48 proceeding by quoting from
Redfern and Hunter on International Arbitration 6
th Edn. and Merkin and
Flannery on the Arbitration Act, 1996.
10.Shri Harin P. Raval, learned senior counsel appearing on behalf of HCL,
has taken a preliminary submission that the only point of difference
between S.B. Sinha,J. and Tarun Chatterjee,J. was on whether the twotier arbitration clause was valid in law. Once that point had been
answered, the question of being unable to present one’s case, not
9
having been decided by S.B. Sinha, J., was not referred to the larger
bench as there was no difference of opinion between the learned
Judges on this aspect and therefore this aspect cannot now be
adjudicated upon. Even otherwise, he argued, basing his submissions
on a list of dates and a paper book of documents filed before this Court
for the first time, to show that as a matter of fact once the arbitrator had
extended time, the last extension being till 12.09.2001, he ought to have
allowed further time in which, apart from legal submissions furnished,
documents could have been furnished in support of HCL’s case. This is
particularly in view of the fact that on 11.09.2001, a terrorist attack had
taken place in New York as a result of which globally, there was
disruption of transport and communication, and therefore it was very
difficult for HCL to send documents within the requisite time. He argued
that had such documents been seen, there can be no doubt that this
one-sided award might well have been in his client’s favour, as a result
of which serious prejudice had been caused to his clients. Even
otherwise, he argued that the issue of jurisdiction was to be taken as a
preliminary question before the learned arbitrator, after which further
proceedings were to take place. This was never done by the learned
arbitrator. Also, the learned arbitrator in proceeding with the arbitration
despite the ex parte ad interim stay being granted by an Indian court
10
resulted in his client being unable to present his case before the
arbitrator.
11.Having heard learned senior advocates for both parties, it is first
necessary to set out the portions of the award dated 29.09.2001 which
deal with the aspect of HCL being unable to present its case before the
learned arbitrator. The learned arbitrator, after referring to the Rajasthan
High Court proceedings and the Supreme Court’s vacation of the stay,
then found:
“7. As set out in paragraph 6 above, HCL, by a series of
letters to the International Court of Arbitration and to
me, in my capacity as arbitrator, maintained that any
arbitration commenced under the second paragraph of
Clause 14 of the contract is null and void and until
August 2001, refused to participate in it, even though
they were invited by me to do so without prejudice to
their jurisdictional objections. Despite this stance, Fox
& Mandal were at all times consulted about the
procedural aspects of this arbitration, were asked for
their submissions in relation to the procedure, progress
and substance of the dispute, received copies of all
correspondence passing between Centrotrade and
myself and of all submissions made and have been
given every opportunity to take any point which they
wished to take in their defence. By Orders made on 20th
December 2000, 19th January 2001 and 3rd May 2001,
I directed that Centrotrade serve submissions and
supporting evidence, followed by HCL's Response and
evidence in support, with a right in Centrotrade to put in
a reply in accordance with a clear timetable. When no
Defence Submissions or supporting evidence was
served by HCL within the time prescribed, I sent them a
fax on 30th July 2001,giving them one last opportunity
to inform me by return of any intention on their part to
put in a Defence and to seek an extension of time for
doing so.
11
8. Following a further fax on 9th August 2001, in which I
informed the parties that I was proceeding with the
Award, on 11th August I received a fax from Fox &
Mandal requesting an extension of time of one month to
put in a defence. On 16th August I ordered that any
submissions in support of an application for an
extension of time for a defence and any submissions on
the substantive merits of the dispute, together with any
evidence relied on in relation to the application and any
submissions should be received by me by 31st August
2001, in the absence of which I would not give them any
consideration. On 27th August Fox & Mandal sought a
further 3 weeks’ extension of time for making their
submissions and serving supporting evidence. I allowed
a final extension for these submissions and evidence
until 12th September 2001. Seventy - five pages of
submissions were received by me on 13th September
2001, without any supporting evidence or any
justification for not complying with my earlier orders. No
grounds were put forward for any application for an
extension of time for putting in Defence submissions.
Indeed no formal application was made for an extension
of time to do so. HCL have therefore not attempted to
justify their earlier stance nor to give me any reason for
considering their submissions on the merits which are
made out of time. Centrotrade have objected to these
submissions contending that they are inadmissible
because of HCL’s persistent breaches of my orders.
Nonetheless, though not bound to do so because of
their belated nature, I have considered those
submissions and taken them fully into account in
making this Award. I made plain in my orders that no
further material provided thereafter would be taken into
account, and I have not done so.
9. In their submissions HCL maintained their arguments
as to lack of jurisdiction and the invalidity of this London
Arbitration but without prejudice to that, put forward
submissions both on the jurisdictional arguments, the
nullity of the second paragraph of the Arbitration clause
in the contract and on the merits of the dispute. It is clear
that this dispute can be determined on the documents
12
turning, as it does essentially on points of construction
of the contract and matters of Indian law.”
 (emphasis supplied)
Ultimately, the arbitrator awarded costs for the London proceeding,
declining to award costs for the arbitration that had taken place in India.
12.The learned Single Judge of the Calcutta High Court, while dealing with
the objections as to breach of natural justice, dismissed the aforesaid
objections as follows:
“Mr. Roy Choudhury then submits that in view of
Section 48(1)(b) of the Act, the award is not
enforceable, as neither notice of appointment of
arbitrator was given to the respondent, nor was it given
opportunity to present its case. The arbitrator followed
the ICC Arbitration and Conciliation Rules, though they
were not mentioned by the parties in the arbitration
agreement, hence in view of Section 48(1)(b) of the Act
the award was not enforceable.
Mr. Sarkar replies that the respondent was given all
opportunities to present its case, but it showed total
non-cooperation with the arbitrator. The arbitral
procedure followed by the arbitrator does not militate
against the arbitration agreement.
I find that the petitioner approached the ICC
International Court of Arbitration on February 22nd
,
2000. The respondent filed a suit in the Court of Civil
Judge, Junior Division, Khetry on March 28th
2000; it wanted to stop the second arbitration in terms
of the arbitration agreement. The arbitrator was
appointed on June 7
th, 2000. Till August 2001 the
respondent maintained that the second part of the
arbitration agreement being against the public policy of
India, the arbitration through the ICC International Court
of Arbitration was not permissible. On this ground the
respondent refused to participate in the arbitral
proceeding. It took the matter upto the Apex Court.
13
Ultimately when it failed to obtain any order to stop the
arbitration, it filed its submissions running into seventyfive pages. Though the papers reached the arbitrator
beyond the stipulated date, he has considered such
submissions. He, however, did not find any merit in the
case made out by the respondent. The arbitrator has
recorded that at every stage he consulted the
procedural aspects with the solicitors representing the
respondent. There is no proof that the respondent ever
objected to the rules and procedure followed by the
arbitrator or that the arbitrator followed a procedure not
contemplated in the agreement. It is apparent from the
award that all opportunities were given to the
respondent to present its case. I find no merit in the
contentions that notice regarding appointment of the
arbitrator was not given to the respondent or that the
terms of reference were settled behind its back. The
respondent had full knowledge of everything; it was
informed about everything. Hence I find no substance
in the grievance that the respondent was unable to
present its case or that procedure not contemplated by
the agreement of the parties was followed by the
arbitrator.”
13.In appeal, the Division Bench, in view of its finding that the award is not
a foreign award, declined to apply Section 50 of the Arbitration Act, 1996
(hereinafter referred to as “Arbitration Act”), and then stated that the
London award is declared to be inexecutable so long as the Indian Nil
Award stands. In view of this finding, it did not go into the natural justice
point argued by HCL.
14.In the first round in this court, S.B. Sinha,J. did not go into the natural
justice point, in view of his finding that the arbitration clause itself was
null and void. Chatterjee,J., after agreeing with Centrotrade’s case on
the arbitration clause, then went into issue no. 4 and held as follows:
14
“Issue 4
Whether HCL was given proper opportunity to present
its case before the ICC arbitrator?
164. Under Section 48(1)(b) enforcement of a foreign
award can be refused if:
“48. (1)(b) the party against whom 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 his case;” (emphasis
supplied)
165. In the case at hand, HCL had the knowledge of
appointment of the arbitrator. In fact, it had approached
the Indian courts to stall the ICC arbitral proceedings.
On a special leave petition filed by Centrotrade against
the order of the Rajasthan High Court staying the ICC
arbitral proceedings, an order was passed by this Court
by which the stay order of the Rajasthan High Court was
vacated on 8-2-2001 and directions were given for the
ICC proceedings to continue in accordance with law.
166. It is true, in his award, Mr Jeremy Lionel Cooke,
the ICC arbitrator has noted that he was appointed by
ICC on 7-6-2000 and that HCL refused to participate in
the arbitral proceedings on the ground that the second
arbitration clause in the contract was null and void. He
directed Centrotrade and HCL to file submissions and
supporting evidence through orders dated 20-12-2000,
19-1-2001 and 3-5-2001. However, HCL did not comply
with these orders. On 30-7-2001, he sent a fax to HCL
to find out whether they intended to file their defence.
He sent a further fax on 9-8-2001 informing them that
he was proceeding with the award. (emphasis supplied)
Then on 11-8-2001, the ICC arbitrator received a reply
seeking extension of time. He granted time till 31-8-
2001. He received another request from HCL's
representatives on 27-8-2001 for further extension of
time. He granted extension till 12-9-2001. He received
the first set of submissions filed by HCL, without
supporting evidence, on 13-9-2001. He considered
those submissions and took them into account while
15
making the award. He has further recorded in his award
that:
“I made plain in my orders that no further material
provided thereafter would be taken into account, and I
have not done so.”
(emphasis supplied)
This last statement indicates that he received further
material from HCL, which he did not consider while
making the award. On the face of it, it seems that HCL
was given sufficient opportunity to present its case by
the arbitrator. However, this question must be looked
into from the then existing situation.
167. It must be noted that this Court vacated the stay
on the proceedings on 8-2-2001. The first direction of
the ICC arbitrator to the parties, after the order of this
Court on 8-2-2001, to serve submissions to him was
made on 3-5-2001 i.e. after a time gap of nearly 3
months. Cooperation of HCL was next requested only
on 30-7-2001 i.e. after a time gap of nearly 2 months.
Then the communication on 9-8-2001 stated that the
arbitrator was proceeding with the award. This time
there was a response from HCL. Upon these requests,
a time-limit of nearly one month ending on 12-9-2001
was given to HCL. The arbitrator received the first set
of submissions filed by HCL on 13-9-2001. Then he
made the award 16 days later on 29-9-2001. It seems
that between 13-9-2001 and 29-9-2001, he did receive
further material from HCL which he did not consider
while making the award on the ground that they were
received after the time-limit granted by him to HCL had
lapsed.
168. It is clear from the above layout of facts that there
have been delays in the arbitral proceedings right from
the beginning when Centrotrade approached ICC on
22-2-2000. Most of the delays were due to HCL's
refusal to participate in the proceedings. However,
there were some delays which cannot be related to
HCL's conduct. For instance, the period from 8-2-2001
when the order of this Court was made to 3-5-2001
when the first direction of the arbitrator was made. The
16
whole arbitral proceeding was conducted in a manner
indicative of lack of urgency. Further, I find merit in the
submission of HCL that due to the total dislocation of air
traffic caused by the terrorist attack of 11-9-2001, the
materials sent by HCL to the ICC arbitrator reached
late. Under these circumstances, a delay of few days in
serving their submissions with supporting evidence,
after having accepted to participate in the arbitral
proceedings, seems excusable and should have been
excused. Considering the overall picture of the
circumstances and the delays, refusal of the arbitrator
to consider the material received by him after 13-9-2001
and before 29-9-2001, seems to be based on a frivolous
technicality. The arbitrator ought to have considered all
the material received by him before he made the award
on 29-9-2001. Considering the decisions in Hari Om
Maheshwari v. Vinitkumar Parikh [(2005) 1 SCC 379]
and Minmetal Germany GmbH v. Ferco Steel Ltd. [
(1999) 1 All ER (Comm) 315] it is true that where a party
is refused an adjournment and where it is not prevented
from presenting its case, it cannot, normally, claim
violation of natural justice and denial of a fair hearing.
However, in the light of the delays, some of which were
not attributable to HCL's conduct, it was only fair to
excuse HCL's lapse in filing the relevant material on
time. Therefore, it can be said that HCL did not get a
fair hearing and could not effectively present its case.
169. For the reasons aforesaid, I am of the view that
HCL could not effectively present its case before the
ICC arbitrator and therefore enforcement of the ICC
award should be refused in view of Section 48(1)(b) of
the Act. Accordingly, the judgment of the Division Bench
and also the judgment of the learned Single Judge of
the Calcutta High Court must be set aside and the
matter be remitted back to the ICC arbitrator for fresh
disposal of the arbitral proceedings in accordance with
law after giving fair and reasonable opportunity to both
the parties to present their cases before him. In view of
the fact that I have set aside the award of the ICC
arbitrator on the ground that HCL was unable to
effectively present its case before the ICC arbitrator, in
compliance with Section 48(1)(b) of the Act, I direct the
17
ICC arbitrator to pass a fresh award within three months
from the date of commencement of the fresh arbitral
proceedings.”
15.The law on the subject matter of Section 48(1)(b) of the Arbitration Act
has been laid down in a recent judgment of this Court in Vijay Karia
(supra). In paragraph 21 of the aforesaid judgment, this Court stated
that it was important to note that no challenge was made to the aforesaid
award under the English arbitration law, though available, just as in the
facts of the present case. This Court then set out the parameters of a
Section 48 challenge which reaches this Court as follows:
“24. Before referring to the wide ranging arguments on
both sides, it is important to emphasise that, unlike
Section 37 of the Arbitration Act, which is contained in
Part I of the said Act, and which provides an appeal
against either setting aside or refusing to set aside a
‘domestic’ arbitration award, the legislative policy so far
as recognition and enforcement of foreign awards is
that an appeal is provided against a judgment refusing
to recognise and enforce a foreign award but not the
other way around (i.e. an order recognising and
enforcing an award). This is because the policy of the
legislature is that there ought to be only one bite at the
cherry in a case where objections are made to the
foreign award on the extremely narrow grounds
contained in Section 48 of the Act and which have been
rejected. This is in consonance with the fact that India
is a signatory to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958
(hereinafter referred to as “New York Convention”) and
intends - through this legislation - to ensure that a
person who belongs to a Convention country, and who,
in most cases, has gone through a challenge procedure
to the said award in the country of its origin, must then
be able to get such award recognised and enforced in
India as soon as possible. This is so that such person
18
may enjoy the fruits of an award which has been
challenged and which challenge has been turned down
in the country of its origin, subject to grounds to resist
enforcement being made out under Section 48 of the
Arbitration Act. Bearing this in mind, it is important to
remember that the Supreme Court’s jurisdiction under
Article 136 should not be used to circumvent the
legislative policy so contained. We are saying this
because this matter has been argued for several days
before us as if it was a first appeal from a judgment
recognising and enforcing a foreign award. Given the
restricted parameters of Article 136, it is important to
note that in cases like the present - where no appeal is
granted against a judgment which recognises and
enforces a foreign award - this Court should be very
slow in interfering with such judgments, and should
entertain an appeal only with a view to settle the law if
some new or unique point is raised which has not been
answered by the Supreme Court before, so that the
Supreme Court judgment may then be used to guide
the course of future litigation in this regard. Also, it
would only be in a very exceptional case of a blatant
disregard of Section 48 of the Arbitration Act that the
Supreme Court would interfere with a judgment which
recognises and enforces a foreign award however
inelegantly drafted the judgment may be. With these
prefatory remarks we may now go on to the
submissions of counsel.”
The Court then went on to refer to Minmetals Germany GmbH v. Ferco
Steel Ltd. (1999) C.L.C. 647 in paragraph 59, and Jorf Lasfar Energy
Co. v. AMCI Export Corp. 2008 WL 1228930 in paragraph 61 as
follows:
“59. The English judgments advocate applying the test
of a person being prevented from presenting its case by
matters outside his control. This was done in Minmetals
Germany GmbH v. Ferco Steel Ltd. (1999) C.L.C. 647
as follows:
19
“In my judgment, the inability to present a case to
arbitrators within s.103(2)(c) contemplates at least
that the enforcee has been prevented from
presenting his case by matters outside his control.
This will normally cover the case where the
procedure adopted has been operated in a manner
contrary to the rules of natural justice. Where,
however, the enforcee has, due to matters within his
control, not provided himself with the means of
taking advantage of an opportunity given to him to
present his case, he does not in my judgment, bring
himself within that exception to enforcement under
the convention. In the present case that is what has
happened”
xxx xxx xxx
61. An application of this test is found in Jorf Lasfar
Energy Co. v. AMCI Export Corp. 2008 WL 1228930,
where the U.S District Court, W.D. Pennsylvania decided
that if a party fails to obey procedural orders given by the
arbitrator, it must suffer the consequences. If evidence is
excluded because it is not submitted in accordance with
a procedural order, a party cannot purposefully ignore
the procedural directives of the decision-making body
and then successfully claim that the procedures were
unfair or violative of due process. Likewise, in Dongwoo
Mann+Hummel Co. Ltd. v. Mann+Hummel GmbH
(2008) SGHC 275, the Singapore High Court held:
“145. A deliberate refusal to comply with a discovery
order is not per se a contravention of public policy
because the adversarial procedure in arbitration
admits of the possible sanction of an adverse
inference being drawn against the party that does
not produce the document in question in compliance
with an order. The tribunal will of course consider all
the relevant facts and circumstances, and the
submissions by the parties before the tribunal
decides whether or not to draw an adverse inference
for the non-production. Dongwoo also had the liberty
to apply to the High Court to compel production of
the documents under s 13 and 14 of the IAA, if it was
not content with merely arguing on the question of
20
adverse inference and if it desperately needed the
production by M+H of those documents for its
inspection so that it could properly argue the point
on drawing an adverse inference. However,
Dongwoo chose not to do so.
146. Further, the present case was not one where a
party hides even the existence of the damning
document and then dishonestly denies its very
existence so that the opposing party does not even
have the chance to submit that an adverse inference
ought to be drawn for non-production. M+H in fact
disclosed the existence of the documents but gave
reasons why it could not disclose them. Here,
Dongwoo had the full opportunity to submit that an
adverse inference ought to be drawn, but it failed to
persuade the tribunal to draw the adverse inference.
The tribunal examined the other evidence before it,
considered the submissions of the parties and
rightfully exercised its fact finding and decision
making powers not to draw the adverse inference as
it was entitled to do so. It would appear to me that
the tribunal was doing nothing more than exercising
its normal fact finding powers to determine whether
or not an adverse inference ought to be drawn.””
The Court finally summed up its conclusion on this aspect of the case,
as follows:
“76. Given the fact that the object of Section 48 is to
enforce foreign awards subject to certain well-defined
narrow exceptions, the expression “was otherwise
unable to present his case” occurring in Section
48(1)(b) cannot be given an expansive meaning and
would have to be read in the context and colour of the
words preceding the said phrase. In short, this
expression would be a facet of natural justice, which
would be breached only if a fair hearing was not given
by the arbitrator to the parties. Read along with the first
part of Section 48(1)(b), it is clear that this expression
would apply at the hearing stage and not after the award
has been delivered, as has been held in Ssangyong
21
(supra). A good working test for determining whether a
party has been unable to present his case is to see
whether factors outside the party’s control have
combined to deny the party a fair hearing. Thus, where
no opportunity was given to deal with an argument
which goes to the root of the case or findings based on
evidence which go behind the back of the party and
which results in a denial of justice to the prejudice of the
party; or additional or new evidence is taken which
forms the basis of the award on which a party has been
given no opportunity of rebuttal, would, on the facts of a
given case, render a foreign award liable to be set aside
on the ground that a party has been unable to present
his case. This must, of course, be with the caveat that
such breach be clearly made out on the facts of a given
case, and that awards must always be read supportively
with an inclination to uphold rather than destroy, given
the minimal interference possible with foreign awards
under Section 48.”
16.Shri Raval took exception to the interpretation of the word “otherwise”
occurring in Section 48(1)(b) and cited a Constitution Bench judgment
of this Court in Kavalappara Kottarathil Kochuni v. States of Madras
and Kerala (1960) 3 SCR 887, for the proposition that the expression
“otherwise” cannot be read ejusdem generis with words that precede it.
17.Kochuni’s case (supra) was concerned with the constitutional validity
of the Madras Marumakkathayam (Removal of Doubts) Act, 1955.
Section 2(b) of the aforesaid Act reads as follows:
“2. Notwithstanding any decision of Court, any sthanam
in respect of which:
(b) the members of the tarwad have been receiving
maintenance from the properties purporting to be
sthanam properties as of right, or in pursuance of a
custom or otherwise”
22
The Constitution Bench then held:
“The word “otherwise” in the context, it is contended,
must be construed by applying the rule of ejusdem
generis. The rule is that when general words follow
particular and specific words of the same nature, the
general words must be confined to the things of the
same kind as those specified. But it is clearly laid down
by decided case that the specific words must form a
distinct genus or category. It is not an inviolable rule of
law, but is only permissible inference in the absence of
an indication to the contrary. On the basis of this rule, is
contended, that the right or the custom mentioned in the
clause is a distinct genus and the words “or otherwise”
must be confined to things analogous to right or contract
such as lost grant, immemorial user etc. It appears to
us that the word “otherwise” in the context only means
“whatever may be the origin of the receipt of
maintenance”. One of the objects of the legislation is to
by-pass the decrees of courts and the Privy Council
observed that the receipt of maintenance might even be
out of bounty. It is most likely that a word of the widest
amplitude was used to cover even acts of charity and
bounty. If that be so, under the impugned Act even a
payment of maintenance out of charity would destroy
the character of an admitted sthanam which ex facie is
expropriatory and unreasonable.”
Given the object of the 1955 Act, the Constitution Bench was careful to
state that the word “otherwise” in the context only means “whatever may
be the origin of the receipt of maintenance”.
18.P. Ramanatha Aiyar’s Advanced Law Lexicon defines the expression
“otherwise” as follows:
“Otherwise. By other like means; contrarily; different
from that to which it relates; in a different manner; in
another way; in any other way; differently in other
respects in different respects; in some other like
capacity.”
23
The Law Lexicon then refers to an early judgment of Cleasby B. in
Monck v. Hilton 46 LJNC 167, in which it is stated as follows:
“As a general rule “otherwise” when following an
enumeration, should receive an ejusdem generis
interpretation (per CLEASBY, B. Monck v. Hilton, 46
LJMC 167, The words ‘or otherwise,’ in law, when used
as a general phrase following an enumeration of
particulars, are commonly interpreted in a restricted
sense, as referring to such other matters as are kindred
to the classes before mentioned.”
As has been held in paragraph 76 of Vijay Karia (supra), the context of
Section 48 is recognition and enforcement of foreign awards under the
New York Convention of 1958. Given the context of the New York
Convention, and the fact that the expression “otherwise” is susceptible
to two meanings, it is clear that the narrower meaning has been
preferred, which is in consonance with the pro-enforcement bias spoken
about by a large number of judgments referred to in Vijay Karia (supra).
Kochuni’s case (supra) dealing with an entirely different Act with a
different object cannot, therefore, possibly apply to construe this word
in the setting in which it occurs.
19.As a matter of fact, three earlier judgments of this Court, all under the
Arbitration Act, 1940, are also instructive. The ground on which a
domestic award could be set aside under Section 30 of the 1940 Act,
inter alia, was if the arbitrator misconducted himself or the proceedings.
It will be seen that “misconduct” as a ground for setting aside an award
24
is conceptually much wider than a party being unable to present its case
before the arbitrator, which is contained in Section 48(1)(b). Thus, in
Ganges Waterproof Works (P) Ltd. v. Union of India (1999) 4 SCC
33, this Court was faced with the legality and validity of the arbitration
proceedings, three grounds being raised as follows:
“2. Challenge to the legality and validity of the arbitration
proceedings has been laid on three grounds: firstly, that
the claimant-Union of India (respondent herein) filed an
additional statement accompanied by documents before
the arbitrator on 11-8-1982, which was the last day of
hearing, and that was taken into consideration by the
arbitrator without affording the petitioner an opportunity
for contesting the same or even delivering a copy thereof
to the petitioner; secondly, though no oral evidence was
adduced by any of the parties, yet the arbitrator has in
his award expressed having heard the evidence which
shows inapplication of mind to the record of the
proceedings and material available before the arbitrator;
and thirdly, that the arbitrator in the sitting held on 11-8-
1982 heard the parties hardly for five or seven minutes
in which limited time, no real hearing could have taken
place. It is submitted that the manner in which the
arbitrator has conducted himself, has resulted in violation
of the principles of natural justice and vitiated the
arbitration proceedings. Similar grounds were raised
before the learned Single Judge as also in the intra-court
appeal before the High Court and have been turned
down. Having heard the learned counsel for the parties,
we are also of the opinion that here too the petitioner
must meet the same fate.”
So far as the first ground was concerned, it was held that as a matter of
fact, nothing was filed by the Union of India on 11.08.1982 and the
additional statement and documents that were filed by the Union of India
before the learned arbitrator was way before on 31.05.1982. This being
25
so, and as no specific case was made out in an additional affidavit
before the learned single Judge supporting the plea that the additional
statement and documents that were furnished could not be effectively
dealt with by the appellant, plea no.1 was turned down. The third
contention was then disposed of as follows:
“6. The third and the last plea urged is equally devoid of
any merit. The burden of substantiating the averment
urged as an objection tantamounting to misconduct on
the part of the arbitrator or complaining of violation of
the principles of natural justice was on the petitioner. No
evidence was adduced to substantiate the plea. The
best person to depose as to what had actually
transpired at the hearing and whether the same was a
real hearing or an eyewash merely was the counsel who
actually made submissions on behalf of the petitioner
before the arbitrator. The least that was expected of the
petitioner was to have filed an affidavit of the counsel
before the Court. That was not done. No timely protest
was raised before the arbitrator. The hearing was
concluded on 11-8-1982 and the award was made on
23-8-1982. During these 12 days also, the petitionerCompany never urged before the arbitrator that
submissions on its behalf were not permitted to be
made by the arbitrator. The learned Single Judge, as
also the Division Bench, have arrived at a finding that
the plea was an afterthought and certainly not
substantiated. We also do not find any reason to take a
view different from the one taken by the High Court.”
20.In Sohan Lal Gupta v. Asha Devi Gupta (2003) 7 SCC 492, this Court
dealt with the arbitrator misconducting the proceedings as follows:
“27. The arbitrator, as appears from the minutes of the
meeting, proceeded only on the documentary evidence.
No party appears to have presented oral evidence.
Thus, the question of cross-examination of the
witnesses appearing on behalf of the other parties did
26
not arise. Submissions must have been made by the
parties themselves. Ghanshyamdas Gupta does not
say that he had difficulty in appearing on 15-6-1976 or
any subsequent date and he had asked for an
adjournment. Even otherwise, a party has no absolute
right to insist on his convenience being consulted in
every respect. The matter is within the discretion of the
arbitrator and the Court will intervene only in the event
of positive abuse. (See Montrose Canned Foods
Ltd. [(1965) 1 Lloyd's Rep 597] ) If a party, after being
given proper notice, chooses not to appear, then the
proceedings may properly continue in his absence.
(See British Oil and Cake Mills Ltd. v. Horace Battin &
Co. Ltd. [(1922) 13 LI L Rep 443] )”
 (emphasis supplied)
In a significant paragraph which foreshadowed the law as it is today, this
Court referred to the Minmetals (supra) judgment and held as follows:
“43. Furthermore, in this case Ghanshyamdas Gupta
expressly relinquished his right by filing an application
stating that he would withdraw his objection. Such
relinquishment in a given case can also be inferred from
the conduct of the party. The defence which was
otherwise available to Ghanshyamdas Gupta would not
be available to others who took part in the proceedings.
They cannot take benefit of the plea taken by
Ghanshyamdas Gupta. Each party complaining
violation of natural justice will have to prove the
misconduct of the Arbitration Tribunal in denial of justice
to them. The appellant must show that he was
otherwise unable to present his case which would mean
that the matters were outside his control and not
because of his own failure to take advantage of an
opportunity duly accorded to him. (See Minmetals
Germany GmbH v. Ferco Steel Ltd. [(1999) 1 All ER
(Comm) 315] ) This Court's decision in Renusagar
Power Co. Ltd. v. General Electric Co. [1994 Supp (1)
SCC 644 : AIR 1994 SC 860] is also a pointer to the
said proposition of law.” (emphasis supplied)
27
21.In Hari Om Maheshwari v. Vinitkumar Parikh (2005) 1 SCC 379, this
Court recorded the arguments of learned counsel appearing on behalf
of the appellant on the natural justice aspect of the case as follows:
“7. Shri Jaideep Gupta, learned Senior Counsel
appearing for the appellant herein contended that the
grounds on which the High Court has set aside the
award are not the grounds contemplated under Section
30 of the Act. He submitted that arbitration proceedings
having started in the year 1995 could not be completed
even in the year 1999, therefore, the High Court ought
not to have interfered with the award. He pointed out
that in Reference Case No. 313 of 1995 pertaining to
Deepa Jain the evidence had already concluded and
the explanation given by the respondent for not leading
evidence on 10-5-1999 was frivolous and the arbitrators
rightly did not entertain a prayer for granting a further
opportunity for leading evidence. Such a denial of a
further opportunity by the arbitrators would not be a
ground contemplated under Section 30 of the Act to set
aside the award. Hence, the courts below have gone
beyond the scope of Section 30 of the Act while allowing
petitions to set aside the arbitration awards.”
The learned Single Judge’s finding in the aforesaid case, which was
accepted by the Division Bench judgment on the facts of the case, is set
out in paragraph 12 of the said judgment as follows:
“12. It is the above award that was challenged under
Section 30 of the Arbitration Act, 1940 before the
learned Single Judge by the respondent which came to
be allowed by the learned Single Judge. While doing so
learned Single Judge observed:
“the cross-examination of M/s D. Jain and Co. was over
in 1997, the cross-examination of witness examined in
Shri Maheshwari's reference was completed on 8-4-
1999 and the arbitrators adjourned the matter to 10-5-
1999 and 11-5-1999 for the petitioner to lead his
28
evidence. However, it appears that the petitioner noted
a wrong date and therefore, he did not appear on 10-5-
1999. It is clear from the record that there is an
application submitted by the petitioner before the
arbitrators on 20-5-1999 regarding the mistake
committed by him in recording the date of hearing and
requested the arbitrators to give an opportunity to lead
the evidence. One can understand if the arbitrators
have after closing the matter for award delivered the
award immediately but since the arbitrators had not
delivered their award by 20-5-1999, they also did not
deliver their award immediately thereafter, but waited till
November 1999 to make their award, the arbitrators
could have easily permitted the petitioner to lead
evidence. I do not think that the arbitrators were justified
in denying the petitioner an opportunity to lead
evidence….”
This finding of the learned Single Judge has been
accepted by the Division Bench without any further
discussion.”
This Court then set aside the Single Judge’s judgment in language that
is even more appropriate today, given the object of the Arbitration Act,
1996, as follows:
“16. From the above it is seen that the jurisdiction of
the court entertaining a petition or application for
setting aside an award under Section 30 of the Act is
extremely limited to the grounds mentioned therein
and we do not think that grant or refusal of an
adjournment by an arbitrator comes within the
parameters of Section 30 of the Act. At any rate the
arbitrator's refusal of an adjournment sought in 1999
in an arbitration proceeding pending since 1995
cannot at all be said to be perverse keeping in mind
the object of the Act as an alternate dispute resolution
system aimed at speedy resolution of disputes.”
22.Shri Banerjee then referred to a number of judgments including
Cuckurova Holding A.S. v. Sonera Holding B.V. (2014) UKPC 15 of
29
the Privy Council. In this judgment, the Minmetals (supra) test was
referred to with approval as follows:
“31. Section 36(2)(c) is in the same terms as section
103(2)(c) of the Arbitration Act 1996 in England. They
reflect Article V(1)(b) of the New York Convention. In
Minmetals Germany GmbH v Ferco Steel Ltd [1999]
CLC 647, 658 Colman J said that the subsection
contemplates that the enforcee has been prevented
from presenting his case by matters outside his control,
which will normally cover the case where the procedure
adopted has been operated in a manner contrary to the
rules of natural justice. In Kanoria v Guinness [2006]
EWCA Civ 222 Lord Phillips CJ held in the Court of
Appeal that, on the ordinary meaning of section
103(2)(c), a party to an arbitration is unable to present
his case if he is never informed of the case he is called
upon to meet. He referred to the statements in
Minmetals referred to above with approval.
xxx xxx xxx
34. The general approach to enforcement of an award
should be pro-enforcement. See eg Parsons &
Whittemore Overseas Co Inc v Société Générale 508 F
2d 969 (1974) at 973:
“The 1958 Convention’s basic thrust was to liberalize
procedures for enforcing foreign arbitral awards … [it]
clearly shifted the burden of proof to the party defending
against enforcement and limited his defences to seven
set forth in Article V.”
In IPCO (Nigeria) v Nigerian National Petroleum [2005]
2 Lloyd’s Rep 326, Gross J said at para 11, when
considering the equivalent provision of the English
Arbitration Act 1996:
“… there can be no realistic doubt that section 103 of
the Act embodies a pre-disposition to favour
enforcement of New York Convention awards,
reflecting the underlying purpose of the New York
Convention itself …”
30
The Board agrees. There must therefore be good
reasons for refusing to enforce a New York Convention
award. The Board can see no basis upon which it
should refuse to enforce the award here if Cukurova
fails to show that it was unable to present its case for
reasons beyond its control.”
The Privy Council, on facts, then dealt with the natural justice
ground by rejecting it as follows:
“53. The approach of the Tribunal described above and
the reasoning in the First Partial Award shows that it
gave Cukurova every opportunity to develop its case.
The basis upon which the Tribunal reached its
conclusions is clear. As stated above, the Tribunal
indicated that it assumed Mr Berkmen’s evidence to be
true. It is therefore difficult to see on what grounds
Cukurova can properly complain. It is not suggested
that the Tribunal deliberately ignored Mr Berkmen’s
evidence. Although Cukurova submits that the outcome
of the arbitration would have been different if Mr
Berkmen had had an opportunity to be heard, it does
not identify on what basis. It is of course no part of the
role of the enforcing court to consider whether the
decision was correct either in law or on the facts.”
23.In Eastern European Engineering v. Vijay Consulting (2019) 1 LLR
1 (QBD), the Queen’s Bench Division dealt with the “inability to present
case” challenge by following Cukorova Holdings (supra) and
Minmetals (supra), and then concluding:
“89. It was also common ground that, as indicated as a
"given" by Lord Clarke in Cukorova at [53], the party
challenging the award must also demonstrate that the
outcome of the arbitration would have been different
had there been no breach of natural justice.”
31
Applying the test of “matters outside one’s control”, it was found that
VCL’s challenge on this ground was not outside its control as follows:
“98. In this specific context what VCL did not do (and
perfectly well could have done) was to raise with the
arbitrator the question of whether the form of his order
in fact shut them out from putting in a statement from Dr
du Toit Malan, or to make submissions as to why they
needed to get evidence from some other identified
person in order to respond to the submissions made.
Instead they chose to seek to challenge the decision on
the basis that they should be allowed to put in new
evidence which covered all issues, not simply in
response to Large 3. This decision to challenge on one
basis and not the other is a matter which was entirely
within VCL's control.
99. In those circumstances too I accept the submission
that the admission of Large 3 (or failure to allow
responsive evidence) would not have had an impact on
the result of the arbitration. The liability decision was
based on the earlier reports of Mr Large and other
witnesses. That is common ground. In relation to
quantum, the arbitrator's reliance upon Large 3 had the
effect of reducing the quantum awarded to EEEL (by
some €9 million). It therefore cannot be said that VCL
was prejudiced by Large 3. If it was prejudiced it was by
its failure to avail itself of the opportunity given it to
respond.” (emphasis supplied)
24.Jorf Lasfar (supra), referred to in paragraph 61 of Vijay Karia (supra),
is also instructive. This case deals with a specific plea relating to natural
justice in relation to a Tribunal’s procedural orders as follows:
“7. We disagree. AMCI was given a full and fair
opportunity to present its case. However, AMCI failed to
meet its obligations under the Tribunal's procedural
orders, 3 and suffered the consequences. It failed to
submit any witness statements by the deadline set forth
by the Tribunal. Rather, AMCI attempted to name Mr.
32
Thrasher as a witness after the deadline, and without
submitting a witness statement. AMCI submitted no
documentary evidence save a governmental report
indicating that coal was in short supply around the time
of the alleged breach.
xxx xxx xxx
9. The requirements of Procedural Order No. 4 are
clear, reasonable, and common in international
arbitration practice. There is no dispute that AMCI
understood what the Order required at the time. A party
cannot purposefully ignore the procedural directives of
a decision-making body, and then successfully claim
that the procedures were fundamentally unfair, or
violated due process. Under the circumstances, we find
that AMCI has failed to satisfy its burden to prove that
the arbitral process violated our basic notions of
fundamental fairness and justice. As such, AMCI
cannot avail itself of either the Article V(1)(b) defense or
the Article V(2)(b) defense.” (emphasis supplied)
25.Shri Banerjee then referred to two United States District Court
judgments. In Consorcio Rive v. Briggs of Cancun 134 F. Supp 2d
789, the US District Court, E.D. Louisiana, found that Briggs of Cancun,
the respondent before it, refused to participate in the arbitration due to
alleged criminal proceedings in Cancun. At the trial, David Briggs
(representative of the respondent therein) testified that he did not seek
alternative ways to appear at the hearings such as by way of telephone,
nor did he send a representative of the company to appear on behalf of
the company. In this fact situation, Article V(1)(b) of the New York
Convention was referred to, the court finding:
“26. Because Briggs of Cancun was continuously
informed of all hearing dates and was provided
33
sufficient opportunity to present witnesses and
evidence in defense of the action, Briggs of Cancun was
given proper notice of the arbitration proceedings.
27. The due process guarantee incorporated in article
V(1) (b) of the Convention requires that "an arbitrator
must provide a fundamentally fair hearing." Generica
Ltd., 125 F.3d at 1130. "A fundamentally fair hearing is
one that `meets "the minimal requirements of fairness"
adequate notice, a hearing on the evidence, and an
impartial decision by the arbitrator.'" Id. "[P]arties that
have chosen to remedy their disputes through
arbitration rather than litigation should not expect the
same procedures they would find in the judicial
arena." Id. Essentially, in exchange for the convenience
and other benefits obtained through arbitration, parties
lose "the right to seek redress from the court for all but
the most exceptional errors at arbitration." Dean v.
Sullivan, 118 F.3d 1170, 1173 (7th Cir.1997).
28. Consistent with the federal policy of encouraging
arbitration and enforcing arbitration awards, the
defense that a party was "unable to present its case"
raised pursuant to article V(1) (b) of the Convention is
narrowly construed. Parsons & Whittemore Overseas
Co. v. Societe Generale de L'Industrie du Papier, 508
F.2d 969, 975 (2d Cir.1974).
29. In the instant case, the Court finds that Briggs of
Cancun was not "unable to present its case," because
Briggs of Cancun could have participated by means
other than David Briggs's physical presence at the
arbitration. For instance, Briggs of Cancun could have
sent a company representative to attend; could have
sent its attorney to attend; or David Briggs could have
attended by telephone.
30. Moreover, the evidence indicates that Briggs of
Cancun did participate to the extent that it designated
an arbitrator and filed over 80 pages of legal argument
and documentation in support of its position. Because
Briggs of Cancun has brought forward no additional
information or evidence that it would have presented at
the arbitration if it had the opportunity to do so, the Court
34
finds that Briggs of Cancun did have an opportunity to
meaningfully participate in the arbitration.
xxx xxx xxx
33. For the foregoing reasons, the Court finds that
Briggs of Cancun's defense under article V(1) (b) of the
Convention must fail. The Court also specifically finds
that even if there was a valid arrest warrant pending
against David Briggs for some period of time, Briggs of
Cancun is not entitled to a defense under article V(1)
(b) of the Convention because Briggs of Cancun could
have participated through its Mexican attorney or
corporate representative or by telephone. Further,
Briggs of Cancun has not demonstrated that it was
prejudiced in any way by whatever restrictions the
alleged criminal action might have imposed, because it
has not pointed to exonerating evidence that it would
have presented, but could not, but for the filing of the
criminal Statement of Facts.”
26.In Four Seasons Hotels v. Consorcio Barr S.A. 613 Supp 2d 1362
(S.D. Fla. 2009), the U.S District Court, S.D. Florida, dealt with the
respondent, having discontinued its participation in the arbitral
proceedings just prior to the final evidential hearings, as follows:
“Moreover, regardless of the decision ultimately
reached by the Court of Appeals concerning the waiver
issue in the previous action to confirm the Partial
Arbitration Award, the issue of the Arbitral Tribunal’s
jurisdiction and the propriety of the anti-suit injunction
was to be conclusively decided one way or the other in
the action to confirm the Partial Arbitration Award. With
the jurisdictional and anti-suit injunction issues thus
decided, Consorcio’s withdrawal from the final
evidentiary hearing, the proceeding governing the
issuance of the Final Award, in an attempt to preserve
its right to contest jurisdiction, was futile. Consorcio’s
withdrawal was thus ineffective to preserve its right to
contest jurisdiction or the anti-suit injunction in the
35
appeal of the Partial Arbitration Award or in this action
to confirm the Final Award.
Given that Consorcio’s withdrawal from the arbitration
proceeding was unnecessary to preserve its rights
Consorcio was not precluded from or unable to present
its case. Even if Consorcio’s decision to withdraw from
the proceeding was taken based on a good faith
subjective belief that such action was necessary to
preserve its rights on appeal, such a misgiving did not
render Consorcio unable to present its case within the
meaning of Article V(1)(b). Therefore, Consorcio has
not met its burden of proving that Article V(1)(b) applies
as a defense.”
27.Shri Banerji then referred to a judgment of the Supreme Court of Hong
Kong, reported in Nanjing Cereals v. Luckmate Commodities XXI
Y.B. Com. Arb. 542 (1996). In paragraph 5 of the judgment the court
held:
“5. However, it appeared that the Defendants had had
ample opportunity to present their own evidence as to
quantum to the Tribunal, but by their own admission
they had failed to do so. In addition, regarding the issue
of whether I should exercise my discretion in refusing in
any case to set aside the Award, Mr. Chan conceded
that the fact that the final Award was lower than that
claimed by the Plaintiffs was against his clients.
xxx xxx xxx
7.…At all events, the Defendants maintain that they did
not submit their own figures to the Tribunal, though this
was clearly going to be an issue before the Tribunal,
nor, it appears, did they avail themselves of the
opportunity to submit them later. That decision was up
to them. They must now live with its consequences.
8. Their omission was similar to that of the Defendants
in another case, namely Qinghuangdao Tongda
Enterprise Development Co. v. Million Basic Co. Ltd.
[1993] 1 HKLR 173, where I held:-
36
"It is not accepted that the defendant had no opportunity
to present its case. On the contrary, the defendant
made full use of the ample opportunity given and only
complained after the proceedings had finally been
closed, having foregone the opportunity of asking for an
extension of those proceedings. All proceedings must
have a finite end."
9. In conclusion, I am not satisfied that the Defendants
have made out sufficient grounds for me to refuse leave
to enforce the Award under S.44 of the Arbitration
Ordinance. Even if they had made out sufficient
grounds, in my opinion this is a classic case where a
court should exercise its discretion to refuse to set aside
an award, due to the failure of the Defendants to
prosecute their own case properly by submitting their
own evidence to the Tribunal. The fact that the award
was lower than that sought by the Claimants is also a
powerful factor against exercising discretion not to
enforce.” (emphasis supplied)
28.Shri Banerjee then referred to a judgment to the Supreme Court of Italy
reported in De Maio Giuseppe v. Interskins Y.B. Comm. Arb. XXVII
(2002) 492. The Italian Supreme Court, in considering the ground
contained in Article V(1)(b) of the New York Convention held as follows:
“[5] "The first two grounds for appeal, which must be
examined together since they concern the same issues,
are unfounded. Art. V(1)(b) of the New York Convention
provides that the failure to communicate either the
arbitrator's appointment or the arbitral proceedings,
which makes it impossible to present one's case, is a
ground for refusing enforcement of the award. De Maio
maintains that it was unable to present its case because
it was given only fourteen days to appoint an arbitrator.
[6] "This Court deems that there was no violation of due
process as alleged by De Maio, and that one or more
missing pages on this issue in the Court of Appeal's
decision do not make this decision invalid. Since this is
37
a procedural defect, we can settle the issue directly,
independent of whether the lower decision failed to give
reasons on this issue, the more so as we deal here
exclusively with the interpretation and the application of
a procedural provision.
[7] "Art. V(1) provides that the party against whom the
award is invoked has the burden to prove the ground for
refusal of enforcement under letter (b), as well as the
other grounds in that paragraph. Further, we must
consider that, according to the spirit of the Convention,
the recognition of arbitral awards depends on specific
requirements which must be interpreted narrowly.
[8] "Since in the present case it is undisputed that
Interskins informed De Maio that it had appointed an
arbitrator, the reasons given in the lower decision,
which deems that this information and the time limit
[given to De Maio] guaranteed due process, suffice,
independent of a failure to give reasons on the
objections raised by De Maio.
[9] "Second, we must consider that the ground for
refusal under letter (b) concerns the impossibility rather
than the difficulty to present one's case. De Maio does
not argue and certainly does not prove that it could not
present its case when the arbitration was commenced
or while it was held.”
29.We now come to the facts of the present case. Shri Raval’s plea that
this Court cannot go into the question posed before it as there was no
difference of opinion on HCL being unable to present its case, Justice
Chatterjee J’s being the only judgment on this score, has no legs to
stand. The reference order that is extracted by us in paragraph 7 above,
and that is contained in paragraph 1 of the decision in Centrotrade
[2017] (supra), makes it clear that, “in view of difference of opinion, the
matter is referred to a larger bench for reconsideration”. That the
38
expression the matter was understood as meaning the entire matter and
not merely issue 1, is further made clear by paragraph 5 of the said
judgment as follows:
“For the present, we propose to address only the first
question and depending upon the answer, the appeals
would be set down for hearing on the remaining issue.
We have adopted this somewhat unusual course since
the roster of business allowed us to hear the appeals
only sporadically and therefore the proceedings before
us dragged on for about three months.”
Finally, the 3 Judge Bench concluded:
48. In view of the above, the first question before us is
answered in the affirmative. The appeals should be
listed again for consideration of the second question
which relates to the enforcement of the appellate
award.”
In this view of the matter, we have proceeded to examine the
correctness of Chatterjee J’s views.
30.Shri Raval has argued that the London arbitrator ought to have
determined the question of jurisdiction as a preliminary question, as he
himself had initially indicated, before going into the substantive issues
relating to the contract. We are afraid that this is an argument that has
never been raised earlier, and has been raised by Shri Raval here for
the first time. Even otherwise, and even if we were to go by the
documents that were submitted to us for the first time by Shri Raval, the
fax sent on 20.12.2000 by the arbitrator to the parties is incomplete.
Even otherwise, it speaks of issues of jurisdiction and Indian law having
39
to be addressed as a primary question before matters of substance
relating to the dispute on the contract. None of this clearly and
unequivocally shows that the learned arbitrator sought to take up the
plea as to jurisdiction as a preliminary objection which should be
decided before other matters. This plea of Shri Raval, being taken here
for the first time and for the reasons given by us, is devoid of substance.
31.Shri Raval then argued that HCL was unable to present its case as the
learned arbitrator did not heed the stay order of the Rajasthan High
Court dated 27.04.2000. First and foremost, the stay order of the
Rajasthan High Court was not and could not be directed against the
arbitrator – it was directed only against the parties to the proceeding.
Secondly, the learned arbitrator initially began the proceedings, after the
green signal given to him by the ICC Court to proceed with the
arbitration, by directing that the appellant serve submissions along with
supporting evidence, followed by the respondent’s response and
evidence on 19.01.2001. This, however, was reiterated only on
03.05.2001, by which time the Supreme Court had vacated the adinterim ex parte order on 08.02.2001. This plea taken by Shri Raval,
also taken before us for the first time, has no legs to stand on.
32.Shri Raval then strenuously argued that considering that the last
extension expired on 12.09.2001, the learned arbitrator ought to have
40
taken onboard two other bundles of documents and granted time for the
same, given the terrorist attack in New York on 11.09.2001.
33.The sequence of events, even from the documents presented by Shri
Raval for the first time, is that legal submissions were furnished after
11.09.2001 and received by the arbitrator’s office on 13.09.2001. The
arbitrator then stated that these submissions have been fully taken into
account in the award and that by 18.09.2001, there would be no scope
for any further material being supplied, as the publication of the award
will follow shortly. This was communicated by fax on 18.09.2001 by the
learned arbitrator to Fox & Mandal, the Attorneys of HCL. It is only
thereafter, on 19.09.2001, that a couriered letter is sent to the learned
arbitrator stating that Fox & Mandal would be deeply obliged if
documents contained in paper binder no.1 would also be taken into
account. It was then added that paper binder no.2, containing judgments
of the Courts of law and authorities are being sent separately and it may
take 7 to 10 days’ more time beyond 19.09.2001.
34.At this stage, it is important to point out that the learned arbitrator had
given a large number of opportunities to file documents and legal
submissions. On 03.05.2001 the learned arbitrator directed that the
appellant serve submissions along with supporting documents,
following the respondent’s response and evidence therein, with a right
in the appellant to put in a reply, in accordance with a clear time table
41
that was set out. On 30.07.2001, since no defence submissions or
supporting evidence was served by the respondent within the time
prescribed, the time was extended, giving the respondent one last
opportunity to put in their defence and to seek extension of time for so
doing. Until August 2001, it may be stated that respondent did not
participate in the arbitral proceedings, even though invited to do so. It is
only on 09.08.2001, when the learned arbitrator informed the parties that
he is proceeding with the award, that on 11.08.2001, the learned
arbitrator received a fax from Fox & Mandal, Attorneys for HCL,
requesting for an extension of one month’s time to put in their defence.
This was acceded to by the learned arbitrator on 16.08.2001, giving time
upto 31.08.2001. However, on 27.08.2001, Fox & Mandal sought for a
further three weeks’ extension of time, which was also granted by the
learned arbitrator, allowing a final extension of time until 12.09.2001.
Despite the fact that the legal submissions running into 75 pages were
submitted beyond time, that is only on 13.9.2001, in view of the
11.09.2001 attack in New York, the learned arbitrator received the same
and took the same into account despite being beyond time. It was only
on 29.09.2001 that the learned arbitrator then passed his award. Given
the aforesaid timeline, it is clear that the learned arbitrator was
extremely fair to the respondent. Having noticed that the respondent
wanted to stall the arbitral proceedings by approaching the Courts in
42
Rajasthan and having succeeded partially, at least till February 2001,
the conduct of the respondent leaves much to be called for. Despite
being informed time and again to appear before the Tribunal and submit
their response and evidence in support thereof, it is only after the
arbitrator indicated that he was going to pass an award that the
respondent’s attorneys woke up and started asking for time to present
their response. This too was granted by the learned arbitrator, by not
only granting extension of time, but by extending this time even further.
Finally, when the legal submissions of 75 pages were sent even beyond
the time that was granted, the learned Arbitrator took this into account
and then passed his award. This being the case, on facts we can find
no fault whatsoever with the conduct of the arbitral proceedings.
35.Justice Chatterjee, however, in his judgment, made several errors of
fact. First and foremost, in paragraph 166 of Centrotrade [2006]
(supra), the learned Judge quoted the penultimate line in paragraph 8
of the award, without even adverting to the line just before the aforesaid
line which indicated that the material that was received from HCL was
in fact taken into consideration while making the award, even beyond
the stipulated time of 12.09.2001. Secondly, in paragraph 167,
Chatterjee,J. conjectured that between 13th and 29th September, 2001,
the Arbitrator did receive further material from HCL which he did not
consider while making the award, on the ground that they were received
43
after the time limit granted by him to HCL. Factually, there is no
supporting material to show that any such further material was received
by the learned arbitrator, except documents that have been presented
by Shri Raval for the first time before us. They were clearly not before
Chatterjee,J. when this surmise was made by the learned Judge,
Further, the arbitrator cannot be faulted on this ground as, given the
authorities referred to by us hereinabove, the arbitrator is in control of
the arbitral proceedings and procedural orders which give time limits
must be strictly adhered to. In paragraph 168, the learned Judge then
said that given the attack in New York on 11.09.2001, the learned
arbitrator should have excused further delay and should not have acted
on frivolous technicalities. This approach of a Court enforcing a foreign
award flies in the face of the judgments referred to by us hereinabove.
Even otherwise, Chatterjee, J., refers to the judgment in Hari Om
Maheshwari (supra) as well as Minmetals (supra), but then does not
proceed to apply the ratio of the said judgments. Had he applied the
ratio of even these two judgments, it would have been clear that an
arbitrator’s refusal to adjourn the proceedings at the behest of one party
cannot be said to be perverse, keeping in mind the object of speedy
resolution of disputes of the Arbitration Act. Further, the Minmetals
(supra) test was not even adverted to by Chatterjee,J., which is that HCL
was never unable to present its case as it was at no time outside its
44
control to furnish documents and legal submissions within the time given
by the learned arbitrator. HCL chose not to appear before the arbitrator,
and thereafter chose to submit documents and legal submissions
outside the timelines granted by the arbitrator.
36.Even otherwise, remanding the matter to the ICC arbitrator to pass a
fresh award in paragraph 169, is clearly outside the jurisdiction of an
enforcing court under Section 48 of the 1996 Act.
37.For all these reasons, it is clear that Chatterjee, J.’s judgment cannot be
sustained. As a result, Centrotrade’s appeal, being Civil Appeal No.
2562 of 2006, is allowed. The judgment of Chatterjee,J is set aside.
HCL’s appeal, being Civil Appeal No. 2564 of 2006, is dismissed.
Resultantly, the foreign award, dated 29.09.2001, shall now be
enforced.
….……………………………J.
 (R.F. Nariman)
….……………………………J.
 (S. Ravindra Bhat)
….……………………………J.
 (V. RAMASUBRAMANIAN)
New Delhi;
June 02, 2020.