Supreme Court: The question before the division bench of Ravindra Bhat and Indira Banerjee, JJ. was whether a foreign award rendered in the pre BALCO[1] era, could be challenged under Section 34 of the Arbitration and Conciliation Act.
The facts in brief were that the respondent and another company ‘Enco’ had signed an agreement to set up a plant in India. Subsequently, with the respondent’s consent Enco had handed over the agreement to the appellant company. Later on, a dispute arose and arbitration proceedings took place under ICC in London. A partial award (and later a final award) was given which was challenged by the Indian company (the respondents) in the Bombay High Court. A single bench of the Bombay High Court rejected the challenge under Section 34 however a division bench allowed the same.
The appellant, an Italian company, challenged the order of the division bench of Bombay High Court stating that the Supreme Court has already overruled it’s earlier judgments, Bhatia International v. Bulk Trading S. A (Bhatia International)[2] and Venture Global Engineering v. Satyam Computers Services Ltd[3] (Venture Global) through the case of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc[4] (BALCO) and therefore a foreign award, cannot be challenged under Part I of the Act. The appellant further submitted that since in this case the seat is not in India (as the parties had chosen ICC, London for the arbitral proceedings) and the law governing the arbitration is not Indian law, hence the parties would be bound by BALCO.
The respondents had claimed that since the arbitration agreements were entered into, and awards too were rendered during the prevalence of Bhatia International and Venture Global judgments, therefore the decision in any subsequent judgment would not apply to them. They further submitted that though arbitration agreement stipulated that arbitration would be under ICC in London but governing law was stipulated to be Indian law.
The Court relied upon recent judgments of MAX Corporation v. E-City Entertainment (India) Pvt. Ltd[5]. (“IMAX”), wherein the award under consideration was also a pre-BALCO award, the court had held that since arbitral proceedings where held in ICC, London hence it was held to be the seat of arbitration and no seat was explicitly chosen. Similarly, in case of Government of India v. Vedanta Ltd[6], the seat of arbitration was Kuala Lumpur but law governing the arbitration agreement was English Law, the Court held Malaysian Law would be the curial law, i.e. the law governing the challenge to the award.
In conclusion, the Court held that challenge to a pre-BALCO foreign award is not maintainable under Section 34 of the Act and even if contract and award is pre-BALCO, the law governing the challenge to the award will be law of seat of arbitration.
[Noy Vallesina Engineering SpA v. Jindal Drugs Limited, 2020 SCC OnLine SC 957, decided on 26.11.2020]
Nilufer Bhateja, Associate Editor has put this story together
[1] Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc (2012) 9 SCC 552
[2] (2002) 4 SCC 105
[3] (2008) 4 SCC 190
[4] (2012) 9 SCC 552
[5] (2017) 5 SCC 331
[6] 2020 SCC Online (SC) 749
