Bombay HC upholds previous order on attachment of assets under foreign arbitration award

A Division Bench of the Bombay High Court has upheld a previous order passed by a Single Judge that allowed attachment of Indian assets of the company against which a foreign award was passed..On 25 January 2017, an award was passed against Heligo Charters Pvt. Ltd for a sum of $7 million (Rs.46 Crores). Heligo, however, failed to pay the awarded amount. The award was passed in Singapore and the arbitration agreement was also governed by Singapore Law..Immediately after the award was passed by the Singapore International Arbitration Centre (SIAC), Aircon Beibars FZE, the company in favour of whom the award was passed, had filed a petition in the Bombay High Court for attachment of a helicopter owned by Heligo. The petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996, which allows parties to seek interim measures after the award has been passed, but not enforced..The Bombay High Court on April 28, 2017, allowed the application and passed an order attaching the helicopter..Heligo then moved before a larger bench of the Bombay High Court, seeking to set aside the judgment. Heligo argued before the Court that attachment of its property was not allowed in view of the law that existed at the time of execution of its arbitration agreement..This argument was based on Section 2(2) of the Arbitration Act which (earlier) said that this provision would apply only in cases where the place of arbitration is in India. This provision was, however, amended in 2015, pursuant to the Supreme Court decision in BALCO, to make a relief sought under Section 9 applicable even to cases where the place of arbitration is outside India..In the instant case, the arbitration agreement was signed in September 2014, the dispute was referred to arbitration in April 2015 and the amendment was passed in October 2015..Heligo, thus argued that since the dispute arose before the amendment was enforced, the provisions of the amendment cannot be retrospectively applied to its case. It argued that its negative right – to not have the ability to approach the Indian courts – had accrued before the amendment took effect..In response to this, the Court recorded another subsequent date, which was more important in answering the question of applicability of the amended Section 2(2) – the date on which the application under Section 9 was made to the Bombay High Court. The petition under Section 9 had been filed in April 2017, much after the amendment was enforced. The Division Bench found no flaw in the previous order passed by the Single Judge and held that the amended Section 2(2) would apply..Heligo also argued, the language of amended Section 2(2) suggests that unless and until the foreign award is first enforced and recognized by the Courts of India, under Section 48 and 49 of the Arbitration Act, no petition under Section 9 is maintainable..The Court said that interim protection cannot be denied irrespective of whether the award was put to execution or not. “Such a measure is made available in law under Section of the Act so as to prevent dissipation and diversion of assets.” The court further ruled that “we are of the view that operation of provisions of Section 9 cannot be excluded in absence of a specific agreement to the contrary”.While upholding with the judgment passed by the single judge, the Court said,.“If the injunction is refused, there is every possibility of irreparable loss being caused to the respondent (Aircon). The respondent has made out a strong prima-facie case and balance of convenience is also in favour of respondent- original petitioner. We, therefore, find no merit in the Appeal.”.Senior Advocate Vikram Nankani appeared for Heligo and was briefed by Economic Laws Practice whereas Senior Advocate Aspi Chinoy appeared for Aircon briefed by Crawford Bayley & Co..Read Judgment