The Delhi High Court has held that the conduct of parties to an arbitration cannot, by itself, convert a domestic award into a foreign award..Answering the question whether parties, by their conduct, agree to treat a domestic award as a foreign award or vice versa, the Court stated that “the answer would be a categorical `NO’.”.The nature of the award, domestic or foreign, has to be decided as per the provisions of the Arbitration and Conciliation Act, 1996 (the Act) and settled judicial precedents, it said..The pronouncement was made by Justice Prathiba M Singh in an execution petition filed under Section 36 of the Act by Decree Holder, Drager Medical GmbH against Judgement Debtor, M/s Ion Bio Med-I-Care Pvt. Ltd, seeking execution of an International Court of Arbitration award dated June 29, 2012..The Decree Holder moved the Court under Section 36 for an order of execution after the expiry of the three months’ limitation period for challenging the award..The Judgment Debtor, however, filed objections under Section 48 of the Act, alleging that the award was a foreign award as opposed to being a domestic award, and was not enforceable..The Decree Holder objected to the said application under Section 48 arguing that it ought to have been challenged under Section 34 as it was a domestic award..The Judgment Debtor submitted that the award was, in fact, a foreign award as per the Decree Holder’s admission made in an earlier round of litigation between the parties. The Decree Holder had invoked Part II of the Act at the time of reference to arbitration. This round of litigation had traveled right till the Supreme Court and the parties were referred to arbitration under Section 45..The Judgement debtor thus argued that since the award was borne out of the reference under Section 45, the Decree Holder could not argue that the award ought to be challenged in terms of Part-I of the Act..Rejecting the Judgement Debtor’s argument, the Court observed that the nature of award “has to be decided not on the basis of a misunderstanding by any party but the stipulations contained in the arbitration clause.”.The Court noted that for the present case the venue of the arbitration proceedings was New Delhi, and Indian law was the substantive law of the contract. Hence, it was “clear that as per section 2(2) (of the Act), whenever the place of arbitration is in India, Part-I of the Act applies”..It further iterated that an award passed in an international commercial arbitration held within India, as in the present case, would be construed as a domestic award for the purposes of the Act..It, therefore, observed that Judgement Debtor’s reliance on Decree Holder’s reference application to presume the award to be a foreign award “was clearly a mistake”..The Court nonetheless afforded one opportunity to the Judgement debtor to challenge the award in terms of Part I of the Act on the grounds that an act of Court cannot cause harm to any party and that Decree Holder could not be allowed to take advantage of its own wrong..“The narration of events set out above and the position in law, leaves no doubt in the Court’s mind that the Judgment Debtor deserves one opportunity to state its case challenging the award. Considering that the Court, which referred the matter to the arbitration, as also the Decree Holder, proceeded under the assumption that the award in this case would be governed by Part-II, there can be no doubt that both parties proceeded under the presumption that Part-II would apply. Thus, there was a bona fide dispute on this issue.”, it stated..Decree Holder was represented by Senior Advocate Arvind Nayar with Advocates Shweta Bharti, J. K. Chaudhary, Swetshikha, Upasana Katyani and Chandra Shekaran..Judgement Debtor was represented by Advocates Samrat Nigam, Sandeep Mittal, Vinod Kathpalia, Abhimanyu Walia and Shaurya Kuthiay..Read the Judgement Below:
The Delhi High Court has held that the conduct of parties to an arbitration cannot, by itself, convert a domestic award into a foreign award..Answering the question whether parties, by their conduct, agree to treat a domestic award as a foreign award or vice versa, the Court stated that “the answer would be a categorical `NO’.”.The nature of the award, domestic or foreign, has to be decided as per the provisions of the Arbitration and Conciliation Act, 1996 (the Act) and settled judicial precedents, it said..The pronouncement was made by Justice Prathiba M Singh in an execution petition filed under Section 36 of the Act by Decree Holder, Drager Medical GmbH against Judgement Debtor, M/s Ion Bio Med-I-Care Pvt. Ltd, seeking execution of an International Court of Arbitration award dated June 29, 2012..The Decree Holder moved the Court under Section 36 for an order of execution after the expiry of the three months’ limitation period for challenging the award..The Judgment Debtor, however, filed objections under Section 48 of the Act, alleging that the award was a foreign award as opposed to being a domestic award, and was not enforceable..The Decree Holder objected to the said application under Section 48 arguing that it ought to have been challenged under Section 34 as it was a domestic award..The Judgment Debtor submitted that the award was, in fact, a foreign award as per the Decree Holder’s admission made in an earlier round of litigation between the parties. The Decree Holder had invoked Part II of the Act at the time of reference to arbitration. This round of litigation had traveled right till the Supreme Court and the parties were referred to arbitration under Section 45..The Judgement debtor thus argued that since the award was borne out of the reference under Section 45, the Decree Holder could not argue that the award ought to be challenged in terms of Part-I of the Act..Rejecting the Judgement Debtor’s argument, the Court observed that the nature of award “has to be decided not on the basis of a misunderstanding by any party but the stipulations contained in the arbitration clause.”.The Court noted that for the present case the venue of the arbitration proceedings was New Delhi, and Indian law was the substantive law of the contract. Hence, it was “clear that as per section 2(2) (of the Act), whenever the place of arbitration is in India, Part-I of the Act applies”..It further iterated that an award passed in an international commercial arbitration held within India, as in the present case, would be construed as a domestic award for the purposes of the Act..It, therefore, observed that Judgement Debtor’s reliance on Decree Holder’s reference application to presume the award to be a foreign award “was clearly a mistake”..The Court nonetheless afforded one opportunity to the Judgement debtor to challenge the award in terms of Part I of the Act on the grounds that an act of Court cannot cause harm to any party and that Decree Holder could not be allowed to take advantage of its own wrong..“The narration of events set out above and the position in law, leaves no doubt in the Court’s mind that the Judgment Debtor deserves one opportunity to state its case challenging the award. Considering that the Court, which referred the matter to the arbitration, as also the Decree Holder, proceeded under the assumption that the award in this case would be governed by Part-II, there can be no doubt that both parties proceeded under the presumption that Part-II would apply. Thus, there was a bona fide dispute on this issue.”, it stated..Decree Holder was represented by Senior Advocate Arvind Nayar with Advocates Shweta Bharti, J. K. Chaudhary, Swetshikha, Upasana Katyani and Chandra Shekaran..Judgement Debtor was represented by Advocates Samrat Nigam, Sandeep Mittal, Vinod Kathpalia, Abhimanyu Walia and Shaurya Kuthiay..Read the Judgement Below:
