Arbitration and Conciliation Act, 1996 – s.48 – Chapter 1 Part II – Foreign Award – According to the appellants-Award Debtors , the Presiding Arbitrator, CL, one of the threemember Arbitral Tribunal, had failed to make a full and frank disclosure of material facts and circumstances concerning conflict of interest and therefore the Award rendered by the Tribunal presided by CL cannot be enforced as it is against public policy in terms of s.48(2) (b)of the Indian Arbitration Act – Propriety:
Held: The Award in the instant matter was passed in Singapore, a New York Convention Country and notified as a reciprocating territory by India – Chapter 1 Part II of the Indian Arbitration Act is applicable in the present case – The parties had expressly chosen Singapore as the seat of Arbitration – It is the seat court which has exclusive supervisory jurisdiction to determine claims for a remedy relating to the existence or scope of arbitrator’s jurisdiction or the allegation of bias – A contrary approach would go against the scheme of the New York Convention which has been incorporated in India – The jurisdiction was therefore chosen based on the perceived neutrality by the parties aligning with the principle of party autonomy – In the instant case, no setting aside challenge based on bias was raised before the Singapore Courts by the appellants within the limitation period – None of the grounds, which are now being pressed, were raised during the arbitration or in the time period available to the appellants to apply, to set aside the Award in Singapore – Bonafide challenges to arbitral appointments have to be made in a timely fashion and should not be used strategically to delay the enforcement process – In other words, the Award Debtors should have applied for setting aside of the Award before the Singapore Courts at the earliest point of time – As far as allegations of bias against Presiding Arbitrator CL is concerned, the High Court after adverting to the IBA guidelines concluded that there was no identity or conflict of interest between CL and the award holder, or any of its affiliates including its holding company – In assessment of this Court, the High Court correctly suggested that CL neither had a duty to disclose nor did he fail to discharge his legal duty of disclosure in accepting the assignment as the Presiding Arbitrator – In the circumstances here, it cannot be inferred that there was a bias or likelihood of bias of the Presiding Arbitrator – Award Debtors therefore cannot claim that there is any violation of the public policy, which would render the foreign award unenforceable in India – The award debtors have failed to meet the high threshold for refusal of enforcement of a foreign award u/s. 48 of the Indian Arbitration Act – Accordingly, the decision given by the High Court for enforcement/execution of the foreign award stands approved. [Paras 27, 28, 29, 35.1, 36, 43]
Arbitration – Foreign Award – Bias – Standard of public policy in India:
Held: Embracing international standards in arbitration would foster trust, certainty, and effectiveness in the resolution of disputes on a global scale – In India, an internationally recognized narrow standard of public policy must be adopted, when dealing with the aspect of bias – It is only when the most basic notions of morality or justice are violated that this ground can be attracted – The Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI) had noted that the ground of most basic notions of morality or justice can only be invoked when the conscience of the Court is shocked by infraction of fundamental notions or principles of justice – There can be no difficulty in holding that the most basic notions of morality and justice under the concept of ‘public policy’ would include bias – However, Courts must endeavor to adopt international best practices instead of domestic standards, while determining bias – It is only in exceptional circumstances that enforcement should be refused on the ground of bias. [Paras 25 and 26]
Arbitration – Foreign Award – Bias – Challenge at enforcement stage:
Held: If the ground of arbitral bias is raised at the enforcement stage, it must be discouraged by the Courts to send out a clear message to the stakeholders that Indian Courts would ensure enforcement of a foreign Award unless it is demonstrable that there is a clear violation of morality and justice – The determination of bias should only be done by applying international standards – Refusal of enforcement of foreign award should only be in a rare case where, non-adherence to International Standards is clearly demonstrable. [Para 42]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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