Lawstreet Journal

Arbitral Awards Can be Enforced Against Non-Signatories, Rules Supreme Court

Lawstreet Journal 23 Aug 2021 7:07pm

Image courtesy: Lawstreet Journal Judiciary Arbitral Awards Can be Enforced Against Non-Signatories, Rules Supreme Court

In yet another pro-arbitration decision, the Supreme Court ruled that under Indian law, a foreign award can only be challenged on limited grounds. The fact that an entity is not a party to the arbitration agreement is not one of them, according to the Supreme Court.

A division bench of Justices RF Nariman and BR Gavai ruled that the grounds for refusing to enforce a foreign award under Indian law cannot be "expansively interpreted."

Attempting to bring non-parties into this ground is akin to trying to fit a square peg into a round hole.

Supreme Court Order:

According to Sameer Jain, managing partner at PSL Advocates & Solicitors, the judgement defeats clever award-debtors' creative attempts to resist the enforcement of foreign arbitral awards by compelling the courts to adopt an expansive interpretation of the specific grounds enumerated in the Arbitration Act, 1996.

The Privity Predicament  Hong Kong-based Integrated Sales Services Ltd. had entered into a commission agreement with an Indian company, DMC Management Consultants Ltd.

ISS initiated arbitration proceedings due to a disagreement. The agreement was governed by Delaware law and included an arbitration clause stating that any dispute between the parties would be resolved by a single arbitrator in Missouri.

The proceedings ended with an arbitral award against DMC and some entities that were not parties to the arbitration agreement. This included DMC's chairman as well as two other companies over which he had significant control, Gemini Bay Consulting Ltd. and Gemini Bay Transcription Private Ltd.

Under Section 48 Continue Reading...

Tagged: Supreme Court of India   Arbitral Awards   Arbitration Act  
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