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The enforcement of a foreign award was in the nature of “Forum Hunting”, the Court recorded.
While examining the issue of territorial jurisdiction of a court for the enforcement of foreign awards, the Delhi High Court has recently stated that a foreign award can be enforced anywhere as a deemed decree, depending on the location of the assets of the Judgement Debtor or where his money lied.
Referring to the Supreme Court's decision in Brace Transport Corporation v. Orient Middle East Lines, the Court recorded that the enforcement was in the nature of “Forum Hunting”.
The issue of territorial jurisdiction of a court for the enforcement of foreign awards was considered by a single Judge Bench of Justice Jyoti Singh.
Decree holder, Glencore International and Judgement Debtor, Hindustan Zinc participated in arbitration proceedings which had London as the Venue of Arbitration. Proceedings were conducted in accordance with Rules of the London Court of International Arbitration.
The final Award on costs as well as the final Award on interest on costs was passed in favour of the Decree Holder.
The Awards were challenged before the Rajasthan High Court by the Judgment Debtor under Section 34 read with Section 48 of the Arbitration & Conciliation Act.
Both the challenges were dismissed by the Rajasthan High Court by a common judgment. An appeal was thereafter filed by Judgment Debtor before the Division Bench of the Rajasthan High Court.
Since payments under the Awards were not made by the Judgment Debtor, the Decree Holder filed execution proceedings before the Delhi High Court.
Broadly, the Petitioner made the following submissions:
- Awards were made in London, UK to which New York Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 applied and the Awards were thus Foreign Awards under Section 44 of the Arbitration Act.
- Awards are final and binding on the parties and enforceable in India as prescribed under Chapter-I of part–II of the Act, as a Decree of this Court.
- Judgement Debtor had its office in Delhi along with assets/properties including bank accounts within territorial jurisdiction of the Court.
The Judgment Debtor, on the other hand, said that the execution proceedings were not maintainable in Delhi.
The contention was based on the following:
- No cause of action had arisen within the territorial jurisdiction of the Delhi High Court.
- The only asset identified in the jurisdiction of the High Court was a property on the first floor in Scope Complex, Lodhi Road but the same was on lease from the Government on India.
- The assets of the Judgement Debtor were located in Rajasthan and there were no assets in Delhi.
- The Decree Holder could not embark on a roving and fishing enquiry and file a petition in any court with the hope that it may be able to identify certain properties in a particular jurisdiction.
- Since the issue of enforceability was sub-judice before Rajasthan High Court, where the assets of the Judgement Debtor are located, it was that Court which would be the executing Court.
- Even assuming that the Delhi High Court had jurisdiction, on principles of comity, the Court ought to await the decision of the petition pending in the Rajasthan High Court.
To arrive at its opinion on the issue of territorial jurisdiction of a Court in the context of Sections 47 and 48 of the Act, the Court relied on decision passed by the Bombay High Court in Tata International Ltd, Mumbai vs. Trisuns Chemical Industry Ltd and Wireless Developers Inc. vs. India Games Ltd.
The Court noted that at the stage of arbitration, the subject matter is the contract and therefore, the place where the contract was entered into or such related issues become material to decide the jurisdiction.
However, once arbitration was concluded and the stage is of enforcement, the focus is the subject matter of the Award, it stated.
Explaining the proposition, the Court said,
The Court further iterated that while the arbitration could be held at a neutral forum, enforcement of the Award was maintainable only where the properties/assets of the Judgment Debtor are located, which may or may not be the chosen place of the parties for the subject matter of the arbitration.
Relying on cases decided by its coordinate bench, the Court also observed that the various provisions of Order XXI CPC clearly held that the only relevant factor in execution of the Award was the location of the assets or the property of the JD and not the Judgment Debtor.
In view of the above discussion, the Court concluded that it was of prima facie opinion that it did have territorial jurisdiction to entertain the petition.
The Court also opined that the appeal against the dismissal of the challenges to the Awards under Section 34 read with Section 48 of the Act would not come in the way of enforcement of the Award before it.
Therefore, proceeding further with the execution proceedings, the Court directed the Judgment Debtor to file details of its assets.
Senior Advocate Gaurab Banerji with Advocates Sumeet Lall, Sidhant Kapoor, Ananya Pratap Singh, Raka Chatterjee, Devyani Sharma appeared for the Decree Holder.
Judgment Debtor was represented by Senior Advocate Prashanto Chandra Sen with Advocates Anne Mathew, Kaustubh Singh.
Read the Order: