1. Delhi High Court ruling on currency conversion and interest when enforcing a foreign award
We have previously reported on the case of Shri Lal Mahal Limited v Progetto Grano S.P.A where the Supreme Court refused to entertain a challenge to the enforcement of a foreign arbitral award on public policy grounds (see here).
More recently, in the subsequent enforcement proceedings, the Delhi High Court has clarified two important issues in the enforcement of foreign arbitral awards1. Firstly, it held that the relevant date for determining the rate of exchange for the calculation of the rupee equivalent to the awarded amount is the date when the award is deemed to be an executable decree under section 49 of the Arbitration and Conciliation Act 1996 (the "Act"). It also held that the Act does not give power to executing and enforcing courts to grant interest, over and above what has been provided for in the award itself. Read more here.
2. Bombay High Court holds that arbitration agreements can bind non-signatory affiliates
The High Court of Bombay has recently held in the case of Rakesh S. Kathotia & Anr. v Milton Global Ltd. & Ors, that an arbitration agreement, on its proper construction, extended to non-signatories within the corporate and family groups of the signatories, in circumstances where the non-signatory affiliates were specifically referred to in the contract. This case further clarifies the principles identified by the Indian Supreme Court in Chloro Controls v Severn Trent previously reported here, although recognising that the facts in Chloro Controls were different and those principles did not fully apply to the present case.
In reaching its decision, the Court noted that the terms of an arbitration agreement have to be construed in a "broad and common sense manner", bearing in mind that the Act has the "object and intent … to encourage arbitration". The Court also gave a potentially helpful steer on the application of the "Group of Companies" doctrine in Indian law, following the decision in Chloro Controls. Read more here.
3. English High Court orders appointment of receivers over foreign assets to assist enforcement of an English award, but declines to order freezing relief against subsidiaries
In recent decisions in the long-running enforcement proceedings in Cruz City 1 Mauritius Holdings ("Cruz City") v Unitech Limited ("Unitech") and Others, the English Court has ordered the appointment of receivers over the defendants' non-UK assets (particularly Unitech's shareholdings in certain subsidiary companies), to assist Cruz City in enforcing a London-seated LCIA award in its favour. This was notwithstanding the fact that the appointment of the receivers may not be recognized by the courts of the jurisdictions where the subsidiaries were located.
The case is also significant in reaffirming the Court's commitment to promote the enforcement of arbitration awards, and its willingness to develop its jurisdiction incrementally if necessary to aid companies seeking to enforce awards against assets held by uncooperative defendants through complex, multi-jurisdictional company structures. Read more here.
However, there are limits to how far the Court will go: in a subsequent decision, it has declined to order freezing relief against the subsidiaries themselves, recognizing that they were not parties to the arbitral award. Read more here.
4. Wide-ranging reforms proposed by the Law Commission of India
As reported earlier, here, the Law Commission of India has proposed several significant amendments to the Arbitration and Conciliation Act 1996 with the objectives of remedying a number of perceived weaknesses and lacunae in the Act and stimulating growth and development in India as a centre for dispute resolution and arbitration. Its full report is published (here). In summary, the proposed amendments include:
- Encouraging institutional arbitration;
- Reducing court interference in arbitration;
- Reducing delays in the appointment of arbitrators;
- Streamlining the arbitration process;
- Neutrality of arbitrators;
- Improving provisions concerning interim relief in arbitration; and
- Reducing the frequency of setting aside of arbitral awards.
5. Updates on BIT claims against the Government of India
By way of an update on the Vodafone BIT claim previously reported on (here), the Finance Ministry of India has reportedly proposed changes to the Indian Income Tax Act's retrospective amendment that lies at the heart of the dispute. Alternatively, the ministry is also considering issuing a circular to waive interest and penalties in all such cases. It may therefore be that an amicable resolution to this dispute may yet be possible.
Also, as reported earlier (here), French firm Louis Dreyfus Armateurs ("LDA") served a notice for arbitration against the Government of India under the 1997 Bilateral Investment Promotion and Protection Agreement between India and France. It has now been reported that the Shipping Ministry of India has appointed Singapore-based lawyer, J. Christopher Thomas QC, as its arbitrator in this dispute over the Indian Government's alleged failure to assist in the implementation of the joint venture entered into by LDA, which they claim caused them economic loss.
6. Mumbai gets an International Arbitration Centre
The city of Mumbai in India got a first-of-its-kind International Arbitration Centre at the Indian Merchants' Chamber in June 2014, which is promoted as an international alternative dispute resolution centre comparable to those available in Paris, London and Singapore. The centre proposes to provide a fixed cost and time bound schedule of proceedings, thereby aiming to provide a streamlined alternative dispute resolution service in India. The centre estimates that it will be able to provide alternative dispute resolution services at 50-60% less cost than court proceedings and about 40% less than ad hoc or private arbitration.