In the case of Centrotrade Minerals & Metals Inc v Hindustan Copper Ltd, the Supreme Court has upheld the validity of appellate arbitration clauses.
The appellant, Centrotrade Minerals, with its headquarters in Virginia, US, had entered into a contract for the sale of 15,500 DMT (dry metric tonnes) of copper concentrate. A dispute arose regarding the quantity of dry weight of copper delivered. Clause 14 of the agreement between the parties provided for the first tier of arbitration in India and, in case of no decision, the second would be via the International Chamber of Commerce (ICC) in London. The Supreme Court had, in 2017, upheld the validity of two-tier arbitration agreements under the Arbitration and Conciliation Act, 1996.
While recently considering the validity of an award passed by the ICC under section 48 of the act, the Supreme Court rejected the objections of Hindustan Copper (HCL) and allowed enforcement of a foreign arbitral award. While deciding the issue of whether HCL was unable to present its cases under article v(1)(b) of the New York Convention, and consequently whether the ex parte award could at all be enforced in India, the court held that HCL was given a fair opportunity to present its case and thus the award would be enforceable in India.
The court observed that the provision in section 48(1)(b) of the act will apply only when the “enforcee” fails to present its case due to circumstances that are “not under its control”. On the other hand, when the enforcee does not take advantage of the opportunity given because of any circumstances that were under its control, it won’t be able to take advantage of the exception provided in article 48(1)(b).
The dispute digest is compiled by Bhasin & Co, a corporate law firm based in New Delhi. The authors can be contacted at firstname.lastname@example.org. Readers should not act on the basis of this information without seeking professional legal advice.