‘Public policy of India’ and the Arbitration Act

By Vivek Vashi, Bharucha & Partners
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In Penn Raquet Sports v Mayor International Limited a single judge of Delhi High Court has considered the scope of “public policy of India” under section 48(2) and section 34 of the Arbitration and Conciliation Act, 1996.

Brief facts

Penn Raquets Sports (PRS) of the US entered into a trademark license agreement (TLA) with Mayor International (MIL) of India in terms of which it granted MIL a licence to use the Penn trademark. In return MIL was to pay royalties to PRS. Following disputes between the parties that culminated in termination of the TLA, PRS invoked arbitration before the International Chamber of Commerce, Paris, for recovery of the outstanding royalty.

MIL refused to countersign the terms of reference and opposed the arbitration on the basis that PRS breached the TLA by granting a licence to Nebus Loyalty an existing sub-licensee of MIL. Owing to non-payment of MIL’s share of the deposit its counterclaim was not considered. The arbitrator held that PRS had not breached the contract, as the licence to Nebus was permitted under clause 2.2.2 of the TLA. Accordingly, an award for outstanding royalties plus interest was made and PRS filed an execution petition with Delhi High Court seeking its enforcement.

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Vivek Vashi is the mainstay of the litigation department at Bharucha & Partners.

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