The Oriental Commercial & Shipping Company's judgment (supra) refers to the commentary of Dr.
Albert Jan van den Berg which noted the features emerging out of the New York Convention. It records
that the burden of proving that the award is not enforceable lies on the party which has raised the issue. It
also points out that if any such additional procedure is required to be followed, this will be a proceeding
of no consideration or any substance. It will be a procedural addition resulting into further delay into
getting the fruits of the award of the party which has succeeded.
SUPREME COURT OF INDIA
(H.L. GOKHALE AND DIPAK MISRA, JJ.)
ESCORTS LTD.
Petitioners
VERSUS
UNIVERSAL TRACTOR HOLDING LLC
Respondents
Special Leave Petition (Civil) No. 35092 of 2012-Decided on 13-3-2013.
Arbitration – Execution of award
1. This special leave petition seeks to challenge the judgment and order dated 13th July, 2012 passed by
the learned Single Judge of the Delhi High Court in Execution Petition No.372 of 2010.
2. The short facts leading to this petition are this wise: The respondent herein and Escorts Agri Machinery
Inc., (“Escorts AMI”) which was a subsidiary of the petitioner, were holding following percentage of
shares in another company, by name, Beever Creek Holdings (“BCH”). The respondent held 49% of
shares and Escorts AMI held 51%. There was an agreement between the two parties whereby the
respondent sold its shareholding in BCH for a price of Rs.1.2 Million Dollars which was to be paid in
four installments. The Escorts AMI paid the first two installments but defaulted in the payment of the
other two. This led to a suit being filed by the respondent in the Wake Country Superior Court in the State
of North Carolina, USA. A consent order was passed therein on 19th June, 2009, wherein both the parties
agreed to refer the matter to arbitration. The arbitration was followed by an award in favour of the
respondent herein. The respondent sought the execution of that award by filing the aforesaid execution
petition in India, since the Escorts AMI has subsequently merged with the petitioner herein. The
execution was objected to by the petitioner, and those objections have been rejected by the impugned
order. Therefore, this special leave petition has been preferred by Escorts Limited.
3. The main submission of Mr. Parag Tripathi, learned senior counsel appearing for the petitioner is that
under the terms of agreement, it was necessary for the respondent to go for confirmation of the award in
the concerned Court in United States. He relied upon paragraphs 2 and 8 of the consent order dated 19th
June, 2009. These two paragraphs read as under:
“2. The case will be stayed from the date and time of entry of this Order until completion of
arbitration between plaintiff and EAMI. Upon the issuance of a decision by the arbitrators, this
Court may confirm and enter judgement upon such decision in accordance with the Federal
Arbitration Act and may conduct such further proceedings as are necessary to resolve plaintiff's
claims against Escorts Limited.”
“8. The plaintiff agree that entry of this order resolves defendants motion to dismiss. The Court
shall retain jurisdiction for the purposes of entering an order confirming the arbitration decision
pursuant to the Federal Arbitration Act.”
4. The submission of Mr. Tripathi is that unless a confirmation of the award by the foreign Court was
obtained, the award could not be executed in India. He relied upon Section 9 of the Federal Arbitration
Act of U.S. which reads as follows:
“& 9. Award of arbitrators; confirmation; jurisdiction; procedure If the parties in their agreement
have agreed that a judgment of the court shall be entered upon the award made pursuant to the
arbitration, and shall specify the court, then at any time within one year after the award is made
any party to the arbitration may apply to the court so specified for an order confirming the award,
and thereupon the court must grant such an order unless the award is vacated, modified, or
corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement
of the parties, then such application maybe made to the United States court in and for the district
within which such award was made. Notice of the application shall be served upon the adverse
party, and thereupon the court shall have jurisdiction of such party as though he had appeared
generally in the proceeding. If the adverse party is a resident of the district within which the
award was made, such service shall be made upon the adverse party or his attorney as prescribed
by law for service of notice of motion in an action in the same court. If the adverse party shall be
a nonresident, then the notice of the application shall be served by the marshal of any district
within which the adverse party may be found in like manner as other process of the court.”
5. Mr. Tripathi submitted that ultimately what one has to see is whether the consent award was a binding
one as required under Section 48(1)(e) of the Arbitration and Conciliation Act, 1996 and that unless a
confirmation of the award was obtained, the award could not be said to be binding and, therefore, not
executable in India. Mr. Tripathi referred to and relied upon paragraph 15 of the judgment of this Court in
Oil and Natural Gas Commission Vs. Western Company of North America, (1987) 1 SCC 496,
wherein this Court held that recognition and enforcement of the award will be refused if the award has not
become binding on the parties.
6. Mr. Rautray, learned counsel appearing for the respondent, on the other hand, pointed out that the
relevant Section of the Federal US Law is concerning the domestic awards and when it comes to foreign
awards, there is a separate chapter under the US Law and in that behalf he referred to Section 202 of the
said Act which reads as follows:
“202. Agreement or award falling under the Convention An arbitration agreement or arbitral
award arising out of a legal relationship, whether contractual or not, which is considered as
commercial, including a transaction, contract, or agreement described in section 2 of this title,
falls under the Convention. An agreement or award arising out of such a relationship which is
entirely between citizens of the United States shall be deemed not to fall under the Convention
unless that relationship involves property located abroad, envisages performance or enforcement
abroad, or has some other reasonable relation with one or more foreign states. For the purpose of
this section a corporation is a citizen of the United States if it is incorporated or has its principal
place of business in the United States.”
7. He pointed out that the requirement of this double excequatur has been removed in view of the
provisions of the New York Convention which has been now adopted under the Arbitration and
Conciliation Act, 1996. He further pointed out that even in England, this has been accepted. He referred
to and relied upon the judgment in the case of Russeel N.V. V. Oriental Commercial & Shipping Co.
(U.K.) Ltd. and Others, reported in (1991) Vol. 2 Lloyd's Law Reports 625. He referred to and relied
upon an American judgment in the case of Florasynth, Inc. V. Alfred Pickholz, 750 F. 2d 171, to the same
effect.
8. The Oriental Commercial & Shipping Company's judgment (supra) refers to the commentary of Dr.
Albert Jan van den Berg which noted the features emerging out of the New York Convention. It records
that the burden of proving that the award is not enforceable lies on the party which has raised the issue. It
also points out that if any such additional procedure is required to be followed, this will be a proceeding
of no consideration or any substance. It will be a procedural addition resulting into further delay into
getting the fruits of the award of the party which has succeeded.
9. He also drew our attention to certain observations of this Court in paragraph 33 in Harendra H.
Mehta an Ors. Vs. Mukesh H. Mehta and Ors., reported in (1995) 5 SCC 108. It was in a situation
where a judgment had, in fact, been obtained before going for execution. However, the Court also
observed that it was not material for the purpose of enforcement of a foreign award under the Foreign
Awards Act that the award in any country other than India is made enforceable by a judgment.
10. We have noted the submissions of both the counsel appearing for the parties. It is also material to note
that even as per the requirement of the US Law, a notice of three months is required to be given in case a
party does not want the award to be enforced. In the instant case, paragraph 7 of the consent order clearly
recorded that the award given by the arbitrator shall be final and binding on the parties. If the petitioner
wanted to dispute it, it was required of them to have issued necessary notice which they had not done. The
submission of Mr. Tripathy, which was emphasised, was that the respondent ought to proceed for
confirmation of the award under the US Law and then come to India for execution. In our considered
view, the said submission is not tenable in view of the changed law and doing away of the rule of double
excequatur. We, therefore, see no error in the order passed by the learned Single Judge of the High Court.
The special leave petition is, therefore, dismissed.
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