Home Legal News Foreign Award can be Enforced Anywhere Depending on the Location of the Assets of Debtor: Delhi High Court

Foreign Award can be Enforced Anywhere Depending on the Location of the Assets of Debtor: Delhi High Court

by Shreya
Delhi HC
The Delhi High Court while examining the issue of territorial jurisdiction of a court for the enforcement of foreign awards 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.

Brace Transport Corporation v. Orient Middle East Lines case was referred where it was recorded that the enforcement was in the nature of “Forum Hunting”.

 A single Judge Bench of Justice Jyoti Singh heard the issue of territorial jurisdiction of a court for the enforcement of foreign awards.

foreign award justice jyoti singh

Glencore International, the Decree holder and Hindustan Zinc, the Judgement Debtor had London as the Venue of their Arbitration proceedings in accordance with Rules of the London Court of International Arbitration.

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Decree Holder was satisfied as the final Award on costs as well as the final award on interest on costs was passed in his favour.

The Judgment Debtor under Section 34 read with Section 48 of the Arbitration & Conciliation Act challenged the awards before the Rajasthan High Court.

The Rajasthan High Court through a common judgment dismissed both the challenges and thereafteran appeal before the Division Bench of the Rajasthan High Court was filed by Judgment Debtor.

The Decree Holder filed execution proceedings before the Delhi High Court as payments under the foreign Awards were not made by the Judgment Debtor.

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SUBMISSIONS BY THE PETITIONER

1. Foreign 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.

2. 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.

3. Judgement Debtor had its office in Delhi along with assets/properties including bank accounts within territorial jurisdiction of the Court.

On the other hand the Judgment Debtor communicated that the execution proceedings in Delhiwere not maintainable.

BASIS OF THE CONTENTIONS

1. No cause of action had arisen within the territorial jurisdiction of the Delhi High Court.

2. 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.

3. The assets of the Judgement Debtor were located in Rajasthan and there were no assets in Delhi.

4. 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.

5.  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.

6. 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.

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 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.

Notings were made that the subject matter is the contract at the stage of arbitration and therefore, the place where the contract was entered into or such related issues become material to decide the jurisdiction.

The focus is the subject matter of the foreign award at the stage of enforcement after arbitration being concluded.

The Delhi High Court explained the proposition of foreign award,

Where the Award is a money Award, the enforcement would lie in a Court which is able to enforce the Award. Thus, where the properties, moveable or immoveable, are located would be the place of enforcement of the Award and issues such as the residence or the place of business of the Respondent would be of little use.

And further pointed 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.

 The Court 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.

Conclusions by the Court were made that it was of prima facie opinion that it did have territorial jurisdiction to entertain the petition of foreign awards.

The High Court of Delhi stated “The subject matter of the Award is money and the JD has its assets within the territorial jurisdiction of this Court. The Award holders have made a categorical averment in the petitions that the JD has an Administrative Office in Delhi, as also some moveable properties lying in those premises. It is also averred that the JD has Bank Accounts in Delhi. Significantly, the JD in its application, objecting to the maintainability, has admitted that there is an Administrative/ liaison office, though on a Lease from the Government. There is no document on record at present to corroborate the stand that the premises are on Lease.”

The Court noted that under Section 34 read with Section 48 of the Act, appeal against the dismissal of the challenges to the foreign Awards would not come in the way of enforcement.

The Court directed the Judgment Debtor to file details of its assets.

The Decree Holder was represented by Senior Advocate Gaurab Banerji with Advocates SumeetLall, Sidhant Kapoor, AnanyaPratap Singh, Raka Chatterjee, Devyani Sharma.

Senior Advocate Prashanto Chandra Sen with Advocates Anne Mathew, Kaustubh Singh represented Judgment Debtor.

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