SC:Appeal against Enforcement of Foreign Award to Lie u/Section 50 of Arbitration Act Only

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February 08, 2018

Case name: Kandla Export Corporation & Anr. v. M/s OCI Corporation & Anr.

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Date of Judgment: February 07, 2018

In this recent case, the Supreme Court has held that appeals filed under Section 50 of the Arbitration Act would have to follow the drill of Section 50 alone and not Section 13(1) of the Commercial Courts Act.

In this case the seminal issue confronted by Two-Judge Bench of the Supreme Court was whether an appeal, not maintainable under Section 50 of the Arbitration Act , is nonetheless maintainable under Section 13(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“the Commercial Courts Act”)?

In the case, the Appellants had filed an appeal under the Commercial Courts Act, which was dismissed stating that the Commercial Courts Act did not provide any additional right of appeal which is not otherwise available to the Appellants under the provisions of the Arbitration Act.

Considering the fact that Section 50 of the Arbitration Act  only provided for an appeal in case a petition to enforce a foreign award was rejected, the High Court held, keeping in view the legislative policy of the Arbitration Act, (to speedily determine matters relating to enforcement of foreign awards) that since an appeal did not lie from a judgment enforcing a foreign award under the said section, no such appeal would be maintainable under the Commercial Courts Act.

Bench’s Verdict

The Court while delivering its judgment in the case heavily relied on the Fuerst Day Lawson Limited v. Jindal Exports Limited[1], wherein it was observed that that the Arbitration Act is a self-contained Code on all matters pertaining to arbitration, which would exclude the applicability of the general law contained in Section 13 of the Commercial Courts Act.

Other key observations made by the Court in the case are as under:

  • That no change was made in Section 50 of the Arbitration Act when the Commercial Courts Act was brought into force, which clearly implies that Section 50 is a provision contained in a self-contained code on matters pertaining to arbitration, and which is exhaustive in nature.
  • That Section 13(1) of the Commercial Courts Act, being a general provision vis-à-vis arbitration relating to appeals arising out of commercial disputes, would obviously not apply to cases covered by Section 50 of the Arbitration Act.
  • That the ratio decidendi[2] of the judgment in Fuerst Day Lawson case would apply, and this being so, appeals filed under Section 50 of the Arbitration Act would have to follow the drill of Section 50 alone. This, in fact, follows from the language of Section 50 itself. In all arbitration cases of enforcement of foreign awards, it is Section 50 alone that provides an appeal.
  • That the forum of appeal is left “to the Court authorized by law to hear appeals from such orders”. Section 50 of the Arbitration Act properly read would, therefore, mean that if an appeal lies under the said provision, then alone would Section 13(1) of the Commercial Courts Act be attracted as laying down the forum which will hear and decide such an appeal.

Read the entire case here.

[1] (2011) 8 SCC 333

[2] the rule of law on which a judicial decision is based