CALCUTTA HIGH COURT - EXISTENCE OF THE ARBITRATION AGREEMENT SHOULD NOT BE INTERFERED WITH UNLESS IT IS MANIFESTLY CLEAR THAT THERE WAS NO AGREEMENT.
In the case of Jaldhi Overseas Pte. Ltd. v. Steer Overseas (P) Ltd. [EC 100 of 2022], the Petitioner has filed execution proceedings u/s 46 of the Arbitration and Conciliation Act, 1996 (“Act”) read with Order XXI of the Civil Procedure Code (“CPC”) for the enforcement and execution of its foreign partial award. The Petitioner/Award-holder is a company incorporated in Singapore, who was hired by the Respondent/Award-Debtor to carry their iron ore fines from Haldia and Vishakhapatnam to the Main Port in China on certain terms and conditions stipulated in the agreement. Additionally, the agreement contained an arbitration clause which stated ‘Arbitration in Singapore, English Law to Apply.’
The Respondent utilized 2 days 4 hours and 8 minutes in excess of the lay time at the discharge port of Zhenjiang which resulted in the accrual of demurrage and damages worth the sum of USD $299,047 to the Petitioner. Thereafter, the Respondent offered a full and final settlement of $200,000, which was rejected by the Petitioner and the dispute was referred to Arbitration in Singapore.
The Singapore International Arbitration Centre (“SIAC”) appointed a sole Arbitrator to chair the proceedings. The Arbitrator upheld its jurisdiction to preside over the dispute and subsequently passed a partial award in favor of the Petitioner. The Petitioner applied the execution of the order in the High Court of Singapore, which rejected all objections raised by the Respondent and granted leave to the Petitioner to enforce the award in Singapore.
The issues before the Calcutta High Court were the following-
1. Was the Arbitration Clause in the Contract entered consensus ad idem by the parties?
2. Whether the Court will refuse the execution of a foreign arbitral award?
The Court stated that “to refuse the enforcement, the evidence must be expressly forthcoming to indicate that there was no concluded contract between the petitioner and respondent, wherein the arbitrator has gone completely amiss in his duty.”
The Court also analyzed the situation where the arbitration agreement is not concluded between the parties. In such cases, these agreements can be deemed to be in violation of sections 48(2)(a) and 48(2)(b) of the Act as they are incapable of being settled through arbitration in India. Moreover, they may also be violative of public policy or go against the fundamental principles of justice, shocking the conscience of any court of law. During the execution proceedings, it is imperative for the court to initially verify the existence of an arbitration agreement. This involves a thorough examination of the Arbitrator's consideration of the agreement and whether the arbitrator has taken into account communications and conduct related to the matter. The ultimate determination from this evaluation is to ascertain if there is a consensus ad idem between the parties, which is essential for enforcing the Award.
The Court observed that it “shall not substitute its own view, replace that of the arbitrator and venture beyond this preliminary determination, unless it is manifestly evident that there existed no agreement.” Moreover, the Arbitrator’s view is “sacrosanct and shall not be replaced with an alternative view/opinion.”
The Court held that in the present case, Section 48 of the Act cannot be attracted as there is nothing pointing toward the absence of an arbitration agreement making the present matter arbitrable within the laws of India. The Court rejected the Respondent’s objection regarding the enforceability of the Arbitral Award, directing the Respondent for execution the award as a decree of the Court.