The Bombay High Court enforced an arbitral award passed by the International Court of Arbitration, London, affirming the legality of an assignment of contract under Sudanese law and rejecting opposition based on public policy concerns in India.

1. Introduction and Background

• Case: Neilan International Co Ltd vs Powerica Ltd.
• Forum: Bombay High Court under Arbitration and Conciliation Act, 1996 (Part II).
• Issue: Enforcement of a foreign arbitral award of €2.45 million awarded to Neilan International by ICC Arbitration.
• Respondent’s Opposition: Challenged the award as violating Indian public policy.

2. Facts of the Case

• Consortium Agreement (2006): For construction of thermal power plants in Sudan.
• Subsequent Contracts (May 2006): Between NEC and Respondent for project execution, governed by Sudanese law.
• Assignment (2012): STGP, NEC's successor, assigned rights to Neilan International, including debts owed by Powerica.

3. Arbitration Proceedings

• Initiated in London under ICC Rules.
• Partial Award (2015): Tribunal upheld jurisdiction and validity of assignment under Sudanese law.
• Final Award (2018): Tribunal awarded €2.45 million to Neilan.
• Respondent did not challenge the awards in London.

4. Legal Arguments

• Petitioner’s Stand:
  • Validity of arbitration agreement and assignment upheld in Partial Award.
  • Limited grounds to resist enforcement of a foreign award.
• Respondent’s Stand:
  • The award violated Indian public policy.
  • Assignment lacked mutual consent and contradicted fundamental principles of arbitration.

5. Court's Observations and Ratio Decidendi

• Binding Arbitration Agreement: Tribunal’s Partial Award, unchallenged by Respondent, was final.
• Assignment Validity:
  • Explicitly provided in contract clauses under Sudanese law.
  • Assignees included under the term “Employer.”
• Public Policy Concerns:
  • No violation of fundamental principles or justice established.
  • Scope for challenging merits of the award was limited by Explanation 2 to Section 48 of the Arbitration Act.

6. Judgment

• Held: The court enforced the award.
• Key Principle: Arbitral awards, foreign or domestic, cannot be re-litigated unless they shock the conscience of the court or breach fundamental public policy.

Acts and Sections Discussed:

1. Arbitration and Conciliation Act, 1996

   • Section 44: Definition of Foreign Awards.
   • Section 48: Conditions for enforcement of foreign awards.
     • 48(1)(a): Validity of arbitration agreements.
     • 48(2)(ii) & (iii): Public policy and morality grounds for refusing enforcement.

2. ICC Arbitration Rules, 2012: Governing the arbitration.

Ratio Decidendi:

• Finality of Awards: The unchallenged Partial Award was binding and could not be revisited during enforcement.
• Public Policy Test: Indian courts maintain a restrictive approach to interpreting "public policy," focusing on legality rather than merits.
• Contractual Autonomy: Explicit contract terms, such as allowing assignment, are enforceable unless proven to violate fundamental principles.

Subject:

Enforcement of Foreign Arbitral Award
Arbitration, International Arbitration, Public Policy, Indian Arbitration Act, Contract Assignment