Case Note & Summary
The appeal arose from an order of a single judge dismissing the appellant's petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an award passed by the second respondent, The Federation of Oils, Seeds and Fats Associations Ltd. (FOSFA). The appellant, Messrs Goldcrest Exports, had entered into two contracts dated 19th September 2003 and 24th September 2003 with the first respondent, Messrs Swissgen N.V. The contracts contained an arbitration clause referring disputes to FOSFA. A dispute arose, and FOSFA passed an award against the appellant. The appellant filed a petition under Section 34 of the Act to set aside the award. The first respondent contended that the award was a foreign award and could not be challenged under Section 34. The single judge dismissed the petition, holding that the award was a foreign award and not amenable to challenge under Section 34. The appellant appealed. The two issues before the Division Bench were: (i) whether a party against whom a foreign award is made can challenge it under Section 34 of the Act, and (ii) whether the mere denial of the existence of the agreement by the party against whom the award is made entitles it to challenge the award under Section 34 if the award otherwise would be a foreign award and the party in whose favour the award is made states that it treats the award as a foreign award and shall not seek its enforcement or rely upon it as a domestic award. The court answered both questions in the negative. The court held that foreign awards are governed by Part II of the Act and can only be challenged by way of objection to their enforcement under Section 48. A petition under Section 34 is not maintainable against a foreign award. The court further held that the mere denial of the existence of the agreement does not change the character of the award. The first respondent's statement that it would treat the award as a foreign award and not seek its enforcement or rely upon it as a domestic award did not make the award a domestic award. The appeal was dismissed.
Headnote
A) Arbitration Law - Foreign Award - Challenge under Section 34 - A party against whom a foreign award is made cannot challenge it under Section 34 of the Arbitration and Conciliation Act, 1996, as foreign awards are governed by Part II of the Act and are enforceable only under Sections 47 to 49. The court held that the remedy to challenge a foreign award is only by way of objection to its enforcement under Section 48, not by a petition under Section 34 (Paras 2-3). B) Arbitration Law - Foreign Award - Denial of Agreement - Mere denial of the existence of the arbitration agreement by the party against whom the award is made does not convert a foreign award into a domestic award. Even if the party in whose favour the award is made states that it treats the award as a foreign award and will not seek its enforcement or rely upon it as a domestic award, the award remains a foreign award and cannot be challenged under Section 34 (Paras 2-3).
Issue of Consideration
Whether a party against whom a foreign award is made can challenge it under Section 34 of the Arbitration and Conciliation Act, 1996, and whether mere denial of the existence of the agreement by the party against whom the award is made entitles it to challenge the award under Section 34 if the award otherwise would be a foreign award and the party in whose favour the award is made states that it treats the award as a foreign award and shall not seek its enforcement or rely upon it as a domestic award.
Final Decision
Appeal dismissed. The court held that the award is a foreign award and cannot be challenged under Section 34 of the Arbitration and Conciliation Act, 1996.
Law Points
- Foreign award cannot be challenged under Section 34 of Arbitration and Conciliation Act
- 1996
- Mere denial of agreement does not convert foreign award into domestic award
- Party can waive enforcement of foreign award
