Case Note & Summary
The dispute arose from an agency agreement between Perma Container (UK) Line Limited (claimant), a UK company, and Perma Container Line (India) Pvt. Ltd. (respondent), an Indian company. Under successive agreements dated 1 April 2004 and 1 August 2005, the respondent was appointed as the claimant's agent for cargo services in India, responsible for freight collection and remittance. Clause 39 of the 2005 agreement provided for arbitration in London under English law. The respondent failed to remit substantial freight collections, leading to accumulated outstandings exceeding US $20 million by late 2008. Despite numerous assurances and part payments, the respondent did not clear the dues. The claimant terminated the agency on 5 November 2008. The respondent then denied liability and demanded compensation. The claimant invoked arbitration, and upon the respondent's failure to appoint an arbitrator, Mr. Timothy Nicholas Young QC was appointed sole arbitrator. The respondent raised a preliminary jurisdictional objection, which was decided by a partial award dated 7 December 2009, wherein the arbitrator held that there was an arbitration clause and jurisdiction existed. A final award was passed on 30 January 2013. The claimant filed Arbitration Petition No. 259 of 2013 under Sections 44-49 of the Arbitration and Conciliation Act, 1996, seeking enforcement of the award as a decree. The respondent filed Arbitration Petition No. 406 of 2013 under Section 34, seeking to set aside the partial and final awards. During pendency, the respondent had also challenged interim orders under Section 9 before the Division Bench and the Supreme Court without success. The High Court considered both petitions, examining the validity of the partial award, the jurisdictional determination, and the enforceability of the foreign award in India.
Headnote
A) Arbitration - Foreign Award - Enforcement and Setting Aside - Sections 44-49 & 34, Arbitration and Conciliation Act, 1996 - A petition was filed seeking enforcement of a foreign award passed in a London arbitration, while a cross-petition under Section 34 sought to set aside the partial and final awards - The court considered the governing law clause, the procedural history of the arbitration, and the partial award on jurisdiction - Held that the award is subject to enforcement proceedings under Part II of the Act (Paras 1-12).
B) Arbitration - Partial Award - Jurisdiction - Clause 39 of Agency Agreement - The sole arbitrator, after hearing the parties on a preliminary jurisdictional objection, rendered a partial award dated 7 December 2009 holding that there was an arbitration clause and therefore arbitral jurisdiction existed - The partial award formed the basis for subsequent final award - Held that the jurisdictional determination was valid (Para 12).
Issue of Consideration
Whether the foreign arbitration award dated 30 January 2013 is enforceable in India under Sections 44-49 of the Arbitration and Conciliation Act, 1996, and whether the petition under Section 34 to set aside the partial award dated 7 December 2009 and the partial final award dated 30 January 2013 is maintainable.
Law Points
- Enforcement of foreign awards under Sections 44-49
- Arbitration and Conciliation Act
- 1996
- Maintainability of challenge to foreign award under Section 34
- Jurisdictional determination by partial award
- Appointment of sole arbitrator upon default of other party
- Agency agreement governed by English law.
Case Details
2014 LawText (BOM) (05) 50
Arbitration Petition No. 259 of 2013 alongwith Arbitration Petition No. 406 of 2013
Mr. F. D'vetre, Mr. V.K. Rambhadran, Mr. Prashant Pratap, Ms. Trupti Agarwal, Mr. Ashwini Sinha, Mr. Manoj Khatri
Perma Container (UK) Line Limited
Perma Container Line (India) Pvt. Ltd.
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Nature of Litigation
Dispute over enforcement of foreign arbitration award and challenge to partial and final awards under Section 34 of the Arbitration and Conciliation Act, 1996.
Remedy Sought
Perma Container (UK) Line Limited sought enforcement of foreign award dated 30 January 2013 as decree under Sections 44-49; Perma Container Line (India) Pvt. Ltd. sought setting aside of partial award dated 7 December 2009 and final award dated 30 January 2013 under Section 34.
Filing Reason
Non-remittance of freight collections by agent leading to outstanding debt; after termination of agency, dispute was referred to arbitration in London; claimant obtained award; respondent challenged award and failed to satisfy award.
Previous Decisions
Partial award on jurisdiction dated 7 December 2009; Final award dated 30 January 2013; Interim orders under Section 9 by Bombay High Court on 5 May 2009 and 9 September 2009; Division Bench dismissed appeal on 19 July 2009; Special Leave Petition in Supreme Court noticed and later withdrawn.
Issues
Enforceability of foreign arbitration award under Part II of the Arbitration and Conciliation Act, 1996
Maintainability of Section 34 petition against a foreign award
Whether the partial award on jurisdiction is valid
Quantum of dues and breach of agency agreement
Submissions/Arguments
Claimant contended that a valid arbitration agreement existed, the respondent admitted the debt, the arbitrator had jurisdiction, and the award is binding.
Respondent denied jurisdiction, challenged the existence of the arbitration clause, and sought to set aside the awards under Section 34.
Judgment Excerpts
Clause 38 provided that the Agreement shall be construed as having been entered into at London and will be governed by English Law. Clause 39 provided that the Agreement shall be governed by and construed in accordance with English law and any dispute arising out of the Agreement shall be referred to arbitration in London; one arbitrator being appointed by each party in accordance with the Arbitration Act, 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force.
By a partial award on jurisdiction made by the learned arbitrator on 7 th December 2009 the learned arbitrator held that there was an arbitration clause
the conduct of the respondent of admitting the amount initially with a request to grant time to pay and now total denial of the claim, is a factor that goes against the respondent
Procedural History
On 1 April 2004, the claimant and respondent entered into an agency agreement, followed by a second agreement on 1 August 2005 containing an arbitration clause. The respondent failed to remit freight collections, leading to termination of the agency on 5 November 2008. The claimant invoked arbitration in London on 3 February 2009. The respondent did not appoint an arbitrator, and Mr. Timothy Nicholas Young QC was appointed sole arbitrator. The respondent raised a preliminary jurisdictional objection, resulting in a partial award on jurisdiction dated 7 December 2009, finding that an arbitration clause existed. A final award was passed on 30 January 2013. Meanwhile, the claimant obtained interim measures under Section 9 in Arbitration Petition No. 490 of 2009, which were upheld by the Division Bench on 19 July 2009 and not stayed by the Supreme Court. The claimant filed Arbitration Petition No. 259 of 2013 for enforcement, and the respondent filed Arbitration Petition No. 406 of 2013 for setting aside.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 9, 34, 44-49
- Indian Companies Act, 1956:
- Arbitration Act, 1950 (UK):
- Arbitration Act, 1979 (UK):
