Centrotrade Minerals and Metal Inc. Vs. Hindustan Copper Ltd. (Supreme Court); Civil Appeal No. 2562 OF 2006; Date of Order- 02/06/2020
Scope of Challenge Against Enforcement of Award under Section 48(1)(B) – ‘Otherwise Unable to Present Its Case
FACTS
The Appellant, under a Contract of sale agreed to supply copper concentrate to the Respondent which was to be used at the Khetri Plant of the Respondent. Despite supply of the goods and due payments made as per the Contract, disputes arose between the parties. Consequently, the Appellant invoked Clause 14 of the Agreement which provided for a two-tiered arbitration clause.
The first layer of the arbitration clause provided reference of disputes to arbitration in India. Whereas, the second layer was an appeal of the first arbitration to a second arbitration which was to be held in London under administration of International Chambers of Commerce (“ICC”).
The Appellant invoked the arbitration clause and the arbitral award in India made a NIL Award on 15.06.1999. Thereupon, the Appellant invoked the second tier of the arbitration agreement, as a result of which Jeremy Cook QC (“the Arbitrator”) who was appointed by the ICC, delivered an award in London on 29.09.2001 in favour of the Appellant.
Simultaneously, the Respondent filed a suit in the Khetri Court of the State of Rajasthan during the pendency of arbitration, challenging the arbitration clause. The Rajasthan High Court granted a stay on the arbitration proceedings when a revision petition was filed against the Order of the Khetri Court. The Supreme Court however, on 08.02.2001 vacated the stay to continue the arbitration proceedings.
After the passing of the final award, the Appellant sought for enforcement of the award before the Calcutta High Court, when the following objections were raised by the Respondent:
a. The arbitration clause was invalid,
b. The ICC award is not a foreign award, and
c. The Respondent was not given proper opportunity to present its case before the Arbitrator in the London arbitration proceedings.
The Single Judge of the Calcutta High Court dismissed the petition of the Respondent filed under Section 48 of the Arbitration & Conciliation Act, 1996 (“the Act”) and the award became executable. On the other hand, the Division Bench held the appeal to be maintainable and set aside the judgment of the Single Judge.
The Division Bench held that two arbitral awards in India and London were mutually destructive for each other and cannot be enforced.
With regards to validity of the arbitration clause, the Division Bench of the Supreme Court under Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. (2006) 11 SCC 245 held that a two-tiered arbitration clause in the nature of one given in the particular case is valid however, the arbitrator ought to have considered all materials received by him before the award is made and because the Respondent did not get proper opportunity of hearing, the appeal filed by the Appellant was dismissed.
The matter came for consideration again before a Three-Judge Bench of the Supreme Court under Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. (2017) 2 SCC 228 to decide upon two issues;
(i) Validity of the two-tiered arbitration clause and permissibility under Indian Laws; and
(ii) Enforceability of the foreign award under Section 48 of the Act.
The Court only considered issue (i) in affirmative and the appeal was listed to decide upon the enforceability of the foreign award under Section 48 of the Act.
