Case Law Details
EIG (Mauritius) Limited Vs McNally Bharat Engineering Company Limited (Calcutta High Court)
Facts- An application for enforcement of a foreign arbitral award dated 19th June 2020 and an addendum dated 26th October 2020 moved by the petitioner (i.e., EIG Mauritius) against the respondent (i.e., McNally Bharat Engineering Company Limited). However, the prayer for execution had been opposed by the respondent on the ground that the enforcement would be contrary to the public policy of India, specifically the fundamental policy of Indian law, since enforcing a Put Option available to the petitioner violates The Foreign Exchange Management Act, 1999 (FEMA) and the Securities Contracts (Regulation) Act, 1956.
Conclusion- If the conditions for refusal under 48(1) and 48(2) are read together, the irrefutable conclusion appears to be that the threshold for breach of the fundamental policy of Indian law must be a breach of the most basic principles of Indian law which forms the substratum of the laws of the country.
Section 48 of the Act does not permit a review on the merits of the dispute. Placing reliance on the Supreme Court judgment in Vijay Karia Vs. Prysmian Cavi E Sistemi, the Court noted that the Supreme Court had frowned “against a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention.
The mandate of Section 48(2)(b) makes it clear that the statutory intent is to curtail the inquiry on the violation of the fundamental policy of Indian law within the periphery of the obvious without delving into the merits of the dispute.
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