India: Arbitral Awards; Relevant Date For FX Rates And Interest Payable

Last Updated: 17 July 2014
Article by Payel Chatterjee, Sahil Shah and Vyapak Desai
  • Delhi High Court ascertains "relevant date" for conversion of foreign exchange in case of enforcement of foreign arbitral awards to be the date of passing of a decree;
  • No power with execution/enforcement courts to award interest for the period from the date of institution of enforcement proceedings till passing of decree and subsequently till the date of actual payment.


The Delhi High Court ("Delhi HC") in its recent judgment in Progetto Grano S.P.A. v. Shri Lal Mahal Limited1 has resolved two long standing issues with respect to enforcement of arbitral awards, viz. (i) relevant date for ascertaining the rate of conversion of the foreign exchange of the sum awarded ("FX Rate"); and (ii) entitlement of decree holder to interest from the date of the arbitral award till the actual date of realization of dues under the provisions of the Indian Arbitration and Conciliation Act, 1996 ("Act").


Shivnath Rai Harnarain (Sellers) (now succeeded by Shri Lal Mahal Limited ("Lal Mahal") and Italgrani Spa, Naples, Italy (Buyers) (now succeeded by Progetto Grano S.P.A. ("Progetto") by way a contract dated May 12, 1994, entered into a contract for sale of 20,000 metric tons of Durum wheat of Indian origin. Progetto sent a fax informing Lal Mahal that as per SGS Geneva, the quality of the wheat supplied was not in accordance with the terms of the contract. Therefore, Progetto initiated arbitration proceedings before the Arbitral Tribunal of the Grain and Feed Trade Association ("GAFTA") for breach of contract.

Lal Mahal challenged the jurisdiction of the Arbitral Tribunal of GAFTA before the Delhi HC by filing a petition on the grounds of absence of an arbitration agreement. The petition was dismissed by the Delhi HC and subsequently the appeal was dismissed by Supreme Court of India ("Supreme Court") as well.

Progetto initiated separate arbitration proceeding against Lal Mahal for having commenced legal proceedings before the Delhi HC with respect to existence and validity of the arbitration agreement.

The Arbitral Tribunal heard both the matters and passed 2 separate awards which were challenged before the Board of Appeal ('Arbitral Award'). The Board of Appeal disposed of both the appeals on September 21, 1998. In terms of the Arbitral Award, Lal Mahal was directed to pay certain sums denominated in US Dollars and GB Pound along with interest. Lal Mahal challenged the Arbitral Award in the High Court of Justice at London and the appeal was dismissed on December 21, 1998.

Progetto filed proceedings to enforce the Arbitral Awards in India. Both the Arbitral Awards were held to be enforceable under Part II of the Act, despite objections raised by Lal Mahal under Section 482 of the Act. The special leave petition challenging the order before Supreme Court was also dismissed by order dated July 3, 2013 making the Arbitral Awards final and binding on the parties. The amounts payable under the Arbitral Awards without interest were deposited by Lal Mahal during the pendency of the special leave petition leaving two issues open for adjudication.


The two primary issues that survived for adjudication (i) determination of the relevant date for the purpose of ascertaining the FX Rate for quantifying the Rupees equivalent of the amount awarded (as amounts were to be paid in India); and (ii) (a) to award pendente lite, interest from the date of institution of the proceedings in the court till judgment and (b) interest for the period subsequent thereto until realization of the awarded amount.


The Delhi HC dealt with both issues at length. On the first issue, the Delhi HC relying on Forasol vs. Oil and Natural Gas Commission3 held that the date for determining the FX Rate should be the date on which the decree finally becomes enforceable under Section 494 of the Act, i.e. the day on which all the objections under Section 48 of the Act are dismissed / disposed of by the final appellate court and no further proceedings remain pending.

Due to long drawn litigation process in India, often foreign parties are subjected to prejudice and fail to recover the amounts awarded well within time. The judgment brings in the much needed clarity on the relevant date for determining the FX Rate and putting an end to the uncertainty with respect to determination of the relevant date. This judgment has clearly set out that the relevant date would be the date on which decree was passed i.e. the Arbitral Awards being final and binding on the parties.

On the second issue, the Delhi HC discussed about the applicability of provisions of Part I of the Act for grant of interest at the time of enforcement of foreign awards. A closer look at this aspect reveals that in an international commercial arbitration, like any domestic arbitration, the award of interest falls under the following periods:-

  • period prior to the date of reference to arbitration (governed by the substantive law of the contract);
  • period during which the arbitration proceedings were pending before the arbitral tribunal (governed by the law governing the arbitral proceedings);
  • period from the date of award till the date of institution of proceedings in a court for enforcement of the award (governed by the law governing the arbitral proceedings);
  • period from the date of institution of enforcement/execution proceedings in a court till the passing of the decree; and
  • period subsequent to the decree till payment.

The law of the forum i.e. "lex fori" where the award is enforced is applicable for determining the rate of interest from the date of filing of enforcement proceedings in a court till the decree is passed and for period thereafter, till the date of actual payment (i.e. for (iv) and (v) above). Section 31(7)5 of the Act (contained in part of Part-I of the Act) provides for payment of interest at the rate of 18% p.a. from the date of the award until the date of payment unless otherwise awarded by the arbitrator.

The Supreme Court in Fuerst Day Lawson Ltd. vs. Jindal Exports Ltd6 has held that the Act being a self-contained code in itself, provisions of Part-I cannot be extended to Part-II (which is applicable to foreign awards). Further, the constitutional Bench of the Supreme Court in Bharat Aluminium Company vs. Kaiser Aluminium Technical Services7, has clarified that there is no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Act. The territoriality principle of the Act precludes Part I from being applicable to an arbitration seated outside India.

"Therefore, the provisions of Section 31(7) of the Act cannot be extended to foreign awards, thus creating a serious lacuna in the legislation. The Delhi HC thus held that a court has limited jurisdiction under Part II of the Act to grant interest as provisions of Part I of the Act are inapplicable.

The amount that was awarded to Progetto under the Arbitral Awards, was required to be kept with the Hon'ble Supreme Court as a fixed deposit, based on the FX Rate as on the date of the order i.e. May 18, 2012; pending the determination of actual FX Rate. The amounts were thereafter released in favour of Progetto but no interest was granted to Progetto for the period from the date of institution of enforcement proceedings till passing of decree and subsequently till the date of actual payment. The court dealing with enforcement and execution of foreign awards do not have the powers to award interest for such period.


1 Ex.P. No. 52/2012

2 Conditions for enforcement of foreign awards.—

(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that—

(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

(2) Enforcement of an arbitral award may also be refused if the Court finds that—

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or

(b) the enforcement of the award would be contrary to the public policy of India. Explanation.—Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

3 1984 Supp SCC 263

4 Enforcement of foreign awards.—Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

5 Section 31 (7)

(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.

6 (2011) 8 SCC 333

7 2012 (9) SCC 552

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Payel Chatterjee
Similar Articles
Relevancy Powered by MondaqAI
Vaish Associates Advocates
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Vaish Associates Advocates
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions