India: Appeal Against Enforcement Of Foreign Award: Interpreting Arbitration Act And Commercial Courts Act In The Light Of Kandla Export Corporation vs. OCI Corporation & ANR

Introduction

In the matter of Kandla Export Corporation & Anr v. M/s OCI Corporation & Anr [Civil Appeal No. 1661-1663 of 2018], the question to be determined was - whether an appeal, not maintainable under Section 50 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Arbitration Act'), is nonetheless maintainable under Section 13(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as 'the Commercial Courts Act').

Background of the case

On August 08, 2017, the High Court of Gujarat allowed the execution petition filed by the Respondents. Being aggrieved by this judgment, the Appellants filed an appeal under the Commercial Courts Act, which was dismissed by the impugned judgment dated September 28, 2017, stating that the Commercial Courts Act did not provide any additional right of appeal which is not otherwise available to the Appellants under the provisions of the Arbitration Act. Considering the fact that Section 50 of the Arbitration Act only provided for an appeal in case a petition to enforce a foreign award was rejected, the High Court held that keeping in view the legislative policy of the Arbitration Act, (which was to speedily determine matters relating to enforcement of foreign awards), since an appeal did not lie from a judgment enforcing a foreign award under the said section, no such appeal would be maintainable under the Commercial Courts Act.

Submissions of the counsel on behalf of appellant

According to the learned counsel on behalf of Appellants, Section 13 provided an appeal to any person aggrieved by the decision of a Commercial Division of a High Court, and as Section 50 of the Arbitration Act found no place in the proviso to Section 13(1) of the Commercial Courts Act, it was clear that the wide language of Section 13(1) would confer a right of appeal, notwithstanding anything contained in Section 50 of the Arbitration Act. The things, according the counsel, became even clearer when read with Section 21, which provides that the provisions of the Commercial Courts Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force. He argued that Section 37 of the Arbitration Act, which is expressly mentioned in the proviso to Section 13(1) of the Commercial Courts Act, specifically speaks of the enumerated appeals in the said provision, together with the expression "and no others", which expression is conspicuous by its absence in Section 50 of the Arbitration Act. He also argued that the language of Section 13(1) of the Commercial Courts Act is extremely wide – it embraces "decisions", "judgments" and/or "orders" by the Commercial Division of a High Court, and that being so, the impugned judgment of August 08, 2017, allowing the execution petition filed by the Respondents, would certainly be a "decision" and/or "judgment" which would expressly be covered by the wide terms contained in Section 13(1) of the Commercial Courts Act. He also relied upon Section 13(2) to state that, after the coming into force of the Commercial Courts Act, appeals lie only in the manner indicated in the aforesaid Act and not otherwise than in accordance with the provisions of the Act. According to the learned counsel, the scheme of the Act would show that, in all matters over Rs.1 crore, the legislative intent is to provide an appeal, given the stakes involved, which will, under Section 14, be expeditiously disposed of within a period of 6 months from the date of filing of such appeal. Learned counsel also referred us to Section 5 of the Arbitration Act, which contains a non-obstante clause insofar as Part I of the Arbitration Act is concerned and stated that the absence of a similar non-obstante clause, so far as Part II of the Arbitration Act is concerned, is significant.

Therefore, this is not even a case where there are competing non-obstante clauses and, therefore, Section 21 of the Commercial Courts Act must be given full play. According to him, Section 49 of the Arbitration Act also makes it clear that the award shall be deemed to be a decree of the Court that enforces it. This being the case, an appeal from such decree is provided by Section 13(1) of the Commercial Courts Act, which, as has been argued by him, speaks of "decisions", "judgments" and "orders".

Submissions of the counsel on behalf of Respondents

Learned counsel appearing on behalf of the Respondents, on the other hand, relied strongly upon Sections 10 and 11 of the Commercial Courts Act. According to the learned counsel, the explanation to Section 47 of the Arbitration Act, when read with Section 11 of the Commercial Courts Act, would make it clear that the non-obstante clause contained in Section 21 of the Commercial Courts Act has to give way to Section 11, and that since Section 50 of the Arbitration Act impliedly bars appeals against an application allowing execution of a foreign award, Section 13 would be out of harm's way, insofar as his client is concerned. He relied strongly on the judgment of this Court in Fuerst Day Lawson Limited v. Jindal Exports Limited, (2011) 8 SCC 333, and stated that the Arbitration Act is a self-contained Code on all matters pertaining to arbitration, which would exclude the applicability of the general law contained in Section 13 of the Commercial Courts Act. Also, according to him, the object of both the Acts is to speedily determine matters pertaining to arbitration and/or commercial disputes and, the providing of an extra appeal by the Commercial Courts Act, which is impliedly excluded by the Arbitration Act, would militate against the object of both Acts. The learned counsel further argued that in cases of enforcement of foreign awards of an amount below Rs.1 crore, admittedly, no appeal would lie. However, merely because the amount contained in the foreign award in question was above Rs.1 crore, it does not stand to reason that an extra appeal would be provided.

The Decision

The proviso to Section 13 goes on to state that an appeal shall lie from such orders passed by the Commercial Division of the High Court that are specifically enumerated under Order XLIII of the Code of Civil Procedure Code, 1908, and Section 37 of the Arbitration Act. It will at once be noticed that orders that are not specifically enumerated under Order XLIII of the CPC would, therefore, not be appealable, and appeals that are mentioned in Section 37 of the Arbitration Act alone are appeals that can be made to the Commercial Appellate Division of a High Court.

However, to answer the main argument by the counsel on behalf of Appellants- that Section 50 of the Arbitration Act does not find any mention in the proviso to Section 13(1) of the Commercial Courts Act and, therefore, notwithstanding that an appeal would not lie under Section 50 of the Arbitration Act, it would lie under Section 13(1) of the Commercial Courts Act, it was found necessary to advert to the judgment in Fuerst Day Lawson (supra), the relevant portion of which is stated thus,

"(vii) The exception to the aforementioned rule is where the special Act sets out a self-contained code and in that event the applicability of the general law procedure would be impliedly excluded. The express provision need not refer to or use the words "letters patent" but if on a reading of the provision it is clear that all further appeals are barred then even a letters patent appeal would be barred."

It, therefore, becomes clear that Section 50 is a provision contained in a self-contained code on matters pertaining to arbitration, and is exhaustive in nature. It was found clear that Section 13(1) of the Commercial Courts Act, being a general provision vis-à-vis arbitration relating to appeals arising out of commercial disputes, would obviously not apply to cases covered by Section 50 of the Arbitration Act. For this reason, it was felt that Section 13(1) of the Commercial Courts Act must be construed in accordance with the object sought to be achieved by the Act. Any construction of Section 13 of the Commercial Courts Act, which would lead to further delay, instead of an expeditious enforcement of a foreign award must, therefore, be eschewed. Even on applying the doctrine of harmonious construction of both statutes, it is clear that they are best harmonized by giving effect to the special statute i.e. the Arbitration Act, vis-à-vis the more general statute, namely the Commercial Courts Act, being left to operate in spheres other than arbitration. Therefore, if an appeal is barred against the enforcement of a foreign award, a corresponding appeal under the Commercial Courts Act would not apply.

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