The Hon’ble Supreme Court in its recent judgment settled the status of foreign arbitral award in dispute between M/S. Centrotrade Minerals and Metals Inc. And Hindustan Copper Ltd. The Hon’ble three judges bench held that the foreign award dated 29.09.2001 delivered by International Chamber of Commerce in London shall be enforced and set aside the previous judgement. The brief facts of the case are as follows:
M/S. Centrotrade Minerals and Metals Inc. A U.S corporation entered in contract for sale of 15,500 DMT of copper concentrate with Hindustan Copper Ltd. The consignment was duly delivered, and payment was done in accordance. Later the dispute arose between party subject to quantity of dry weight of copper concentrate delivered. The party had two-tier arbitration agreement between them wherein, in first tier the dispute is to be settled by arbitration in India. Further, if any party disagrees with the arbitration decision, had the right to make appeal to second arbitration held by International Chamber of Commerce in London.
The Centrotrade solicit the arbitration clause, by an award dated 15.06.1999 the arbitrator was appointed by Indian Council of Arbitration; the appointed arbitrator made a Nil Award. Then, Centrotrade invoked second part of the arbitration agreement, as a result Jeremy Cook QC was appointed by the ICC who delivered an award in London dated 29.09.2001.
The Hindustan Copper during the pendency of second arbitration proceeding filed a suit in the Court at Khetri in Rajasthan. The High Court of Rajasthan by order dated 27.04.2000 restrained Centrotrade from taking further steps in the London arbitration proceedings. The ad interim ex parte stay granted by High of Rajasthan was set aside by Hon’ble Supreme Court on 08.02.2001.
The Centrotrade sought to enforce arbitral award, the Hindustan Copper filed petition challenging the enforcement of foreign award which was dismissed by Calcutta High Court Single Bench. Later, the Hon’ble High Court Divisional bench passed a judgment dated 28.07.2004 setting aside the Single Bench’s Judgment and held that award could not be enforced.
The matter came before Hon’ble Supreme Court division bench held by Justice S.B Sinha and Tarun Chatterjee in Centrotrade Minerals & Metals Inc. Vs. Hindustan Copper Ltd. (2006) 11 SCC 245 held that a two-tier arbitration agreement is invalid under Section 23 of Indian Contract Act 1872, therein the foreign award could not be enforced in India, the Centrotrade’s appeal was dismissed and Hindustan Copper’s appeal was allowed.
Then the matter on reference came before three judge bench in Centrotrade Minerals & Metal Inc. Vs. Hindustan Copper Ltd. (2017) 2 SCC 228 concluded that the two-tier arbitration agreement was valid, and appeal should again be listed for consideration of further question subject to enforcement of appellate award.
Finally, on 02.06.2020 the Hon’ble Apex Court three judge bench comprising Justice R.F. Nariman, S.Ravindra Bhat, V. Ramasubramanian opined that Justice Chatterjee made several errors of the fact thus, set aside the earlier judgment of Hon’ble Justice Tarun Chatterje, allowing the Centrotrade’s appeal (2006) held that the foreign award 29.09.2001 shall be enforced.
Timeline of the legal battle:
- 1999: First tier arbitration proceedings conducted by Indian Arbitrator, who gave Nil Award.
- 2000: Suit filed by Hindustan Copper in Rajasthan High Court during proceedings of Second-tier arbitration proceedings conducted in London.
- 2001: Supreme Court set aside Rajasthan High Court stay order.
- 2004: Calcutta High Court divisional bench set aside judgment of its single bench.
- 2006: Supreme Court Divisional bench held that two-tier arbitration agreement is invalid in accordance to Indian legislations and foreign award cannot be enforced.
- 2017: Supreme Court three judge bench upheld the validity of the arbitration agreement.
- 2020: Supreme Court three judge bench held that the arbitration agreement is valid and foreign award shall be enforced.
Image Link: Arbitration-l.jpg