Court Should Not Substitute Its View With That Of Arbitral Tribunal’s Opinion On Reappreciation Of Evidence- Calcutta High Court

The Calcutta High Court recently, while dealing with an application seeking enforcement and execution of a foreign award, reiterated that "The scope of enquiry to determine whether the award is in conflict with the ‘public policy of India’ accords the same discretion to a court under Section 34 as it does under Section 48. However, this discretion is very limited and narrow. The proscription is against courts undertaking a review and re-appreciating the evidence which was produced before the arbitral tribunal. The court should not substitute its view/interpretation with that of the arbitral tribunal’s views."

The Single Judge Bench of Justice Shekhar B. Saraf was dealing with a case where the Petitioner's firm, Jaldhi Overseas, had offered to carry the Respondent's firm, Steer Overseas, cargo of iron ore fines from Haldia and Visakhapatnam Ports to a Main Port in China on the terms and conditions as contained in the correspondence dated December 24, 2009.

The said correspondence was modified by the Respondent after which the Petitioner circulated a separate fixture notice [hereinafter referred to as ‘fixture note 2’] to Global Up International Ltd. [hereinafter referred to as ‘sister company’] in Hong Kong which is a 100% subsidiary of the Respondent. Succeeding invoices in light of fixture note 2 were raised under the name of the sister company under the direction of the award Respondent. 

Later on, a dispute arose on the payment of the amounts on which the Petitioner initiated arbitral references in relation to all the fixtures between the award holder, award debtor, and the sister company before the Singapore International Arbitration Centre. The arbitrator issued a partial award in favour of the petitioner on account of the existence of a valid contract and the jurisdiction of the tribunal to adjudicate the dispute. In light of the issued partial award, the award holder filed the instant application.

Senior Advocate Tilak Bose appeared for the Petitioner while Senior Advocate Joy Saha appeared for the Respondent before the Court.

Considering the submissions, the High Court noted that "In my view, this court should tread carefully while undertaking the task of determining whether there was a concluded contract along-with an arbitration clause, specifically when the arbitrator has decided on it. It is not even the respondent’s case that there was no contract, but that the correspondence suggests that it was ultimately concluded with the subsidiary of the respondent."

Upholding the view of the Arbitral Tribunal, the Judge said "The Arbitrator has provided a determination after analyzing facts and applying law to the same. This court should not substitute its own view, replace that of the arbitrator and venture beyond this preliminary determination, unless it is manifestly evident that there existed no agreement. Such is not the case herein as the arbitrator has concluded from appreciation of the evidence that there was an agreement between the petitioner and the respondent, owing to communication and subsequent conduct of the parties. The arbitrator’s view is sacrosanct and should not be substituted with an alternate view/opinion which this court may possibly have on re-appreciation of the evidence."

Accordingly, the High Court found the award enforceable and executable said that "Keeping in mind the law with regards to Section 48 of the Act wherein my discretion is very limited, I do not find there was no concluded contract or no arbitration agreement which could have made (i) the matter being incapable of settlement by arbitration in India or (ii) shocked the conscience of the court in light of forceful imposition of a contract not entered into by the respondent. Therefore, the respondent’s challenge to the enforcement of the award must fail."

Cause Title: Jaldhi Overseas Pte Ltd. v. Steer Overseas Pvt. Ltd.

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