Relevant Date For Determining Conversion Rate Of Foreign Award Expressed In Foreign Currency Is The Date When The Award Becomes Enforceable: SC

The Supreme Court held that the relevant date for determining the conversion rate of foreign award expressed in foreign currency is the date when the award becomes enforceable.

In that context, the Bench of Justice PS Narasimha and Justice Aravind Kumar observed that, "The date when the arbitral award becomes enforceable shall be the date for conversion. Under the Arbitration and Conciliation Act, 19962 this date is when the objections against the award are dismissed, and award attains finality."

In this case, the respondent, who held the award, had not withdrawn the partial amount of Rs. 7.5 crores deposited by the award debtor in 2010 during the proceedings. The respondent argued that the currency exchange rate should not be based on the date of this deposit but rather on the date when the entire award amount was enforced. Essentially, the respondent claimed that the deposited amount should not be considered converted into the relevant currency on the date of its deposit.

Two questions arose for consideration in this case: First, what is the correct and appropriate date to determine the foreign exchange rate for converting the award amount expressed in foreign currency to Indian rupees. Second, what would be the date of such conversion, when the award debtor deposits some amount before the court during the pendency of proceedings challenging the award.

The Apex Court made the following conclusions:

i. The statutory scheme of the Act makes a foreign arbitral award enforceable when the objections against it are finally decided. Therefore, as per the Act, the relevant date for determining the conversion rate of foreign award expressed in foreign currency is the date when the award becomes enforceable.

ii. When the award debtor deposits an amount before the court during the pendency of objections and the award holder is permitted to withdraw the same, even if against the requirement of security, this deposited amount must be converted as on the date of the deposit.

iii. After the conversion of the deposited amount, the same must be adjusted against the remaining amount of principal and interest pending under the arbitral award. This remaining amount must be converted on the date when the arbitral award becomes enforceable, i.e., when the objections against it are finally decided. 

Cause Title: DLF Ltd. & Anr. vs Koncar Generators & Motors Ltd.

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