Supreme Court on Wednesday, upheld a foreign arbitration award in favor of Vedanta and Videocon (GOVERNMENT OF INDIA vs. VEDANTA LIMITED, CIVIL APPEAL NO. 3185 OF 2020).
Bench headed by Justice S.Abdul Nazeer, also comprising Justices Indu Malhotra and Aniruddha Bose has observed,
"The enforcement court is not to correct the errors in the award under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to “refuse” enforcement, if the grounds are made out.”
This case was filed by the centre, challenging the decision of the Hon’ble High Court of Delhi which allowed Vedanta to implement the foreign award of 2011, which allowed the company to seek a larger sum of recovery instead of the amount that was capped by the Indian government.
The apex court disagreed with the decision of the High Court that a foreign award is enforceable on its own strength, and is not necessarily dependent on whether or not it goes through Section 48. The bench observed that a foreign award is not a decree by itself and it becomes enforceable as a deemed decree under Section 49 only after compliance of the stages laid down under Section 47 and 48 of the Act.
The bench stated,
"A foreign award does not become a "foreign decree" at any stage of the proceedings. The foreign award is enforced as a deemed decree of the Indian Court which has adjudicated upon the petition filed under Section 47, and the objections raised under Section 48 by the party which is resisting enforcement of the award. A foreign award is not a decree by itself, which is executable as such under Section 49 of the Act. The enforcement of the foreign award takes place only after the court is satisfied that the foreign award is enforceable under Chapter 1 in Part II of the 1996 Act. After the stages of Sections 47 and 48 are completed, the award becomes enforceable as a deemed decree, as provided by Section 49. The phrase "that court" refers to the Indian court which has adjudicated on the petition filed under Section 47, and the application under Section 48."
The bench further observed,
"The enforcement court is not to correct the errors in the award under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to "refuse" enforcement, if the grounds are made out."