Case: Transocean Shipping Agency P.Ltd Vs. Black Sea Shipping

any material including the law of Ukraine to establish that the award was invalid as per Ukrainian law or the procedure was incorrect. 16. Under Section 7 of the Foreign Awards (Recognition and Enforcement) Act, 1961 it is provided as follows :- "7. Conditions for enforcement of foreign award : (1) A foreign award may not be enforced under this Act :- (a) If the party against whom it is sought to enforce the award proves to the Court dealing with the case that : (i) ....................... (ii) ...................... (iii) ..................... (iv) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place. ..................." It is for the party against whom a foreign award is sought to be enforced, to prove to the court dealing with the case that the composition of the arbitral authority or the arbitral procedure was not in accordance with the law of the country where the arbitration took place. The burden to prove in this regard is expressly placed on the challenger by the statute. This section is in conformity with Article V of the New York Convention which provides "(1) recognition and enforcement of the award may be refused at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proves that ....... (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or failing such agreement was not in accordance with the law of the country where the arbitration took place .........". It was, therefore, entirely for the appellants to prove before the High Court that the appointment of the second respondent or the procedure of arbitration was not in accordance with the law of Ukraine. The appellants, however, did not produce any relevant law of Ukraine in this connection apart from raising the bare contention. 17. Under Rule 801 of the Bombay High Court Rules, which forms a part of Chapter XLIII dealing with Rules under the Foreign Awards (Recognition and Enforcement) Act, 1961, it is provided as follows :- "801. Enforcement of foreign award - The party seeking to enforce a foreign award shall produce with his petition : ..................... (c) An affidavit or affidavits showing (1) .................... (2) .................... (3) that it was made in conformity with the law governing the arbitration procedure and (4) that it had become binding on the parties in the country in which it was made................." The respondents did file an affidavit in this connection affirming that the award had been made in conformity with the law of Ukraine and that it was binding on the parties under the law of Ukraine. It was for the appellants who were challenging the validity of the award to have shown that appointment of the arbitrator or the arbitration procedure was not in accordance with the law of Ukraine. They failed to do so. The High Court, therefore, rightly rejected this contention. 18. The appellants have now sought permission to produce before us the arbitration law of Ukraine which, according to them, is the prevailing law. This is rightly objected to by the respondents. The respondents also contend that what is sought to be produced is not the entire law on the subject. We do not propose to permit the appellants now to produce/prove the relevant law of Ukraine when they have failed to do so before the High Court, and their contention has been consequently rejected by the High Court. The practice of filing fresh documents or evidence for the first time before this Court when the High Court had rejected the claim in the absence of such material, must be deprecated. The appellants were in a position to produce the relevant material before the High court. They failed and neglected to do so. They must take the consequence. The respondents have, in this connection, also pointed out that any objections to the competence of the arbitrator, or any defect in arbitration procedure could have been agitated by the appellants in Ukraine before the prescribed authorities. They have, however, not taken any steps in accordance with the law of Ukraine to challenge the arbitration or the award. Hence the award has now become final and binding. The respondents have filed an affidavit stating that the award has become final and binding as per Ukrainian law. The appellants has not controverted this by showing the relevant law. A mere assertion by the appellants that the award is defective or not in accordance with the law of Ukraine cannot be treated as establishing this contention. On the contrary, the presumption would be in favour of the validity of the award. 19. The last objection which is taken by the appellants is to the second respondent being appointed as arbitrator on the ground that she was a high ranking officer of the first respondent. According to the appellants an award which is given by her cannot be enforced in India because it would be against public policy. There is, however, no violation of any public policy in the present case. The parties had agreed to be governed by the law of Ukraine as far as the arbitration proceedings were concerned. If the award given by the second respondent is valid under the law of Ukraine, then there is no violation of any public in enforcing it here. Often parties appoint an officer of one of the parties to the arbitration agreement, as a sole arbitrator. Sometimes the agreement in terms so provides. This does not ipso facto make the arbitration or the award contrary to any public policy, especially if the officer had not personally handled disputed transactions and is impartial. The High Court has, therefore, correctly passed a decree in terms of the award.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We do not propose to permit the appellants now to produce/prove the relevant law of Ukraine when they have failed to do so before the High Court, and their contention has been consequently rejected by the High Court. The practice of filing fresh documents or evidence for the first time before this Court when the High Court had rejected the claim in the absence of such material, must be deprecated. The appellants were in a position to produce the relevant material before the High court. They failed and neglected to do so. They must take the consequence. The respondents have, in this connection, also pointed out that any objections to the competence of the arbitrator, or any defect in arbitration procedure could have been agitated by the appellants in Ukraine before the prescribed authorities. They have, however, not taken any steps in accordance with the law of Ukraine to challenge the arbitration or the award. Hence the award has now become final and binding. The respondents have filed an affidavit stating that the award has become final and binding as per Ukrainian law. The appellants has not controverted this by showing the relevant law. A mere assertion by the appellants that the award is defective or not in accordance with the law of Ukraine cannot be treated as establishing this contention. On the contrary, the presumption would be in favour of the validity of the award.The last objection which is taken by the appellants is to the second respondent being appointed as arbitrator on the ground that she was a high ranking officer of the first respondent. According to the appellants an award which is given by her cannot be enforced in India because it would be against public policy. There is, however, no violation of any public policy in the present case. The parties had agreed to be governed by the law of Ukraine as far as the arbitration proceedings were concerned. If the award given by the second respondent is valid under the law of Ukraine, then there is no violation of any public in enforcing it here. Often parties appoint an officer of one of the parties to the arbitration agreement, as a sole arbitrator. Sometimes the agreement in terms so provides. This does not ipso facto make the arbitration or the award contrary to any public policy, especially if the officer had not personally handled disputed transactions and isHigh Court has, therefore, correctly passed a decree in terms of the award.