Case: M/S Shinhan Apex Corporation Vs. M/S Euro Apex B.V

was a Licence Agreement between the appellant and the respondent dated 22.2.1993 which provided for settlement of disputes by way of arbitration in accordance with the Rules of the Dutch Arbitration Institute. The said agreement was sought to be terminated by a notice by the respondent on 12.3.2007. The termination was to take effect from 23.02.2008. The dispute went before the Arbitral Tribunal. On 11.6.2008, the appellant filed an application for registration of Patent Nos.10-0865115 and 100909490 in the United States as well as in India. In the arbitral proceedings, a Partial Final Award (for short, PFA) came to be passed by the Arbitral Trinunal on 23.12.2011. We are presently concerned with the Indian Patents in which the appellants rights and interest were involved, namely, Patent Nos. 2143/MUM/2008 and 2144/MUM/2008. The relevant part of the award (viz) paragraphs 7 and 9, of the PFA reads asRespondent to, within 30 days following the notification of the arbitration award, unconditionally and irrevocably, fully transfer all rights and interests of Indian Patent No.2143/MUM/2008 and 2144/MUM/2008 to Claimant, or a company designated by Claimant, and sign/execute and submit, at the first request of Claimant, and within 3 days following such request, all the documents that are required to effect such patent rights and interests transfer in accordance with the requirements of the Indian Patent Act and applicable Indian laws; and to simultaneously provide copies of all the relevant correspondence relating to such transfer to the attorney of Claimant by fax and registered post (fax: +31-20-6513001, HIL International Lawyers & Advisers, PO Box 22678, 1100 DD Amsterdam, the Netherlands);8. xxx xxx xxx9. Respondent to pay a direct enforcement penalty in the amount of Euro 50,000 for each case in which Respondent infringes the arbitral orders sub 7 and 8 above, and Euro 5,000 for each day the infringementThe Award dated 23.12.2011 was communicated to the parties by the Arbitral Tribunal on 27.12.2011. Therefore, the period of thirty days, fixed in paragraph 7, was to start from 27.12.2011.4. Closely followed by that, the respondent forwarded its request dated 19.1.2012 in the form of a letter communicated by the Advocate of the respondent to the appellant by enclosing the required documents to be executed by the appellant for the purpose of transfer of the patents. In the opening paragraph of the draft transfer deed a reference was made to PFA rendered on 23.12.2011 of CASE NAI 3625, in order to ascertain the obligation of the appellant to execute the transfer of the patents. It is not in dispute that subsequent to the said letter dated 19.1.2012 and the enclosures, discussions were held between January and March, 2012 among the advocates of the appellant and the respondent to finalize the draft deed of transfer.5. Thereafter, again at the instance of the respondent through a communication dated 3.4.2012 of the respondents lawyers addressed to the appellant a re-draft of the deed of transfer was enclosed, which was dated 4.4.2012. In the opening part of the said Deed, the reference to PFA, which was mentioned in the earlier draft transfer deed, was omitted. In other respects, the draft remained the same which contained a clause under the caption Consideration to the effect,That apart, in clause 5.5 of the re-draft it was mentioned that arbitration of the dispute arising out of or in connection with the deed should be initially settled under the Rules of Singapore International Arbitration Centre by a Sole Arbitrator appointed in accordance with the said Rules and the proceedings should be in English and the seat of arbitration should be Singapore. Insofar as the said clause was concerned, the same was different than the one which was contained in the earlier draft, as per which the arbitration was to be carried out with the Rules and provisions by Netherlands Arbitration Institute and the venue of the arbitration as Hague, The Netherlands and governing law was also mentioned as the laws in force in the Netherlands and the Courts at Netherlands to have jurisdiction. In the draft dated 4.4.2012 the governing law was to be the laws in force in India.7. The appellant received the re-draft by way of e-mail on 3.4.2012 with a direction to the appellant to sign the document, get it legalized by the Indian Embassy in Seoul and dispatch the same to the respondents lawyers in Amsterdam. The appellant executed the deed of transfer dated 4.4.2012 and thereby transferred all its rights and interests in the Indian Patents in favour of the respondent. The appellants lawyers sent an electronic copy of the said document to the respondent duly notarized with an assurance that the original would be promptly couriered to the respondent upon confirmation. In response to the same, the lawyers of the respondent in their email dated 11.4.2012 intimated that the signature part of the deed was correctly executed by the appellant and also wanted the original deed to be sent by courier to their Amsterdam Office for carrying out other additional formalities for effecting the transfer. Simultaneously, their lawyers also on the same day informed the respondent confirming the forwarding of the transfer deed for effecting the transfer of the patent applications duly signed by the appellant. The original document was also forwarded to the lawyers of the respondent on 12.4.2012.8. However, it appears that the respondent had its own issue with its lawyers as regards the draft as well as the final deed executed by the appellant in favour of the respondent which came to light when the present proceedings before the High Court was launched by the respondent. The same was reflected in the communication dated 12.4.2012 addressed by the representative of the respondent to its lawyers. Thereafter, the next communication was dated 3.12.2012 by the respondents lawyer addressed by way of an e-mail to the appellants lawyer suggesting that the transaction can be by way of trade sale of the appellants business. On behalf of the appellant, its lawyer sent a reply dated 11.12.2012 taking the definite stand that after the execution of the transfer deed dated 4.4.2012 the requirement of the obligation to be fulfilled by the appellant was duly complied with as per the PFA dated 23.12.2011. Thereafter, by another communication dated 15.3.2013, the respondents lawyers sent a fresh e-mail to the appellants lawyers informing that fresh steps are required to be taken to arrive at a final settlement of disputes. The said e-mail was also replied on behalf of the appellant on 20.3.2013 wherein the respondent was reminded as to the confirmation of the steps taken based on the transfer deed executed by them. For the first time, on 8.6.2013, by way of e-mail at the instance of the respondents lawyers it was intimated that respondent was not willing to accept the transfer of Indian Patents based on the language used in the draft deed as signed by the appellant. The said e-mail was also duly replied on behalf of the appellant on 15.6.2013 pointing out that the deed was executed as per the draft forwarded to the respondent by their lawyers and consequently the appellant was not in any way liable for either any delay or for the terms contained in the transfer deed.9. It was in the above-stated background the present application came to be filed by the respondent on 8.7.2013 before the High Court of Bombay for the enforcement of paragraph 7 of the PFA dated 23.12.2011. By the impugned order, the learned Single Judge held that there was a material alteration in the draft deed forwarded by the respondent to the appellant when the final deed was executed in the deed dated 4.4.2012 and consequently, the appellant is bound to execute a transfer deed of assignment as per the draft sent by the award holder, namely, the respondent as was originally forwarded to the appellant.10. With that view, the learned Judge directed the appellant to execute the deed of transfer and assignment of Patent Nos. 2143/MUM/2008 and 2144/MUM/2008 in favour of the award holder in terms of Annexure P6 to the Execution Application incorporating therein the complete recital B and the Arbitration Clause 5.5 showing the future arbitration in Netherlands within two weeks from the date of the order. Aggrieved by the impugned order, the appellant is before us.

Reasoning: 14. Having regard to the said development which had taken place after the PFA dated 23.12.2011 which discloses that the appellant did not commit any default in complying with the direction of the said Award and, therefore, the present direction of the learned Judge in the impugned order was wholly unwarranted. If the respondent failed to act based on the final transfer deed executed by the appellant on 4.4.4012, which was in tune with the draft forwarded by the respondent themselves, the appellant cannot be in any way blamed for the misfeasance committed by thefailure on the part of the learned Judge in having noted the fact that the transfer deed dated 4.4.2012 was as per the re-draft forwarded by the respondent themselves which was duly executed and sent back by the appellant by 9.4.2012 and the original by 12.4.2012 unfortunately resulted in the passing of the impugned order. In the light of the said patent illegality in the impugned order, the same is liable to be set aside.