Case: P.E.C. LIMITED THROUGH ITS GENERAL MANAGER Vs. AUSTBULK SHIPPING SDN BHD

1. The judgment of the High Court of Delhi directing enforcement and execution of a foreign award dated 30.05.2001 is challenged in this appeal. The Appellant chartered MV "Rubin Halycon" from the Respondent for transportation of a minimum quantity of 16,500 MT upto a maximum of 17,000 MT of chickpeas in bulk from Geraldton Port, Australia to Jawahar Lal Nehru Port, India (JNPT). The Charter Party dated 20.04.2000 provided, inter alia, thee Port(s) or PlaceSB JNPT See Clause 3 shifting time to control for 2nd berth as lay time at discharge port or time one load/discharge 3,000 mt. PWWD. Sat noon/SHEX EIU/2000 mt PWWD Sat Noon SHEX EIU time from noon on Sat or a day preceding legal holiday till 0800 hrs on Mon or next working day not toe and Despatch Rate of Load (Clause4,000 PD PR/halfe and Despatch Rate at Discharge (Clause5,000 PD PR/halfic Tonnes per weather Working Day of 24 Consecutive Hours (Clausenoon SHEX EIU, Time from noon on Sat or a day preceding a legal holiday till 0800 hrs on Mon or next wkg day not tome for discharging shall commencehours after notice of readiness has been received by written/telegraphic or telefax notice during ordinary office hour as per the usual custom of the port, whether in berth or not at the first or sole port of discharge provided vessel within port limits and ready in all respects for discharging hergo is to be, discharged free of expense to the Respondent at the average rate set out in Box 24.In accordance with the terms and conditions of the Charter Party, the lay time commenced at 0900 hours on 03.05.2000. The load rate of 3,000 MT per day was valid in accordance with the Charter Party and the lay time allowed for loading equated to 5.5 days. The loading of the Cargo commenced at Geraldton Port, Australia at 10.10 hrs on 01.05.2000 and was completed on 12.40 hrs on 02.05.2000. The Vessel arrived at JNPT at 0305 hrs on 15.05.2000 at which time the master tendered the notice of readiness. A request was made by the Appellant to take the vessel to a nearby port i.e. Mumbai. The request made by the Appellant was acceded to by the Respondent and the vessel was taken to the Mumbai port. The time allowed for discharge was calculated on the basis of discharge rate of 2,000 MT per day and the time allowed for discharge was 8.25 days. Taking into account the Cargo quantity being 16,500 MT, the Respondents calculated demurrage for a period of 20.9493 days at the rate of US $ 6250 per day and requested the Appellants to make the payment. A final freight account was submitted by the Respondent on 22.06.2000 taking into consideration the dispatch at Geraldton and the demurrage at Bombay. The final freight account showed that the Appellant had to pay the Respondent US $150,362.18.The Respondent appointed Mr. William Robertson Esq, 47 Perrymount Road, Haywards Health, West Sussex, RH 16 3 BN as their nominated Arbitrator and the Appellant was called upon to appoint its Arbitrator. The Appellant did not appoint its Arbitrator within 14 days as mentioned in the letter dated 19.09.2000. On 13.03.2001, the Respondent filed its claims with the supporting documents. The Arbitrator directed the Appellant to submit its defense together with counter claims, if any, before 17.04.2001. The Appellant submitted a brief response but did not participate in the arbitration. The Arbitrator proceeded and finally awarded US $ 150,362.18 to the Respondent with interest at the rate of 8% per annum compounded atintervals from 1st July, 2000 till the date of payment.The reasons for the final award were given by the Arbitrator separately. The Arbitrator dealt with the submissions made on behalf of the Appellant in a detailed manner. The contention of the Appellant that they did not sign the Charter Party and they did not agree for arbitration by the London Maritime Arbitration Association was rejected by the Arbitrator on the ground that there is no obligation that a Charter Party or contract has to be signed under English law. The Arbitrator referred to the correspondence between Mr. Sasi Nair of Forbes Gokak Limited, Palvolk Division (Appellants Brokers) and Mr. Ian Latimer of SSY (Respondents brokers) which showed that the fixture was made for the account of Appellant. Documents showing that the letter of indemnity was issued on behalf of the Appellant and the freight was paid by the Appellant were relied upon by the Arbitrator to conclude that the Appellants brokers were authorized to act on its behalf. There was other evidence on record which was referred to by the Arbitrator which showed that the Appellant fully participated in the fixture by itself and also paid the freight apart from providing a letter of indemnity when the vessel had to travel from JNPT to Mumbai Port. The Arbitrator accepted the calculations of the Respondent in support of its claim and held that the Respondent succeeded in proving its claim of US $150,362.18.The Respondent filed a petition for enforcement of the award dated 30.05.2001 passed by the sole Arbitrator Mr. William Robertson, in the High Court of Delhi. The Appellant filed its objections to the enforcement petition. The High Court observed that the award sought to be enforced was made at London and that United Kingdom was a party to the New York Convention. The United Kingdom is also a reciprocating territory and a notification was issued to that effect. The High Court also took note of the fact that a duly certified copy of the arbitration agreement was placed on record by the Appellant along with the reply filed by it. Further, the High Court observed that admittedly the Respondent placed on record the original Charter Party agreement which contained the arbitration Clause during the course of the enforcement proceedings. The main point that was considered by the High Court was the maintainability of the petition for enforcement of the award without an authenticated copy of the original agreement being filed at the time of presentation of the application. The High Court was of the view that there was substantial compliance with the provisions of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") as a certified copy of the arbitration agreement was placed on record by both the parties. According to the High Court, the application filed for enforcement Under Section 47 of the Act was in the nature of an execution and in case the relevant documents were not filed along with the application, the adjudicating forum has an obligation to return the same for compliance with the requirements of the Act.of the Petition after curing defects is not barred by any law.The High Court rejected the submissions made on behalf of the Appellant that there was no arbitration agreement. Apart from referring to the detailed discussion of the Arbitrator on this point, the High Court analyzed the correspondence exchanged between the parties and the relevant material placed on record to hold that there existed an arbitration agreement. Finally, the High Court refused to accept the submission of the Appellant that the award sought to be enforced was not a valid foreign award as defined Under Section 44 of the Act.The judgment of the High Court was passed on 18.02.2005 and notice was issued by us in this appeal on 15.04.2005. We stayed the execution on 29.08.2005.

Reasoning: 12. Admittedly, an authenticated copy of the arbitration agreement was not placed on record by the Respondent at the time of filing of the application for enforcement. It is clear from the record that the Appellant placed the arbitration agreement along with its reply and thereafter the Respondent also filed the original arbitration agreement in the Court. The submission made by the Appellant is that production of the arbitration agreement at the time of filing of the award is mandatory, theof which ought to have resulted in the dismissal of the application. The Appellant sought support for this submission from the word "shall" appearing in Section 47. We do not agree with the submission made by the learned Counsel for the Appellant. We are of the opinion that the word "shall" appearing in Section 47 of the Act relating to the production of the evidence as specified in the provision at the time of application has to be read as "may".The object of the New York Convention is smooth and swift enforcement of foreign awards. Keeping in view the object and purpose of the New York Convention, we are of the view that the word "shall" in Section 47 of the Act has to be read as "may". The opposite view that it is obligatory for a party to file the arbitration agreement or the original award or the evidence to prove that the award is a foreign award at the time of filing the application would have the effect of stultifying the enforcement proceedings. The object of the New York Convention will be defeated if the filing of the arbitration agreement at the time of filing the application is made compulsory. At the initial stage of filing of an application for enforcement,of the production of the documents mentioned in Section 47 should not entail in dismissal of the application for enforcement of an award. The party seeking enforcement can be asked to cure the defect ofof the arbitration agreement. The validity of the agreement is decided only at a later stage of the enforcement proceedings.It is relevant to note that there would be no prejudice caused to the party objecting to the enforcement of the Award by theof the arbitration agreement at the time of the application for enforcement. In addition, the requirement of filing a copy of the arbitration agreement under the Model Law which was categorized as a formal requirement was dispensed with. Section 48 which refers to the grounds on which the enforcement of a foreign award may be refused does not include theof the documents mentioned in Section 47. An application for enforcement of the foreign award can be rejected only on the grounds specified in Section 48. This would also lend support to the view that the requirement to produce documents mentioned in Section 47 at the time of application was not intended to be mandatory.Reading the word "shall" in Section 47 of the Act as "may" would only mean that a party applying for enforcement of the award need not necessarily produce before the Court a document mentioned therein "at the time of the application". We make it clear that the said interpretation of the word "shall" as "may" is restricted only to the initial stage of the filing of the application and not thereafter. It is clear from the decisions relied upon by the counsel for the Appellant that Courts in certain jurisdictions have taken a strict view regarding the filing of the documents for enforcement of a foreign award. Courts in many other jurisdictions have taken the opposite view that the application for enforcement of the foreign awards does not warrant rejection forof the relevant documents including the award and the arbitral agreement. We need not adjudicate on this issue as the subject matter of this case does not relate to theof the arbitration agreement during the enforcement proceedings. There is no dispute that the arbitration agreement has been brought on record by both theis no dispute that the contract is governed by the English law under which there is no requirement for the Charter Party to be signed by the parties to make it binding. We have no doubt in approving the conclusion of the High Court on this point and rejecting the submission made on behalf of the Appellant. Abundant material was examined by both the Arbitrator and the High Court to record a finding that there existed a valid arbitration agreement. Article II of the First Schedule of the Act defines arbitration agreement as including an arbitral Clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. The High Court found that the Charter Party which contained the arbitration agreement was agreed to and entered upon by the parties and the same is supported by the correspondence between the parties. The term "agreement in writing" in Article II is very wide. An arbitral Clause need not necessarily be found in a contract or an arbitral agreement. It can be included in the correspondence between the parties also. In the present case the arbitration agreement is found in the Charter Party which has been accepted by both the Arbitrator and the High Court. We see no reason to differ from the view taken by the High Court on this point.