INDEX I Background Facts 2 II Relevant Terms of the Production Sharing Contract 3 III Genesis of Dispute 8 IV Challenge to the Award before the Seat Courts at Kuala Lumpur 13 V Submissions on behalf of the Appellants 15 VI Submissions on behalf of the Respondents 22 VII Discussion and Analysis 28 Part A Limitation for filing an enforcement/ execution petition of a foreign 28 award under Section 47 of the 1996 Act Part B Scheme of the 1996 Act for enforcement of New York Convention 37 awards Part C Whether the Malaysian Courts were justified in applying the 44 Malaysian law of public policy while deciding the challenge to the Signature Not Verified foreign award?

17:42:52 IST Part D Whether the foreign award is in conflict with the Public Policy of 54 Reason: India?

INDU MALHOTRA, J.

Leave granted.

The present Civil Appeal has been filed by the Government of India to challenge the Judgment and Order dated 19 February 2020 passed by the Delhi High Court, wherein the application under Section 48 of the Arbitration and Conciliation Act, 1996 being I.A. No. 3558 of 2015 filed by the Government of India has been dismissed; the Application filed under Section 47 read with 49 being O.M.P. (EFA) (Comm) 15 of 2016 for the enforcement of the foreign award by the Respondents, and the I.A. No. 20149 of 2014 for condonation of delay in filing the execution petition by the Respondents were allowed.

I. Background Facts In 1993, the Government of India was desirous of exploring and developing the petroleum resources in the Ravva Gas and Oil Fields (lying 10 to 15 kms offshore in the Bay of Bengal), for which a global competitive tender was floated to invite bids. Pursuant thereto, Videocon International Ltd. and Command Petroleum Holdings NV, the predecessors of the Respondents submitted their bid to develop the Ravva Field along with other bidders. The contract for this petroleum development was to be given on a production sharing basis through a Production Sharing Contract.

On 28.10.1994, the Production Sharing Contract (the “PSC”) was executed between the Government of India and the following parties to commercially explore and develop the Ravva Oil and Gas Field:

II. Relevant Terms of the Production Sharing Contract The dispute between the Parties emanates from Article 15 of the PSC which inter alia provides for the recoverability of Base Development Costs (“BDC”) incurred by the Respondents-Claimants for the development of the Ravva Field. The relevant clauses of the PSC are extracted hereinbelow :

Appendix F to this contract shall constitute the approved development plan for the Existing Discoveries (hereinafter to as “the Ravva Development Plan”). The Ravva Development Plan shall be deemed to have been approved by the Managing Committee.”

(ii) The Proposed Development Plan for the Ravva Field (including Addendums 1 and

2), which was accepted by the Parties as the approved Ravva Development Plan, states as follows :

(b) Notwithstanding the provisions of Article 15.5 (a) and subject to the remaining provisions of this Article 15.5 , the Contractor shall not, for the purposes only of determining the volume of Petroleum to which Contractor 4 shall be entitled under Article 15.1 as Cost Petroleum, claim as Contract Costs Contractor's Development Costs incurred after the Effective Date in connection with Development operations under the Ravva Development Plan which exceed Contractor's Base Development Costs (as hereinafter defined) by more than five percent (5%).

(c) For the purpose of this Article 15.5 " Contractor's Base Development Costs” means costs incurred after the Effective Date relating to the construction and/or establishment of such facilities as are necessary to produce, process, store and transport Petroleum from within the Existing Discoveries, in order to enable Crude Oil production of 35,000 BOPD in accordance with the Ravva Development Plan plus such costs as are allowed pursuant to Section 3 .3 of the Accounting Procedure. Such costs shall include, but not be limited to costs incurred in relation to the following facilities and matters in connection therewith, such as:

The Parties agree that for the purposes of this Article 15.5 the Contractor's Base Development Costs shall be the sum of US $188.98 million (as indicated in the August 1993 Addendum to the Ravva Development Plan.) ….

(i) Having regard, inter alia, to the matters referred to in Article 15.5(d) , the Parties agree as follows:

(iii) In the event that the Contractor's Base Development Costs are exceeded by more than five per cent (5%) as a result of:

Then the Management Committee shall, at the request of the operator, in a meeting convened under Article 6,7, promptly consider what, if any, increase should be made to the Contractor's base Development Costs to fairly reflect the circumstances in the question PROVIDED THAT in the case of delays referred to in Article 15.5 (e) (ii) (aa) the Management Committee shall not be obliged to consider any increase where such delay has been caused by the Contractor's failure to act in a diligent manner.

a circumstance referred to in Article 15.5(e) (iii) has arisen, or resulted in the Contractor’s Base Development Costs being exceeded by more than five percent (5%); or

(ii) The Management Committee is unable to agree whether an increase should be made to the Contractor’s Base Development Costs, or is unable to agree on the amount of any such increase; then at any time after thirty (30) days from the date of the Management Committee meeting referred to in Article 15.5(e)(iii) , any Party shall be at liberty to refer the matter to a sole expert for decision in accordance with the provisions of Article 34.2.” (emphasis supplied)

(iv) Article 33 of the PSC provides the law applicable to the PSC, and reads as under:

It was envisaged that the production profile of 35,000 BOPD would be reached after about two years, and the said production figure would be maintained as a plateau production for 6 years thereafter. A total field production life of 14 years was estimated.

(iii) The Contractor’s Base Development Costs were agreed on certain assumptions and / or factors set out in Article 15.5(d) , including the range of physical reservoir characteristics not being materially different from the ranges on which the Ravva Development Plan was based.

(iv) There are specific exclusions contained in Article 15.5(e)(i) and (ii), and sub-Article (e)(iii) which set out the circumstances in which the agreed amount of the Contractor’s Base Development Costs may be increased by the Management Committee; or in default by an expert, as provided in the dispute resolution clause.

(v) During the working of the PSC, the production rate of 35,000 BOPD was achieved in 1997-1998. By 1998-1999, when the complete extent of the reserves in the Ravva Field was known, the Claimants requested the Government of India to permit an increased production of 50,000 BOPD. This increase was approved by the Management Committee on 25.03.1998, and by the Government on 01.04.1999. By 1999-2000, the increased rate of production at 50,000 BOPD was achieved. This rate of production was maintained till 2008-2009, after which it decreased to 40,000 BOPD. The oil fields were found to be enormously profitable for both parties.

(vi) The Claimants submitted that by 1999-2000, they had incurred Development Costs to the tune of about US $ 220 million to achieve the production rate of 35,000 BOPD. The Claimants sought that the ‘cap’ in Article 15.5 should be increased accordingly. After 1999-2000 and until 2007-2008, the Claimants incurred Development Costs totalling a further US $ 278 million, which they contended that they were entitled to recover as Cost Petroleum, since the ‘cap’ would no longer apply post 1999-2000.

The Claimants claimed that they were entitled to more than US $ 264.35 million with respect to Development Costs incurred in 1994-1995 until 2008-2009.

(vii) On the other hand, the Government contended that all the Development Costs claimed by the Claimants were incurred in connection with the Ravva Plan, and were subject to the ‘cap’ on such costs as provided by Articles 15.5(b) and (c), notwithstanding the increased quantity of production. The exceptions, were however not subject to the ‘cap’, and were properly recovered from Cost Petroleum under Article 15.5(a) which totalled to US $ 65.95 million.

(viii) The Government contended that the work contemplated by the Ravva Plan, as per Article 15.5(c) was not completed till 1999-2000, when only 14 wells had been drilled; the remaining 7 wells stipulated in Article 15.5(c)(xi) were drilled by 2007-2008. Consequently, the ‘cap’ on the Contractor’s Base Development Costs would apply to the whole of the costs incurred till 2007-2008, and not the costs incurred till 1999-2000. The Claimants were not entitled to claim more than the Cost Petroleum agreed at US $ 198.43 million plus US $ 65.95 million (towards exceptions).

(ix) The Government raised counter claims equivalent to the amounts which the Claimants had claimed as Cost Petroleum, in excess of the agreed amount of US $ 198.43 million plus US $ 65.95 million.

(x) On 18.08.2008, the disputes were referred to arbitration under Article 34 of the PSC. The Claimants nominated Mr. Andrew Berkeley as its nominee-arbitrator; the Government of India appointed Hon’ble Dr. Justice Adarsh Sein Anand (former Chief Justice of India) as its nominee-arbitrator. The nominee arbitrators appointed Rt. Hon’ble Sir Anthony Evans as the presiding arbitrator.

(xi) The tribunal passed the Award on 18.01.2011 inter alia holding that :

Article 15.5(b) and (c) imposed a cap on the Development Costs to the agreed figure of US $ 188.98 million plus 5%. The Claimants were not entitled to recover Development Costs in excess of US $ 198.43 million in view of the cap provided under Article 15.5(c) of the PSC for the period 1994-95 to 1999-2000.

b) The Claimants had wrongly recovered US $ 22,307,381 in excess of the capped figure of US $ 198.43 million as Base Development Costs during the period 1994-95 to 1999-2000. The Government of India was entitled to be credited with the said amount in the final settlement of cost recovery accounts.

c) The PSC contained certain exceptions where the Claimants might incur Development Costs in excess of those anticipated under the PSC and Ravva Development Plan. These exceptions were covered under Article 15.5(d) and (e) for increase of the BDC cap by the Management Committee.

d) During exploration in 1998-1999, when the complete extent of the reserves in the Ravva Field came to be known, the Management Committee approved an increase in the production profile from 35,000 to 50,000 BOPD. The Respondents proceeded to develop the Ravva Field to achieve the production rate of 50,000 BOPD, and drilled 7 additional wells.

e) The tribunal accepted the evidence of the Expert Witness produced by the Claimants, which found that the enlarged reservoir known as Block A/D in the Ravva Field, showed a range of physical characteristics which were “materially different” from those on which the Ravva Development Plan was based. The range of relevant characteristics which were different from what was anticipated included the fault line on the north-west boundary, which was found not to be sealed, but to be porous; the permeability of the rocks was found to be greater leading to increased production pressures; the oil / water contact levels were found to be different. Article 15.5(e)(iii)(dd) provided that a request for an increase in the BDC cap could be made, since 11 materially different characteristics were encountered in the drilling of the additional wells. In such circumstances, Claimants would be entitled to recover the increased amounts, notwithstanding the limit imposed by Article 15.5(b) and (c).

The tribunal held that the Respondents were entitled to recover US $ 278,871,668 from the Cost Petroleum towards Development Costs incurred by the Respondents for the period 2000-01 to 2008-09.

f) The Award declared as under :

IV. Challenge to the Award before the Seat Courts at Kuala Lumpur

(i) On 15.04.2011, the Government of India challenged the Award under Section 37 of the Malaysian Arbitration Act, 2005 before the Malaysian High Court, on three principal grounds:

There was no determination by the tribunal which was outside the submissions of the parties.

(iv) On 10.07.2014, a show cause notice was issued by the Government to the Respondents-Claimants, raising a demand of US $ 77 million towards the Government’s share of Profit Petroleum under the PSC. The Respondents were directed to show cause as to why the said amount ought not to be directly recovered from the amounts payable by the Oil Marketing Companies.

(v) On 21.07.2014, the Government filed an Application for Leave to Appeal before the Malaysian Federal Court, which was rejected vide Order dated 17.05.2016.

(vi) During the pendency of the Application for Leave to Appeal before the Malaysian Federal Court, on 14.10.2014, the Respondents-Claimants filed a Petition for enforcement under Sections 47 read with 49 of the 1996 Act before the Delhi High Court, along with an application for condonation of delay.

(vii) The Government filed an Application under Section 48 resisting the enforcement of the Award before the Delhi High Court inter alia on the ground that the enforcement petition was filed beyond the period of limitation; the enforcement of the Award was contrary to the public policy of India, and contained decisions on matters beyond the scope of the submission to arbitration.

(viii) The Delhi High Court rejected the Petition under Section 48 vide the impugned judgment dated 19.02.2020, allowed the application for condonation of 14 delay filed by the Respondents / Claimants, and directed the enforcement of the Award.

(ix) Aggrieved by the judgment of the High Court, the Government has filed the present Civil Appeal before this Court. This Court issued notice vide Order dated 17.06.2020, and directed the parties to maintain status quo till further orders.

(x) Subsequently, the Respondents filed I.A. No. 61469 of 2020 for Modification of the Order of status quo dated 17.06.2020, and for interim directions. The I.A. was taken up for hearing on 22.07.2020, when the Order of status quo was partially modified, and a direction was issued that the sales revenues be paid directly by the Oil Marketing Companies to the Respondents as per the Orders dated 28.05.2020 and 04.06.2020 passed by the Delhi High Court. The Order of status quo would, however, continue to operate with respect to the bank guarantees / deposits of US $ 93 million, during the pendency of the present proceedings.

V. Submissions on behalf of the Appellants Shri. K.K. Venugopal, Learned Attorney General for India instructed by Mr. K.R. Sasiprabhu, Advocate represented the Government of India. It was submitted that the enforcement of the Award was liable to be refused on the following principal grounds:

Since there is no specific provision in the Limitation Act for enforcement of foreign awards, it would necessarily fall under the residuary provision – Article 137.

(ii) Article 137 applies to the enforcement of foreign awards, which provides a period of 3 years from “when the right to apply accrues”. It was submitted that the right to apply would accrue from the date of making the award.

In the present case, the Award was passed on 18.01.2011, and the petition for enforcement / execution was filed by the Respondents on 14.10.2014. The petition was barred by 268 days beyond the period of limitation.

(iii) The execution petition for the purposes of the Limitation Act , has to be treated as an application under the provisions of Order XXI of the CPC . The execution of a foreign award under Section 49 of the 1996 Act, is carried out under Order XXI CPC , as held in BCCI v Kochi Cricket (P) Ltd.1

(iv) Section 5 of the Limitation Act, 1963 excludes an application filed under Order XXI, CPC .

Section 5 reads as under:-

Article 136 deals with an application for execution of any decree or order of a civil court. This finding is contrary to the express holding in Bank of Baroda v Kotak Mahindra Bank,2 wherein it has been held that the period of limitation of 12 years prescribed by Article 136 of the Schedule to the Limitation Act , applies only to a decree or order passed by an Indian court. A foreign award could not be treated to be a decree of a civil court.

(2018) 6 SCC 287.

2020 SCC OnLine SC 324.

(vii) It was submitted that the reasoning of the Delhi High Court is contrary to the provisions of the 1996 Act, since it has ignored the express words of Section 49, which provides that the court would require to be “satisfied that the foreign award is enforceable under this Chapter”. It was submitted that this is further supported by the language of Section 46 of the Act which pre-supposes an inquiry before the award is said to achieve the status of the decree of a court. The purposive interpretation adopted by the Ld. single judge, could not be used to negate the express terms of the statute.

(viii) For the purpose of making a foreign award enforceable, the procedure available under Part II of the Act is required to be followed. A petition for enforcement and execution of such foreign award by way of a composite petition is required to be filed under Section 47. A foreign award does not become a decree until and unless it passes the muster of Sections 47 to 49, only after which it acquires the status of a decree. It was only after the Court adjudicates on the enforceability of the foreign award under Sections 47 to 48, would the foreign award be deemed to be a decree of that Court. Post such adjudication, the foreign award is declared as a deemed decree under Section 49 of the Act.

The foreign award has no legal sanctity, till an affirmative decision is obtained under Section 48 of the 1996 Act. The foreign award gets the imprimatur of the Court, before it can be enforced as a deemed decree under Section 49 of the 1996 Act.

(ix) Section 49 provides that where the Court is satisfied that the foreign award is enforceable, it shall be deemed to be a decree of the Court. The limited purpose of the deeming fiction was to apply the machinery provided under Order XXI of the CPC to enable Indian Courts to execute foreign awards. The foreign award does not transform into a decree of a civil court in India. The foreign award does not lose its character as an arbitral award. It is only presumed to be a decree of the Court, for the purposes of execution.

(b) Challenge on grounds of Public Policy of India The Government inter alia contended that the foreign Award is in conflict with the Public Policy of India as expounded in the Renusagar3 judgment. This Court in Renusagar held that public policy of India, in the context of foreign awards would be: (a) fundamental policy of Indian law; or (b) the interests of India; or (c) justice or morality.

(i) The PSC related to the exploration and development of petroleum in its natural state in the Territorial Waters and Continental Shelf of India, which is vested in the Union of India. The Government was desirous that the petroleum resources be exploited in the overall interests of India in accordance with good international petroleum industry practices.

The PSC in recital (1) expressly states that petroleum being a natural resource is vested in the Government of India under Article 297 of the Constitution of India. Since the PSC related to the exploration of a natural resource, there was an inherent character of national and public interest in the implementation of the PSC, and the natural gas was held in the sovereign trust of the people of India. The sovereignty over the petroleum produced would continue to remain with the nation, since the natural gas is a resource which falls squarely within the purview of Article 297 of the Constitution of India.

(ii) The learned A.G. submitted on behalf of the Government of India that the Award was in conflict with the public policy of India. The tribunal had ignored various clauses of Article 15.5(c) read with the Ravva Development Plan, and particularly Attachment 10 thereto, which contained the basis of computation of the “sum” of US $ 188.98 million payable to the Respondents as Base Development Costs.

Article 15.5(c) of the PSC read with the Ravva Development Plan formed the basis of the dispute between the Parties. Article 15.5(c) provided that the Base Development Cost shall mean the costs incurred after the Effective Date relating to the construction and / or establishment of such facilities as were necessary to produce Petroleum from within the Existing Discoveries in order to enable crude oil 3 1994 Supp (1) SCC 644.

production of 35,000 BOPD in accordance with the Ravva Development Plan. Such costs “shall include, but not be limited to” costs incurred in relation to the list of facilities mentioned therein.

Sub-clause (xi) under Article 15.5(c) of the PSC specifically referred to the “drilling of nineteen (19) Oil Wells and two (2) Gas Production Wells”. Under Article 15.5(c) , the parties had expressly agreed that the Contractor’s Base Development Costs shall be the “sum” of US $ 188.98 million, as indicated in the Ravva Development Plan, which was an integral part of the PSC. The sum of US $ 188.98 million took into consideration the drilling of 21 wells as also the construction of facilities mentioned in Article 15.5(c) of the PSC.

The tribunal proceeded on the false assumption that every aspect of Article 15.5 (c) , must be subjugated to the achievement of 35,000 BOPD.

The failure of the tribunal to look into all the relevant documents, particularly Attachment 10 to the Ravva Development Plan, which formed an integral part of the PSC, and contained the computation of the amount payable as Base Development Costs, would shock the conscience of the Court, and the award would be in conflict with the basic notions of justice.

(iii) The Ld. A.G. contended that the said Plan contained the computation of the sum of US $ 188.98 million to be paid towards Base Development Cost under Article 15.5(c) of the PSC. The Ravva Plan provided the approximate cost of drilling one well in the Ravva Field as being US $ 2.43 million.

Attachment 10 to Addendum 2 of the Ravva Development Plan sets out the Development of R10 and R17 blocks – Oil and Associated Gas Reserves. It provides for the drilling and completion of 19 wells, SPM and Tanker Loading Lines, Four platforms, production/ injection pipelines to/from shore in-field flow lines, Onshore oil process facilities, Onshore oil storage, Gas treatment and compression, Water injection, Gas lift pipeline and Compression, Project Management, etc., for which an amount of US $ 201.1 million was earmarked.

The total amount payable for the Ravva Development Cost (i.e. 210.1 + 16.9) was US $ 218 million. After deducting US $ 18 million towards abandonment costs and US $ 11.32 million towards import duty, the amount payable would work 19 out to US $ 188.98 million, which is the amount mentioned in Article 15.5(c) of the PSC.

(iv) The tribunal on the basis of one isolated criteria mentioned in Article 15.5

(c) of achieving 35,000 BOPD passed the Award in favour of the Claimants. In fact, the Claimants failed to fulfil the other requirements stated in Article 15.5(c) inter alia with respect to development facilities, which included the drilling of 19 oil wells and 2 gas reserves. This was specifically mentioned in the Ravva Development Plan, which was an integral part of the PSC as stated in Article 11.2 of the PSC. By deciding the claim on the basis of one isolated criteria, it had given a go-by to all the other conditions, which would amount to re-writing the mandatory terms of the contract between the parties, and foisting the Government with obligations, which were never agreed to. The net result of the arbitral award was that the Government of India suffered a huge loss to the tune of approximately Rs.1,600 crores, which would be contrary to the interests of India.

The tribunal’s interpretation of Article 15.5(c) had the effect of substituting the plain language of sub-clause (xi) of the said Article, with a new stipulation that the cost of construction of the wells in the Ravva Field would be borne by the Government, once the production capacity of 35,000 BOPD was achieved. This interpretation rendered the stipulation of drilling 19 oil wells and 2 gas wells contained in Article 15.5(c)(xi) as nugatory. The tribunal omitted any reference to Attachment 10 of the Ravva Development Plan, which was crucial to the determination of the dispute, and formed an integral part of the PSC, since it contained the basis of the computation of the amount payable towards Base Development Cost. Such an Award would shock the conscience of the Court, and would be in conflict with the public policy of India, and contrary to the interests of India.

The daily rate of production specified in Article 15.5(c) i.e. 35,000 BOPD, was the ‘plateau’ rate of production which had to be achieved and maintained for a period of 6 years of the contract period. It was not a one-time target to be achieved by the Respondents. The plateau rate of production of 35,000 BOPD could not have been related to the cap of US $ 188.98 million, which related only to the costs 20 incurred for setting up specified facilities under Article 15.5(c) , including the 21 wells.

The tribunal failed to note that the cap of US $ 188.98 million was relatable to the facilities mentioned in Article 15.5(c) of the PSC, which expressly included the drilling and completion of 19 oil wells and two gas wells. The tribunal erred in holding that the cap of US $188.98 million related only to the achievement of a production target of 35,000 BOPD, and adjusted the capped figure of US $ 188 million upon the drilling of 14 wells, when the production capacity of 35,000 BOPD was achieved. The tribunal held that the costs with respect to the 7 wells drilled thereafter, amounting to US $ 278 million, would have to be borne by the Government to the Respondents.

(v) It was further submitted that the Counter Claim raised by the Government was summarily disposed of in paragraph 100 of the Award, and the tribunal gave a finding which was contrary to the express provisions of the contract.

(vi) It was submitted that Clauses 33.1 and 33.2 of the PSC provided that the PSC was governed and interpreted in accordance with Indian law. The Malaysian Courts at the seat of arbitration had erroneously applied the Malaysian Arbitration Act (Act 646), 2005 while deciding the challenge to the Award. The Award was to be tested on the basis of Indian law, as mandated by Article 33 of the PSC. The PSC was to be interpreted as per Indian law.

(vii) Reliance was placed on paragraph 76.4 of the judgment in Reliance Industries v. Union of India,4 wherein this Court in the penultimate paragraph of that judgment had observed that since the substantive law governing the contract is Indian law, even the Courts in England (seat of arbitration), would be required to decide the issue of arbitrability by applying the Indian law of public policy.

In this case, the Malaysian Courts had erroneously applied the Arbitration Act of Malaysia to uphold the validity of the award.

(2014) 7 SCC 603.

VI. Submissions on behalf of the Respondents The Respondents were represented by Mr. C.A. Sundaram and Mr. Akhil Sibal, Senior Advocates.

(a) On Limitation

(i) It was contended that under Section 49 of the 1996 Act, the foreign award becomes a decree of an Indian court after the objections to the award are adjudicated by the enforcement court.

(ii) Article 136 of the Limitation Act prescribes a period of 12 years from the date of the decree of the civil court, which would be the appropriate provision for execution of a foreign award. In the present case, the foreign award was passed on 18.01.2011, and the Respondents had a period of 12 years to seek enforcement of the award i.e. till 17.01.2023. The execution petition was, therefore, filed within the period of limitation.

(iii) In the alternative, it was contended that if Article 137 of the Limitation Act is held to be applicable for the enforcement of foreign awards, the limitation period would commence from “when the right to apply accrues”, which does not necessarily mean the date of the award. Had this been the intention of the legislature, it would have been expressly provided so. The right to apply may accrue even on a later date, as it has in the present case.

(iv) The Award was passed on 18.01.2011 granting a declaration in favour of the Respondents-Claimants. The counter claim of the Government of India was partly allowed, directing the Respondents to revise the cost recovery statements. Consequently, an amount of US $ 22 million became payable by the Respondents- Claimants to the Government of India.

On 10.07.2014, the Government of India issued a notice to the Claimants to show cause as to why US $ 77 million ought not to be directly recovered from the amounts payable by the Oil Marketing Companies.

It was thus contended that the right to apply for enforcement of the award accrued on 10.07.2014.

(v) It was further contended that the period of limitation would commence from the date when the award attained finality at the seat of arbitration. In the 22 present case, the award attained finality at the seat court on 10.05.2016, when the Federal Court of Malaysia rejected the application of the Government of India seeking leave to appeal.

(vi) It was submitted that irrespective of whether limitation under Article 136 or 137 is applicable for enforcement of foreign awards, Section 5 would be applicable in both cases. Section 5 of the Limitation Act is applicable to any appeal, or any application.

The application for enforcement / execution was filed by the Respondent- Claimants under Sections 47 and 49 of the 1996 Act, which was a composite application, as per the judgments in Fuerst Day Lawson Limited v. Jindal Exports Limited5 and LMJ International Limited v. Sleepwell Industries Co. Ltd.6

(vii) It was further contended that limitation is a mixed question of fact and law.

Reliance was placed on Article 113 of the Limitation Act , which provides that any suit for which no period of limitation is provided elsewhere in Schedule, the period of limitation is 3 years from the date when the right to sue accrues. The Counsel placed reliance on the judgment of this Court in Shakti Bhog Food Industries Ltd. v the Central Bank of India7 . Article 137 is similar to the residuary provision in Article 113 for filing applications, for which no period of limitation has been provided elsewhere in this division, and provides a period of 3 years from the date when the right to apply accrues.

If the substantive application was filed under Sections 47 and 49 of the 1996 Act, it would not fall under Order XXI of the CPC , and hence an application under Section 5 of the Limitation Act, 1963 would be maintainable. Furthermore, since there was uncertainty in the law, as the Madras High Court had held limitation for enforcement of a foreign award to be 12 years, while the Bombay High Court treated this as 3 years, there was sufficient ground to condone the delay.

It was submitted that there is a difference between the execution of a foreign decree under Order XXI of the CPC , and the enforcement of a foreign award under Section 49 of the 1996 Act. Further, even though Section 36 refers to the 5 2001 (6) SCC 356.

2019 (5) SCC 302.

2020 SCC OnLine SC 482.

enforcement of a domestic award in accordance with the provisions of the CPC , Section 49 does not refer to the CPC .

The application for enforcement of the foreign award was thus a substantive application under Section 47 of the 1996 Act, and not one under Order XXI of the CPC . The provisions of Section 5 would consequently apply to the application for enforcement, and the High Court was empowered to condone the delay in filing the application.

(b) On Public Policy of India

(i) It was submitted that the dispute between the parties pertains to the interpretation of Article 15.5(c) of the PSC, which provides for recoverability of Base Development Costs incurred by the Respondent-Claimants in the Ravva Field.

Article 15.5(c) stipulated that the Respondents were entitled to recover US $ 198 million ($ 188 million + 5%) as BDC for the facilities which they developed to achieve a production capacity of 35,000 BOPD. At the time when the PSC was entered into, it was envisaged that for achieving the production capacity of 35,000 BOPD, 21 wells would be required. However, the production capacity was achieved by the Respondents with the construction of 14 wells.

(ii) The Respondents claimed recoverability of BDC as follows:

(vi) It was contended that under the Award, the tribunal had made declarations in favour of the parties. The tribunal had upheld the manner in which the Respondents-Claimants had computed and recovered the costs due to them under the PSC. The tribunal had declared a sum of US $ 22 million as payable by the Respondents to the Government of India, which was paid after the Award was passed.

(vii) It was contended that the issue of interpretation of the PSC, and a review of the merits of the Award, could not be raised under Section 48 of the 1996 Act. The scope of inquiry under Section 48 is limited, and the Appellants cannot invite the Court to take a “second look” at the Award by seeking a review on merits. Reliance was placed on the judgment of this Court in Shri Lal Mahal Ltd v Progretto Grano Spa,8 wherein it was held that:

justice or morality. The objections raised by the appellant do not fall in any of these categories and, therefore, the foreign awards cannot be held to be contrary to public policy of India as contemplated under Section 48(2)(b).” This view is further fortified by Explanation 2 of Section 48(2) of the Act which clarifies that “the test as to whether there is a contravention with the fundamental policy of Indian law, shall not entail a review on the merits of the dispute”.

(viii) Reliance was placed on the judgment of this Court in Vijay Karia v Prysmian Cavi E Sistemi Srl9 , wherein it was held that the enforcement of a foreign award cannot be refused by taking a different interpretation of the contract. The Supreme Court held that :

this Court in Bharat Aluminium Co. v Kaiser Aluminium Technical Services Inc10 wherein it was held that :

Similar would be the position in cases where parties seek interim relief with regard to the protection of the assets. Once the parties have chosen voluntarily that the seat of the arbitration shall be outside India, they are impliedly also understood to have chosen the necessary incidents and consequences of such choice. We, therefore, do not find any substance in the submissions made by the learned counsel for the appellants, that if applicability of Part I is limited to arbitrations which take place in India, it would leave many parties remediless.” (emphasis supplied)

(x) The Counsel submitted that the view taken by the Tribunal was a plausible view, since Article 15.5(e)(iii)(dd) is an exception i.e. when there is a change in the range of the physical reservoir, the cap on the Base Development Costs may be increased. The present case fell in this exception. It was argued that Clause 15.5(c) defined the “Base Development Costs” to mean costs incurred after the effective date relating to the construction and/or establishment of such facilities “as are necessary” to produce petroleum in order to enable crude oil production of 35,000 BOPD in accordance with the Ravva Development Plan. It was argued that the target to be achieved by the Claimants was to produce 35,000 BOPD.

The tribunal correctly relied on Article 15.5(e)(iii)(dd) to hold that the Respondents were entitled to request for an increase in the Base Development Costs, when the range of physical reservoir characteristics of the Existing Discoveries were found to be materially different from those on which the Ravva Development Plan was based. The Respondents had achieved the target of 35,000 BOPD by 1999-2000 with the drilling of 14 wells. The further wells which were drilled subsequently 10 (2012) 9 SCC 648.

would take into account the changed physical characteristics of the existing reserves. The tribunal had correctly interpreted Article 15.5(c)(xi) to hold that it was not an undertaking given by the Respondents to drill 21 wells, even though only 14 were required.

The Award therefore was not in conflict with the public policy of India, and did not attract the grounds for refusal of enforcement envisaged under Section 48 of the 1996 Act.

respect to the period of limitation for filing a petition for enforcement of a foreign award under the 1996 Act. It has therefore become necessary to settle the law on this issue.

Noy Vallesina Engineering Spa v Jindal Drugs Limited11 A single judge of the Bombay High Court held that there is no period of limitation provided by any of the Articles in the Schedule to the Limitation Act , for making an application for execution of a foreign award. It was held that the enforcement of a foreign award must take place in two stages. In the first stage, the enforceability of the foreign award would be decided, which would be governed by the residuary provision i.e. Article 137 which provides for 3 years from when the right to apply accrues. After the issue of enforceability of award is determined, the award is deemed to be a decree, and the execution of the award as a deemed decree would be governed by Article 136 which provides a period of 12 years.

Louis Dreyfous Commodities Suisse v Sakuma Exports Limited12 Another view was taken by another single judge of the Bombay High Court in this case, wherein it was held that the period of limitation for enforcement of a 11 2006 (3) Arb LR 510.

(2015) 6 Bom CR 258.

foreign award would be 3 years from the date when the right to apply accrues i.e. Article 137 of the Limitation Act .

Imax Corporation v E-City Entertainment (I) Pvt. Limited13 In Imax , a third view was taken by another single judge of the Bombay High Court, which followed the judgment in Fuerst Day Lawson,14 and held that since the foreign award is already stamped as a decree, the award holder may apply for enforcement after steps are taken for the execution of the award under Sections 47 and 49 of the 1996 Act. In one proceeding there may be different stages, the first stage being that the court would be required to decide on the enforceability of the award, having regard to the requirement of the said provisions; and thereafter, proceed to take further steps for execution of the award. It was concluded that Article 136 of the Limitation Act would be applicable for the enforcement of a foreign award.

M/s. Compania Naviera ‘SODNOC’ v Bharat Refineries Limited15 A single judge of the Madras High Court held that under the 1996 Act since the foreign award is already stamped as a decree, the award holder can straight away apply for enforcement of the foreign award as a decree holder, and would have a period of 12 years for enforcement.

Cairn India Limited v Union of India16 The Delhi High Court in the impugned Judgment in this case held that Article 136 of the Limitation Act would be applicable for the enforcement of a foreign award. The execution of the award takes place in three stages: access, recognition and enforcement. Section 47 deals with the first and second stages i.e. access and recognition. A foreign award which passes the gateway of Section 47 is at that stage enforceable on its own strength as a ‘foreign decree’, and is not necessarily dependent on whether or not it goes through the process of Section 48.

(2020) 1 AIR Bom 82.

(2001) 6 SCC 356.

(2008) 1 Arb LR 344.

2020 SCC Online SC 324.

Such a foreign award is treated as being equivalent to a foreign decree, whose enforcement may be refused only under Section 48. Section 48 pre-supposes that a foreign award is a decree whose execution can be resisted by a party against whom it is sought to be executed, if it is able to discharge the burden that the objections can be sustained under one or more of the clauses of sub-section (1) and/or sub- section (2) of Section 48 of the 1996 Act.

The Delhi High Court held that Article 136 of the Limitation Act would be applicable for filing a petition for enforcement of a foreign award. Even if it is assumed that Article 137 of the Limitation Act is applicable, sufficient grounds for condonation of delay had been urged since the Applicants were under the bona fide belief that the period of limitation for enforcement of a foreign award was 12 years from the date of the Award, as held in Compania Naviera (supra) by the Madras High Court.

(ii) Given the conflicting stands taken by various High Courts, we will now discuss this issue.

The issue of limitation for enforcement of foreign awards being procedural in nature, is subject to the lex fori i.e. the law of the forum (State) where the foreign award is sought to be enforced.17 Article III of the New York Convention on the Recognition and Enforcement of Foreign Awards, 1958 provides that :

Report of the General Assembly of the UN Commission on International Trade Law in its 41st Session dated 16th June – 3rd July, with respect to the legislative implementation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York 1958) (UN Doc A/CN.9/656/Add.1) (UN Doc A/CN.9/656/Add.1).

Articles 136 and 137 read as :

Umesh Goyal v Himachal Pradesh Co-op Group Housing Society Ltd. (2016) 11 SCC 313.

Sundaram Finance Ltd. v Abdul Saman and Anr. (2018) 3 SCC 622.

In Param Singh Patheja v ICDS Ltd.21 , this Court in the context of a domestic award, held that the fiction is not intended to make an award a decree for all purposes, or under all statutes, whether state or central. It is a legal fiction which must be limited to the purpose for which it was created. Paragraphs 39 and 42 of the judgment in Param Singh Patheja read as :

In State of Karnataka v State of Tamil Nadu,23 this Court held that :

2017 (3) SCC 274.

fiction has been created and not intended to travel beyond it. The purpose is to have the binding effect of the Tribunal's award and the effectiveness of enforceability. Thus, it has to be narrowly construed regard being had to the purpose it is meant to serve.” (emphasis supplied)

(ix) In Bank of Baroda v Kotak Mahindra Bank,24 this Court took the view that Article 136 of the Limitation Act deals only with decrees passed by Indian courts. The Limitation Act was framed keeping in view the suits, appeals and applications to be filed in Indian courts. Wherever the need was felt to deal with an application / petition filed outside India, the Limitation Act specifically provided a time period for that situation. The legislature has omitted reference to “foreign decrees” under Article 136 of the Limitation Act . The intention of the legislature was to confine Article 136 to the decrees of a civil court in India. The application for execution of a foreign decree would be an application not covered under any other Article of the Limitation Act, and would be covered by Article 137 of the Limitation Act .

(x) Foreign awards are not decrees of an Indian civil court. By a legal fiction, Section 49 provides that a foreign award, after it is granted recognition and enforcement under Section 48, would be deemed to be a decree of “that Court” for the limited purpose of enforcement. The phrase “that Court” refers to the Court which has adjudicated upon the petition filed under Sections 47 and 49 for enforcement of the foreign award.

In our view, Article 136 of the Limitation Act would not be applicable for the enforcement / execution of a foreign award, since it is not a decree of a civil court in India.

(xi) The enforcement of a foreign award as a deemed decree of the concerned High Court [as per the amended Explanation to Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the High Court for execution of foreign awards] would be covered by the residuary provision i.e. Article 137 of the Limitation Act .

(2020) SCC OnLine 324.

A three judge bench of this Court in The Kerala State Electricity Board, Trivandrum v T.P. Kunhaliumma25 held that the phrase “any other application” in Article 137 cannot be interpreted on the principle of ejusedem generis to be applications under the Civil Procedure Code. The phrase “any other application” used in Article 137 would include petitions within the word “applications,” filed under any special enactment. This would be evident from the definition of “application” under Section 2(b) of the Limitation Act, which includes a petition. Article 137 stands in isolation from all other Articles in Part I of the Third Division of the Limitation Act, 1963.

(xii) The exclusion of an application filed under any of the provisions of Order XXI of the CPC from the purview of Section 5 of the Limitation Act, was brought in by the present Limitation Act, 1963 . Under the previous Limitation Act, 1908 there were varying periods of limitation prescribed by Articles 182 and 183 of the said Act, as well as Section 48 of the CPC, 1908. Article 182 provided that the period of limitation for execution of a decree or order of any civil court was 3 years, and in case where a certified copy of the decree or order was registered, the period of limitation was 6 years. Article 183 provided that the period of limitation to enforce a decree or order of a High Court was 6 years. Section 48 of the CPC (which has since been repealed by Section 28 of the Limitation Act of 1963) provided that the period of limitation for execution of a decree was 12 years.

(xiii) The Law Commission in its 3rd Report dated 21st July 1956 noted that different time limits were prescribed for filing an application for execution of decrees or orders of civil courts. It was recommended that the time limit should be absolute, and there should be no scope for any further extension of time by acknowledgments. There was no justification for making a distinction between decrees or orders passed by the High Court in exercise of original civil jurisdiction, and other decrees. The maximum period of limitation for the execution of a decree or order of any civil court was fixed at twelve years in the new Limitation Act, 1963 from the date when the decree or order became enforceable.

(1976) 4 SCC 634.

In this background, the present Limitation Act, 1963 excludes any application filed under Order XXI from the purview of Section 5 of the Act, with the object that execution of decrees should be proceeded with as expeditiously as possible. The period of limitation for execution of the decree of a civil court is now uniformly fixed at the maximum period of 12 years for decrees of civil courts.

(xiv) In view of the aforesaid discussion, we hold that the period of limitation for filing a petition for enforcement of a foreign award under Sections 47 and 49, would be governed by Article 137 of the Limitation Act, 1963 which prescribes a period of three years from when the right to apply accrues.

(xv) The application under Sections 47 and 49 for enforcement of the foreign award, is a substantive petition filed under the Arbitration Act, 1996 . It is a well- settled position that the Arbitration Act is a self-contained code.26 The application under Section 47 is not an application filed under any of the provisions of Order XXI of the CPC , 1908. The application is filed before the appropriate High Court for enforcement, which would take recourse to the provisions of Order XXI of the CPC only for the purposes of execution of the foreign award as a deemed decree. The bar contained in Section 5 , which excludes an application filed under any of the provisions of Order XXI of the CPC , would not be applicable to a substantive petition filed under the Arbitration Act, 1996 . Consequently, a party may file an application under Section 5 for condonation of delay, if required in the facts and circumstances of the case.

(xvi) In the facts of the present case, the Respondents submitted that after the Award dated 18.01.2011 was passed, the cost account statements were revised, and an amount of US $ 22 million was paid to the Government of India.

On 10.07.2014, a show cause notice was issued to the respondents, raising a demand of US $ 77 million, being the Government’s share of Profit Petroleum 26 Fuerst Day Lawson Ltd. v Jindal Exports Ltd. (2011) 8 SCC 333. Kandla Export Corporation and Anr. v. OCI Corporation and Anr. , (2018) 14 SCC 715; Shivnath Rai Harnarain India Co. v. G.G. Rotterdam 164 (2009) DLT 197; Usha Drager Pvt. Ltd. v. Dragerwerk AG , (170) DLT 628; Sumitomo Corporation v. CDC Financial Services (Mauritius) Limited (2008) 4 SCC 91; Conros Steels Pvt. Ltd. v. Lu Qin (Hong Kong) Company Ltd. and Ors. , 2015 (1) Arb LR 463 (Bombay): (2015) 2 Bom CR 1.

under the PSC. It was contended that the cause of action for filing the enforcement petition under Sections 47 and 49 arose on 10.07.2014. The enforcement petition was filed on 14.10.2014 i.e. within 3 months from the date when the right to apply accrued.

We hold that the petition for enforcement of the foreign award was filed within the period of limitation prescribed by Article 137 of the Limitation Act, 1963 .

In any event, there are sufficient grounds to condone the delay, if any, in filing the enforcement / execution petition under Sections 47 and 49, on account of lack of clarity with respect to the period of limitation for enforcement of a foreign award.

Part B Scheme of the 1996 Act for enforcement of New York Convention awards On account of certain anomalies in the impugned judgment with respect to the enforcement of foreign awards, it has become necessary to discuss the scheme contemplated under Chapter I Part II of the 1996 Act.

(i) In paragraph 20.5 of the judgment, the High Court has taken the view that a foreign award which passes the gateway of Section 47, is “at that stage”, treated as being “equivalent to a foreign decree” whose enforcement can be refused at the request of the party against whom it is invoked, if it falls within the provisions of Section 48 of the 1996 Act.

In paragraphs 20.7 and 20.8 of the impugned judgment, it has been held that:

section (2) of Section 48 of the 1996 Act.” 37 In paragraph 21, it has been held that a foreign award is enforceable on its own strength, and is not necessarily dependent on whether or not it goes through the process of Section 48 proceedings.

(ii) The aforesaid findings are contrary to the scheme of the Act, since 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.

In contrast, the procedure for enforcement of a foreign decree is not covered by the 1996 Act, but is governed by the provisions of Section 44A read with Section 13 of the CPC.

The scheme of the 1996 Act for enforcement of New York Convention awards is as follows :

Under the 1996 Act, there is no requirement for the foreign award to be filed before the seat court, and obtain a decree thereon, after which it becomes enforceable as a foreign decree. This was referred to as the “double 38 exequatur,” which was a requirement under the Geneva Convention, 1927 and was done away with by the New York Convention, which superseded it.27. There is a paradigm shift under the 1996 Act. Under the 1996 Act, a party may apply for recognition and enforcement of a foreign award, after it is passed by the arbitral tribunal. The applicant is not required to obtain leave from the court of the seat in which, or under the laws of which, the award was made.

(b) Section 44 of the 1996 Act provides that a New York Convention award would be enforceable, if the award is with respect to a commercial dispute, covered by a written agreement in a State with which the Government of India has a reciprocal relationship, as notified in the Official Gazette.

(c) Section 46 provides that a foreign award which is enforceable under Chapter 1 of Part II of the 1996 Act, shall be treated as final and binding on the parties, and can be relied upon by way of defence, set off, or otherwise, in any legal proceeding in India.

(d) Section 47 sets out the procedure for filing the petition for enforcement / execution of a foreign award. This section replicates Article IV (1) of the New York Convention which requires the applicant to file the authenticated copy of the original award, or a certified copy thereof, alongwith the original agreement referred to in Article II, or a certified copy thereof, at the time of filing the petition.

(e) Section 47 provides that the application shall be filed alongwith the following evidence i.e. :

Refer to Renusagar Power Co. Ltd. v General Electric Co. (1994) Suppl. (1) SCC 644, para 41. See also Escorts Limited v Universal Tractor Holding LLC (2013) 10 SCC 717.

In PEC Limited v Austbulk Shipping,28 this Court held that even though Section 47 provides that the award holder “shall” produce such evidence alongwith the application for enforcement of a foreign award, this being a procedural requirement, a pragmatic, flexible and non-formalist approach must be taken. The non-production of documents at the initial stage, should not entail a dismissal of the application for enforcement. The party may be permitted to produce the evidence during the course of the proceedings, to enable the Court to decide the enforcement petition. It was observed that excessive formalism in the matter of enforcement of foreign awards must be deprecated.

(f) The award holder is entitled to apply for recognition and enforcement of the foreign award by way of a common petition. In Fuerst Day Lawson Ltd. v Jindal Exports Ltd.,29 this Court held that a proceeding seeking recognition and enforcement of a foreign award has different stages : in the first stage, the Court would decide about the enforceability of the award having regard to the requirements of Sections 47 and 48 of the 1996 Act. Once the enforceability of the foreign award is decided, it would proceed to take further effective steps for the execution of the award. The relevant extract from the judgment reads as:

and alternative solution of the dispute, the same procedure cannot be insisted under the new Act when it is advisedly eliminated. If separate proceedings are to be taken, one for deciding the enforceability of a foreign award and the other thereafter for execution, it would only contribute to protracting the litigation and adding to the sufferings of a litigant in terms of money, time and energy. Avoiding such difficulties is one of the objects of the Act as can be gathered from the scheme of the Act and particularly looking to the provisions contained in Sections 46 to 49 in relation to enforcement of foreign award. In para 40 of the Thyssen judgment already extracted above, it is stated that as a matter of fact, there is not much difference between the provisions of the 1961 Act and the Act in the matter of enforcement of foreign award. The only difference as found is that while under the Foreign Award Act a decree follows, under the new Act the foreign award is already stamped as the decree. Thus, in our view, a party holding foreign award can apply for enforcement of it but the court before taking further effective steps for the execution of the award has to proceed in accordance with Sections 47 to 49. In one proceeding there may be different stages. In the first stage the Court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of court/decree again. If the object and purpose can be served in the same proceedings, in our view, there is no need to take two separate proceedings resulting in multiplicity of litigation. It is also clear from objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and Scheme of the Act that every final arbitral award is to be enforced as if it were a decree of the court. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. In our opinion, for enforcement of foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to make rule of the court or decree and the other to take up execution thereafter. In one proceeding, as already stated above, the court enforcing a foreign award can deal with the entire matter. Even otherwise, this procedure does not prejudice a party in the light of what is stated in para 40 of the Thyssen judgment.

(emphasis supplied) In a recent judgment rendered in LMJ International Ltd. v. Sleepwell Industries30 , this Court held that given the legislative intent of expeditious disposal of arbitration proceedings, and limited interference of the courts, the maintainability of the enforcement petition, and the adjudication of the objections filed, are required to be decided in a common proceeding.

(2019) 5 SCC 302.

(g) The enforcement / execution petition is required to be filed before the concerned High Court, as per the amendment to Section 47 by Act 3 of 2016 (which came into force on 23.10.2015). The Explanation to Section 47 has been amended, which now reads as:

Sub-sections (1) and (2) of Sections 48 contain seven grounds for refusal to enforce a foreign award. Sub-section (1) contains five grounds which may be raised by the losing party for refusal of enforcement of the foreign award, while sub-section (2) contains two grounds which the court may ex officio invoke to refuse enforcement of the award,31 i.e. non-arbitrability of the subject-matter of the dispute under the laws of India; and second, the award is in conflict with the public policy of India.

(i) The enforcement Court cannot set aside a foreign award, even if the conditions under Section 48 are made out. The power to set aside a foreign award vests only with the court at the seat of arbitration, since the supervisory or primary jurisdiction is exercised by the curial courts at the seat of arbitration.

The enforcement court may “refuse” enforcement of a foreign award, if the conditions contained in Section 48 are made out. This would be evident from the language of the Section itself, which provides that enforcement of a foreign 31 Malhotra’s Commentary on the Law of Arbitration, 4 th Edition, Vol. 2, Pg. 1163-1164, Wolters Kluwer.

award may be “refused” only if the applicant furnishes proof of any of the conditions contained in Section 48 of the Act.

(j) The opening words of Section 48 use permissive, rather than mandatory language, that enforcement “may be” refused. 32 The use of the words “may be” indicate that even if the party against whom the award is passed, proves the existence of one or more grounds for refusal of enforcement, the court would retain a residual discretion to overrule the objections, if it finds that overall justice has been done between the parties, and may direct the enforcement of the award.33 This is generally done where the ground for refusal concerns a minor violation of the procedural rules applicable to the arbitration, or if the ground for refusal was not raised in the arbitration.34 A court may also take the view that the violation is not such as to prevent enforcement of the award in international relations.35

(k) The grounds for refusing enforcement of foreign awards contained in Section 48 are exhaustive, which is evident from the language of the Section, which provides that enforcement may be refused “only if” the applicant furnishes proof of any of the conditions contained in that provision. 36 32 Refer to Vijay Karia & Ors. v Prysmian Cavi E Sistemi SRL & Ors. , 2020 SCC OnLine 177.

This has been eloquently stated by the Supreme Court of Hong Kong in a 1994 decision which confirmed that:

The concerned High Court would then enforce the award by taking recourse to the provisions of Order XXI of the CPC .

Part C Whether the Malaysian Courts were justified in applying the Malaysian law of public policy while deciding the challenge to the foreign award?

The Ld. A.G. raised the ground that the Malaysian courts, while deciding the challenge to the Award, ought to have applied the substantive law of the contract, which was Indian law, and particularly the issue regarding conflict with the public policy ought to have been decided in accordance with the law expounded by the Supreme Court in paragraph 76.4 of the judgment in Reliance37 (supra).

This Court vide Order dated 24.08.2020 appointed Mr. Gourab Banerji, Senior Advocate, as Amicus Curiae to assist on this limited issue. Submissions of the Amicus Curiae :

The learned Amicus inter alia submitted that:

Reliance Industries v. Union of India (2014) 7 SCC 603.

The Government of India challenged the arbitral award before the Malaysian High Court on three grounds :

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia;

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party’s case;

(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;

(v) subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration; or 45

(vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or

(b) the High Court finds that—

(i) the subject matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or

(ii) the award is in conflict with the public policy of Malaysia (2) Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with the public policy of Malaysia where—

(a) the making of the award was induced or affected by fraud or corruption; or

(b) a breach of the rules of natural justice occurred—

(i) during the arbitral proceedings; or

(ii) in connection with the making of the award.

(3) Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside.” (emphasis supplied)

(iv) The Malaysian Act provides that the public policy defence is to be decided in accordance with Malaysian law, which is consistent with the Convention on the Recognition & Enforcement of Foreign Arbitral Awards, 1958. The seat court while deciding the public policy challenge, would decide the same in accordance with its own domestic public policy.

(v) With respect to the challenge on the ground of “excess of jurisdiction,” it was submitted that the correct position in law is that the issue of excess of jurisdiction would be governed by English law, since Article 34.12 of the PSC provides that the arbitration agreement contained in Article 34 shall be governed by the laws of England.

Even though the substantive law of the contract was Indian law, it would not be applicable for deciding the challenge to the issue of excess of jurisdiction.

(vi) The Malaysian High Court rejected the challenge made by the Government of India to the award, and also the reliance placed on the decision of the Indian 46 Supreme Court in ONGC v Saw Pipes38. While doing so, the High Court commented that the Court of Appeal in Singapore in PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA39 had not followed the decision of the Supreme Court of India in the Saw Pipes case. The learned Amicus submitted that these observations of the Malaysian High Court were wholly unnecessary to the issues in question.

(vii) It was submitted that the High Court of Malaysia gave contradictory findings with respect to the applicable law while deciding the issue of excess of jurisdiction. Initially, in paragraphs 159 and 161, the Malaysian High Court was of the view that the seat being in Kuala Lumpur, the applicable law to such a challenge would be under Section 37(1)(a)(iv) and (v) of the Malaysian law, being the curial law. Paragraphs 158 to 161 read as :

Dosco India Ltd. v M/s. Doosan Infracore Co. Ltd. (Arbitration Petition No 5 of 2008) 2010 (9) UJ 4521 (SC) that took an otherwise position :

[2006] SGCA 41.

considering applications to set aside awards. We are therefore not persuaded that the decision of the Indian Supreme Court should be applied.”

161. Although Indian law is the substantive law or proper law of the contract or PSC, and English law is the law of the arbitration agreement; that in no way means that Indian lex arbitri applies on the determination of an application under section 37.” (emphasis supplied) In paragraph 165, the High Court, however, observed that English law was the substantive law of the arbitration agreement and answers any questions on the jurisdiction of the arbitral tribunal.

“165. I appreciate that the Court of Appeal in PT Asuransi was expressing its views in the context of a challenge on the ground of a conflict with public policy. This position however, maintains even when dealing with the other grounds relied on here as the Indian law on “excess of jurisdiction” is not the applicable law. I agree with the Defendants that English law which is the substantive law of the arbitration agreement answers any questions on the jurisdiction of the Arbitral Tribunal. This was recognised in Sumitomo Heavy Industries v Oil and Natural Gas Commission 1995 1 Lloyds’ Rep 45. ..” (emphasis supplied) The High Court of Malaysia placed reliance on the judgment of Potter, J. in Sumitomo Heavy Industries Ltd. v Oil and Natural Gas Commission,40 the relevant portion of which reads as follows:

The Federal Court however, held that this was an issue of curial law, and the curial law ought to be the law of the seat of arbitration. The Federal Court of Malaysia in paragraph 25 held that :

The enforcement of the award is a subsequent and distinct proceeding from the setting aside proceedings at the seat. The enforcement court would independently determine the issue of recognition and enforceability of the foreign 42 (2012) 9 SCC 552.

award in India, in accordance with the provisions of Chapter 1 Part II of the Indian Arbitration Act, 1996 .

(ii) The courts having jurisdiction to annul or suspend a New York Convention award are the courts of the State where the award was made, or is determined to have been made i.e. at the seat of arbitration. The seat of the arbitration is a legal concept i.e. the juridical home of the arbitration. The legal “seat” must not be confused with a geographically convenient venue chosen to conduct some of the hearings in the arbitration. The courts at the seat of arbitration are referred to as the courts which exercise “supervisory” or “primary” jurisdiction over the award. The “laws under which the award was made” used in Article V (1)(e) of the New York Convention, is mirrored in Section 48(1)(e) of the Indian Arbitration Act, which refers to the country of the seat of the arbitration, and not the State whose laws govern the substantive contract.

The constitution bench in BALCO v Kaiser Aluminium43 held that :

In the aforesaid case, the Court of Appeal had approved the observations made in A v. B [(2007) 1 All ER (Comm) 591 : (2007) 1 Lloyd's Rep 237] wherein it is observed that:

which would govern the arbitral procedure, which is referred to as the lex arbitri, and is expressed in the choice of the seat of arbitration.45 The curial law governs the procedure of the arbitration, the commencement of the arbitration, appointment of arbitrator/s in exercise of the default power by the court, grant of provisional measures, collection of evidence, hearings, and challenge to the award.

The courts at the seat of arbitration exercise supervisory or “primary” jurisdiction over the arbitral proceedings, except if the parties have made an express and effective choice of a different lex arbitri, in which event, the role of the courts at the seat will be limited to those matters which are specified to be internationally mandatory and of a non- derogable nature.46

d) The lex fori governs the proceedings for recognition and enforcement of the award in other jurisdictions. Article III of the New York Convention provides that the national courts apply their respective lex fori regarding limitation periods applicable for recognition and enforcement proceedings; the date from which the limitation period would commence, whether there is power to extend the period of limitation. The lex fori determines the court which is competent and has the jurisdiction to decide the issue of recognition and enforcement of the foreign award, and the legal remedies available to the parties for enforcement of the foreign award.

(v) In view of the above-mentioned position, the Malaysian Courts being the seat courts were justified in applying the Malaysian Act to the public policy challenge raised by the Government of India.

The enforcement court would, however, examine the challenge to the award in accordance with the grounds available under Section 48 of the Act, without being constrained by the findings of the Malaysian Courts. Merely because the Malaysian Courts have upheld the award, it would not be an impediment for the Indian courts 45 The Conflict of Laws, Dicey, Morris and Collins, (15th ed.) Volume 1, Chapter 16, paragraph 16-035, p. 843.

Russel on Arbitration, Sweet & Maxwell (24th Edition, 2015).

to examine whether the award was opposed to the public policy of India under Section 48 of the Indian Arbitration Act, 1996. If the award is found to be violative of the public policy of India, it would not be enforced by the Indian courts. The enforcement court would however not second-guess or review the correctness of the judgment of the Seat Courts, while deciding the challenge to the award.

(vi) In our view, the observation made in paragraph 76.4 of the Reliance47judgment does not have any precedential value, since it is an observation made in the facts of that case, which arose out of a challenge to a final partial award on the issue of arbitrability of certain disputes. The last sentence in paragraph 76.4 is not the ratio of that judgment, which is contained in paragraphs 76.1 to 76.3.

(vii) In the present case, the Appellants have challenged the Award inter alia on the ground of excess of jurisdiction, and as being contrary to the public policy of India. The observations made in paragraph 76.4 in the Reliance judgment, would not be applicable to the present case, since the issue of arbitrability has not been raised, and cannot be relied upon by the Appellants in the present case.

Part D Whether the foreign award is in conflict with the Public Policy of India?

(i) This issue is required to be determined in accordance with the conditions laid down in Section 48 of the 1996 Act, which reads as :

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

(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; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

(2) Enforcement of an arbitral award may also be refused if the Court finds that—

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or

(b) the enforcement of the award would be contrary to the public policy of India.

“Explanation.—Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.” (3) … ” (emphasis supplied)

(ii) The public policy defence for refusing enforcement under Section 48 of the 1996 Act was interpreted by a three-judge bench of this Court in Shri Lal Mahal Ltd. v Progetto Grano SPA48 . This Court held that the law as expounded in the Renusagar60 judgment, would be applicable to the ambit and scope of Section 48(2)(b) even under the 1996 Act. The relevant extract from the judgment reads as:

this there is no reason why Renusagar3 should not apply as regards the scope of inquiry under Section 48(2)(b). Following Renusagar, we think that for the purposes of Section 48(2)(b), the expression “public policy of India” must be given narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to public policy of India if it is covered by one of the three categories enumerated in Renusagar. Although the same expression ‘public policy of India’ is used both in Section 34(2(b)(ii) and Section 48(2)(b) and the concept of ‘public policy in India’ is same in nature in both the Sections but, in our view, its application differs in degree insofar as these two Sections are concerned. The application of ‘public policy of India’ doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award.

29. We accordingly hold that enforcement of foreign award would be refused under Section 48(2)(b) only if such enforcement would be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The wider meaning given to the expression “public policy of India” occurring in Section 34(2)(b)(ii) in Saw Pipes [ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705] is not applicable where objection is raised to the enforcement of the foreign award under Section 48(2)(b).

45. Moreover, Section 48 of the 1996 Act does not give an opportunity to have a 'second look' at the foreign award in the award-enforcement stage. The scope of inquiry Under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy.

47. While considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award nor does it enquire as to whether, while rendering foreign award, some error has been committed. Under Section 48(2)(b) the enforcement of a foreign award can be refused only if such enforcement is found to be contrary to:

There is nothing to indicate that the expression "public policy" in Article V(2)(b) of the New York Convention and Section 7(1)(b)(ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article 1(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention Act of 1937. This would mean that "public policy" in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract to bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles of private international law, the expression "public policy" in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied in the field of private international law. Applying the said criteria it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or

(ii) the interests of India; or (iii) justice or morality.” (emphasis supplied) The enforceability of the foreign award will be decided in accordance with the parameters laid down in Renusagar i.e. whether the award is contrary to the (i) fundamental policy of Indian law, or (ii) interests of India, or (iii) justice or morality.

(iv) The Counsel for the Respondents submitted that it was the amended Section 48, which would be applicable to the present case; or alternately, that the amendments effected by the 2016 Amendment Act would have retrospective effect.

1994 Supp (1) SCC 644.

(v) We will now briefly touch upon the amendments made to Section 48, and consider the issue whether the amendments have retrospective application, and are applicable to the present case.

Section 48 was amended by Act 3 of 2016, which came into force w.e.f. 23.10.2015. These amendments were incorporated on the basis of the 246th Report of the Law Commission. The relevant extracts from the 246th Report with respect to the amendments in Section 48 are set out hereunder :

Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,—

(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or

(ii) it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

2016 Amendment Act. We find that these are substantive amendments, which have been incorporated to make the definition of “public policy” narrow by statute. It is relevant to note that the 2016 Amendment has dropped the clause “interests of India,” which was expounded by the Renusagar judgment.

The newly inserted Explanation 2 provides that the examination of whether the enforcement of the award is in conflict with the fundamental policy of Indian law, shall not entail a review on the merits of the dispute.

(ix) The two Explanations in Section 48 begin with the words “For the avoidance of any doubt.” It cannot, however, be presumed to be clarificatory and retrospective, since the substituted Explanation 1 has introduced new sub-clauses, which have brought about a material and substantive change in the section. A new Explanation 2 has been inserted which states that the test as to whether there is a contravention with the fundamental policy of Indian law, shall not entail a review on the merits of the dispute. Since the amendments have introduced specific criteria for the first time, it must be considered to be prospective, irrespective of the usage of the phrase “for the removal of doubts.” Reliance is placed on the judgment of this Court in Sedco Forex International Drill v Commissioner of Income Tax, Dehradun51 wherein it was held that an Explanation if it changes the law, it cannot be presumed to be retrospective, irrespective of the fact that the phrases used are “it is declared” or “for the removal of doubts”. In Ssangyong Engineering & Construction Co. Ltd. v NHAI,52 this Court was considering the amendments made to Section 34, wherein two Explanations to Section 34 had been inserted, which are identically worded with the two Explanations to Section 48. In that case, a similar ground of retrospectivity had been urged. This Court held that since the Explanations had been introduced for the first time, it is the substance of the amendment which has to be looked at, rather than the form. Even in cases where “for avoidance of doubt”, something is clarified by way of an amendment, such 51 (2005) 12 SCC 717.

(2019) 15 SCC 131.

clarification cannot have retrospective effect, if the earlier law has been changed substantially.

(x) Section 26 of the 2016 Amendment Act provided that :

(xiii) In Hindustan Construction Co. Ltd v. Union of India & Ors. , 54 the Supreme Court struck down Section 87 of the 2019 Amendment Act, and restored Section 26 of the 2016 Amendment Act to the statute book. It was held in paragraph 54 that :

Applying the unamended Section 48 to the present case, this Court in the Renusagar judgment had placed reliance on the enunciation of the law on international public policy in the judgment of the U.S. Court of Appeals for the 2nd Circuit in Parsons & Whittemore Overseas Co. Inc. v. Societe Generale De L’industrie du Papier (RAKTA),55 wherein it was held that :

8. Perhaps more probative, however, are the inferences to be drawn from the history of the Convention as a whole. The general pro-enforcement bias informing the Convention and explaining its supersession of the Geneva Convention points toward a narrow reading of the public policy defense. An expansive construction of this defense would vitiate the Convention’s basic effort to remove preexisting obstacles to enforcement. [See Straus, Arbitration of Disputes between Multinational Corporations, in New Strategies for Peaceful Resolution of International Business Disputes 114-15 (1971); Digest of Proceedings of International Business 55 508 F. 2d 969 (2nd Cir 1974).

Disputes Conference, April 14, 1971, at 191 (remarks of Professor W. Reese)]. Additionally, considerations of reciprocity – considerations given express recognition in the Convention itself – counsel courts to invoke the public policy defense with caution lest foreign courts frequently accept it as a defense to enforcement of arbitral awards rendered in the United States.

9. We conclude, therefore, that the Convention’s public policy defense should be construed narrowly. Enforcement of foreign arbitral awards may be denied on this basis only where enforcement would violate the forum state’s most basic notions of morality and justice.

xxx …To read the public policy defence as a parochial device protective of national political interests would seriously undermine the Convention’s utility. This provision is not meant to enshrine the vagaries of international politics under the rubric of “public policy. Rather, a circumscribe public policy doctrine was contemplated by the Convention’s framers and every indication is that the United States, in acceding to the Convention, meant to subscribe to this supranational emphasis. Cf. Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct.2449. 41L.Ed. 2d 270, 42 U.S.L.W., 4911, 4915-16 n. 15(1974)” (emphasis supplied) The judgment in Parsons has been followed in various other jurisdictions.56 In International Navigation Ltd. v Waterside Ocean Navigation Co. Inc.,57 the Court of Appeals, Second Circuit, U.S.A. held that the public policy defence must be interpreted in light of the overriding object of the New York Convention. The Court applied the judgment in Parsons (supra), and held that the public policy defence should apply only where enforcement of the award would violate the basic notions of morality and justice of the forum state. Any interference by the national court in international arbitration on this ground should be minimal, and public policy under the New York Convention should be interpreted narrowly. This position was followed in the Southern District of New York in Telenor Mobile Communications 56 See, e.g., BCB Holdings Limited and The Belize Bank Limited v The Attorney General of Belize, Caribbean Court of Justice, Appellate Jurisdiction, 26 July 2013, [2013] CCJ 5 (AJ); Traxys Europe S.A. v Balaji Coke Industry Pvt Ltd., Federal Court, Australia, 23 March 2012, [2012] FCA 276; Uganda Telecom Ltd. v. Hi-Tech Telecom Pty Ltd., Federal Court, Australia, 22 February 2011, [2011] FCA 131; Petrotesting Colombia S.A. & Southeast Investment Corporation v. Ross Energy S.A., Supreme Court of Justice, Colombia, 27 July 2011; Hebei Import & Export Corp. v. Polytek Engineering Co. Ltd., Court of Final Appeal, Hong Kong, 9 February 1999, [1999] 2 HKC 205; Renusagar Power Co. Ltd. v. General Electric Company & Anr. , Supreme Court, India, 7 October 1993, 1994 AIR 860; Brostrom Tankers AB v. Factorias Vulcano S.A., High Court, Dublin, Ireland, 19 May 2004, XXX Y.B. Com. Arb. 591 (2005).

737 F.2d 150 (Second Circuit, 1984).

v Storm LLC.58 It was opined that to refuse enforcement on the ground of public policy, the decision would have to directly contradict the foreign law in such a manner, so as to make compliance with one a violation of the other. (xvi) Albert van den Berg in his commentary on “The New York Arbitration 59 Convention, 1958: Towards a Uniform Judicial Interpretation” opines that the scope of jurisdiction of the enforcement court is :

Clause 1 (a) of the General recommendations of the ILA provides that the finality of awards in international commercial arbitration should be respected, save in exceptional circumstances, and that such exceptional circumstances are found if recognition or enforcement of the international arbitral award would be contrary to international public policy.

Clause 1(d) of the Recommendations state that the expression “international public policy” is used to designate the body of principles and rules, which are : (i) fundamental principles, pertaining to justice or morality, that the State wishes to protect even when it is not directly concerned, (ii) rules designed to serve the essential political, social or economic interests of the State, these being 58 524 F.Supp. 2d 332 (SDNY 2007).

The New York Convention of 1958, Kluwer, 1981, pp. 267-268, cited in Redfern and Hunter, Law and Practice of International Commercial Arbitration, fifth edn., 2009, p. 639, para 11.60.

known as “lois de police” or “public policy rules” and (iii) the duty of the State to respect its obligations towards other States or international organisations. Clause 3(a) states that the violation of a mere mandatory rule (i.e. a rule that is mandatory, but does not form part of the State’s international public policy), should not bar its recognition and enforcement, even when said rule forms part of the law of the forum, the law governing the contract, the law of the place of performance of the contract, or the law of the seat of the arbitration.

(xviii) The International Council for Commercial Arbitration (ICCA) Guide to the Interpretation of the 1958 New York Convention : A Handbook for Judges (2011), states that while considering the grounds for refusal of a foreign award, the Court must be guided by the following principles (i) no review on merits; (ii) narrow interpretation of the grounds for refusal; and (iii) limited discretionary power.

The merits of the arbitral award are not open to review by the enforcement court, which lies within the domain of the seat courts. Accordingly, errors of judgment, are not a sufficient ground for refusing enforcement of a foreign award. (xix) Given the well-settled position in law with respect to the finality of awards in international commercial arbitrations, and the limits of judicial intervention on the grounds of public policy of the enforcement State, we will advert to the facts of the present case.

The Appellants have contended that the award may not be enforced, since it is contrary to the basic notions of justice. We are unable to accept this submission for the following reasons :

In the seminal judgment of Parsons (supra), which has been followed in various jurisdictions, including by the Indian Supreme Court in the Renusagar case, it was held that enforcement may be refused only if it violates the enforcement State’s most basic notions of morality and justice, which has been interpreted to mean that there should be great hesitation in refusing enforcement, unless it is obtained through “corruption or fraud, or undue means.” The Singapore Court of Appeal in PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA,60 while interpreting international public policy, opined that :

The tribunal relied upon the evidence of the Expert Witness produced by the Claimants who deposed that the enlarged reservoir known as Block A/D showed a range of physical characteristics, which were “materially different” from those of the Fault Blocks defined in Article 11.1 of the PSC, on which the Ravva Development Plan was based. Since there was a material change in the physical reservoir characteristics of the existing reserves, Article 15.5

(e)(iii)(dd) would get triggered, which would enable the Claimants to request for an increase in the capped figure of Base Development Costs under Article 15.5(e)(iii)(dd).

The tribunal noted that the PSC was entered into for a period of 25 years and the parties envisaged the possibility that the Respondents may incur Development Costs greater than those anticipated when the Ravva Development Plan and the PSC were executed. Article 15.5(d) and (e) were events where the capped figure under Article 15.5 (c) could be increased by the Management Committee.

The tribunal held that the cap on Base Development Costs under Article 15.5(c) was to be read with reference to the object of the Plan to achieve the production profile of 35,000 BOPD. The production profile of 35,000 BOPD was achieved on the drilling of 14 wells by about 31st March 1999. The reference to 21 wells under Article 15.5(c)(xi) was interpreted as being an estimate of the number of wells contemplated by the parties in 1993, which would be required to achieve the object of achieving the production profile of 35,000 BOPD. It could not be construed to be an undertaking by the Claimants 67 to drill 21 wells, even though the targeted production profile of 35,000 BOPD had been achieved by the drilling of 14 wells.

The remaining 7 wells were drilled subsequently, not for the purposes of the Ravva Development Plan, but to take into account the changed physical characteristics of the existing reserves which were encountered. The costs of US $ 278 million was incurred by the Respondents as a result of events which fell within Article 15.5(e)(iii)(dd).

In 1998-1999 when the complete extent of the reserves in the Ravva Field was known, the Management Committee, approved an increase in the production profile from 35,000 BOPD to 50,000 BOPD on 25 March 1998. The Respondents proceeded to develop the Ravva Field to enable a production rate of 50,000 BOPD, and drilled 7 wells. The Respondents incurred costs of $ 278,871,668 million towards the drilling of the 7 wells.

(d) The Appellants herein filed a counter claim, seeking sums equivalent to the amount which the Respondents had claimed as Cost Petroleum, in excess of the agreed figure of US $ 198 million limit.

On the interpretation of Article 15.5(c) of the PSC, and the circumstances in which the PSC and the Ravva Development Plan, were executed, the tribunal held that the Respondents were entitled to costs of US $ 278 million, in excess of the US $ 198 million. The counter claim of the Appellants to the extent of US $ 22 million was allowed by the tribunal.

(e) The Appellants are aggrieved by the interpretation taken by the tribunal with respect to Article 15.5 (c) of the PSC and its other sub-clauses. The interpretation of the terms of the PSC lies within the domain of the tribunal. It is not open for the Appellants to impeach the award on merits before the enforcement court. The enforcement court cannot re-assess or re-appreciate the evidence led in the arbitration. Section 48 does not provide a de facto appeal on the merits of the award. The enforcement court exercising jurisdiction under Section 48, cannot refuse enforcement by taking a different interpretation of the terms of the contract.

(f) We feel that the interpretation taken by the tribunal is a plausible view, and the challenge on this ground cannot be sustained, to refuse enforcement of the Award.

(g) With respect to the submission made on behalf of the Appellants that the Production Sharing Contracts are “special contracts” pertaining to the exploration of natural resources, which concerns the public policy of India, we are of the view that the disputes raised by the Claimants emanate from the rights and obligations of the parties under the PSC. The Award is not contrary to the fundamental policy of Indian law, or in conflict with the notions of justice, as discussed hereinabove. The term of the PSC was for a period of 25 years from 28.10.1994, which ended on 27.10.2019. We have been informed that the term of the PSC has since been extended for a further period of 10 years, through the mutual agreement between the parties. This itself would reflect that the performance of the obligations under the PSC were not contrary to the interests of India.

(xx) We conclude that the enforcement of the foreign award does not contravene the public policy of India, or that it is contrary to the basic notions of justice.

We affirm the judgment of the Delhi High Court dated 19.02.2020 passed in I.A. No. 3558 / 2015 rejecting the Application filed under Section 48 of the 1996 Act, and confirm the order of enforcement passed on the petition under Sections 47 read with 49 for enforcement of the award, even though for different reasons.

The interim Orders of status quo dated 17.06.2020 and 22.07.2020 passed by this Court stand vacated. The Award dated 18.01.2011 passed by the tribunal is held to be enforceable in accordance with the provisions of Sections 47 and 49 of the Arbitration & Conciliation Act, 1996.

(xxi) Before we part with this judgment, we record our sincere appreciation of the assistance rendered by the Ld. Amicus Curiae, Shri Gourab Banerji, Senior Advocate at short notice.

We also record our appreciation of the valuable assistance provided by the Ld. Attorney General for India, Shri K.K. Venugopal and Mr. Tushar Mehta, Solicitor General of India, Senior Advocates, who represented the Appellants, and 69 Mr. C.A. Sundaram and Mr. Akhil Sibal, Senior Advocates, who appeared on behalf of the Respondents, and assisted us through oral and written submissions. (xxii) The Civil Appeal is accordingly dismissed, with no order as to costs.

All pending applications are accordingly disposed of. Ordered accordingly.