Centrotrade Minerals and Metals Inc. Versus Hindustan Copper Limited

Court / Forum : Supreme Court of India
Citation : 2020 SCC OnLine SC 479
Coram : Justice R.F. Nariman, Justice S. Ravindra Bhatt and Justice V. Ramasubramanian
Subject : Section 48(1)(b) of the Arbitration and Conciliation Act, 1996
Date of Decision : June 2, 2020

Brief Facts

• The Appellant is a U.S. Corporation who had entered into a contract for sale of 15,500 DMT of copper concentrate with the Respondent.
• Dispute arose between the parties with regard to the quantity of dry weight of copper concentrate that was delivered.
• The agreement between the parties, provided a two-tier arbitration, wherein the first was to be held in India and thereafter, either party would have a right to appeal to a second arbitration to be held at London, in accordance with the Rules of Conciliation and Arbitration of the International Chambers of Commerce (‘ICC”).
• The Appellant invoked arbitration, pursuant to which a nil award was made. Following which the Appellant initiated the second arbitration, wherein the Respondent did not appear despite being provided multiple opportunities.
• The arbitral award provided by the second arbitration, directed the Respondent to pay damages to the Appellant.
• Following which the award was challenged before various courts of India, before coming up for consideration in the present matter.

Issues

1. Whether a settlement of disputes or differences through a two-tier arbitration procedure is permissible under the laws of India?
2. Assuming that a two-tier arbitration procedure is permissible under the laws of India, whether the award rendered in the appellate arbitration being a “foreign award” is liable to be enforced under the provisions of Section 48 of the Arbitration and Conciliation Act, 1996?

Decision

• The first issue was decided by a sperate bench of the Hon’ble Supreme Court in the present civil appeal 1 , wherein it was held that a two-tier arbitration process was permissible under the Indian laws.

  “The fact that recourse to a court is available to a party for challenging an award does not ipso facto prohibit the parties from mutually agreeing to a second look at an award with the intention of an early settlement of disputes and differences. The intention of Section 34 of the A&C Act and of the international arbitration community is to avoid subjecting a party to an arbitration agreement to challenges to an award in multiple forums, say by way of proceedings in a civil court as well under the arbitration statute. The intention is not to throttle the autonomy of the parties or preclude them from adopting any other acceptable method of redressal such as an appellate arbitration.”

• With respect to the second issue, the Hon’ble Supreme Court held that the award passed by the second arbitration was enforceable under the Indian laws, since the challenge by the Respondent under section 48(1)(b) of the Arbitration and Conciliation Act, 1996, was not tenable. It was held that the Ld. Arbitrator, was extremely fair by providing several opportunities to the Respondent to appear and submit its response and evidence thereof, however the Respondent wanted to stall the arbitral proceedings. Therefore, there was no fault in the conduct of the arbitral proceedings.
• Accordingly, the Hon’ble Supreme Court, directed that the arbitral award be enforced.