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Eitzen Bulk A/S v. Ashapura Minechem Limited

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 5131-5133 of 2016)Decided 13 May 2016
Civil Appeal Nos. 5131-5133 of 2016
Justice F.M. Ibrahim Kalifulla · Justice S.A. Bobde

Background

Eitzen Bulk, a Danish shipping company, and Ashapura Minechem, an Indian mining company, had a shipping contract with a London arbitration clause specifying English law. After Ashapura lost a large arbitration award (over USD 36 million) in London, it tried to block enforcement and separately challenge the award in Indian courts, leading to conflicting rulings: the Gujarat High Court held Indian courts did have jurisdiction to entertain Ashapura's challenge to the foreign award, while the Bombay High Court held the opposite and allowed enforcement of the award. A connected set of appeals involved a similar dispute between Ashapura and another shipping company, Armada (Singapore).

Decision Breakdown

The core legal question was whether "Part I" of India's Arbitration and Conciliation Act, 1996, which allows a domestic court to interfere with and set aside an award, applies to a foreign award where the parties chose London as the seat of arbitration and English law to govern it. The Supreme Court held that by choosing London as the seat and expressly agreeing that English law would apply, the parties had, by necessary implication, excluded Part I of the Indian Act entirely; this meant Indian courts had no jurisdiction to decide objections to the award under Section 34, and any challenge had to proceed under English arbitration law instead. Applying this, the Court held the Gujarat High Court was wrong to entertain Ashapura's challenge, upheld the Bombay High Court's decision enforcing the award, allowed Eitzen's appeals, dismissed Ashapura's appeals, and rejected Ashapura's related special leave petitions against Armada (Singapore).

Lesson Learnt

When a contract fixes a foreign city as the "seat" of arbitration and specifies a foreign governing law, Indian courts generally will not have the power to set aside the resulting award: a losing party cannot use Indian courts to relitigate or delay enforcement of an award it agreed, by contract, to subject to a foreign legal system.

Official source (sci.gov.in)View Judgment (PDF)

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