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M/S Shriram EPC Limited v. Rioglass Solar SA

Civil Appeal · 2018 INSC 816Decided 13 Sept 2018
Civil Appeal No. 9515 of 2018
Justice Rohinton Fali Nariman · Justice Indu Malhotra

Background

Rioglass Solar SA obtained an ICC arbitral award in London against Shriram EPC Limited for breach of a supply agreement, directing Shriram to pay over €4.3 million in damages and interest. When Rioglass sought to enforce this foreign award in the Madras High Court, Shriram objected that the award could not be enforced because it had not been stamped under the Indian Stamp Act, 1899. A single judge of the Madras High Court rejected this objection and allowed enforcement, and an appeal to the Division Bench was held not maintainable, leading Shriram to approach the Supreme Court.

Decision Breakdown

The Supreme Court traced the history of arbitration and stamp legislation in India from 1899 onward and held that the term "award" in Item 12 of Schedule I of the Indian Stamp Act, 1899 has always meant only a domestic award made within British India/India, and never included foreign awards, since the Act's definition was never amended to bring in foreign awards even after the 1937, 1961 and 1996 arbitration enactments. As a fiscal statute, any ambiguity had to be resolved in favour of the party liable to pay the duty. The Court therefore held that a foreign award is not liable to Indian stamp duty at all, rejected arguments based on the New York Convention's "no more onerous conditions" clause (since that clause only applies if stamp duty is leviable in the first place) and on the Law Commission's 194th Report, and dismissed Shriram's appeal, upholding enforcement of the foreign award.

Lesson Learnt

A foreign arbitral award being enforced in India cannot be resisted on the ground that it lacks an Indian stamp: Indian stamp duty law has never covered foreign awards, so this is not a valid defence to enforcement.

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

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