Posted: 02/08/2013
The Supreme Court of India, in the recent decision of Shri Lal Mahal Ltd v Progetto Grano Spa, has overruled its earlier decision in Phulchand Exports Limited v OOO Patriot and declined to consider the merits of a foreign arbitral award in an enforcement proceeding. The judgment in Shri Lal Mahal represents another significant pro-arbitration step by the Indian Supreme Court. It has affirmed that while considering the enforceability of foreign awards, it does not exercise appellate jurisdiction - nor does it enquire as to whether, while rendering foreign awards, any errors have been committed. The court has followed the decision in Renusagar Power Plant Co Ltd v General Electric and held that enforcement can only be opposed on grounds of public policy where it is contrary to:
In particular, the court has expressly declined to allow a challenge on the grounds of ‘patent illegality’. Since the challenge in this case required reevaluation of the merits of the case and reconsideration of the facts, the court refused to entertain the challenge and allowed enforcement. The decision represents a long awaited change, especially for those seeking to enforce foreign seated arbitral awards in India. The overruling of Phulchand meaningfully reduces the ability of Indian courts to accept requests to inhibit foreign awards and prevents a reexamination of the case in enforcement proceedings. This more constrictive approach to the public policy grounds for resisting enforcement is more in tune with a developing international trend.
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