VIJAY KARIA & ORS. v. PRYSMIAN CAVI E SISTEMI SRL & ORS.

A (d)failure by the tribunal to deal with all the issues that were put to it;” It was in this context that the Court held: “Has the Board dealt with all essential issues? GAFTA findings are habitually brief. Many would regard that as a virtue. It is certainly not an irregularity. Nor is it incumbent on arbitrators to deal with every argument on every point raised. But an award should deal, however concisely, with all essential issues. One of the heads of serious irregularity recognised in section 68(2)(d) is “Failure by the tribunal to deal with all the issues that were put to it”. The central point raised by Ascot on its appeal was that if the bills of lading were pledged as security, as appears on the face of the October 1998 contract, Olam’s loss was not to be approached in the same way as if they were beneficial owners of the cargo. The point has, with respect, not been addressed…Since the whole process of arbitration is intended as a way of determining points at issue, it is more likely to be a matter of serious irregularity if on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding is ambiguous, or an important issue is not addressed, than if the complaints go simply to procedural matters. E Mr Young submitted that Ascot’s real complaint is that its arguments were not accepted and that this cannot be an irregularity. He noted that there has been no application for permission to appeal. He also submitted that if the terseness of the Board’s findings made it legitimate for Ascot to have requested further reasons, they could have asked for them but have not done so. F On a fair reading of the award it seems to me that this is not case in which the tribunal has directed itself to, and rejected, the central issue argued by Ascot but has, in truth, missed it…But if an award, as delivered, fails to contain a finding on a central issue, it would be odd to ask for reasons for something which is not there.” G

69Copy pinpoint69. Likewise, in Zebra Industries v. Wah Tong Paper Products Group Ltd. (2012) HKCU 1308, the Hong Kong Statute, namely, Section 23(2) of Old Arbitration Ordinance (Cap 391), enabled an award to be set aside on the ground of error of law. In this context, it was held:

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“44. In light of Zebra’s above submissions, the question of law that arises is whether the arbitrator was wrong in law in failing to take into account of the Venture Capital Clauses in determining Zebra’s claim for damages. xxx xxx xxx

47. In my view, properly looked at, a claim on damages for breach of the Agreement based on and by reference to the Venture Capital Clauses had been put forward by Zebra in the SD. xxx xxx xxx

49. In the circumstances, I think the arbitrator has also committed an error of law in failing to consider and address this part of Zebra’s claim for consequential damages, if any, for the loss of chance in securing a venture capital fund investment and the listing of the company.

50. I would therefore also remit this part of the Award to the arbitrator for his reconsideration. These issues for reconsideration are closely tied with the assessment of the relevant parts of the evidence on the alleged loss of chance, if any, and should best be dealt with by the arbitrator. In doing so, the arbitrator should take into account of the Venture Capital Clauses to consider and decide this part of Zebra’s claim for consequential damages as mentioned in paragraph 42 above.”

70Copy pinpoint70. In A v. B (2015) 3 HKLRD 586, the Court held: “33. It is fundamental to concepts of fairness, due process and justice, as recognized in Hong Kong, that key and material issues raised for determination, either by a court or the arbitral tribunal, should be considered and dealt with fairly. An award should be reasoned, to the extent of being reasonably sufficient and understandable by the parties (ie within the confines set out in R v F [2012] 5 HKLRD 278). Under Article 33(2) of the Model Law, the award should state the reasons upon which it is based. Having G carefully considered the Award, I have to agree that the parties are entitled to query whether the Limitation Defence had been considered at all by the Arbitrator, and if rejected by the Arbitrator after due consideration, why it was rejected. The process of arbitration is intended as a way of determining disputes and points H

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A at issue, and I agree with the sentiments expressed by the court in Ascot Commodities NV v Olam International Ltd [2002] CLC 277 and in Van der Giessen-de Noord Shipbuilding Division BV v Imtech Marine and Off shore BV [2009] 1 Lloyd’s Rep 273 that it is a serious irregularity and a denial of due process which causes substantial injustice and unfairness to the parties, if B an important issue, which the parties are entitled to expect to be addressed, is not in fact addressed.

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“Article 34. Application for setting aside as exclusive A recourse against arbitral award

2. An arbitral award may be set aside by the court specified in article 6 only if: (b) the court finds that: B (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or (ii) the award is in conflict with the public policy of this State.”

71Copy pinpoint71. Shri Dewan strongly relied upon judgments from Singapore in support of the proposition that non-consideration of material issues would amount to a breach of natural justice and, therefore, would fit within the ground mentioned in Section 48(1)(b). In Front Row Investment Holdings v. Daimler South East Asia (2010) SGHC 80, the Singapore High Court decided whether there was a breach of natural justice in connection with the making of the award by which the rights of any party has been prejudiced under Section 48(1)(a)(vii) of the Arbitration Act, 2002 (Singapore). It referred to breach of natural justice if an award was set aside on a basis not raised or contemplated by the parties since the affected party would have been deprived of its opportunity to be heard. It then held that the corollary of this would be that an arbitral tribunal will be in the breach of natural justice if in the course of reaching its decision it disregarded the submissions and arguments made by the parties on the issues without considering the merits thereof. For this, it relied upon three Australian cases and an earlier judgment which considered these three cases. The Court then concluded: “53. As I have concluded earlier, an arbitrator’s failure to consider material arguments or submissions is a breach of natural justice. In the present case, the Arbitrator had dismissed Front Row’s counterclaim without considering the grounds of its counterclaim in full because he was under the misapprehension that Front Row had abandoned its reliance on the Representation. Had he not been mistaken, he would have had to decide whether or not the Representation was false. A decision that there had been a misrepresentation in regard thereto would have resulted in an award in favour of Front Row, assuming the other ingredients for a successful claim (viz, “reliance” and “detriment”) were satisfied. H

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A It was not for me to delve further into the question whether Front Row’s reliance upon the Representation would have succeeded but for the arbitrator’s misrepresentation. It sufficed that the Arbitrator failed to consider such a material ground. That alone was sufficient prejudice to Front Row.

B 54. In the result, I allowed Front Row’s application and ordered that the part of the Award dealing with Front Row’s counterclaim and with costs of the Arbitration be set aside as a whole. I further ordered that the part of the Award so set aside be tried afresh by a newly appointed arbitrator. Finally, I also ordered that the costs of and incidental to Front Row’s application be paid by Daimler to C Front Row.”

72Copy pinpoint72. In TMM Division Maritime SA v. Pacific Richfield Marine Pte Ltd. (2013) SGHC 186, the Singapore High Court referred to Section 24(b) of the International Arbitration Act (Singapore), which requires an award to be set aside if the rules of natural justice are breached. In arriving at its conclusion under the caption “General Principles of Curial Scrutiny”, the Court held “However, it does not follow, and neither do I accept, that this process always entails sifting through the entire record of the arbitral proceedings with a fine-tooth comb.” (See paragraph 42). The Court also held, “the Court should not nit-pick at the award. Infelicities are to be expected and are generally irrelevant to the merits of any challenges” (See paragraph 45). The Court went on to hold that the high standard of cogent reasons required by the judiciary should not be applied to arbitration awards (See paragraph 102). The Court then outlined what standards could be applied to arbitral awards as follows: F “103. The Singapore Court of Appeal’s decision in Thong Ah Fat v Public Prosecutor [2012] 1 SLR 676 (“Thong Ah Fat”) which sets out the scope and content of the court’s duty to give reasons offers, in my view, an instructive parallel. I note in passing that Professor Jeffrey Waincymer suggests that it is unhelpful to G define the content of arbitrators’ duty to give reasons by reference to judicial standards: Waincymer at para 16.9.³. In support of his view, he referred to the High Court of Australia decision of Westport Insurance Corporation & Ors v Gordian Runoff Limited [2011] HCA 37 where Kiefel J stated (at [168]–[169]) H that there is nothing in the relevant Australian legislation, the

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Commercial Arbitration Act 1984, which stipulates that the standard for giving reasons in arbitration should be the same as the judicial standard. The same is true of the IAA but as the court in Thong Ah Fat held (at [19]), the general duty of a judicial body to explain its decision is ineluctably “a function of due process, and therefore of justice”. While there are structural differences between a court and an arbitral tribunal, it cannot be gainsaid that arbitrations are subject to the same ideals of due process and justice. It bears mentioning that Kiefel J concluded that the requirement to give a reasoned award cannot be devoid of content and for that reason, he was content to adopt Donaldson LJ’s statement in Bremer (see [101] above). C

104. Therefore, in my view, the standards applicable to judges are assistive indicia to arbitrators. While the rules of natural justice must be applied rigorously in arbitrations as they are in court litigation, the practical realities of the arbitral ecosystem such as promptness and price are also important (see Soh Beng Tee at D [63]). On this note, the following are clear from Thong Ah Fat: (a) The standard of explanation required in every case must correspond to the requirements of the case. Costs and delays are relevant factors to consider when determining the extent to which reasons and explanations are to be set out in detail: at [29]–[30]. E (b) In “very clear cases” with specific and straightforward factual or legal issues, the court may even dispense with reasons. Its conclusion will be sufficient because the reasons behind the conclusion are a matter of necessary inference: at [32]. (c) Decisions or findings which do not bear directly on the substance of the dispute or affect the final resolution of the parties’ rights may not require detailed reasoning. As a rule of thumb, the more profound the consequences of a specific decision, the greater the necessity for detailed reasoning: at [33]. (d) There should be a summary of all the key relevant evidence but not all the detailed evidence needs to be referred to: at [34]. (e) The parties’ opposing stance and the judge’s findings of fact on the material issues should be set out. However, the judge does not have to make an explicit ruling on each and every factual issue: at [35]–[36]. H

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A (f) The decision should demonstrate an examination of the relevant evidence and the facts found with a view to explaining the final outcome on each material issue: at [36].”

73Copy pinpoint73. In AKN & Anr. v. ALC & Ors. (2015) SGCA 18, the Singapore High Court, again in considering the natural justice requirement contained in Section 24(b) of the International Arbitration Act (Singapore), held as follows: “38. In particular, there is no right of appeal from arbitral awards. That is not to say that the courts can never intervene. However, the grounds for curial intervention are narrowly circumscribed, and generally concern process failures that are unfair and prejudice the parties or instances where the arbitral tribunal has made a decision that is beyond the scope of the arbitration agreement. It follows that, from the courts’ perspective, the parties to an arbitration do not have a right to a “correct” decision from the arbitral tribunal that can be vindicated by the courts. Instead, they only have a right to a decision that is within the ambit of their consent to have their dispute arbitrated, and that is arrived at following a fair process.” (emphasis supplied)

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consider an important pleaded issue – if it is to be drawn at all, must be shown to be clear and virtually inescapable. If the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary (notwithstanding that this view may have been formed based on a misunderstanding of the aggrieved party’s case), then the inference that the arbitrator did not apply his mind at all to the dispute before him (or to an important aspect of that dispute) and so acted in breach of natural justice should not be drawn.

47. Front Row was recently considered in AQU v AQV [2015] C SGHC 26 (“AQU”), where the High Court judge distilled the very principles which we have just enunciated above (see AQU at [30]–[35]). The judge in AQU also considered the High Court decision of TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (“TMM”), and reiterated the proposition that no party to an arbitration had a right to expect the arbitral tribunal to accept its arguments, regardless of how strong and credible it perceived those arguments to be (see AQU at [35], citing TMM at [94]). This principle is important because it points to an important distinction between, on the one hand, an arbitral tribunal’s decision to reject an argument (whether implicitly or otherwise, whether rightly or wrongly, and whether or not as a result of its failure to comprehend the argument and so to appreciate its merits), and, on the other hand, the arbitral tribunal’s failure to even consider that argument. Only the latter amounts to a breach of natural justice; the former is an error of law, not a breach of natural justice. xxx xxx xxx 59.With respect, poor reasoning on the part of an arbitral tribunal is not a ground to set aside an arbitral award; even a misunderstanding of the arguments put forward by a party is not such a ground. As noted by this court in BLC at [86], the court “is not required to carry out a hypercritical or excessively syntactical analysis of what the arbitrator has written” when considering whether an arbitral award should be set aside for breach of natural justice. Neither should it approach an arbitral award with a H

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A “meticulous legal eye endeavouring to pick holes, inconsistencies and faults … with the objective of upsetting or frustrating the process of arbitration” (likewise at [86] of BLC). Taking these considerations into account, we find no breach of natural justice as there is no basis for concluding that the Tribunal did not consider the Liquidator’s Primary Argument. Accordingly, we answer B Appeal Issue 1 affirmatively.” (emphasis supplied)

74Copy pinpoint74. In BAZ v. BBA & Ors. (2018) SGHC 275, again with reference to Section 24(b) of the International Arbitration Act (Singapore), C the Court approached the issue of natural justice as follows: “133. It is well established that to succeed in a claim under s.24(b) of the IAA, the claimant needs to establish the following four elements (see Soh Beng Tee at [29]; AKN v ALC 2015 at [48]): (a) which rule of natural justice was breached; (b) how it was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced its rights.

134. The failure to consider an important issue that has been pleaded in an arbitration is a breach of natural justice because in such a case, the arbitrator would not have brought his mind to bear on an important aspect of the dispute before him (AKN v ALC 2015 at [46]). It will usually be a matter of inference rather than of explicit indication that the arbitrator wholly missed one or more important pleaded issues. However, this inference must be shown to be “clear and virtually inescapable” (AKN v ALC 2015 at [46]). The Court of Appeal cautioned against arguments dressed up to appear as breaches of natural justice: if the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary, then the inference that the arbitrator did not apply his mind at all to the dispute before him or to an important aspect of that dispute and so acted in breach of natural justice should not be drawn. xxx xxx xxx

141. Although the Majority did not comment on the legal basis for the application of a discount rate, it does not mean that it did not

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consider the issue. A tribunal does not have to give responses on all submissions made (SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 at [60]). xxx xxx xxx

159. The legal area concerning the enforcement and setting aside of awards is governed by statute, namely the Arbitration Act (Cap B 10, 2002 Rev Ed) and the IAA. As such, the conceptual framework outlined in UKM can be helpful to navigate public policy considerations in arbitration, even though the subject matter of the public policies that can be raised under Art 34(2)(b)(ii) of the Model Law and Art V(2)(b) of the New York Convention may include both socio-economic policies and legal policies. When a challenge on the ground of public policy is brought, the outline draws attention to the importance of conducting a forensic exercise to identify whether the alleged public policy exists, and the criteria influencing the identification as explained in UKM are applicable. The balancing exercise in the context of arbitration is between the policy of enforcing arbitral awards – as encapsulated in s.19B(1) of the IAA which states that awards are “final and binding on the parties” and the judicial policy of minimal curial intervention – and the alleged public policy which the award purportedly violates. This balance is generally in favour of the policy of enforcing arbitral awards, and only tilts in favour of the countervailing public policy where the violation of that policy would “shock the conscience” or would be contrary to “the forum’s most basic notion of morality and justice”. In determining whether the balance tilts towards the countervailing public policy, it is important to consider both the subject nature of the public policy, the degree of violation of that public policy and the consequences of the violation.”

75Copy pinpoint75. In Campos Brothers Farms v. Matru Bhumi Supply Chain Pvt. Ltd. (2019) 261 DLT 201, the Delhi High Court had to consider the enforcement of a foreign award. The arbitrator in the aforesaid case did not give any finding on maintainability of the arbitration proceedings, which was argued before her. In this fact circumstance, the Delhi High Court held: “55. In any case, the respondent nos. 1 and 2 had also made submissions on merit before the Arbitrator. Though the learned H

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A counsel for the petitioner submitted that the same were rightly excluded from consideration by the Arbitrator as the Arbitrator had never sought for the same, the Award does not reflect any such reason given by the Arbitrator for excluding them from consideration. The Arbitrator does not record a finding that she has intentionally ignored such submissions as they were filed B belatedly or beyond what was permitted. In fact, as noted above, as per the Arbitrator no submission was filed by the respondents by 13.06.2016, which is factually incorrect.

56. In exercise of powers under Section 48 of the Act, this Court cannot consider the submissions made by the respondent nos. 1 C and 2 in their e-mail dated 13.06.2016 on merit as if it is a Court of Original Jurisdiction and find out whether such submission of the respondent nos. 1 and 2 had any merit or not. Once it is found that the Arbitrator has ignored the submissions of a party in totality, whatever be the merit of the submissions, in my opinion, such D Award cannot be enforced being in violation of the Principles of Natural Justice and contrary to the public policy of India as stated in sub-Section 2(b) read with Explanation 1(iii) of Section 48 of the Act. xxx xxx xxx

76Copy pinpoint76. It may be correct that the Arbitrator, upon considering evidence led before it by the parties, comes to a conclusion that in the given facts the transaction, though under different Contracts, is one or that the corporate veil deserves to be lifted, however, for arriving at such a finding the Arbitrator has to give reasons for the same. F This Court, in exercise of its power under Section 48 and 49 of the Act, cannot supplant such reasons by considering the claims and defence of the parties on merit. Whether the request of the respondent no. 1 to the petitioner to make shipments in the name of respondent no. 2 under Contracts that had been executed between the petitioner and respondent no. 1, would entitle the petitioner to file a consolidated statement of claim against respondent nos. 1 and 2 or not, was an issue to be determined by the Arbitrator and reasons for such determination were to be given in the Award. From a reading of the Award it seems that the Arbitrator was neither alive to the issue whether such claims against different Contracts can be consolidated as one, nor was

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she alive to the fact that joint and several liability cannot be fastened on respondent nos. 1 and 2 without lifting the corporate veil and giving reasons for the same. The Award in question clearly qualifies as a non speaking Award. xxx xxx xxx

81. In any case, as noted above, if the arbitrator had considered this issue giving reasons therefore, this Court may not have the power under Section 48 of the Act to test the validity of such reasons, however, the present is the case where the arbitrator has not only not given any reasons for her conclusion but infact, the Award indicates that the Arbitrator is not even alive to such an issue.” Thus, the ground on which the award was not enforced for failure to consider a material issue relating to maintainability of the arbitral proceedings was pigeon-holed not under Section 48(1)(b), but under the “public policy of India” ground, stating that such a thing would violate the most basic notion of justice.

76. Given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression “was otherwise unable to present his case” occurring in Section 48(1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties. Read along with the first part of Section 48(1)(b), it is clear that this expression would apply at the hearing stage and not after the award has been delivered, as has been held in Ssangyong (supra). A good working test for determining whether a party has been unable to present his case is to see whether factors outside the party’s control have combined to deny the party a fair hearing. Thus, where no opportunity was given to deal with an argument which goes to the root of the case or findings based on evidence which go behind the back of the party and which results in a denial of justice to the prejudice of the party; or additional or new evidence is taken which forms the basis of the award on which a party has been given no opportunity of rebuttal, would, on the acts of a given case, render a foreign award unenforceable on the ground that a party has been unable to present his case. H

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A This must, of course, be with the caveat that such breach be clearly made out on the facts of a given case, and that awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under Section 48.

77Copy pinpoint77. All the cases cited by Mr. Nakul Dewan are judgments based on the language of the particular statute reflected in each of them – for example, Section 68 of the Arbitration Act, 1996 (U.K), Section 23(2) of the Hong Kong Old Arbitration Ordinance (Cap 391), Section 24(b) of the International Arbitration Act (Singapore) and Section 48(1)(a)(vii) of the Arbitration Act, 2002 (Singapore), all of which are differently worded from Section 48(1)(b). Each of these statutes deal with a breach of natural justice which, as we have seen, is a wider expression than the expression “unable to present his case”. Thus, it is not possible to hold that failure to consider a material issue would fall within the rubric of Section 48(1)(b).

78Copy pinpoint78. Having said this, however, if a foreign award fails to determine D a material issue which goes to the root of the matter or fails to decide a claim or counter-claim in its entirety, the award may shock the conscience of the Court and may not be enforced as was done by the Delhi High Court in Campos (supra) on the ground of violation of the public policy of India, in that it would then offend a most basic notion of justice in this E country¹. It must always be remembered that poor reasoning, by which a material issue or claim is rejected, can never fall in this class of cases. Also, issues that the tribunal considered essential and has addressed must be given their due weight – it often happens that the tribunal considers a particular issue as essential and answers it, which by implication would mean that the other issue or issues raised have been implicitly rejected. For example, two parties may both allege that the 1 In Sssangyong (supra), this Court cautioned that this ground would only be attracted with the following caveat: “48. However, when it comes to the public policy of India argument based upon “most basic notions of justice”, it is clear that this ground can be attracted only in very exceptional circumstances when the conscience of the Court is shocked by infraction of fundamental notions or principles of justice… However, we repeat that this ground is available only in very exceptional circumstances, such as the fact situation in the present case. Under no circumstance can any Court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of H Section 34 of the 1996 Act, as has been noted earlier in this judgment.”

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other is in breach. A finding that one party is in breach, without expressly stating that the other party is not in breach, would amount to a decision on both a claim and a counter-claim, as to which party is in breach. Similarly, after hearing the parties, a certain sum may be awarded as damages and an issue as to interest may not be answered at all. This again may, on the facts of a given case, amount to an implied rejection of the claim for interest. The important point to be considered is that the foreign award must be read as a whole, fairly, and without nit-picking. If read as a whole, the said award has addressed the basic issues raised by the parties and has, in substance, decided the claims and counter-claims of the parties, enforcement must follow. Violation of FEMA Rules C

79Copy pinpoint79. It has been argued by the Appellants, based on the Non-Debt Instrument Rules, that a foreign award by which shares have to be purchased at a discounted value, would violate the aforesaid Rules, and therefore, would amount to a violation of the fundamental policy of Indian law. Resultantly, the Appellants contended that as a result of this, the D award in the present case would not be enforceable in India.

80Copy pinpoint80. The relevant provisions of the aforesaid rules are set out hereinbelow: “2. Definitions: E xxx xxx xxx (ac) “investment” means to subscribe, acquire, hold or transfer any security or unit issued by a person resident in India; Explanation:- F (i) Investment shall include to acquire, hold or transfer depository receipts issued outside India, the underlying of which is a security issued by a person resident in India; (ii) for the purpose of LLP, investment shall mean capital contribution or acquisition or transfer of profit shares; G xxx xxx xxx

3. Restriction on investment in India by a person resident outside India.- Save as otherwise provided in the Act or rules or regulations made thereunder, no person resident outside India shall make any investment in India : H

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A Provided that an investment made in accordance with the Act or the rules or the regulations made thereunder and held on the date of commencement of these rules shall be deemed to have been made under these rules and shall accordingly be governed by these rules: B Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons and in consultation with the Central Government, permit a person resident outside India to make any investment in India subject to such conditions as may be considered necessary. C xxx xxx xxx

9. Transfer of equity instruments of an Indian company by or to a person resident outside India.- A person resident outside India holding equity instruments of an Indian company or units in accordance with these rules or a person D resident in India, may transfer such equity instruments or units so held by him in compliance with the conditions, if any, specified in the Schedules of these rules and subject to the terms and conditions prescribed hereunder: (3) A person resident in India holding equity instruments of an E Indian company or units, may transfer the same to a person resident outside India by way of sale, subject to the adherence to entry routes, sectoral caps or investment limits, pricing guidelines and other attendant conditions as applicable for investment by a person resident outside India and documentation and reporting F requirements for such transfers as may be specified by the Reserve Bank in consultation with the Central Government from time to time; xxx xxx xxx

21. Pricing guidelines – G (1) The pricing guidelines specified in these rules shall not be applicable for any transfer by way of sale done in accordance with Securities and Exchange Board of India regulations where the pricing is specified by Securities and Exchange Board of India.

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(2) Unless otherwise prescribed in these rules, the price of equity A instruments of an Indian company, - xxx xxx xxx (b) transferred from a person resident in India to a person resident outside India shall not be less than,- B xxx xxx xxx (iii) the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a Merchant Banker registered with the Securities and Exchange C Board of India or a practising Cost Accountant, in case of an unlisted Indian company.”

81Copy pinpoint81. Based on the aforesaid Rules, the Appellants have argued that the transfer of shares from the Karias, who are persons resident in India, to the Respondent No.¹, who is a person resident outside India, D cannot be less than the valuation of such shares as done by a duly certified Chartered Accountant, Merchant Banker or Cost Accountant, and, as the sale of such shares at a discount of 10% would violate Rule 21(2)(b)(iii), the fundamental policy of Indian law contained in the aforesaid Rules would be breached; as a result of which the award cannot be enforced. E

82Copy pinpoint82. Before answering this question, it is important to first advert to the decision of the Delhi High Court in Cruz (supra). The learned Single Judge was faced with a similar problem of a foreign award violating the provisions of FEMA. In an exhaustive analysis, the learned Single Judge referred to Renusagar (supra) and then held: F “97.It plainly follows from the above that a contravention of a provision of law is insufficient to invoke the defence of public policy when it comes to enforcement of a foreign award. Contravention of any provision of an enactment is not synonymous to contravention of fundamental policy of Indian law. The expression fundamental Policy of Indian law refers to the principles G and the legislative policy on which Indian Statutes and laws are founded. The expression “fundamental policy” connotes the basic and substratal rationale, values and principles which form the bedrock of laws in our country. H

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A 98. It is necessary to bear in mind that a foreign award may be based on foreign law, which may be at variance with a corresponding Indian statute. And, if the expression “fundamental policy of Indian law” is considered as a reference to a provision of the Indian statue, as is sought to be contended on behalf of Unitech, the basic purpose of the New York Convention to enforce foreign awards would stand frustrated. One of the principal objective of the New York Convention is to ensure enforcement of awards notwithstanding that the awards are not rendered in conformity to the national laws. Thus, the objections to enforcement on the ground of public policy must be such that offend the core values of a member State’s national policy and which it cannot be expected to compromise. The expression “fundamental policy of law” must be interpreted in that perspective and must mean only the fundamental and substratal legislative policy and not a provision of any enactment. D xxx xxx xxx

102. Although, this contention appears attractive, however, fails to take into account that there has been a material change in the fundamental policy of exchange control as enacted under FERA and as now contemplated under FEMA. FERA was enacted at the time when the India’s economy was a closed economy and the accent was to conserve foreign exchange by effectively prohibiting transactions in foreign exchange unless permitted. As pointed out by the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd. (supra), the object of FERA was to ensure that the nation does not lose foreign exchange essential for economic survival of the nation. With the liberalization and opening of India’s economy it was felt that FERA must be repealed. FERA was enacted to replace the Foreign Exchange Regulation Act, 1947 which was originally enacted as a temporary measure. The Statement of Objects and Reasons of FERA indicate that FERA G was enacted as the RBI had suggested and Government had agreed on the need for regulating, among other matters, the entry of foreign capital in the form of branches and concerns with substantial non-resident interest in them, the employment of foreigners in India etc.

H xxx xxx xxx

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110. The contention that enforcement of the Award against A Unitech must be refused on the ground that it violates any one or the other provision of FEMA, cannot be accepted; but, any remittance of the money recovered from Unitech in enforcement of the Award would necessarily require compliance of regulatory provisions and/or permissions.” B

83Copy pinpoint83. This reasoning commends itself to us. First and foremost, FEMA - unlike FERA - refers to the nation’s policy of managing foreign exchange instead of policing foreign exchange, the policeman being the Reserve Bank of India under FERA. It is important to remember that Section 47 of FERA no longer exists in FEMA, so that transactions that violate FEMA cannot be held to be void. Also, if a particular act violates C any provision of FEMA or the Rules framed thereunder, permission of the Reserve Bank of India may be obtained post-facto if such violation can be condoned. Neither the award, nor the agreement being enforced by the award, can, therefore, be held to be of no effect in law. This being the case, a rectifiable breach under FEMA can never be held to be a D violation of the fundamental policy of Indian law. Even assuming that Rule 21 of the Non-Debt Instrument Rules requires that shares be sold by a resident of India to a non-resident at a sum which shall not be less than the market value of the shares, and a foreign award directs that such shares be sold at a sum less than the market value, the Reserve Bank of India may choose to step in and direct that the aforesaid shares E be sold only at the market value and not at the discounted value, or may choose to condone such breach. Further, even if the Reserve Bank of India were to take action under FEMA, the non-enforcement of a foreign award on the ground of violation of a FEMA Regulation or Rule would not arise as the award does not become void on that count. The F fundamental policy of Indian law, as has been held in Renusagar (supra), must amount to a breach of some legal principle or legislation which is so basic to Indian law that it is not susceptible of being compromised. “Fundamental Policy” refers to the core values of India’s public policy as a nation, which may find expression not only in statutes but also time- honoured, hallowed principles which are followed by the Courts. Judged G from this point of view, it is clear that resistance to the enforcement of a foreign award cannot be made on this ground.

84Copy pinpoint84. The Appellants, however, relied upon certain observations in Dropti Devi v. Union of India (2012) 7 SCC 499. In that case, a H

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A challenge was made to the constitutional validity of Section 3 of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as “COFEPOSA”), stating that by reason of the new legal regime articulated in FEMA, in replacement of FERA, the said provision has become unconstitutional in the changed situation. This submission was repelled by this Court stating: B “66. It is true that provisions of FERA and FEMA differ in some respects, particularly in respect of penalties. It is also true that FEMA does not have provision for prosecution and punishment like Section 56 of FERA and its enforcement for default is through civil imprisonment. However, insofar as conservation and/or augmentation of foreign exchange is concerned, the restrictions in FEMA continue to be as rigorous as they were in FERA. FEMA continues with the regime of rigorous control of foreign exchange and dealing in the foreign exchange is permitted only through authorised person. While its aim is to promote the orderly development and maintenance of foreign exchange markets in India, the Government’s control in matters of foreign exchange has not been diluted. The conservation and augmentation of foreign exchange continues to be as important as it was under FERA. The restrictions on the dealings in foreign exchange continue to be as rigorous in FEMA as they were in FERA and the control of the Government over foreign exchange continues to be as complete and full as it was in FERA.

67. The importance of foreign exchange in the development of a country needs no emphasis. FEMA regulates the foreign exchange. The conservation and augmentation of foreign exchange continue to be its important theme. Although contravention of its provisions is not regarded as a criminal offence, yet it is an illegal activity jeopardising the very economic fabric of the country. For violation of foreign exchange regulations, penalty can be levied and its non-compliance results in civil imprisonment of t he default er. The whole int ent and i de a behind Cofeposa is to prevent violation of foreign exchange regulations or smuggling activities which

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have serious and deleterious effect on national A economy.” It is important to note that this Court recognized that FEMA, unlike FERA, does not have any provision for prosecution and punishment like that contained in Section 56 of FERA. The observations as to conservation and/or augmentation of foreign exchange, so far as FEMA B is concerned, were made in the context of preventive detention of persons who violate foreign exchange regulations. The Court was careful to note that any illegal activity which jeopardises the economic fabric of the country, which includes smuggling activities relating to foreign exchange, are a serious menace to the nation and can be dealt with effectively, inter alia, through the mechanism of preventive detention. C From this to contend that any violation of any FEMA Rule would make such violation an illegal activity does not follow. In fact, even if the reasoning contained in this judgment is torn out of its specific context and applied to this case, there being no alleged smuggling activity which involves depletion of foreign exchange, as against foreign exchange D coming into the country as a result of sale of shares in an Indian company to a foreign company, it does not follow that such violation, even if proved, would breach the fundamental policy of Indian law. Challenge to Enforcement of the Foreign Award in this case on facts E

85Copy pinpoint85. Dr. Singhvi and Shri Dewan arguing for the Appellants have raised fourteen submissions, all of which fall under Section 48(1)(b) read with Explanation 1 (ii) and (iii) to Section 48(2)(b) of the Arbitration Act, taken either cumulatively as grounds of objection or separately, depending upon the nature of the ground argued. We now deal with each of these grounds seriatim. I. The Tribunal failed to deal with the Appellants’ counter- claim pertaining to the incorporation of Jaguar Communication Consultancy Services Private Limited.

86Copy pinpoint86. According to the Appellants, this ground of objection – i.e. the incorporation of Jaguar - was pleaded by them as a “concealed breach”, which became known to them only at a much later stage of the arbitral proceedings. Despite the tribunal specifically ruling in the First Partial Final Award that a non-defaulting party could rely on a “concealed breach” and treat the same as an unrectified event of default under clause 23.4 H

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A of the JVA, the submission made by the Appellant in this behalf was ignored in its entirety. This was countered by Respondent No.¹ by stating that there was no “concealed breach” at all, inasmuch as, as early as 05.10.2012, the Appellant had filed a request calling upon the Respondent to produce documents which included the list of clients, employees and disclosure of business activities of Jaguar. These documents were called for in order to buttress the case of the Appellant that the Respondent was in breach of clause 21.¹ of the JVA, and to ascertain whether the employees of Jaguar were passing on Ravin’s confidential information to Jaguar. In response to this request, on 12.10.2012, the Respondent stated that no case of breach of clause 21.¹ of the JVA had been pleaded; that Jaguar does not have any business of producing cables; and that it had been set up for the sole purpose of hiring office premises. The Memorandum of Association and the Articles of Association of Jaguar were also handed over to the Appellants. What was stressed is that at no time after 12.10.2012 did the Appellants seek the leave of the tribunal to amend their counter-claim. D

87Copy pinpoint87. It must be remembered that the First Partial Final Award was made only on 15.².2013. When the Respondent No.¹ made its oral submissions and filed written closing submissions on 19.07.2013, the Appellants did not plead any case of breach due to Jaguar. It was only at the fag end, i.e. in the Appellants’ Responsive Closing Submissions, filed on 20.08.2013, that the tribunal was invited to rule on this breach. Obviously, by this time, the Respondent did not have any opportunity to controvert this case put up for the first time by the Appellants. Since this case had been put up for the first time at the fag end of the proceedings, before passing of the Second Partial Final Award dated 19.12.2013, the arbitrator cannot be faulted for not dealing with this case. In the Second Partial Final Award, the tribunal also recorded that the Appellants’ case on clause 21.¹ was limited to the acquisition of ACPL and direct sales into India. The argument of the Appellant, made at the fag end of the proceedings, that since the Respondent held 99.99 % shares of Jaguar, which is in a similar cable business as Ravin, as evidenced by the G Memorandum and Articles of Association of Jaguar, is a case that has never been pleaded. This being the case, it is obvious that the arbitrator was within his jurisdiction not to deal with this so-called counter-claim at all. This objection, therefore, does not fall within any of the grounds mentioned in Section 48 and must, therefore, be rejected. H

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II.The Tribunal failed to make a determination on the A Appellants’ counter-claim concerning ouster of the Appellants

88Copy pinpoint88. According to the Appellants, the tribunal failed to make a determination on the Appellants’ counter-claim that the Respondent’s efforts to oust Appellant No.¹ and his family from Ravin amounted to a breach of the JVA. In answer to this submission, the tribunal, in the B Second Partial Final Award, expressly set out the following: “6. Further, the parties both identify different catalysts for the breakdown of the JVA relationship. In short, the Respondents submitted that, as far as they were concerned, during the tenure of Mr. Sarogni their relationship with the Claimant was good and C both parties were working together to make Ravin a more successful company. The swing point came and the trouble started brewing when Ms. Farise was sent out to head the affairs of Ravin with the single agenda to take control of Ravin and oust the Karias. The Respondents’ overall case theory therefore focuses on a clash of personalities combined with the acquisition of ACPL D and the Claimant’s overriding intention to create a situation where the Karias appeared to be in breach so that the Claimant could buy the Respondents out for a lower price.

7. The Claimant submitted that whilst relations had not been good from the time of the JVA onwards, matters took a turn for the E worse after 15 September 2011, when the Integration Period came to an end. The Claimant contends that up until this point Mr Karia had been able to maintain a large degree of control over the Company, both because of the arrangements in the Integration Period and the fact that Mr. Sarogni had been absent from India F for long periods of time. The end of the Integration Period was followed shortly after by a change of CEO. Pursuant to the Board Resolution of 1 November 2011, Ms. Farise was appointed CEO of Ravin (H16/3381) and came to India with the legitimate intent to actually take over the day to day management of Ravin. Indeed, the Claimant does not shy away from the fact that Ms. Farise did G intend to take control of Ravin, despite the Respondents’ own particular interpretation of this event and motive. The Claimant’s overall case theory therefore focuses not so much on any clash of personalities per se, but on the date when power and control under the terms of the JVA was to shift decisively away from H Mr. Karia. It is the Claimant’s case that Mr. Karia was simply not

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A willing to abide by such provisions and wished to remain in day to day control of Ravin and prevent the Claimant from exercising such control. In other words there is a straightforward division between the parties’ rival position. Neither party suggested that both versions could in essence be correct. The Tribunal therefore has to make findings as to where the evidence lies and which B version fits the facts as found.” This case was answered in great detail, finding that it was the Appellants and not the Respondent No.¹ who materially breached the JVA. Given this position, the tribunal finally held: C “291. Given the findings made by the Tribunal in favour of the Claimant’s allegations of material breach it naturally follows that the Respondents do not succeed in these allegations of mismanagement

292. The Respondents were themselves in material breach with D regard to the whole conduct surrounding Mr. Dhall’s appointment of Ms. Mathure and the so called authorisation form. The Claimant was not in material breach in suspending Mr. Dhall. Far from it. The Respondents, however, were plainly in material breach by their reaction to this suspension effectively leading to a one day strike. E

293. The question of the attendance of Claimant nominees at the Akruti office is another chapter of the saga in which the Respondents do not emerge without serious criticism. As is clear from this Award the Respondents engendered a toxic atmosphere at Akruti in January 2012 (even in its fire stricken state) and such was the situation at the ground that it was not really possible for Claimant nominees to attend without fear of their own safety.

294. Lastly, the circumstances surrounding the appointment of the CEO and CFO does not give rise to any conceivable material breach on the part of the Claimant. The Claimant was entitled to nominate a CFO and the CEO. They did so. The Respondents did not oppose the appointment of Ms. Farise. Nevertheless they did obstruct her at every turn once she was appointed because it became apparent that she intended pursuant to the JVA to take day to day control of Ravin and the Respondents did not wish this to happen. As regards Mr. Brunetti, the CFO, the Respondents H

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did veto his appointment. This was not a material breach on their part as it was their right to do so under Schedule IX to the JVA. Nevertheless it cannot be said to be a material breach by the Claimant. That is unsustainable. CONCLUSION

295. The Respondents have not succeeded in establishing any material breach of the JVA committed by the Claimant.”

89Copy pinpoint89. This being the case, it would be wholly incorrect to state that the tribunal has failed to make a determination on the Appellants’ counter- claim that the Respondent’s efforts to oust Appellant No. 1 and his family amounted to a breach of the JVA. While considering the case of the C Appellants and the cross-case of the Respondent, the tribunal has adverted to pleadings, evidence and has given detailed findings as to why the Appellants are in material breach of the JVA, as a result of which the Respondent cannot be said to be in material breach of the JVA. This being the case, it cannot be said that this material issue has D not been answered by the Second Partial Final Award. This ground, therefore, also does not fall within any of the stated pigeon-holes under Section 48. III.The Tribunal failed to make a determination on the Appellants’ counter-claim concerning registration of the Ravin E Trademark

90Copy pinpoint90. Dr. Singhvi then argued that the tribunal failed to make any determination on the Appellants’ counter-claim that the Respondent No.1’s surreptitious attempts to register the Ravin trademark in its own name was a material breach of the JVA. When the First Partial Final F Award is perused, it becomes clear that what was argued before the arbitrator, and therefore answered by the arbitrator, is whether the tribunal had jurisdiction to go into the Trademark License Agreement. The First Partial Final Award records: “IX. Tribunal’s ruling on jurisdiction G

134. Finally, there were before the Tribunal three short points on the scope of the jurisdiction of the Tribunal under the arbitration agreement in the JVA.

135. Sensibly, the parties only made very brief submissions on these points. At one point, it seemed that the Respondents’ H accepted that the Tribunal did not have the jurisdiction which it

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A contended for, but instead was inviting the Claimant to agree upon an expansion of the Tribunal’s jurisdiction in order to avoid any possibility of multiplicity of proceedings under different agreements.

136. In the end, however, the Respondents’ counsel did invite the Tribunal to rule upon these short points. The three points were as follows: 1) Whether under Clause 27.¹ of the JVA the Tribunal has jurisdiction to decide who has the right to register the Ravin trademark. 2) Whether the Tribunal has jurisdiction to decide alleged breaches of the Trademark License Agreement. 3) Whether the Tribunal has jurisdiction to decide alleged breaches of the Technical Assistance Agreement.

137. The Tribunal concludes that it does not have jurisdiction in respect of any of these three matters.

138. The ownership of the Ravin trademark and the right to register the same is not a dispute arising out of, relating to, or in connection with the JVA. There is no provision in the JVA permitting the parties to the JVA to change the name of Ravin Cables to a new name incorporating the word Prysmian – see Clause 9. There is also a provision for Ravin to enter into a trademark licence agreement in the form of Schedule 5, but that agreement deals with the licence by Prysmian and not the Ravin trademark.

139. Quite simply a dispute regarding the right to register the Ravin trademark falls outside of the scope of the arbitration clause. F

140. This makes it unnecessary for the Tribunal to consider further the interesting and difficult questions of the arbitrability of such disputes, even if they were held to fall within the scope of the arbitration agreement. The Tribunal makes no finding on this point, it not having been argued, but observes that it is by no means a G foregone conclusion that such disputes would under English law be arbitrable.

141. Further, the disputes respectively under the Trademark License Agreement (in the form of Schedule 5) and the Technical

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Assistance Agreement (in the form of Schedule 6) fall outside the jurisdiction of the Tribunal.

142. It is common ground that the parties did enter into a Trademark License Agreement in the form of Schedule 5 and the Technical Assistance Agreement in the form of Schedule 6.

143. Equally, it is common ground that these agreements made provision for disputes to be referred to arbitration in Milan, ltaly under Italian law. There is no warrant to construe the arbitration agreement in the JVA as somehow trespassing upon the arbitration agreement contained in two agreements, which the parties agreed to enter into and, in fact, did enter into with these separate dispute resolution provisions. Disputes under or concerning the Trademark License Agreement and Technical Assistance Agreement are to be resolved in accordance with the dispute resolution provisions under those agreements. The Tribunal observes that, if there had been a dispute under Clause 9 of the JVA as to whether in fact the covenant to enter into those two further agreements had been complied with, then this would be a dispute under the JVA agreement. Nevertheless, this is not the case being advanced by the Respondents in their pleaded case.”

91Copy pinpoint91. We have gone through the transcript of the hearings on both 12th and 13th December, 2012 before the arbitrator which clearly show that no argument was ever made by the Appellants before the tribunal that the Respondent had surreptitiously attempted to register the Ravin Trademark in its own name, and therefore was in breach of the competition clauses of the JVA. We are thus satisfied that this argument again appears to be an afterthought which has no foundation in the submissions made before the learned arbitrator. This submission does not again fall within any of the grounds referred to under Section 48. IV. The Tribunal acted contrary to the Parties’ expert witnesses and ignored critical evidence with regard to the acquisition of ACPL G

92Copy pinpoint92. Dr. Singhvi argued that the tribunal acted contrary to the admissions of the parties’ expert witnesses and ignored critical evidence with regard to the acquisition of ACPL. Further, since the Respondent failed to produce the relevant documents regarding the competing business carried out by ACPL, an adverse inference ought to be drawn H

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A against the Respondent No.¹, which the Appellants allege the learned arbitrator failed to do.

93Copy pinpoint93. The learned arbitrator indicated his approach in the Second Partial Final Award as follows: “23. Whilst therefore the parties’ detailed submissions have set B the parameters for the Tribunal’s decisions and have assisted the Tribunal in reaching its conclusions on the individual particulars of alleged material breach, it has simply not been possible and nor is it desirable for the Tribunal to undertake an exhaustive analysis of each sub-argument and each piece of evidence referred to. C Instead, in disposing of this dispute the Tribunal will focus, in large part, on the heart of the rival contentions with respect to the dispute as a whole and the individual allegations in the rival Determination Notices. This requires the detailed submissions to be substantially stripped back to reveal the essential complaint being made, which can then be assessed against the terms of the JVA and the rival D theories.

24. In respect of the rival theories, the Tribunal has not lost sight of the broader case theories which frame the disputed events and allegations. The veracity of the individual and collective allegations arising from the crucial period between November 2011 and March E 2012 can and indeed must be tested by reference to the parties’ rival theories and should not necessarily be isolated and examined in the abstract.”

94Copy pinpoint94. The tribunal then went into the acquisition of ACPL in some detail, from paragraphs 216 to 244 of the Second Partial Final Award, F and held that Mr. Karia’s contemporaneous reaction to the acquisition of Draka, which led to an indirect acquisition of 60 subsidiaries, one of which was ACPL, was that he was very happy that the Respondent No. 1 had so expanded its business. Several congratulatory emails are referred to by the arbitrator. Further, the arbitrator found that Mr. Karia’s G statements in cross-examination showed that he had knowledge of this acquisition way back in November 2010 but never complained of material breach of the JVA. The arbitrator also examined evidence as to serious actual loss or harm, finding no such credible evidence, except occasional instances of both companies tendering for the same business. It was held that there was no reliable evidence that the Ravin’s business had H

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been lost post the ‘Draka acquisition’ or that there had been any diversion of business from Ravin to ACPL or vice versa. The arbitrator then held that ACPL is a small specialist cable business and operates principally in the area of instrumentation cables, which is not the area in which Ravin operates. The learned arbitrator also adverted to the evidence of the expert witnesses in arriving at this conclusion. It also made a reference to Mr. Karia’s cross-examination, stating that Mr. Karia himself considered ACPL to be the 50th or 60th competitor given its small business. The finding, therefore, was that the acquisition of ACPL did not in any manner amount to a serious material breach of the JVA.

95Copy pinpoint95. Insofar as the failure to produce documents by Respondent No.¹ with regard to its subsidiary ACPL is concerned, it must be remembered that ACPL is not a direct subsidiary of Respondent No. 1, being an indirect subsidiary of Respondent No.1’s parent company consequent upon the acquisition of Draka. It has an independent Board of Directors. Above all, ACPL was not a party to these arbitral proceedings. The tribunal therefore made Procedural Order No. 5 dated D 27.11.2012 in which it specifically recorded that if the Appellants wish to pursue their request for disclosure of further documents qua ACPL, they must approach the Courts to do so, as it was not within the arbitrator’s power to direct a person who is not party to the proceedings to produce documents. At no stage did the Appellants act in compliance of this Procedural Order and approach an English Court to direct ACPL E to produce documents within its possession. This being so, as has been held hereinabove, a party cannot complain of breach of natural justice when it was within the control of such party to approach a U.K Court for production of such documents. This not having been done, it is clear that no adverse inference, as has been argued, could have been drawn by the learned arbitrator. This ground also, therefore, does not fall within any of the grounds argued before us under Section 48. V. Perverse Interpretation of the JVA

96Copy pinpoint96. According to Dr. Singhvi, the tribunal’s interpretation of clause 21 of the JVA is perverse. As has been held, referring to some of the judgments quoted hereinabove, in particular Shri Lal Mahal (supra), the interpretation of an agreement by an arbitrator being perverse is not a ground that can be made out under any of the grounds contained in Section 48(1)(b). Without therefore getting into whether the tribunal’s interpretation is balanced, correct or even plausible, this ground is rejected. H

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A VI. The Tribunal ignored critical evidence with regard to the issue of agency agreements and Direct Sales

97Copy pinpoint97. Dr. Singhvi argued that the tribunal ignored admissions of the Respondent and other critical evidence with regard to the issue of agency agreements and direct sales. The Second Partial Final Award deals with this issue and the issue regarding agreements with agents in great detail from paragraph 245 to paragraph 279. As many as five reasons are given, after examining the evidence, for rejecting the plea that agency or distribution agreements were entered into in violation of the JVA. Further, so far as direct sales into India were concerned, after considering the pleadings and the evidence, the tribunal found that the Appellants altered their case from their pleaded case and now advanced a case that the fact of direct sales amounts to a material breach of clauses 8 and 20 of the JVA, contrary to what was stated in their determination notice. Even otherwise, the tribunal found that there was no material breach for the following reason: D “277. Those sales, however, were for all practical purposes made up of sales of telecom cables, industrial special cables, automotive cables, network and component and services. Ravin did not manufacture those types of cables. Indeed over 85% of the sales came from two affiliates manufacturing telecom cables, which E Ravin did not manufacture and had no experience in selling either. Indeed the Tribunal accepts the evidence of Ms. Farise and Mr. Koch and Mr. Karve on this issue (see, inter alia, §§5-8, E(I)/ 10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§18- 32. E(I)/23/ 184-186, 11 December 2012 hearing, pp.134-140, §46, E(I)/17/ 92, Day 2, pp.83-86, §18 of, E(l)/24/189). This renders the whole argument of diversion of sales or breach of good faith by virtue of these direct sales somewhat academic.

278. Indeed these figures illustrate exactly why the Respondents placed so much emphasis on their argument that the mere fact of sales was a breach irrespective of anything else. This was once more how it was put by Mr Salve SC in his oral closing argument (Day 10, pp. 183-185) The Tribunal has, however, found against the Respondents on this point.”

98Copy pinpoint98. Having perused the Award in this behalf, it cannot be said that the tribunal has in any manner ignored admissions or other critical evidence with regard to the issue of direct sales. In any case, if at all, this ground

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goes to alleged perversity of the award, which as has been held by us hereinabove, is outside the ken of Section 48. VII. The Tribunal adopted disparate thresholds in determining material breach

99Copy pinpoint99. Dr. Singhvi has then argued that the tribunal adopted disparate thresholds for determining material breach between the Appellant and the Respondent. Again, all the allegations made under this ground go to perversity of the award, which is outside the ken of Section 48. That apart, the tribunal indicates in paragraphs 104 to 106 of the Second Partial Final Award, that no disparate thresholds in determining material breach was adopted as follows: C “(3) Tribunal’s conclusions on the Events of Default relied upon by the Claimant

104. The Tribunal has in mind the test for establishment of material breach as identified in paragraphs 37-47 above. The Claimant has particularised a number of different aspects of the conduct of the Respondents concentrating on the time frame from November 2011 to February 2012. Each of the Claimant and the Respondents have advanced detailed evidence and submissions on each of these particulars as addressed above. Nevertheless the breaches cannot be treated in complete isolation. In many instance the breaches can be seen as forming part of a pattern of alleged conduct involving the same witnesses and questions of their credibility as regards the rival evidence and rival “case theories.” This does not mean to say that the allegations all stand or fall together but a finding in relation to the credibility of the story advanced by one side or other in relation to one allegation does impact on the credibility of other parts of the story.

105. Therefore before turning to the individual allegations it is necessary to say something about the chief witnesses on each side and their credibility and demeanour, having reviewed and considered carefully once more the evidence advanced. G

106. The Tribunal has no hesitation in reaching the conclusion that the chief witnesses called by the Claimant were truthful, honest and whilst faced with a difficult and tense situation in India continued to try to resolve matters in accordance with the provisions of the JVA.” H

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A VIII. The Tribunal’s selective consideration of contemporaneous evidence

100Copy pinpoint100. Dr. Singhvi then argued that the tribunal’s analysis of contemporaneous conduct is selective and perverse. Without going into any further details in this ground, this argument must be rejected out of B hand, as not falling within the parameters of Section 48. Equally, the tribunal’s consideration of evidence of key witnesses being selective and perverse, must be rejected on the same ground. IX. The Tribunal appointed a conflicted valuer

101Copy pinpoint101. Dr. Singhvi then contended that the tribunal appointed a C conflicted valuer, which prevented the Appellants from participating in the valuation exercise. This has been dealt with in the Final Award dated 11.04.2017 by the learned arbitrator as follows: “II. Deloitte Valuation Report and the Respondents’ Challenge to Deloitte D

4. It is important at this stage to record one specific matter here which is referred to and set out in the Claimant’s submissions (see paragraph 24 and Annexure E thereto at pages 170-172) and not contradicted by the Respondents in its submissions. On 14 October 2014 (Annexure E p. 171), Mr. Karia on behalf of the E Respondents sent an email to the Claimant in response to the Claimant’s request dated 14 October 2014 (Annexure E p.170) that the Respondents do cause the Company in a timely fashion to execute the Engagement letter for Deloitte. On 14 October 2014 (Annexure E p.171), Mr. Karia for the Respondents objected F to the engagement of Deloitte contending that they were conflicted out of acting as Valuer. This was a remarkable stance to take. On 30 April 2013 the Respondents, via an email sent by their solicitors, had confirmed that the Respondents were agreeable to Deloitte or KPMG acting as independent Valuers under the JVA. The Tribunal noted and recorded this in the Preamble to Procedural G Order No 12, albeit referring to the date as 30 April 2014. There had been no material change in circumstance since April 2013 or Procedural Order No 12, to justify this change of position. The Tribunal concludes that the Respondents took this position in an attempt to hinder, delay and frustrate the valuation exercise and consequent transfer of shares. The Respondents advanced a series H

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of points in their email. Each was answered in the Claimant’s A solicitors’ email dated 15 October 2014 (see Annexure E p.170 to the Claimant’s submissions). In summary, the Respondent was not in a position following Procedural Order No 12 and its prior agreement to Deloitte subsequently to withhold its agreement to or not to object to the appointment of Deloitte. It had been ordered following the Respondents’ indication of agreement or non- objection to Deloitte.

5. The Respondents had not previously sought to identify any matters which disentitled Deloitte from acting but instead had agreed to their name being put forward to the Tribunal for appointment. Furthermore, the matters identified did not in any event impugn Deloitte’s independence or ability to act as Valuer in accordance with the provisions of the JVA. The fact that Deloitte had been approached by the Respondents to conduct an independent valuation but had declined to act because of the impending role for the Company as Valuer only serves to underline not undermine their independence. Also, the fact that the Respondents had asked Deloitte earlier in the arbitration to undertake some computer forensic exercise was not relied upon by the Respondents nor did it impugn their independence. Finally, the Respondents refer to Deloitte having acted as auditor of Power Plus Cable Company LLC (“Power Plus”) a company incorporated in the UAE and based in Dubai in which Ravin holds a 49% shareholding, This is not the same entity as the Company, and did not impugn Deloitte’s independence and did not prohibit them under the terms of Clause 17.³ of the JVA from being appointed. Clause 17.³ only applied to a prohibition on the statutory auditor of the Parties to the JVA acting as Valuer. It is not suggested that Deloitte was the statutory auditor of Ravin. Power Plus was not a Party to the JVA. Further, Clause 17.¹ of the JVA expressly identified Deloitte as a suitable independent party to be appointed as Valuer. In any event, Deloitte’s role as auditor of Power Plus was known to the Respondents and having agreed not to object to G Deloitte in their 30 April 2013 email it was no longer open to the Respondents to advance this point. There was no breach of the JVA but even if there had been it was waived by the Respondents.

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A 6. Thus following this exchange, Deloitte were in due course engaged albeit through the default mechanisms provided for in Procedural Order No. 12.” We are satisfied that the learned arbitrator has considered this point in some detail and dismissed it. This objection again does not fall B under any of the grounds mentioned in Section 48. X. Valuation ignores Ravin’s stake in Power Plus

102Copy pinpoint102. Dr. Singhvi then argued that the valuation made by Deloitte ignored a stake of 49% of Ravin in a company called Power Plus, which stake has been valued by the Appellants’ valuer (one BDO) at INR 563 C crores. Considering that this aspect was not taken into account by Deloitte, the valuation report ought not to have been accepted by the learned arbitrator, also being contrary to the position taken by both parties. This submission was dealt with by the learned arbitrator in great detail in paragraph 19 of the Final Award dated 11.04.2017. Among other things, the learned arbitrator referred to clause 17 of the JVA and stated that the said clause together with the formula prescribed therein was followed by Deloitte. Since this was done, Deloitte cannot possibly be faulted and cannot further be asked to take into account the stake of Ravin in Power Plus, as that would go outside the JVA. This again is a matter for the arbitrator to determine. This again is a ground wholly outside grounds that can attract challenge to foreign awards under Section 48. XI. Valuation Date

103Copy pinpoint103. Dr. Singhvi then argued that the tribunal acted contrary to the parties’ submissions in arriving at a valuation date of 30.09.2014, F much later on the date of the Final Award which is 11.04.2017, as the parties had agreed that this date ought to be the date closest to the date of actual sale of share and would be valid only until 31.12.2014. The learned arbitrator dealt with this objection in the Final Award dated 11.04.2017 as follows: “D. Valuation date G

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25. The Tribunal is unable to accept the validity of this criticism for the following reasons: 1) Deloitte records that it did request data from the Company up to 30 September 2014, but this data was not provided to Deloite. The Tribunal has earlier in this Award recited the facts from which the Tribunal has reached the conclusion that the Company’s lack of cooperation with Deloitte was effectively controlled and directed by the Respondent. This was most notably the case with regard to the Company’s failure to issue the Engagement Letter to Deloitte following Procedural Order No. 12. The Tribunal therefore concludes that it is not open to the Respondents to complain of the lack of further data being proved to Deloitte. It was the C Respondents who were in control of the provision or non-provision of that data. 2) The Tribunal also concludes that the Respondents are not entitled to complain of the delay in the production of the Deloitte Valuation Report since that delay was materially contributed to by reason of the Respondents’ complaint with regard to Deloitte’s involvement which is made to the LCIA. It is notable that the Respondents have not in their submission denied that they made such a complaint to the LCIA and have not contradicted the Claimant’s submission that this complaint materially contributed to the delay in the production of the Deloitte Report. 3) Furthermore, the Respondents are not entitled to complain that Deloitte has used a valuation date of 30 September 2014. This was the valuation date agreed to and requested by the Respondents. Furthermore, as is recorded in the Recital to F Procedural Order No. 12 prior to the hearing in October 2014 leading to the making of the order of the valuation date, the Respondents expressly accepted that the question of the Valuation date was a matter properly within the jurisdiction of and for the determination of the Tribunal. The Tribunal then made an order for the valuation as requested by the Respondents.” G Having found that the delay in the valuation report was attributable largely to the Appellants and that therefore the agreed date of 30.09.2014 is the correct date, we find nothing in the award which can be said to even remotely shock our conscience. This ground is also therefore H

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A rejected. Dr. Singhvi’s fervent plea to exercise our power under Article 142 of the Constitution of India, so as to shift the valuation date from 30.09.2014 to the date of our judgment must also be rejected given the learned arbitrator’s finding. Quite apart from this, nothing in Section 48 of the Arbitration Act would permit an enforcing court to add to or subtract from a foreign award that must either be enforced or rejected by reason B of any of the grounds under Section 48 being made out to resist enforcement of such foreign award. This Court’s power under Article 142 ought not to be used to circumvent the legislative policy contained in Section 48 of the Arbitration Act. XII. Inconsistent Awards C

104Copy pinpoint104. Dr. Singhvi then argued that the tribunal’s ruling in the First and Second Partial Final Award, with regard to the interpretation of clause 21, is inconsistent and irreconcilable. Apart from the fact that we do not find anything in the said two awards with regard to clause 21 being inconsistent and irreconcilable, this ground again does not, in any D manner, shock our conscience and is therefore rejected. XIII. Violation of FEMA and the Rules thereunder

105Copy pinpoint105. Dr. Singhvi then argued that in ordering the sale of shares at a 10% discount of the fair market value arrived at by Deloitte, FEMA E and the Rules made thereunder would be breached, resulting in the award being contrary to the public policy of India, in that it would be against the fundamental policy of the Indian law. As pointed out hereinabove, for the reasons given in paragraphs 79 to 84 of this judgment, this ground again is bereft of any merit. In fact, the learned arbitrator awarded INR 63.90 per share as per the Deloitte valuation, which was contractually binding under clause 17 of the JVA. Therefore, the lower valuation of INR 16.88 per share as in the M/s Kalyaniwalla & Mistry valuation report dated 04.³.2016 was not accepted. XIV. Bias of the Tribunal

106Copy pinpoint106. Lastly, Dr. Singhvi argued that the learned arbitrator was clearly biased in that the outcome of the Second Partial Final Award was clear to the Respondent No.¹, inasmuch as its agent, one M/s Gilbert Tweed Associates, sent out an advertisement for recruiting employees for Ravin, two months before the Second Partial Final Award, thereby showing that this agent was clear as to the outcome of the proceedings. H This was strongly refuted by the Respondent, stating that at no time had

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Gilbert Tweed Associates been retained by them. As a matter of fact, an agency called M/s Key2People was engaged by Respondent No.¹ to identify potential candidates who could be recruited for the company in due course. M/s Key2People, in turn, appointed M/s Gilbert Tweed Associates. In any case, the Respondent undertook to terminate the engagement of M/s Key2People by its email of 28.10.2013. The allegation of bias thus made was clearly a desperate afterthought. The contention that the arbitrator was otherwise biased was dealt with in the Final Award as follows: “16. The Respondents have also made a repeated reference to an allegation that the Tribunal lacked independence and that the Respondents have lost faith in the Tribunal continuing to give an impartial determination of the matters which remain in dispute.

17. These allegations have already been raised by the Respondents and rejected by the LCIA Court. Furthermore, the Respondents have not sought to invoke any procedure in the English Court, which is the court of the seat with supervisory jurisdiction. If the D Respondents wished to challenge the ruling of the LCIA Court and challenge the further involvement of the Tribunal in the process, the Respondents had to bring a challenge within the strict time limits provided for in the English Arbitration Act 1996, but they have not done so. It is regretted that the Respondents continued to advance this unfounded and unparticularised allegation. The Tribunal has in the past pointed out the distinction between independence and impartiality on the one hand and on the other the role of an arbitrator who has to decide between rival arguments, diametrically opposed and irreconcilable positions adopted before it and direct clash of evidence before it and then apply such findings to the disputes before it. It is an inherent and an inevitable part of the arbitral process that where parties, as indeed has been the case in this arbitration, have taken radically opposing positions on the evidence and the law that multiple decisions will have to be made that will ultimately disappoint one of the parties. This has been exactly such a dispute. It has, however, been a distinct feature of this process that the Respondents have not only voiced their disappointment but have not complied with the orders of the Tribunal to protect the Parties’ rights during the course of the Arbitration and not complied with the terms of the JVA as has H

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A been found and determined by the Tribunal in its prior Awards. In a dispute such as the present where it has been necessary to render a series of Awards, it is necessary for the Tribunal to apply the prior findings in any subsequent Award.”

107Copy pinpoint107. Having answered each of the submissions of Dr. Singhvi on behalf of the Appellants, we cannot help but be left with a feeling that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. We have no doubt whatsoever that all the pleas taken by the Appellants are, in reality, pleas going to the unfairness of the conclusions reached by the award, which is plainly a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention. We have read, in detail, the four awards passed by the learned sole arbitrator and are satisfied that he has exhaustively discussed the evidence and arrived at detailed findings for each of the issues, claims and counter-claims, and finally accepted the Respondent’s case and rejected the Appellants’. Given the fact that our jurisdiction under Article 136 of the Constitution is itself limited, and given the fact that this Court’s time has unnecessarily been taken by a case which has already been dealt with by four exhaustive awards on merits and also by the impugned judgment of the Bombay High Court, we dismiss these appeals with costs of INR 50 lakhs, to be paid by the Appellant to Respondent No.¹ within 4 weeks from today.

Devika Gujral Appeals dismissed.