Devi Resources Limited v. Ambo Exports Limited

At a glance

Parties

Devi Resources Limited (Hong Kong), appellant and award-holder, v. Ambo Exports Limited (Kolkata), respondent and award-debtor

Case no.

APO No. 430 of 2017 in EC No. 233 of 2016

Court

High Court at Calcutta, Ordinary Original Civil Jurisdiction (Division Bench): Sanjib Banerjee J. and Suvra Ghosh J.

Underlying award(s)

LMAA arbitral award of 21 January 2016 (London), by a sole arbitrator

Forum and rules

Enforcement of a New York Convention award under Section 48, Arbitration and Conciliation Act, 1996

Treaty

Clause 14 of the contract of 29 February 2012 (English law, LMAA arbitration in London)

Sector

Iron ore trade; shipping (demurrage and dead freight)

Outcome

Appeal allowed (13 February 2019). The order refusing enforcement was set aside and the enforcement petition was sent back to the executing court.

Amount

Award: US $ 1,270,127.15 with interest in favour of Devi Resources. No order as to costs in the appeal.

The dispute

Devi Resources, a Hong Kong company, agreed on 29 February 2012 to buy iron ore fines from Ambo Exports, a Kolkata company. The contract was governed by English law and provided for LMAA arbitration in London. The goods came late through another supplier, and Devi claimed demurrage, dead freight and losses for goods below specification. Ambo said the dispute had been settled by a letter of 24 April 2013 under which Devi was to pay US $ 1 million. In June 2014 it sued on the bills of exchange in the Calcutta High Court. On 14 January 2016 that court issued an interim injunction in personam restraining Devi from pursuing the London arbitration. The arbitrator nonetheless made an award on 21 January 2016. On 22 August 2017 a Single Judge refused to enforce the award as contrary to Indian public policy, because it was obtained while the injunction was in force. The injunction was later vacated on 28 August 2018. Ambo also relied on Section 48(1)(a)–(d): that the arbitration agreement was invalid, that it had no proper notice, that the award went beyond the scope of the submission, and that the tribunal was wrongly composed.

Key holdings

1. An Indian court, particularly a High Court exercising original civil jurisdiction, has general equitable power to grant anti-suit or anti-arbitration injunctions in personam. That power must be used only in the most extreme cases, with regard to comity. ¶¶ 53–55, 63
2. This is an exception to the general rule that acts done in breach of a subsisting injunction are void. If an interim anti-suit or anti-arbitration injunction is later vacated or set aside, the vacating order dates back to the filing of the application, and the injunction is treated as never passed. ¶¶ 56–58
3. An enforcement court faced with this objection should decide it only once the injunction is final. If enforcement was refused on that ground and the injunction is later vacated, the refusal must be reversed to that extent. ¶ 59
4. The injunction of 14 January 2016 was vacated by a final order of 28 August 2018, against which no appeal was filed. It is therefore treated as never passed, and the only ground for refusing enforcement falls away. ¶ 66
5. The Section 48(1)(a)–(d) objections fail. The award-debtor bears the burden of proof and made only bald denials. These objections should have been raised in the arbitration or in a challenge in England. Section 48 looks at the decision-making process, not the merits. ¶¶ 45–50, 65
6. Public policy under Section 48(2) is construed strictly. The arbitration was not started merely as a counter-blast to Ambo's suit, since a pre-suit letter had already claimed the same amounts. ¶¶ 49, 51
7. The Court disagreed with the Bombay High Court's reasoning in Noy Vallesina v. Jindal Drugs that such injunctions are nullities. ¶¶ 25–27, 60

Procedural history

1. 29 February 2012Sale contract signed, with an LMAA London arbitration clause (Clause 14).
2. June 2014Ambo files a summary suit in the Calcutta High Court on the bills of exchange.
3. January 2015Devi applies under Section 45 for the dispute in the suit to be referred to arbitration.
4. June 2015Devi invokes the arbitration agreement and appoints its arbitrator. It files its statement of claim in October 2015.
5. 14 January 2016Interim injunction restrains Devi from proceeding with the London arbitration.
6. 21 January 2016LMAA award: US $ 1,270,127.15 with interest to Devi.
7. April 2016Devi petitions for enforcement of the award (EC No. 233 of 2016).
8. 22 August 2017Single Judge refuses enforcement on public policy grounds.
9. 28 August 2018Injunction vacated. Ambo's anti-arbitration application and Devi's Section 45 application are both dismissed.
10. 13 February 2019Division Bench allows the appeal and restores the enforcement petition.

Tribunal, counsel and experts

Decided by

• Sanjib Banerjee Judge, High Court at Calcutta
• Suvra Ghosh Judge, High Court at Calcutta

For the claimant

Dhrubo Ghosh · Sarbopriyo Mukherjee · Rahul Karmakar · Debamitra Adhikari · Rohit Banerjee · Anindita Mukherjee · Ayan Ray

For the respondent

Ratnanko Banerji · Urmila Chakraborty · Mudrika Khaitan

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Keywords

• anti-arbitration injunction
• anti-suit injunction
• enforcement of foreign award
• New York Convention
• Section 48 Arbitration and Conciliation Act 1996
• public policy
• LMAA
• iron ore
• demurrage
• dead freight
• vacated interim injunction
• relation back
• Noy Vallesina
• Modi Entertainment Network
• burden of proof
• India

Summary generated with AI from the published documents — refer to the award for the authoritative text.