Surrendra Overseas (panama) Inc v. Seashell Logistics Pvt. Ltd.
2024-02-05
MANISH PITALE
body2024
DigiLaw.ai
ORDER : The respondent - award debtor is resisting execution of the foreign arbitral award only on the ground of alleged bias and no other ground has been pressed while objecting to the execution. The allegation of bias is against one of the arbitrators, on the ground that the said arbitrator and the counsel appearing for the applicant before the arbitral tribunal belong to the same chambers of practice. Apart from various contentions raised on behalf of the respondent in this regard, it is specifically contended that the chamber practice of the concerned chamber can be said to be akin to practice of a law firm and that therefore, the specific entries in Schedules V and VII of the Arbitration and Conciliation Act, 1996 (Arbitration Act) are attracted, thereby supporting the allegation of bias raised against the said arbitrator. Bias being an aspect of fundamental policy of Indian law, is raised as a specific ground by the respondent in order to contend that the foreign award cannot be executed. 2. The facts in brief leading to filing of the execution application are that, the applicant - claimant as owners of a vessel entered into a Trip Time Charter with the respondent - award debtor. The vessel was taken on charter for a duration of approximately 25 to 40 days. The charter party agreement contained an arbitration clause, which specified that the arbitration would be conducted at London as per English Law and that the arbitrators and the umpire, if any, shall be members of the London Maritime Arbitrator’s Association (LMAA) and that the arbitration would be governed by English Law and LMAA Rules. 3. Disputes arose between the parties in the context of the said agreement and the applicant claimed that the respondent failed to make timely payments of hire and in this context, the applicant was constrained to file an application under Section 9 of the Arbitration Act before this Court, bearing Commercial Arbitration Petition No.225 of 2017, for interim reliefs. On 30.03.2017, this Court directed the respondent to secure the claim of the applicant by furnishing a bank guarantee, which the respondent failed to furnish. In fact, the respondent filed review petition seeking review of the said order, which was dismissed on 27.04.2017. An appeal filed against the order was unilaterally withdrawn by the respondent on 03.05.2017 before the Division Bench of this Court.
In fact, the respondent filed review petition seeking review of the said order, which was dismissed on 27.04.2017. An appeal filed against the order was unilaterally withdrawn by the respondent on 03.05.2017 before the Division Bench of this Court. On 04.05.2017, this Court directed the respondent to disclose its assets on affidavit and thereafter on 09.05.2017, the respondent was directed to deposit Rs. 20,00,000/- per month with the Prothonotary and Senior Master of this Court till a total amount of Rs.4,80,00,000/- stood deposited. The said direction was complied with and the amount has remained in deposit with this Court. 4. On 22.05.2017, the applicant invoked arbitration and nominated Mr. Alan Oakley as its arbitrator. On 05.06.2017, the respondent nominated Mr. Patrick O’Donovan as its arbitrator. As the respondent objected to the appointment of Mr. Alan Oakley on the ground that he had been appointed by the respondent in another arbitration against their sub-charterers, the claimant agreed to revocation of the name of Mr.Alan Oakley and in his place the applicant appointed Mr. Bruce Harris as its appointed arbitrator. Upon the insistence of the respondent, on 25.01.2019, the arbitral tribunal appointed Ms. Clare Ambrose as the umpire. It was clarified that only in case of a disagreement between the arbitrators, the umpire would take over the proceedings. After completion of pleadings and exchange of skeleton arguments, the respondent requested Mr. Bruce Harris to recuse from the proceedings. This was objected to by the applicant. Mr. Bruce Harris refused to recuse himself for the reasons that were endorsed by the tribunal, including the umpire. Between 17.02.2019 to 02.04.2019, the arbitral proceedings continued and the arbitral tribunal published its detailed award and informed the parties. Later, at the request of the respondent, to which the applicant acquiesced, the tribunal re-dated and re-published the foreign award with amended date of 02.04.2019. It was held that the applicant was entitled to the sum of USD 715,568.83 with recoverable costs and interest @ 5% p.a. compounded quarterly from the date of the award. According to the applicant, the total amount due and payable under the foreign award at the time of hearing of the present application came to Rs.5,92,36,330.14/-. 5.
It was held that the applicant was entitled to the sum of USD 715,568.83 with recoverable costs and interest @ 5% p.a. compounded quarterly from the date of the award. According to the applicant, the total amount due and payable under the foreign award at the time of hearing of the present application came to Rs.5,92,36,330.14/-. 5. It is relevant to note that a learned Single Judge of this Court passed an order on 19.10.2020, directing that the amount of Rs.4,80,00,000/-, deposited in the petition filed under Section 9 of the Arbitration Act, shall stand transferred to the credit and benefit of the present execution application. 6. Mr. Zal Andhyarujina, learned senior counsel appearing for the applicant submitted that since the respondent had pressed only the ground of bias, submissions were being advanced only in that regard. It was submitted on behalf of the applicant that the foreign award, of which execution is sought in the present application, was passed unanimously by two arbitrators and it was also confirmed by the umpire. Although the respondent had prayed for recusal of one of the arbitrators i.e. Mr. Bruce Harris on the ground of bias or likelihood of bias, such a contention was neither specifically raised before the tribunal when the arbitral proceedings were taken up for final hearing nor was any challenge made to the arbitral award, which admittedly attained finality. In such a situation, according to the applicant, the objection on the ground of bias or reasonable likelihood of bias could not be raised in the present proceedings to resist execution of the foreign award. 7. The learned senior counsel appearing for the applicant relied upon judgement of this Court in the case of POL India Projects Limited Vs. Aurelia Reederei Eugen Friederich GmbH, 2015 SCC OnLine Bom 1109, to contend that since the applicant had failed to challenge the arbitral award in English courts, it was estopped from resisting execution of the award by raising the ground of bias or reasonable likelihood of bias. It was further submitted that the respondent cannot rely upon subsequent judgement of this Court in the case of Prysmian Cavi E Sistemi Vs.
It was further submitted that the respondent cannot rely upon subsequent judgement of this Court in the case of Prysmian Cavi E Sistemi Vs. Vijay Karia and another, 2019 SCC OnLine Bom 19 to contend otherwise, for the reason that in the said judgement also, this Court observed that in ordinary course, resistance to execution of a foreign award was permissible, but where a challenge to the arbitral award in the seat of arbitration was necessary, failure to challenge the award would be a relevant factor. On this basis, it was submitted that the only ground raised on behalf of the respondent, for resisting execution of the arbitral award, does not deserve consideration before this Court. 8. Without prejudice to the said submissions, the learned senior counsel appearing for the applicant submitted that the respondent was required to demonstrate under Section 48 of the Arbitration Act that, execution of the arbitral award would be in conflict with the fundamental policy of India. It was submitted that the fundamental policy of India is manifested by the amendments brought about in the Arbitration Act and inclusion of certain situations, which would render an arbitrator disqualified from continuing as a member of the arbitral tribunal. Since the respondent was placing reliance on guidelines issued by the International Bar Association (hereinafter referred to as the ‘IBA guidelines’), a comparison of the IBA guidelines with the situations statutorily incorporated in Schedules V and VII to the Arbitration Act was necessary. It was submitted that such a comparison would show that, while the IBA guidelines indicate that if the arbitrator is a partner in the law firm, which represents either party, it could be a good ground for demonstrating bias and hence disqualification. The IBA guidelines further apply to members of the same barristers’ chambers. But, the Parliament of India in its wisdom has included only the situation pertaining to law firms as a disqualification and there is no reference to the members of Chambers, as opposed to the IBA guidelines. On this basis, it was submitted that the fundamental policy of India recognizes disqualification for an arbitrator only in the context of law firms, which is a fact situation inapplicable in the present case. Reliance was placed on the judgement of the Supreme Court in the case of Chennai Metro Rail Limited Vs.
On this basis, it was submitted that the fundamental policy of India recognizes disqualification for an arbitrator only in the context of law firms, which is a fact situation inapplicable in the present case. Reliance was placed on the judgement of the Supreme Court in the case of Chennai Metro Rail Limited Vs. Transtonnelstroy Afcons, 2023 SCC OnLine SC 1370, in support of the said proposition, indicating that the entries in the Schedules to the Arbitration Act ought to be construed strictly in order to avoid uncertainty with regard to the arbitration process. 9. It was further submitted that the argument pertaining to bias or reasonable likelihood of bias has to be considered on the basis of the reasonable third person test, which is recognized by the Supreme Court of United Kingdom in the case of Haliburton Co. Vs. Chubb Bermuda Insurance Limited, (2020) UKSC 48. It was submitted that even this Court applied the reasonable third person test in the recent judgement in the case of HSBC PI Holdings (Mauritius) Limited Vs. Avitel Post Studioz Limited and others (judgement and order dated 25.04.2023 passed in Arbitration Petition No.833 of 2015) and that applying such a test to the facts of the present case would show that the respondent clearly failed to make out its case of even reasonable likelihood of bias against one of the arbitrators i.e. Mr. Bruce Harris, on the ground that he is a member of Quadrant Chambers, of which the counsel representing the claimant i.e. Mr. Semark is also a member. The learned senior counsel appearing for the applicant relied upon e-mail dated 03.02.2019 sent by Mr. Bruce Harris, indicating the nature of his association with Quadrant Chambers and also the statement made on the website of the said Chambers to the effect that, “Barristers, Arbitrators and Mediators at Quadrant Chambers are self-employed and independent practitioners. Whist they share costs of offices and administration, they do not share in profits or liabilities”. It was submitted that, therefore, the association of Mr. Bruce Harris and even of Mr. Semark with the Quadrant Chambers cannot even be said to be akin to the relationship of partners in law firms. On this basis, it was submitted that there was no duty to disclose on the part of Mr.
It was submitted that, therefore, the association of Mr. Bruce Harris and even of Mr. Semark with the Quadrant Chambers cannot even be said to be akin to the relationship of partners in law firms. On this basis, it was submitted that there was no duty to disclose on the part of Mr. Bruce Harris with regard to the association of Quadrant Chambers and therefore, the objection raised on behalf of the respondent is without any substance. 10. In order to buttress the said argument, reference was made to judgement of the Queen’s Bench Division (Commercial Court) in the case of Laker Airways Inc. Vs. FLS Aerospace Limited and Burnton, (1999) 2 Lloyd’s Law Reports 45, as also judgement of this Court in the case of Oil and Natural Gas Corporation Limited Vs. Sumitomo Heavy Industries Limited, 2000 (2) ALL MR 195. The learned senior counsel appearing for the applicant sought to distinguish the judgement in the case of Hrvatska Elektroprivreda Vs. Republic of Slovenia rendered by the International Centre for the Settlement of Investment Disputes (ICSID) Institution, firstly on the ground that India is not a member of ICSID and secondly, that the judgment rendered by the said Institution has no precedential value before this Court. It appears that in the said judgement, observations were made to the effect that the functioning of chambers now-a-days has become akin to functioning of law firms. 11. Learned senior counsel appearing for the applicant then referred to the provisions of the English Arbitration Act, 1996, particularly Sections 24, 68 and 73 thereof, to contend that the respondent having failed to even challenge the arbitral award after having specifically sought recusal of Mr. Bruce Harris as an arbitrator, it cannot lie in the mouth of the respondent that an objection to execution of the arbitral award can be raised before this Court. 12. It was further submitted on behalf of the applicant that the general law pertaining to bias in India cannot be relied upon and resorted to on behalf of the respondent, for the reason that the Parliament of India in its wisdom has already legislated with respect to the arbitral process. The Vth and VIIth Schedules to the Arbitration Act manifest the fundamental policy of Indian law in respect of the situations in which the arbitrator can be said to be ineligible or disqualified from being member of an arbitral tribunal.
The Vth and VIIth Schedules to the Arbitration Act manifest the fundamental policy of Indian law in respect of the situations in which the arbitrator can be said to be ineligible or disqualified from being member of an arbitral tribunal. Since the Vth and VIIth Schedules do not contain any situation even close to the allegations levelled by the respondent, this Court cannot exercise jurisdiction under Section 48 of the Arbitration Act to entertain the objection of the respondent to the execution of the foreign award. On this basis, it was submitted that the objection be rejected and the execution application be allowed with consequential directions. 13. On the other hand, Mr. Sharan Jagtiani, learned senior counsel appearing for the respondent submitted that the fundamental policy of Indian Law subsumes within itself the aspect of bias or reasonable apprehension of bias as vitiating the entire proceedings, thereby indicating that the objection of bias cannot be looked at only from a limited perspective. It was submitted that the law pertaining to bias has evolved over the years and it has now reached a stage of development where any factor that may give rise to a reasonable apprehension in the mind of one of the litigating parties, is enough to vitiate the proceedings, thereby indicating that the decision / award / judgement, which is a culmination of such a proceeding, cannot be executed. The learned senior counsel specifically referred to judgements of the Supreme Court in the cases of Manak Lal Vs. Prem Chand Sanghvi and others, AIR 1957 SC 425 ; Ranjit Thakur Vs. Union of India and others, (1987) 4 SCC 611 , Rattan Lal Sharma Vs. Managing Committee Dr. Hari Ram School and others, (1993) 4 SCC 10 ; Voestalpine Schienen Gmbh Vs. Delhi Metro Rail Corporation Limited, (2017) 4 SCC 665 ; HRD Corporation Vs. GAIL (India) Limited, (2018) 12 SCC 471 ; Bharat Broadband Network Limited Vs. United Telecoms Limited, (2019) 5 SCC 755 ; and Jaipur Zila Vs. Ajay Sales & Suppliers, 2021 SCC OnLine SC 730. 14. It was submitted that the law pertaining to the concept of bias is clearly a part of the fundamental policy of Indian law and hence a valid ground to be raised under Section 48 of the Arbitration Act, while resisting execution in the present case.
Ajay Sales & Suppliers, 2021 SCC OnLine SC 730. 14. It was submitted that the law pertaining to the concept of bias is clearly a part of the fundamental policy of Indian law and hence a valid ground to be raised under Section 48 of the Arbitration Act, while resisting execution in the present case. It was further submitted that the IBA guidelines and the Vth and VIIth Schedules to the Arbitration Act also can be said to be forming a part of the fundamental policy of Indian law. In this regard, reference was made to the judgement of this Court in the case of HSBC PI Holdings (Mauritius) Limited Vs. Avitel Post Studioz Limited and others (supra), wherein this Court observed that adherence to the IBA guidelines can be said to be part of public policy of India. 15. It was submitted that a narrow interpretation pertaining to the fundamental policy of Indian law in the context of arbitration proceedings, with reference to the Vth and VIIth Schedules of the Arbitration Act, being canvassed on behalf of the applicant, ought not to be accepted. It was specifically submitted that even if the Vth and VIIth Schedules to the Arbitration Act mention only situations pertaining to law firms, while indicating ineligibility of an arbitrator, any association of an arbitrator with an organization with which counsel of one of the parties is also related, must be held to be akin to the situation pertaining to a law firm contemplated under the said Schedules to the Arbitration Act. Merely because the Vth and VIIth Schedules of the Arbitration Act do not refer to counsel’s chambers or barristers’ chambers, while the IBA guidelines do refer to them, cannot lead to a conclusion that as per the fundamental policy of Indian law manifested by the said Schedules to the Arbitration Act enacted by the Parliament of India, an argument pertaining to bias with reference to barristers’ chambers will have to be rejected outright. This Court is required to examine the nature of allegation, in the backdrop of the nature of relationship of the arbitrator with the barristers’ chambers and thereupon, reach a conclusion as to whether a reasonable apprehension of bias from the point of view of the party was made out or not.
This Court is required to examine the nature of allegation, in the backdrop of the nature of relationship of the arbitrator with the barristers’ chambers and thereupon, reach a conclusion as to whether a reasonable apprehension of bias from the point of view of the party was made out or not. In this context, it was submitted that the entries in the Vth and VIIth Schedules to the Arbitration Act will have to be interpreted in a purposive manner and in that backdrop, this Court will have to apply the judgement of the Supreme Court in the case of Chennai Metro Rail Limited Vs. Transtonnelstroy Afcons (supra). 16. It was contended that in this context, the Court will have to read the term ‘law firm’ in Entry 4 of the VIIth Schedule to the Arbitration Act to include ‘chambers’, to hold that, in the present case, a reasonable apprehension of bias as against the arbitrator Mr. Bruce Harris was prevalent. This further indicated that he was ineligible to have proceeded as an arbitrator, thereby holding that sufficient ground was made out under Section 48(2)(b) of the Arbitration Act to dismiss the execution application filed by the applicant. 17. It was further submitted that reliance placed on judgement of this Court in the case of POL India Projects Limited Vs. Aurelia Reederei Eugen Friederich GmbH (supra) on behalf of the applicant is wholly misplaced. The said case concerned maintainability of a proceeding under Section 34 of the Arbitration Act to challenge a foreign award and therefore, a passing remark made in the said judgement could be of no avail. It was further submitted that the subsequent judgement of this Court in the case of Prysmian Cavi E Sistemi Vs. Vijay Karia and another (supra) was absolutely clear with regard to the provisions of law. It is further submitted that even the Supreme Court in the case of Vijay Karia Vs. Prysmian Cavi and others, (2020) 11 SCC 1 , arising from the aforesaid judgement of this Court, did not disturb the position of law as recognized by this Court. It was further submitted that the Supreme Court, much earlier in the case of Satya Vs.
Prysmian Cavi and others, (2020) 11 SCC 1 , arising from the aforesaid judgement of this Court, did not disturb the position of law as recognized by this Court. It was further submitted that the Supreme Court, much earlier in the case of Satya Vs. Teja Singh, (1975) 1 SCC 120 , held that, if courts in India found that giving effect to a foreign award would offend Indian public policy, the courts would refuse to give effect to such a foreign award. On this basis, it was submitted that the contention raised on behalf of the applicant cannot be sustained that since the respondent had not challenged the foreign arbitral award in English courts, it is estopped from raising an objection with regard to the aspect of bias as part of fundamental policy of Indian law, while resisting the execution application. 18. It was further submitted that reliance placed on behalf of the applicant on the judgement of the Supreme Court of United Kingdom in the case of Haliburton Co. Vs. Chubb Bermuda Insurance Limited (supra) is also misplaced, for the reason that nothing in the LMAA Rules restricts the right of the respondent to resist execution of the foreign award under Section 48 of the Arbitration Act. It was further submitted that even if the test of reasonable third person is to be applied to the facts of the present case, it would become evident that a reasonable person would have an apprehension of bias, considering that the arbitrator Mr. Bruce Harris and the counsel representing the claimant i.e. Mr. Semark were admittedly members of the Quadrant Chambers. It was submitted that the Arbitration Act is a central statute applying throughout the country and it cannot be said that if a limited number of lawyers practising in cities like Bombay and Delhi are aware of the concept of chamber practice, the advocates and litigants at large in this country would also be aware of the same. The test of reasonable third person ought to be applied in that context. 19. The learned senior counsel further submitted that in terms of law laid down by the Supreme Court in the context of the issue of ‘bias’, a commonsensical approach is to be adopted by the Court.
The test of reasonable third person ought to be applied in that context. 19. The learned senior counsel further submitted that in terms of law laid down by the Supreme Court in the context of the issue of ‘bias’, a commonsensical approach is to be adopted by the Court. By adopting such an approach, in the facts and circumstances of the present case, according to the respondent, the execution of the foreign award cannot be granted as the same would be contrary to the fundamental policy of Indian law under Section 48 of the Arbitration Act. 20. The plethora of judgements on the said subject matter clearly indicated that bias or reasonable apprehension of a bias in the mind of a party vitiating the entire proceedings and the eventual arbitral award are clearly covered under the fundamental policy of Indian law and since the respondent is able to demonstrate that such a reasonable apprehension of bias does arise in the facts and circumstances of the present case, Section 48(2)(b) of the Arbitration Act comes into operation in favour of the respondent herein. It was submitted that allowing such a foreign award to be executed would clearly be contrary to the fundamental policy of Indian law and hence, the execution application deserves to be dismissed. 21. The respondent claims that the foreign arbitral award in the fact and circumstances of the present case cannot be executed as it is hit by bias and executing such an award would be contrary to public policy of India. While asserting that the award is in contravention with the public policy of India and / or fundamental policy of Indian law, not only has the respondent invoked the Vth and VIIth Schedules to the Arbitration Act, but the general law pertaining to bias that has developed over a period of time in India, is also invoked on behalf of the respondent. The endeavor of the respondent is to first fit the facts and circumstances of the present case into the aforesaid Schedules by claiming that the functioning of barristers’ chambers in United Kingdom, as on today, including the aforesaid Quadrant Chambers, ought to be treated as akin to the functioning of law firms, and thereafter to fall back on the general law of bias as developed in the jurisprudence of India to resist execution of the said foreign arbitral award.
The respondent is required to fall back on the general law pertaining to bias, for the reason that the applicant has forcefully contended that the public policy of India and / or the fundamental policy of India pertaining to the concept of bias applicable to situations arising under the Arbitration Act, is manifested in the Vth and VIIth Schedules to the Arbitration Act. It is claimed that the wisdom of the Parliament, which is the voice of the people of this country, has thought it fit to depart from the IBA guidelines by restricting the concept of bias in the context of law firms and that chambers have been specifically excluded. 22. Heard learned counsel for the parties and perused the material on record. In the context of the rival submissions made in this regard, it can be said that the concept of bias and the general law pertaining to the same that has developed in the jurisprudence of this country can be treated as a larger circle of two concentric circles, with the smaller circle being the situations of bias specifically contemplated under the aforesaid Schedules to the Arbitration Act. According to the respondent, even if it was to be held that the facts and circumstances of the present case do not fall within the smaller concentric circle, the respondent is entitled to have recourse to the larger concentric circle pertaining to the law regarding bias developed over a period of time in the aforesaid jurisprudence. 23. In this context, this Court will first have to deal with the rival contentions pertaining to the IBA guidelines, the provisions of the Arbitration Act and the Vth and VIIth Schedules thereof. A perusal of the provisions of the Arbitration Act and Schedules V and VII thereof shows that there is no reference to lawyers’ chambers or barristers’ chambers. In fact in India, after the enactment of the Advocates Act, 1961, there is no longer any classification between barristers and others, although there is a provision for designation of senior advocates. The entries in the Vth and VIIth Schedules do not refer to barristers’ chamber and hence, there is no direct entry in the said Schedules relatable to the concept of barristers’ chamber and the contention raised in that regard on behalf of the respondent.
The entries in the Vth and VIIth Schedules do not refer to barristers’ chamber and hence, there is no direct entry in the said Schedules relatable to the concept of barristers’ chamber and the contention raised in that regard on behalf of the respondent. The material placed on record shows that entry 3.3 of the IBA guidelines refers to relationship between an arbitrator and another arbitrator or counsel in the context of both, law firms as well as barristers’ chambers. Entry 3.3.1 of the IBA guidelines refers to the arbitrator and another arbitrator being lawyers in the same law firm, while entry 3.3.2 thereof refers to the arbitrator and another arbitrator, or the counsel for one of the parties being members of the same barristers’ chambers. 24. In this context, a perusal of the Vth Schedule to the Arbitration Act shows that entries 3, 4, 6, 7, 23, 25, 27, 28, 29 and 30 refer only to ‘law firm’ and in that context various situations that may give rise to a ‘relationship’ of the arbitrator. A perusal of the VIIth Schedule to the Arbitration Act shows that reference is made only to ‘law firm’ in entries 3, 4, 6, 7 and 8. Neither in the Vth Schedule nor in the VIIth Schedule to the Arbitration Act, is there any reference to barristers’ chambers or chambers in general. It is significant that the Vth Schedule to the Arbitration Act under entries 32 to 34 cover ‘other circumstances’ and even here, no reference is made to barristers’ chambers or chambers in general. The question is whether the Parliament has consciously departed from the IBA guidelines insofar as the question of bias arising in the context of barristers’ chambers or chambers in general is concerned. If it is held to be a conscious decision of the Parliament based on its wisdom and the same is strictly construed as manifestation of public policy of India or fundamental policy of Indian law, it can be said that the situation arising from relationship concerning barristers’ chambers or chambers in general for assessing bias is not contemplated and available under the Arbitration Act. It is for this reason that the respondent has insisted on a purposive and broad interpretation of the entries in the Vth and VIIth Schedules while assessing the public policy of India or fundamental policy of Indian law in the context of bias. 25.
It is for this reason that the respondent has insisted on a purposive and broad interpretation of the entries in the Vth and VIIth Schedules while assessing the public policy of India or fundamental policy of Indian law in the context of bias. 25. In this context, reference can be made to the judgement of the Supreme Court in the case of Chennai Metro Rail Limited Vs. Transtonnelstroy Afcons (supra). The relevant portion of the said judgement reads as follows:- “43. The attempt by Chennai Metro to say that the concept of de jure ineligibility because of existence of justifiable doubts about impartiality or independence of the tribunal on unenumerated grounds [or other than those outlined as statutory ineligibility conditions in terms of Sections 12 (5)], therefore cannot be sustained. We can hardly conceive of grounds other than those mentioned in the said schedule, occasioning an application in terms of Section 12(3). In case, this court were in fact make an exception to uphold Chennai Metro's plea, the consequences could well be an explosion in the court docket and other unforeseen results. Skipping the statutory route carefully devised by Parliament can cast yet more spells of uncertainty upon the arbitration process. In other words, the de jure condition is not the key which unlocks the doors that bar challenges, mid-stream, and should "not to unlock the gates which shuts the court out" from what could potentially become causes of arbitrator challenge, during the course of arbitration proceedings, other than what the Act specifically provides for.” 26. It is held by the Supreme Court that if the statutory route devised by Parliament is not followed scrupulously, there would be uncertainty as regards the process of arbitration. It is also a settled position of law as recognized by the Supreme Court in the case of Vijay Karia Vs. Prysmian Cavi and others (supra), that the Court should be inclined towards enforcement and execution of foreign arbitral awards rather than upholding objections, that may frustrate the process of arbitration, which is a quick alternative dispute resolution process. Therefore, this Court is not inclined to give purposive interpretation to the entries in the Vth and VIIth Schedules to the Arbitration Act.
Therefore, this Court is not inclined to give purposive interpretation to the entries in the Vth and VIIth Schedules to the Arbitration Act. It would also not be appropriate to accept the contentions raised on behalf of the respondent that now-a-days the functioning of barristers’ chambers even in the United Kingdom has changed and it has become akin to functioning of lawyers’ firms. It would not be appropriate to venture into the said debate as the statutory route manifesting the will of the Parliament shows only specific entries under the Vth and VIIth Schedules to the Arbitration Act and reference is made only to lawyers’ firms and not to barristers’ chambers or chambers in general. 27. Yet, it may not be safe to proceed on the basis that the Vth and VIIth Schedules to the Arbitration Act cover all conceivable relationships that may give rise to the apprehension of bias. It is only in this context that the contentions raised on behalf of the respondent with regard to the general law of bias that has developed in the jurisprudence of this country can be taken up for consideration. While doing so, this Court will have to apply the objective third party test. This Court will also have to test the contentions of bias raised on behalf of the respondent on the touchstone of a ‘reasonable person’ arriving at a conclusion as to whether a reasonable apprehension of bias could arise in the facts and circumstances of the present case. It is in this context that the position of law laid down in the judgements referred to in paragraph 13 hereinabove, needs to be analyzed and applied to the present case. 28. In the cases of Manak Lal Vs. Prem Chand Sanghvi and others (supra); Ranjit Thakur Vs. Union of India and others (supra); and Rattan Lal Sharma Vs. Managing Committee Dr. Hari Ram School and others (supra), the Supreme Court has laid down that when an allegation of bias is made, the test must be whether a litigant could reasonably apprehend that a bias attributable to the member of a tribunal might operate against him.
Union of India and others (supra); and Rattan Lal Sharma Vs. Managing Committee Dr. Hari Ram School and others (supra), the Supreme Court has laid down that when an allegation of bias is made, the test must be whether a litigant could reasonably apprehend that a bias attributable to the member of a tribunal might operate against him. The proper approach for the judge (in this case, the arbitrator) is not to look at his own mind and ask himself, however, honestly, as to whether he is biased, but to look at the mind of the party to examine as to whether a reasonable apprehension of bias arises and the test is whether there is a real likelihood of bias even though such bias has not in fact occurred. 29. In the cases of Voestalpine Schienen Gmbh Vs. Delhi Metro Rail Corporation Limited (supra); HRD Corporation Vs. GAIL (India) Limited (supra); Bharat Broadband Network Limited Vs. United Telecoms Limited (supra); and Jaipur Zila Vs. Ajay Sales & Suppliers (supra), the Supreme Court examined the concept of bias in the context of the provisions of the Arbitration Act. In these judgements, the Supreme Court considered the necessity of neutrality of arbitrators and the need to examine as to whether circumstances exist that give rise to justifiable doubts regarding existence of any relationship or interest of the arbitrator. In that context, the importance of disclosures on the part of the arbitrator was discussed and it was also found that the VIIth Schedule to the Arbitration Act is based on IBA guidelines, which are regarded as representation of international based practices. This Court in the judgement in the case of HSBC PI Holdings (Mauritius) Limited Vs. Avitel Post Studioz Limited and others (supra) has also referred to the IBA guidelines in the context of the public policy of India. 30. In the case of HRD Corporation Vs. GAIL (India) Limited (supra), the Supreme Court rejected the argument that the entries in the Vth and VIIth Schedules should be construed in a most expansive manner so that the remotest likelihood of bias gets removed. It was emphasized that the allegation of impartiality of an arbitrator or a likelihood of bias has to be tested on the reasonable third person test, wherein such a third person has knowledge of the relevant facts and circumstances.
It was emphasized that the allegation of impartiality of an arbitrator or a likelihood of bias has to be tested on the reasonable third person test, wherein such a third person has knowledge of the relevant facts and circumstances. A broad commonsensical approach to the entries in the Vth and VIIth Schedules to the Arbitration Act has been recommended in the said judgement of the Supreme Court. In the case of Bharat Broadband Network Limited Vs. United Telecoms Limited (supra) and Jaipur Zila Vs. Ajay Sales & Suppliers (supra) also, the Supreme Court has indicated that a commonsensical approach ought to be adopted in such cases where bias is alleged against the arbitrator. 31. Hence, even if the Court is to consider the general law pertaining to the aspect of bias that has developed in the jurisprudence of this country, the reasonable third person test will have to be applied to ascertain the claim made on behalf of the respondent that under the fundamental policy of Indian law, as applied to the facts of the present case, the foreign arbitral award is rendered inexecutable on the ground of bias. 32. The basis for alleging bias in the present case against one of the members of the arbitral tribunal i.e. Mr. Bruce Harris is that he is a member of Quadrant Chambers and that the counsel representing the original claimant i.e. Mr. Semark is also a member of the said chambers. It is claimed that this fact in itself is enough to raise a reasonable apprehension of bias in the mind of the respondent, even if the material on record may not indicate actual bias. The said objection was also raised before the tribunal and a perusal of the final award shows that the said aspect was dealt with by the tribunal in paragraphs 16 to 23. The tribunal found that there was no need for Mr. Bruce Harris to recuse, for the reason that mere membership of Quadrant Chambers could not be a ground for raising the apprehension of bias. It was found that Mr. Bruce Harris was not even a barrister, although he was a member of the Quadrant Chambers and that he had no personal relationship with Mr.Semark i.e. the counsel representing the original claimant (applicant). It was recorded that the associate status of Mr.
It was found that Mr. Bruce Harris was not even a barrister, although he was a member of the Quadrant Chambers and that he had no personal relationship with Mr.Semark i.e. the counsel representing the original claimant (applicant). It was recorded that the associate status of Mr. Bruce Harris with Quadrant Chambers was the loosest of affiliations, not comparable to the membership of a law firm. The tribunal recorded that the applicant in an e-mail had stated that the oral hearings were being attended without prejudice to the rights of the respondent to object in appropriate proceedings, if need be. It is an admitted position that the respondent never challenged the aforesaid final award and therefore, no objection was raised at any point of time after the same was raised only once before the tribunal. 33. This Court is of the opinion that the applicant cannot claim that since the final award was not challenged by the respondent in the jurisdictional court, no ground pertaining to bias can be raised while resisting execution of the final award. Reliance placed on the judgement of this Court in the case of POL India Projects Limited Vs. Aurelia Reederei Eugen Friederich GmbH (supra) is misplaced, for the reason that the real question for consideration in the said case pertained to the right of a party to file a petition under Section 34 of the Arbitration Act in order to challenge a foreign arbitral award. The observation made in the said judgement in respect of enforcement / execution of foreign award under Section 48 of the Arbitration Act is only a passing remark. In the subsequent judgement of the learned Single Judge of this Court in the case of Prysmian Cavi E Sistemi Vs. Vijay Karia and another (supra), the question of bias was gone into despite the fact that no challenge was raised to the foreign award. It is relevant to note that in the case of Government of India Vs. Vedanta Limited, (2020) 10 SCC 1 the Supreme Court, in the facts of the said case, went to the extent of holding that merely because the courts where seat of arbitration was located had upheld the award on challenge, it would not be an impediment for the Indian courts to examine whether the award was opposed to public policy of India under Section 48 of the Arbitration Act.
Thus, in a situation where challenge was raised and it was repudiated, the aforesaid position of law has been laid down, clearly indicating that absence of challenge to the arbitral award in the present case cannot be an impediment to examine the contentions being raised on behalf of the respondent. Thus, the contention raised on behalf of the applicant to that extent is rejected. Nonetheless, in the present case, it is necessary to examine as to whether applying the test of bias evolved in the jurisprudence of this country, which forms part of the public policy of India or fundamental policy of Indian law, it can be said that reasonable apprehension of bias could be found in order to vitiate the foreign arbitral award. As noted hereinabove, the reasonable third person test will have to be applied, and as held in the case of HRD Corporation Vs. GAIL (India) Limited (supra), doubts with regard to the impartiality and independence of an arbitrator would be justified only if a reasonable third person having knowledge of the relevant facts and circumstances would reach the conclusion that there is likelihood of the arbitrator being influenced by factors other than the merits of the case. 34. In this context, the respondent has heavily relied on material obtained from the website of Quadrant Chambers to contend that secretarial services were being provided by the Quadrant Chambers to both, the arbitrator i.e. Mr. Bruce Harris and the counsel representing the claimant i.e. Mr. Semark. The reasonable third person test will have to be applied on the basis that such a third person has knowledge of the relevant facts and circumstances pertaining to the association of individuals with chambers. In the present case, the respondent was represented by a counsel and the proceedings took place in the United Kingdom under the English law and the stipulations of the LMAA. The reasonable third person having knowledge of relevant facts would appreciate the nature of association of individuals with chambers like Quadrant Chambers. It is a matter of record that Mr. Bruce Harris is not even a barrister. Chambers like the Quadrant Chambers in United Kingdom do not manage and run the practice of arbitrators like Mr. Bruce Harris or even Mr. Semark, who is a counsel. The material on record even to a reasonable third person would show loose association of the said individuals with Quadrant Chambers.
Bruce Harris is not even a barrister. Chambers like the Quadrant Chambers in United Kingdom do not manage and run the practice of arbitrators like Mr. Bruce Harris or even Mr. Semark, who is a counsel. The material on record even to a reasonable third person would show loose association of the said individuals with Quadrant Chambers. This Court is unable to agree with the respondent that a reasonable third person having knowledge of all such relevant facts and circumstances would reach a conclusion that the learned arbitrator, in this case Mr. Bruce Harris, would be biased or that there could be reasonable apprehension of bias or that he would be influenced by the factors other than the merits of the case in reaching his decision. Once this conclusion is reached, the objection raised on behalf of the respondent loses its force. Even applying the general position of law evolved in the jurisprudence of this country pertaining to the concept of bias and applying the reasonable third person test, this Court is unable to accept the contention raised on behalf of the respondent that the foreign award in the facts of the present case stood vitiated on the ground of bias. Thus, it cannot be said that the foreign arbitral award is contrary to the public policy of India and / or the fundamental policy of Indian law. 35. A contention is raised on behalf of the respondent that a lay person in this country is not aware of the niceties of the relationship of the members of chambers like Quadrant Chambers. It is submitted that barring advocates and counsel practising in courts in metropolitan cities like Mumbai, Calcutta, Delhi and Madras, even members of the legal profession in other parts of this country are not aware of the way of functioning of such chambers. This argument is unacceptable for the reason that the reasonable third person test is to be applied, keeping in mind the fact that the respondent is into business pertaining to international relationships and such a person, who is also represented by counsel in United Kingdom, being fully aware of the material pertaining to the facts and circumstances of the present case, cannot claim ignorance and on that basis raise a contention regarding apprehension of bias. Therefore, the aforesaid contention raised on behalf of the respondent is rejected. 36.
Therefore, the aforesaid contention raised on behalf of the respondent is rejected. 36. Reliance placed on behalf of the respondent on the judgement rendered by ICSID in the case of the Hrvatska Elektroprivreda Vs. Republic of Slovenia (supra) is also misplaced for the reason that judgements of the said institution have no precedential value, particularly because India is not a member of ICSID and they are certainly not binding on this Court. The judgement of the Supreme Court of United Kingdom in the case of Haliburton Co. Vs. Chubb Bermuda Insurance Limited (supra) can also not come to the aid of the respondent, for the reason that even in the said judgement, with reference to the concept of 'fair-minded and informed observer', it is laid down that ‘fair-minded’ means that the observer does not reach a judgment on any point before acquiring full understanding of both sides of the argument. The real question in such cases, as held in the said judgement, is as to whether the fair-minded and informed observer, having considered the facts, would reach a conclusion that there was a real possibility that the tribunal is biased. Even if the said test is to be applied to the facts of the present case, for the reasons stated hereinabove, the contentions raised on behalf of the respondent cannot be accepted. 37. It is relevant to note that this Court in the case of Oil and Natural Gas Corporation Limited Vs. Sumitomo Heavy Industries Limited (supra) referred to the judgement of the Queen’s Bench Division (Commercial Court) in the case of Laker Airways Inc. Vs. FLS Aerospace Limited and Burnton (supra) and proceeded to hold that barristers are self-employed and even if they have the same chamber and share the same clerks, it does not impair their independence and there is no question of any bias in such a case. This is relevant in the context of even the reasonable third person test sought to be pressed into service on behalf of the respondent as part of the fundamental policy of Indian law. As noted hereinabove, such a reasonable third person cannot be presumed to be a person ignorant of the relevant facts and circumstances.
This is relevant in the context of even the reasonable third person test sought to be pressed into service on behalf of the respondent as part of the fundamental policy of Indian law. As noted hereinabove, such a reasonable third person cannot be presumed to be a person ignorant of the relevant facts and circumstances. Being aware of such relevant facts and circumstances, no reasonable third person would be able to reach the conclusion that in the facts of the present case, the foreign arbitral award stands vitiated, rendering it inexecutable. 38. It is also relevant to note that this Court while considering the present application cannot be expected to look for reasons not to execute the foreign arbitral award. On the contrary, the approach of the Court under Section 48 of the Arbitration Act is to proceed to enforce and execute the award, unless the extremely narrow grounds available under the said provision are successfully proved by the respondent resisting execution of such an award. In other words, granting execution is the rule and upholding objections to execution is an exception under the aforesaid provision. This is in line with the New York Convention adopted in the United Nations Conference on Commercial Arbitration, wherein the thrust was to liberalize procedure for enforcing foreign arbitral awards. This has been specifically noted in the judgement of the Supreme Court in the case of Vijay Karia Vs. Prysmian Cavi and others (supra). In the case of Government of India Vs. Vedanta Limited (supra), the Supreme Court has also observed that the Courts under Section 48 of the Arbitration Act can exercise discretion to overrule objections to execution and enforceability, emphasizing on the opening words of the said provision. The party seeking to resist execution of the foreign arbitral award is, therefore, required to meet a very high threshold, which in the facts and circumstances of the present case, the respondent has not been able to meet. In view of the above, the objections raised on behalf of the respondent are rejected. The application is made absolute as per the prayer made in the present application. Consequently, the amount of Rs.4,80,00,000/- lying in the credit and to the benefit of the present application, along with accrued interest, shall be disbursed to the applicant. The balance amount shall be paid by the respondent to the applicant within six weeks from today. 39.
The application is made absolute as per the prayer made in the present application. Consequently, the amount of Rs.4,80,00,000/- lying in the credit and to the benefit of the present application, along with accrued interest, shall be disbursed to the applicant. The balance amount shall be paid by the respondent to the applicant within six weeks from today. 39. The application stands disposed of in above terms.