EX.P.--99/2015. Case: Glencore International AG Vs. Indian Potash Limited & Anr.. High Court of Delhi (India)
| Case Number | EX.P.--99/2015 |
| Citation | NA |
| Judgement Date | August 09, 2019 |
| Court | High Court of Delhi (India) |
Judgment Reserved on 31.1.2019 % Judgment Pronounced on 09.08.2019
+ EX.P. 99/2015
GLENCORE INTERNATIONAL AG ..... Decree Holder Through: Mr. Nakul Dewan with Mr. Moazzam
Khan, Ms. Shweta Sahu, Mr. Kumar, and Mr. Kartik Prasad, Advs. versus
INDIAN POTASH LIMITED & ANR. ..... Judgement Debtor Through: Mr. Arjun Singh Bhati, Adv.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J.:
Preface
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The captioned execution petition seeks enforcement of foreign dated 12.3.2012 (hereafter referred to as „Final Award‟) and the cost of reference awarded in favour of the decree holder i.e. Glencore International (hereafter referred to as „Glencore‟) which was passed by the arbitral after the final award on 12.5.2015 (hereafter referred to as „Cost Award‟).
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Notice in the execution petition was issued on 23.3.2015. The judgment debtor i.e. India Potash Ltd. (hereafter referred to as „IPL‟) entered appearance through its counsel on 29.4.2015. On that date, IPL was granted two weeks file its objections to the award.
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The record shows that on 22.5.2015, IPL‟s application i.e.
No.523/2015 seeking an extension of time for filing objections was allowed the Court. IPL was thus granted further three weeks from that date to file objections in the matter. Glencore, on the other hand, was given two weeks file its rejoinder thereafter. The application was disposed of in the aforesaid terms.
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The record also shows that IPL filed an application i.e.
No.709/2015 for issuance of directions to Glencore to file the complete record. On this application, notice was issued on 23.7.2015. The application was dismissed by the Joint Registrar (Judicial) on 25.8.2015. The Registrar (Judicial) took the view that on earlier occasions time had been sought by IPL to file objections without adverting to the plea that in order to objections the arbitral record was required. Furthermore, the Joint Registrar (Judicial) took the view, given the nature of the proceedings, that Glencore not required to file the arbitral record and what was necessary to proceed in matter was only a decree sheet which has been filed by Glencore.
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As indicated at the very outset, the Cost Award came to be rendered the arbitral tribunal post the pronouncement of the Final Award and due to circumstance obtaining, Glencore moved an application i.e.
No.870/2015 to bring on record the Cost Award dated 12.5.2015 passed by Registrar, Singapore International Arbitration Centre (hereafter referred to „SIAC‟). Consequently, the application seeking amendment of the execution petition for bringing on record the Cost Award was allowed on 8.1.2016 amended execution petition was taken on record. As a result of development, IPL was granted four weeks to file objections to the amended
to the amended petition were not brought on record.
Backdrop
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Given this preface, the following facts are required to be noticed to the background as to how the captioned petition and the objections came to filed. On 5.2.2010, Glencore executed an agreement with IPL (hereafter referred to as „Contract‟). As per this agreement, IPL was required to 40,000 Wet Metric Tonnes (WMT) iron ore. One of the conditions incorporated in the Contract was that the iron ore should have iron (hereafter referred to „Fe‟) content equivalent to at least 61 percent and that if Fe content was 60 percent, Glencore was to reject the cargo in terms of the specifications obtaining in Schedule 1 of the contract obtaining between parties.
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Having executed the contract, Glencore entered into a sub-sale agreement with an entity by the name Hebei Tianxhu & Steel (Group) Co. Ltd. (in „Hebei‟) on 16.3.2010 in the hope that it would receive iron ore from IPL having the specified Fe content. The base price at which Glencore had entered into sub-sale agreement with Hebei was USD 129/DMT. Apparently, on the when the cargo was shipped by IPL to Glencore, which was on 31.3.2010, chemical composition analysis carried out showed that the Fe content of was 60.40 percent. However, upon arrival of the cargo at the port of discharge on 28.4.2010, its chemical composition analysis showed that it had Fe equivalent to 57.70 percent. Consequently, on 6.7.2010, Glencore via solicitors issued a notice of rejection. Through the notice of rejection, it conveyed to IPL that the cargo was been rejected as it had Fe content of than 60 per cent. This stand of Glencore was rebutted by IPL. IPL conveyed its
to the sub-sale agreement dated 16.3.2010. Under the addendum, Glencore agreed to resell the cargo to Hebei at a reduced base price of USD 111.00/DMT on the premise that the Fe content would be at least 58 percent.
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Simultaneously, Glencore served a Notice of Arbitration (hereafter referred to as „NOA‟) on the same date i.e. 5.8.2010. Inter alia, via the Glencore indicated to IPL that it had commenced arbitration proceedings SIAC rules. Besides this, Glencore also proposed the appointment of one Alan Thambiayah as the sole arbitrator.
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In response thereto, IPL vide communication dated 19.8.2010 resisted the commencement of arbitration proceedings in its entirety and furthermore averred that invocation of arbitration proceedings by Glencore at that was “void” as the “process of mutual talks” was on. It was also conveyed IPL that it had instructed its lawyers to take further steps in the matter therefore, time for enabling IPL to take suitable steps in the matter should extended by a further period of 30 days. Glencore responded to communication through their solicitors on 24.8.2010.While noticing that had sought an extension of time by 30 days, Glencore responded by stating it had assumed that IPL had no objection to the applicability of the SIAC Rules. Accordingly, Glencore called upon IPL to give its response to the same the close of business in Singapore on 25.8.2010. On 26.8.2010, IPL wrote back and indicated that the request for extension of time made should not construed as if it had agreed to the commencement of arbitration proceedings or the applicability of the SIAC Rules.
to respond to the NOA.
10.2 Further, vide communication dated 16.09.2010, Glencore conveyed stand as to why SIAC Rules would apply to the arbitration proceedings.
10.3 On 12.11.2010, Registrar, SIAC informed IPL that he had carried out exercise in pursuance to the provisions of Rule 25.1 of SIAC Rules, 2010 short 'SIAC Rules') and thereafter reached a prima facie conclusion that arbitration agreement existed between the parties. IPL was thus called upon give its response, inter alia, with regard to the claims preferred by Glencore.
10.4 Being optimistic that IPL would agree with the name suggested Glencore for appointment as an arbitrator, its solicitors, vide communication dated 15.11.2010, wrote to IPL to seek confirmation in that behalf.
10.5 Since no response was received from IPL concerning the same,
17.02.2011, Glencore triggered the Expedited Procedure under Rule 5 of SIAC Rules by making a request in that behalf to the Registrar, SIAC.
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The record shows that on 14.3.2011, the Chairperson, SIAC appointed one Mr. Chooi Yue Wax Kenny as the Sole Arbitrator instead of Mr. Thambiayah whose name was proposed by Glencore. Furthermore, Chairman, SIAC also ruled that the arbitration proceedings will be conducted as per Expedited Procedure as envisaged under the SIAC Rules.
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Thereafter, pleadings in the matter were completed. Glencore filed Statement of Claim (SOC) on 27.05.2011. Likewise, IPL filed its Statement Defence (SOD) along with the counterclaim on 21.07.2011.Glencore filed rejoinder and defence to the counterclaim on 08.08.2011.
Submissions of the counsel
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Given this backdrop, arguments in support of the objections filed on of IPL were advanced by Mr. Arjun Singh Bhati, Advocate, while submissions in support of the execution petition were advanced by Mr. Nakul Dewan Advocate.
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It would be relevant to note that the record shows that IPL‟s objections to the execution petition were captured in the proceedings held on 17.01.2017 perusal of the order dated 17.01.2017 shows that IPL has raised four-fold objections to the continuation of the execution petition. These being:
i. That the awards which include the Final Award and the Cost Award not stamped. The contention is that since the awards are unstamped would have to be impounded and that enforcement proceedings could commenced only after they are stamped and that would assume (penalty is paid) in accordance with the law prevailing in this country. [ Objection No. 1 ]
ii. Second, the arbitral tribunal was not constituted as per the agreement obtaining between the parties. Reference in this behalf was made Section 48(1)(d) of the 1996 Act. The argument being that the parties had not agreed to the arbitration proceedings being conducted under the SIAC Rules. Therefore, the applicable law qua the arbitration proceedings ought to be the International Arbitration Act (Chapter 143 A) (in short „the Act‟). Consequently, parties were required to adopt the procedure constituting the arbitral tribunal as provided under the IA Act though, Chairman, SIAC was the specified authority for constituting
iii. Third, the failure of the arbitral tribunal to decide the objection as to jurisdiction at the very threshold as required under the IA Act deprived IPL of the opportunity to file a possible appeal if such a decision had been rendered before pronouncement of the Final Award. procedure adopted had caused significant prejudice to IPL. [ Objection No. 3 ]
iv. Lastly, the awards rendered by the arbitral tribunal were vitiated account of breach of principles of natural justice in as much as Glencore was permitted to amend its pleadings on the date when final hearing in the matter was held without allowing IPL to contest the amendment. [ Objection No. 4 ]
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Mr. Arjun Singh Bhati, who appeared for IPL elaborated upon objections articulated at the hearing held on 17.01.2017 before me, broadly, follows:
16.1 The main thrust of...
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