March, 2005

The Arbitration & Conciliation (Amendment) Bill 2003 initiated by the earlier Government is still pending in Parliament. Presently it is before a Joint Parliamentary Committee which is inviting suggestions from stakeholders and lawyers. The indications coming in from the new Law Minister are that the (new) Government is not in favour of incorporating the sea changes proposed under the original Bill; nor is it in favour of opening up any further the scope of judicial review. With this, the Government seems to have come a full circle and feels that it would not be prudent to divert substantially from the Model Law on which the 1996 Act is based. The Indian Council of Arbitration is also believed to have taken a view that the proposed amendment should not affect any “basic features” of the existing law, specially those based on Party Autonomy, Minimum Supervision and Interference from Courts.

March, 2005

The judgment debtor, M/s Modi Wellvest Private Limited (MWPL) raised a preliminary challenge to an execution petition to enforce a foreign award against it by Motorola Inc. on the ground that the Delhi High Court did not have territorial jurisdiction. Motorola Inc. filed the execution petition in the Delhi High Court, inter alia, on the basis that a Shareholder Guarantee, containing the arbitration clause had been executed between the parties at New Delhi and that the primary assets of the MWPL are 51% of the shares of the company Spice Communications Ltd., having its registered office in New Delhi where the Register of Shares is maintained.

MWPL contended, inter alia, that by virtue of the location of share certificates of Spice outside Delhi, no execution of the decree in Delhi is permissible in law. It also pleaded that unless the Court having jurisdiction in personam over MWPL granted a money decree based on the foreign award, no execution proceedings could lie for the execution of such a foreign award.

Relying on the Supreme Court’s decision in Fuerst Day Lawson case, AIR 2001 SC 2293, the High Court held that execution can only be done after the court is satisfied that there are no objection to the enforcement of the award under Section 48 and an award would only be deemed to be a decree under Section 49 after that and would be available for execution.

Rejecting the preliminary objection regarding maintainability of the enforcement / execution application the Court held that an execution petition qua shares of Spice with its registered office at Delhi (situs of shares in question is the registered office of the company ) and existence of the bank accounts in Delhi, was maintainable before the High Court at Delhi. The High Court also relied on decision of the Supreme Court in Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Ltd., Saudi Arabia, (1995) Supp 2 SCC 280, wherein it was held that a party seeking enforcement of an international award will be able to go forum shopping and locate the assets of the losing party for executing the award.