Whether Enforcement Of Foreign Arbitration Award Can Be Denied Due To Non-Stamping Of Arbitration Agreement? Delhi High Court To Examine

The bench of Justice Manoj Kumar Ohri has issued notice on a plea seeking to raise objection to the enforcement of the Singapore seated foreign arbitration award under Section 48 of the A&C Act.

The award debtor raised objections to the enforcement of the foreign seated arbitration award on the ground of non-stamping of the arbitration agreement. It contended that the underlying arbitration agreement, being unstamped, is not considered "valid" under Indian law, which governs the agreement. It relied upon the recent judgment of the Constitution bench of the Supreme Court in N.N. Global, wherein the Court held that an unstamped arbitration agreement is deemed "unenforceable," "invalid," "bereft of life," "non-est," and cannot be "acted upon" by a Court at the stage of referring disputes under Section 11 of the Arbitration Act,^[1] to contend that the findings regarding the invalidity of an unstamped agreement should also apply to proceedings for the enforcement of foreign awards under Part – II of the Arbitration Act.

Additionally, the award debtor submitted an application requesting the payment of outstanding stamp duty related to the arbitration agreement. Their argument rested on the premise that the Award Holders are obligated to fulfill their contractual duty of stamp duty payment for the arbitration agreement, regardless of the ongoing assessment of the foreign award's enforceability. They contended that foreign entities, like the Award Holders, who seek to enforce a foreign award under Part – II of the Arbitration Act, should not be permitted to circumvent India's mandatory fiscal statutes.

Upon hearing the parties, the Court issued the notice on the applications moved by the award debtor and directed the award holders to file their reply.

Case Title: SIMPLOT INDIA LLC v. HIMALAYA FOOD INTERNATIONAL LIMITED

Citation: 2023 LiveLaw (Del) 938

Date: 06.10.2023

Counsel for the Award Holders: Ms. Madhu Sweta and Ms. Shivanghi Khanna

Counsel for the Award Debtor: Mr. Ashish Dholakia, Sr. Advocate with Mr. Mohit Rohatgi, Mr. Rajendra Dangwal, Ms. Samriddhi Sukla and Ms. Nutun Keswani

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