| The Supreme Court held in Thyssen
Stahlunion GMBH vs. Steel Authority of India Ltd. that,
“A foreign award given after the commencement of the
new Act (i.e. Act of 1996) can be enforced only under the
new Act. There is no vested right to have the foreign award
enforced under the Foreign Awards Act [i.e. Foreign Awards
(Recognition and Enforcement) Act, 1961]”.
The Supreme Court affirmed the judgement of the Gujarat
High Court in the case of Western Shipbreaking Corpn. vs.
Clare Haren Ltd., U.K. and held that the foreign award given
after the commencement of the Act of 1996 would be governed
by the said Act although arbitration proceedings had commenced
in that case prior to the enforcement of the Act. The learned
Judges in this case said that they were in respectful agreement
with the law laid down in Thyssen judgement.
Article 367(2) of the Constitution states that any reference
in the Constitution to Acts or laws of, or made by Parliament,
or to Acts or laws of or made by the Legislature of a State
shall be construed as including a reference to Ordinance made
by the President or to an Ordinance made by a Governor, as
the case may be. This article read with Section 30 of the
General Clauses Act clearly indicates that when a reference
is made to an Act, it shall be construed including reference
to an Ordinance. Under Articles 123 and 213, subject to limitation
stated therein, an Ordinance promulgated shall have the same
force and effect as an Act of Parliament or an Act of a Legislature
of a State”
The learned Judges held that a foreign award passed on 13/8/1996
could be enforced with the same vigour under the Ordinance
as it could be under the Act of 1996.
The learned Judges held that although the Act of 1996 was
brought into force w.e.f.22/8/1996 vide Notification No.GSR
375(E) dt.22/8/1996 published in the Gazette of India, for
all practical and legal purposes it shall be deemed to have
been effective from 25/1/1996, i.e. the date when the first
Ordinance came into force, since the provisions of the said
Act and Ordinance are similar and there is nothing in the
Act to the contrary so as to make the Ordinance ineffective
as to either its coming into force on 25-1-1996 or its continuation
upto 22-8-1996.
The learned Judges held that the object of the Act of 1996
is to minimise supervisory role of the court and to give speedy
justice. Under the Arbitration Act, 1940 the arbitral award
had to be filed in a court to obtain a decree, which is dispensed
with under the Act of 1996. In one proceeding there may be
different stages. In the first stage, the court may have to
decide about the enforceability of the award. Once the court
decides that the foreign award is enforceable, there arises
no question of making the foreign a rule of court/decree.
If the object and purpose can be served in the same proceedings,
there is no need to take two separate proceedings resulting
in multiplicity of litigation.
The impugned judgement and order were set aside by the Supreme
Court.
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