Bombay High Court: In an interim application seeking stay on operation, execution or enforcement of award dated 27-07-2023 during the pendency of Arbitration Petition, RI Chagla, J. upheld the costs awarded by the arbitrator finding the same in conformity with the cost regime under Section of (‘Arbitration Act’).
Background
It was stated on behalf of the petitioner that without prejudice to the Petitioner’s rights and contentions, the Petitioner is willing to deposit the principal amount awarded by the Tribunal as damages and nominal damages, while contending that there should be an unconditional stay of that part.
Court’s Analysis
The Court looked at the decisions cited by the counsel surrounding challenge to the costs awarded by the Arbitral Tribunal and noted that the impugned award under challenge was an International Commercial Arbitration Award passed in an SIAC Arbitration. The Court explained that “any challenge to the Award on the ground of it suffering from perversity will not arise and what is required to be considered, prima facie at this stage, is whether the Award of costs is in any manner contrary to the fundamental public policy of Indian law.”
The Court cited Renusagar Power Co. Ltd. v. General Electric Co., wherein the Supreme Court had considered grounds of public policy for refusing enforcement of a foreign Award under Section 7(1)(b)(ii) of the Foreign Awards Act to hold that costs awarded by an Arbitrator, challenged for being excessive and unconscionable were not the grounds for refusing enforcement of Award. The Court further referred to Delhi High Court’s decision in Xstrata Coal Marketing v. Dalmia Bharat (Cement) Ltd., wherein it was held that awarded cost fell under the Arbitral Tribunal’s discretion, and that a challenge to awarding of costs on ground of proportionately i.e. damages awarded being substantially less than the amount claimed, the cost should be allocated proportionately, could not be considered, since there was no mathematical formula for splitting the costs in the ratio of the amount claimed and the amount awarded.
The Court further clarified that the Supreme Court in Vijay Karia v. Prysmian Cavi E Sistemi SRL, considered the decision in Renusagar (supra) and did not depart from the principle laid down, wherein it was held that “fundamental policy of Indian law must amount to breach for some principle or legislature which is so basic to Indian Law that it is not susceptible of being compromised. “Fundamental Policy” refers to core values of India’s public policy as a nation, which may find expression not only in statute, but also time-honoured, hallowed principles which are followed by the Courts.”
Coming back to the findings of Arbitral Tribunal in the instant matter, the Court viewed that while awarding costs, the Tribunal considered the conduct of parties including the petitioner and, in such circumstances, held it fair and appropriate for the claimant to make a fulsome recovery of its costs.
The Court prima facie found that the Arbitral Tribunal had given due regard to the regime of costs under Section of the and also considered that claimant was a successful party in the arbitration and that the petitioner had breached the contract, which led the Tribunal to observe that the petitioner throughout the proceedings disputed its liability to the Claimant or to pay damages, and found the claimant obliged to proceedings for achieving any finding or recognition of any liability on part of the petitioner and pay all the arbitration costs after the petitioner defaulted on its payment obligations to SIAC penalized the petitioner.
The Court upheld the Arbitral Tribunal’s decision holding the same in conformity with the cost regime under Section of the . The Court further directed petitioner to deposit the principle awarded amount of USD 1,098,187.20 as damages and USD 3.00 as nominal damages as well as costs awarded in the sums of (i) SGD528,630.19; (ii) GBP63,440.00; and (iii) INR387,339.00, stating the same to be the condition for stay on operation and/or execution and/or enforcement of the impugned Award within 6 weeks.
[Chowgule and Company Private Limited v. Fomento Commodities Pte Limited, Interim Application No. 30249 of 2023, Order dated 18-03-2024]
Advocates who appeared in this case :
For Petitioner: Senior Advocate Sharan Jagtiani, Advocate Chirag Kamdar, Advocate Shalaka Patil, Advocate Ankit Pathak, Advocate Surbhi Shah; Trilegal
For Respondent: Senior Advocate Zal Andhyarujina, Advocate Vishal Sheth, Advocate Bimal Rajasekhar, Advocate Rishi Murarka, Advocate Revati Desai, Advocate Kunal Naik, Advocate Bimal Rajasekhar
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