LexSMITA CONDUCTORS LTD. versus EURO ALLOYS LTD.
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SMITA CONDUCTORS LTD. v. EURO ALLOYS LTD. AUGUST 31, 2001 [S. RAJENDRA BABU AND S.N. PHUKAN, JJ.] Arbitration : Foreign A"1,·ards (Recognition and Enforcement) Act, 1961 2(a)-Schedule-Article II-Paragraph I and 2. Section Foreign Award-Enforcement of-Agreement in writing-Essential attributes of-Contract for supply of aluminium rods proposed by purchaser A c to seller--Contract contained arbitration clause-Seller neither signed nor returned the contract-Letters of credit opened by seller and shipments made- D Subsequently, RBI placed restrictions on import of goods-Seller invoked 'force majeure' clause and cancelled shipments-Purchaser initiated arbitration proceedings-Foreign award passed in favour of purchaser-Seller contended that there was no 'agreement in writing'-However, High Court allowed purchaser's petition for enforcement of award-Correctness of-Held: If an arbitration clause falls in any one of the four categories mentioned in Para E 2 of Art. II it is an 'agreement in wriling'-·Invoking of force majeure clause by seller indicates existence of an 'agreenient in writing'-Hence, High Court rightly directed enforcement of foreign award-Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Section 7(f)(b)(ii)-Pubiic policy-Meaning of-RBI imposed certain F restrictions on import of goods-Foreign Award passed pursuant to such restrictions-Held: Public policy meam public policy of !ndia--Foreign award cannot be recognised and enforced if it is contrary to (I) fundamental policy of Indian Law: or (2) the interests of India; or (3) justice or morality-Private International Law. Code of Civil Procedure, I908-Section I I-Res judicata-Princip/es of-Applicability-Arbitration-Foreign Award-Passing of-Seller filed suit before High Court contending that there was no arbitration agreement-High Court treated suit as petition and dismissed the same under S.33 of the 477 G H 478 SUPREME COURT REPORTS [2001) SUPP. 2 S.C.R. A Arbitration Act-Held: Such decision is binding on the parties-Arbitration Act, I940-S.33. Words and Phrases : "Agreement in writing"-Meaning of-In the context of Para 2 of Art. B II of Schedule to Foreign Awards (Recognition & Enforcement) Act, I96I. "Public Policy"-Meaning of-In the context of S. 7(I)(b)(ii) of the Foreign Awards (Recognition & Enforcement) Act, 1961. A contract for shipment of aluminium rods containing an arbitration C clause was proposed by the respondent to the appellant. The appellant was required to sign and return the contract, but it did not do so. Reminders were sent in this regard but without any result. On the basis of certain irrevocable letters of credit opened by the appellant, shipments were made. Jn the meanwhile, Reserve Bank of India D issued a circular placing restrictions on import of goods. The appellant, therefore, invoked the force majeure clause and cancelled the shipments. Thereafter, the respondent initiated arbitration proceedings. Subsequently, the appellant filed a suit seeking a declaration that there was no valid agreement between the parties. The High Court treated the petition as a suit under Section 33 of the Arbitration Act, 1940 and dismissed it. E The foreign arbitrators published an award in favour of the respondent. The respondent's petition for enforcement of the foreign award under the Foreign Awards (Recognition & Enforcement) Act, 1961 was allowed by the High Court. Hence this appeal. F On behalf of the appellant it was contended that the arbitration was not pursuant to an agreement in terms of Article II of the Schedule to the Act; that as the contract was not signed by the appellant there was·no 'agreement in writing' so as to attract Paras I and 2 of Article II; that there was no exchange of letters or telegrams between the parties so as to include G the arbitration clause; and that the foreign award was contrary to the public policy of India. On behalf of the respondent it was contended that dismissal of the suit by the High Court amounted to res judicata; that the 'agreement in writing' need not be signed by the parties; and that by the course of conduct H between the parties an 'agreement in writing' could be spelt out. - SMITA CONDUCTORS LTD. 1·. EURO ALLOYS LTD. 479 Dismissing the appeal, the Court A HELD : 1.1. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York convention, controls the proc
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