Case Number: Civil Appeal Nos. 8345-8346 of 2018

Judges Name: Hon’ble Judges Rohinton Fali Nariman J, B.R. Gavai J

Order dated: 10.08.2021

“Foreign Award can be binding on Non-signatories to Arbitration Agreement.”

Facts of the case:

• A Representation Agreement (‘Agreement’) was entered into between Respondent and DMC Management Consultants Ltd (‘DMC’). As per the arbitration clause in the Agreement, any dispute between the parties was to be referred to a single arbitrator in Kansas City, Missouri, USA. Disputes arose between the parties, Respondents sent a notice for arbitration to Arun Dev Upadhyaya.
  
• Appellant was a company formed in India, owned and/or controlled and dominated by Arun Dev Upadhyaya. DMC and the Appellant were also arrayed as Respondents to the statement of Claim. The Arbitrator passed an award in favour of Respondents. The Respondents approached a single judge of the Bombay High Court to enforce the foreign arbitral award. The Single judge held that the arbitral award was enforceable only against DMC and not against Arun Dev Upadhyaya and the Appellant as they were non-signatories to the arbitration agreement. 
• However, on appeal the Division Bench of the Bombay High Court reversed the judgment of the Single judge. Thereafter, the Appellant filed an appeal against the judgment of the Division Bench of the High Court

Supreme Court held/ observed:

• A reading of section 44 of the Arbitration and Conciliation Act, 1996 would show that there are six ingredients to an award being a foreign award. 
• Section 47(1)(c) being procedural in nature does not go to the extent of requiring substantive evidence to “prove” that a non-signatory to an arbitration agreement can be bound by a foreign award. 
• Section 48(1)(a) speaks only of parties to the agreement being under some incapacity, or the agreement being invalid under the law to which parties have subjected it. 
• Perversity as a ground to set aside an award in an international commercial arbitration held in India no longer obtains after the 2015 amendment to the Arbitration Act, 1996.
  
• Section 46 does not speak of “parties” at all, but of “persons” who may therefore, be non-signatories to the arbitration agreement. 
• The Hon’ble Supreme Court dismissed the appeals accordingly.