Madras High Court: Petition for execution of foreign arbitral award can be filed simultaneously before all such courts where assets of the judgment debtor are located without falling foul of forum shopping

The Madras High Court on June 3, 2020, in the case of Pueblo Holdings Limited (“Petitioner”) v. Emirates Trading Agency LLC (“Defendant”), decided upon an execution petition filed by the Petitioner, a company incorporated under the laws of Marshall Islands, under Order XXI, Rule 46 of the Code of Civil Procedure ("CPC"), seeking to attach and sell the debts and shares for executing two foreign arbitral awards dated April 9, 2017 and August 6, 2017. Background of the case Based on the aforesaid foreign awards, on April 19, 2018, the Petitioner sought for injunction proceedings before the Supreme Court of Mauritius. On May 2, 2018, the Petitioner managed to obtain an order passed by the Supreme Court of Mauritius granting mareva injunction. In support of the injunction application, evidences were furnished, showing the companies which held the shares. Moreover, the Petitioner also obtained an order of execution of the aforesaid foreign awards against the Defendant on November 2, 2018 from the Madras High Court. Thus, during the prevalence of the aforesaid situation, the instant petition was filed by the Petitioner before the Madras High Court for attachment and sale of debts and shares of the Defendant located in India for the purposes of execution of the foreign arbitral awards. Issue The issues which arose for consideration before the Madras High Court were Where execution is levied by attachment of share, whether the appropriate court having jurisdiction for execution is the court within whose jurisdiction (i) the registered office of the company which has issued those shares or (ii) the shares/ assets are located? and Whether a foreign award holder can maintain multiple execution proceedings before different courts, without falling foul of Forum Shopping? Decision by the court The Madras High Court observed that Part II, Chapter I of the Arbitration Act deals with enforcement of certain foreign awards, as per which, a party holding an international award is entitled to apply in any jurisdiction in the world, where, the assets of the defaulting party are located for recognition and enforcement of the award. Further, the court also noted that if a party receives a binding award from a country, which is a signatory to the New York Convention or the Geneva Convention and the award is made in the territory, which has been notified by India as a convention country, the award would be enforceable in India. The court, while dealing with the first issue, held that, merely because Defendant i.e. the award debtor has its registered office in Dubai, it cannot be stated that the execution proceedings are maintainable only in Dubai. It is open to the Petitioner i.e. the decree-holder to execute the award in a jurisdiction, where assets of the Defendant are located. The Madras High Court, thus, held that- “21....in any dispute between a company and shareholders, the jurisdiction would be with the Court where the registered office of the company is situate, whereas, any disputes between a third party over the shares held in the company, the jurisdiction would vest with the Court, where the sharers are located.” (emphasis supplied) While deciding upon the second issue, the court observed that when a party is enforcing the award in execution, which is a foreign award, it has a choice of country and it is open to the decree-holder to go forum-shopping based on the location of the assets of the award-debtor. The Madras High Court thus, concluded that there is no iota of doubt that the competent court for filing an application for enforcement of a foreign award is before the court in whose jurisdiction the assets of the award-debtor are located and further noted that, when the assets of the judgment-debtor are located in various territorial jurisdictions, the award holder can file simultaneously in all of such courts and the principle of forum non-convenience will not be applicable to execution proceedings qua foreign awards. Recent Developments The Delhi High Court on June 8, 2020 in the case of Glencore International AG v. Hindustan Zinc Limited , O.M.P. (EFA)(COMM.) 9/2019, also decided on a similar question of law by holding that a foreign arbitral award can be enforced at any place where the assets and money of the judgment debtors are located. Please find a copy of the judgment here. This update has been contributed by Arka Majumdar (Partner) and Kunal Dey (Associate).