| CITATION | 2021 SCC OnLine Del 1079 (India) |
| DATE OF JUDGEMENT | February 19, 2021 |
| COURT | Delhi High Court |
| APPELLANT | M/s. Daiichi Sankyo Company Ltd. |
| RESPONDENT | Oscar Investments Ltd |
| BENCH | Justice Jayant Nath |
INTRODUCTION
The case of M/s. Daiichi Sankyo Company Ltd. vs. Oscar Investments Ltd. involves the enforcement of an arbitral award issued in Singapore in favor of Daiichi Sankyo Company Ltd., a Japanese pharmaceutical company. The dispute arose from Daiichi Sankyo’s purchase of shares in Ranbaxy Laboratories from the Singh brothers, Ranbaxy’s controlling shareholders at the time. Daiichi Sankyo claimed that the Singh brothers misled the buyers during the sale.
A Singaporean arbitral tribunal ruled in Daiichi Sankyo’s favor and awarded significant damages. Daiichi Sankyo attempted to enforce the arbitral award in India against the Singh brothers and their associated entities, including Oscar Investments Ltd. The Singh brothers challenged the enforcement on a variety of grounds, including public policy and jurisdictional issues. The Delhi High Court, presided over by Justice Jayant Nath, upheld the arbitral award, emphasizing India’s commitment to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards as well as the limited grounds for refusing enforcement. This case demonstrates the Indian judiciary’s commitment to international arbitration and the enforcement of foreign arbitral awards.
FACTS OF THE CASE
- Daiichi Sankyo Company Ltd., a Japanese pharmaceutical company, paid around USD 4.6 billion to Malvinder and Shivinder Singh (the Singh brothers) for a controlling stake in Ranbaxy Laboratories in 2008. Following the acquisition, Daiichi Sankyo accused the Singh brothers of making fraudulent misrepresentations and concealing critical information about ongoing FDA and DOJ investigations into Ranbaxy’s compliance with good manufacturing practices and data integrity issues.
- Daiichi Sankyo filed arbitration proceedings in Singapore against the Singh brothers, seeking damages for alleged fraud and misrepresentation. After reviewing the evidence and hearing the arguments, the arbitral tribunal ruled in favor of Daiichi Sankyo and awarded damages totaling approximately INR 3500 crore (around USD 550 million).
- In order to enforce the arbitral award in India, Daiichi Sankyo filed applications in the Delhi High Court to seize the Singh brothers’ assets and those of their associated entities, including Oscar Investments Ltd. The Singh brothers and their entities opposed enforcement on several grounds, including that the arbitral award violated Indian public policy, that the arbitral tribunal lacked jurisdiction, and that the arbitration process was flawed.
- The Delhi High Court, presided over by Justice Jayant Nath, considered the respondents’ objections. The court considered the provisions of the Indian Arbitration and Conciliation Act of 1996, which incorporates the principles of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and ultimately upheld the arbitral award’s enforceability.
ISSUE RAISED
- Can the arbitral award issued by the Singapore tribunal be enforced in India under the Indian Arbitration and Conciliation Act of 1996, which is in line with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards?
- Does the enforcement of the arbitral award violate India’s public policy, a ground for challenging enforcement under Section 48 of the Indian Arbitration and Conciliation Act?
- Did the arbitral tribunal in Singapore have proper jurisdiction over the dispute between Daiichi Sankyo and the Singh brothers, taking into account the respondents’ objections to the tribunal’s jurisdiction?
- Whether any procedural irregularities or violations of natural justice principles during the arbitration process that would justify refusing to enforce the arbitral award? Act?
- Can the court attach the Singh brothers’ and their associated entities’ assets in India, including Oscar Investments Ltd., to facilitate the arbitral award’s enforcement?
CONTENTIONS OF APPEALENT
- Daiichi Sankyo contended that the arbitral award issued by the Singapore tribunal is valid and enforceable under the Indian Arbitration and Conciliation Act of 1996, which is consistent with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The appellant contended that the award meets the statutory requirements for recognition and enforcement in India.
- The appellant argued that enforcing the arbitral award does not violate Indian public policy. Daiichi Sankyo argued that the grounds for refusing enforcement under Section 48 of the Indian Arbitration and Conciliation Act, which include public policy considerations, did not apply in this case. The appellant argued that the award was not based on illegal or immoral behavior that would contradict public policy.
- Daiichi Sankyo argued that the Singapore arbitral tribunal had proper jurisdiction over the dispute. The appellant argued that the tribunal was properly formed and had jurisdiction based on the arbitration agreement, which designated Singapore as the seat of arbitration.
- The appellant claimed that the arbitration process followed natural justice principles and that no procedural irregularities occurred. Daiichi Sankyo argued that the arbitration was fair and transparent, with the tribunal’s decisions based on a thorough review of the evidence.
- Daiichi Sankyo sought to attach the Singh brothers’ and their associated entities’ assets, including Oscar Investments Ltd., in order to ensure that the arbitral award was effectively enforced. The appellant contended that such attachment was required to secure the award and enforce the damages granted by the tribunal.
CONTENTIONS OF RESPONDENT
- The respondents contended that enforcing the arbitral award would violate Indian public policy. They argued that the award was based on findings that contradicted Indian laws and regulations, and that enforcing it would violate the fundamental principles of justice and fairness under Indian law.
- The respondents contested the jurisdiction of the Singapore arbitral tribunal. They claimed that the tribunal lacked the necessary jurisdiction to resolve the dispute, calling into question the arbitration agreement’s validity and the tribunal’s authority to rule on the claims against them.
- Respondents objected to procedural irregularities and violations of natural justice principles during the arbitration process. They claimed that the arbitration was unfair or biased, and that procedural flaws occurred during the arbitration proceedings, compromising the integrity of the tribunal’s decision.
- The respondents argued that the arbitration agreement’s terms were not followed. They claimed that the arbitration did not follow the agreed-upon procedures or was conducted in a manner that contradicted the terms outlined in the agreement’s arbitration clause.
- The respondents contested the attachment of their assets, which included those of Oscar Investments Ltd. They claimed that attaching their assets in India was unjustified and that such measures were excessive. They argued that the enforcement of the award should not include the seizure or attachment of their assets, especially if there were valid objections to its enforcement.
JUDGEMENT
- The court upheld the arbitral award issued by the Singapore tribunal. It confirmed that the award was enforceable under the Indian Arbitration and Conciliation Act of 1996, which is consistent with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The court determined that the award satisfied the statutory requirements for recognition and enforcement in India.
- The court rejected the respondents’ argument that enforcing the arbitral award would be against Indian public policy. It determined that the grounds for refusing enforcement under Section 48 of the Indian Arbitration and Conciliation Act did not apply in this case. The judgment stated that the award did not involve any illegal or immoral activities that would be against public policy.
- The court determined that the Singapore arbitral tribunal had proper jurisdiction over the dispute. It determined that the tribunal was properly constituted and had authority under the arbitration agreement between the parties, which designated Singapore as the seat of arbitration.
- The court rejected the respondents’ claims of procedural irregularities. It upheld the arbitration process’s fairness and compliance with natural justice principles, as well as the absence of any procedural flaws that would jeopardize the award’s validity.
- The court granted Daiichi Sankyo’s request for asset attachment in order to ensure the arbitral award was enforced properly. It permitted the attachment of the Singh brothers’ and their associated entities’ assets, including Oscar Investments Ltd., in order to secure the award and enforce the tribunal’s damages.
CASE ANALYSIS
- The case of M/s. Daiichi Sankyo Company Ltd. vs. Oscar Investments Ltd. is a seminal affirmation of the principles underlying international arbitration and the enforcement of foreign arbitral awards in India.
- The Delhi High Court’s decision demonstrates a strong support for arbitration as an effective dispute resolution mechanism. By upholding the enforceability of the Singapore arbitral award, the court demonstrated India’s commitment to international arbitration norms and its willingness to honor international arbitration agreements and decisions.
- The decision also clarifies that challenges to the enforcement of such awards are limited to very specific grounds, establishing clear guidelines for what constitutes valid objections. Furthermore, the decision emphasizes the judiciary’s pragmatic approach to enforcing arbitral awards, emphasizing the importance of real-world effectiveness in arbitration decisions.
- The court’s willingness to allow the attachment of assets to ensure compliance demonstrates a pragmatic approach to enforcement. This approach ensures that arbitral awards have practical consequences, reinforcing India’s position as a jurisdiction that upholds international arbitration standards while providing effective remedies to parties involved in cross-border disputes. Overall, the case demonstrates strong support for international arbitration and improves its predictability and reliability as a preferred method of resolving international commercial disputes.
CONCLUSION
The case of M/s. Daiichi Sankyo Company Ltd. vs. Oscar Investments Ltd. is a significant affirmation of the principles governing international arbitration and the enforcement of foreign arbitral awards in India. The Delhi High Court’s decision strongly supports the enforcement of arbitral awards issued by foreign tribunals, demonstrating India’s adherence to international arbitration standards and the New York Convention. By upholding the Singapore arbitral award’s enforceability and dismissing objections based on public policy, jurisdiction, and procedural irregularities, the court has clarified the narrow grounds for contesting such awards.
The decision also demonstrates the court’s pragmatic approach to ensuring that arbitral awards have real-world consequences. The decision to allow asset attachment demonstrates the judiciary’s commitment to providing effective remedies and enforcing arbitral decisions. This case strengthens India’s reputation as a jurisdiction that supports international arbitration, instilling confidence in arbitration as a dependable and effective method of resolving cross-border commercial disputes. Overall, the decision emphasizes the importance of upholding international arbitration standards and strengthens the Indian judiciary’s role in facilitating and enforcing international arbitral awards.
REFERENCE
https://indiankanoon.org/doc/23881121
https://www.casemine.com/judgement/in/65da61bad7806119191239a7
https://www.livelaw.in/pdf_upload/yva24042023ompefacomm62016155328-469797.pdf
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