Objections Of Bias Must Be Raised In Originating Country In Case Of Foreign Award, SC Holds

The Supreme Court of India recently allowed the enforcement of a foreign arbitral award and emphasised the importance of adhering to international standards rather than domestic ones while assessing arbitral bias.

Bench comprising Justice Hrishikesh Roy and Justice Prashant Kumar Mishra stated that refusal of enforcement of an arbitral award based on bias should be exceptional, and India should adopt a globally recognised narrow standard of public policy regarding issues pertaining to bias in arbitration.

The instant case involved a share subscription agreement between HSBC PI Holdings (Respondent) and Avitel Post Studioz Limited (Appellant No.1), with an arbitration clause specifying resolution at the Singapore International Arbitration Centre (SIAC). The respondent alleged fraudulent misrepresentations, leading to a final award of US$ 60 million in damages. Despite challenges citing arbitral bias and public policy violation, the Court stressed minimal judicial intervention in foreign awards, referring to precedent and international recommendations on public policy standards in arbitration.

The Court highlighted that objections to bias should be raised in the originating country of the award first and not strategically to delay enforcement. Consequently, the Court dismissed the appeal against award enforcement, underscoring the need for timely enforcement to avoid prolonged legal battles.