P.E.C. Ltd v. Austbulk Shipping SDN BHD, 2018 (15)

P.E.C. LTD. V. AUSTBULK SHIPPING

Whether an application for the execution of a foreign award under Section 47 of the Arbitration and Conciliation Act, 1996, could be dismissed if it was not accompanied by the appropriate arbitration agreement?
How the phrase “shall” should be construed in Section 47 of the Act in the context of producing documents, such as the original arbitration agreement, during the initial stage of submitting an application for the enforcement of a foreign award?

The execution of international arbitral awards in India is governed by Section 47 of the Arbitration and Conciliation Act, 1996. Section 47 requires the party seeking international award enforcement to present certain papers, including the original arbitration agreement, at the time of application.

A foreign award was being enforced and executed in this instance.
The main question was whether an application for enforcement under Section 47 of the Arbitration and Conciliation Act of 1996 was filed without an associated arbitration agreement.
Section 47 of the Act requires certain papers, including the original arbitration agreement, to be presented during the application for enforcement of a foreign award.
The side seeking enforcement failed to present the arbitration agreement at the time of the application, resulting in a disagreement.
The Supreme Court was asked to define the word “shall” in Section 47 and to rule on the consequences of failing to produce the arbitration agreement during the initial application.
The decision emphasised the importance of balancing the New York Convention criteria.

Non-compliance with the production of papers, including the original arbitration agreement, as required by Section 47, should not automatically result in the dismissal of the application at the initial stage of filing an application for the execution of a foreign award.
The party seeking enforcement may be asked to correct the fault of non-filing of the arbitration agreement, and the arbitration agreement’s validity will be established at a later stage of the enforcement procedures.
To respect the New York Convention’s objectives and avoid impediments to enforcement procedures, the word “shall” in Section 47 should be construed as “may.” This interpretation allows for greater flexibility during the first filing step.
However, this view that “shall” means “may” only applies to the application’s initial stage. As a result, the party is still required to present the required documents, including the arbitration agreement, as stated in Section 47.