Foreign Awards are not required to be stamped under the Indian Stamp Act, 1899 as a pre-condition to their enforceability in India

In the case of M/s Shriram EPC Limited vs. Rioglass Solar SA, the Supreme Court of India (“Supreme Court”) held that foreign awards sought to be enforced in India are not required to be stamped as an ‘award’ under the Indian Stamp Act, 1899, as a pre-condition to their enforceability under the Arbitration and Conciliation Act, 1996.

FACTS

Certain contractual disputes having arisen between M/s Shriram EPC Limited (“Appellant”) and Rioglass Solar SA (“Respondent”), such disputes were referred to arbitration under the auspices of the International Chamber of Commerce. An ICC Arbitral Award was delivered against the Appellant in London.

Thereafter, the Respondent filed a petition with the High Court of Judicature at Madras (“High Court”) for the purpose of enforcing the said Arbitral Award, under Section 48 (Conditions for Enforcement of Foreign Awards) and Section 49 (Enforcement of Foreign Awards) of the Arbitration and Conciliation Act, 1996.

The High Court ruled in favour of the Respondent on several grounds, and allowed the petition for the enforcement of the foreign award. Thereafter, the Appellant approached the Supreme Court by way of a special leave petition for the judgement of the Supreme Court on the limited ground of whether a foreign award that has not been stamped under the Indian Stamp Act, 1899 can be enforced under the said Sections 48 and 49 of the Arbitration and Conciliation Act, 1996.

ISSUE

Whether a foreign award that has not been stamped as an ‘award’ under Item No. 12 of Schedule I of the Indian Stamp Act, 1899 can be enforced under Section 48 and Section 49 of the Arbitration and Conciliation Act, 1996?

JUDGEMENT

The Supreme Court observed that the main bone of contention in the present appeal was whether the expression ‘award’ under Item No. 12 of Schedule I of the Indian Stamp Act, 1899 would include a foreign award.

In order to determine this question, the Supreme Court observed that in 1899, the law relating to arbitration was contained in the Code of Civil Procedure, 1882 and the Indian Arbitration Act, 1899, both of which were restricted in their application to what was then ‘British India’. Therefore, the Supreme Court observed that, the only ‘award’ that could have been referred to in the Indian Stamp Act, 1899 was an award that was made in the territory of British India. Awards that may have been passed in foreign countries, and in the various princely states then in existence, would have been ‘foreign awards’ not governed by either of the aforesaid laws. If any such foreign award were to be enforced by means of a suit in British India, it would not be covered by the expression ‘award’ contained in Item 12 of Schedule I of the Indian Stamp Act, 1899.

The Supreme Court observed that this position continued even under the Code of Civil Procedure 1908, and thereafter under the Arbitration Act, 1940, which were restricted in their application to domestic awards. Foreign awards were governed by the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. The present Arbitration and Conciliation Act, 1996, which repealed and consolidated the earlier laws on arbitration, continued with this position as well.

Thus, the expression ‘award’ under Item No. 12 of Schedule I of the Indian Stamp Act, 1899 has remained unchanged till date, was right from its very inception restricted to ‘domestic award’, and was never interpreted or amended to include ‘foreign award’.Consequently, a foreign award, not being includible in Schedule I of the Indian Stamp Act, 1899, is not liable for stamp duty.

Further, the Supreme Court observed that the Indian Stamp Act, 1899 being a fiscal statute, it must be interpreted literally. Any ambiguity in the said statute would be construed so as to ensure to the benefit of the assessee who has to pay stamp duty.

Therefore, the Supreme Court accordingly dismissed the appeal of the Appellant and upheld the ruling of the High Court in favour of the Respondent.