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CS Professional · Arbitration, Mediation and Conciliation · International Law of Arbitration

A foreign award is challenged in an Indian enforcement proceeding as contrary to the public policy of India. The objector argues only that the tribunal misread the contract and reached a wrong conclusion on facts. Under Explanation 2 to Section 48(2), how should the court treat this argument?

The argument should be rejected. Explanation 2 to Section 48(2) states that testing for contravention of the fundamental policy of Indian law does not entail a review on the merits, so alleged misreading of the contract or facts cannot by itself make enforcement contrary to public policy.

  1. AAccept it, because any error on merits contravenes the fundamental policy of Indian law
  2. BAccept it, because the court must re-examine the merits before enforcing
  3. CReject it, because the test of contravention of fundamental policy of Indian law does not entail a review on the merits of the disputeCorrect
  4. DReject it, because public policy objections can never be raised against foreign awards

Explanation

Explanation 1 limits public policy to fraud or corruption, contravention of fundamental policy of Indian law, or conflict with basic notions of morality or justice. Explanation 2 says the fundamental policy test does not involve a review on merits. A mere factual or contractual misreading therefore fails. Public policy objection is available in principle, so the last option is wrong.

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