RENUSAGAR POWER

COMPANY VS. GENERAL

ELECTRIC COMPANY
BY: DIVYANSHI PATHAK
DIVYA ROY
ANURUP DEB
Background of the case

 The issue concerned the notion of public policy as out in section 7(1)(b)(ii) of the
Foreign Awards (Recognition and Enforcement) Act of 1961, which is analogous to
Section 48 of the Arbitration Act. The Supreme Court debated whether the narrower idea
of public policy as applied in public international law or the broader concept of public
policy as applied in municipal law should be applied.
 It was decided that execution of a foreign award would be prohibited on the grounds that
it would be against public policy if it would be against (i) fundamental policy of Indian
law; or (ii) the interests of India; or (iii) justice or morality.
The 'basic policy of Indian law' is divided
into three pillars.

 Judicial approach: It is the adjudicating authority's or tribunal's responsibility to use a

judicial approach and use its judicial thinking.
 Natural justice: Every judicial authority or tribunal should follow natural justice
principles and provide equal chance for all parties to be heard and represented.
 Reasonability: The judicial authority must guarantee that the result reached is not so
unreasonable or perverse that no reasonable person could have reached the same
conclusion.
 FACTS OF THE CASE

 Renusagar Power Co Ltd ("Renusagar") entered into a contract with General Electric Company ("General
Electric"), which stipulated that disputes be resolved by arbitration through the International Chamber of
Commerce ("ICC") in Paris. When a disagreement emerged, General Electric decided to take the case to
arbitration. Renusagar claimed that the disagreement was not covered by the arbitration agreement, but the
Supreme Court of India disagreed. General Electric received a favourable award, which it attempted to
enforce in the Bombay High Court.

 The High Court enforced the award and Renusagar appealed to the Supreme Court, arguing that (i) the
arbitral tribunal had failed to inform it of the potential effects of certain of the Tribunal's decisions, thereby
rendering it unable to present its case in violation of Section 7(1)(a)(ii) of the Foreign Awards (Recognition
and Enforcement) Act 1961 (the “1961 Act”) (mirroring Article V(1)(b) NYC); and, (ii) the terms of the
award were grossly unfair, so enforcement would be contrary to public policy, in violation of Section 7(b)
(ii) of the 1961 Act (mirroring Article V(2)(b) NYC).
 ISSUES RAISED IN THIS CASE

i.) What is the scope of enquiry in proceedings for enforcement of a foreign award under
Section 5 read with Section 7 of the Foreign Awards Act?
(ii) Were Renusagar unable to present their case before the Arbitral Tribunal and consequently
the award cannot be enforced in view of Section 7(1)(a)(ii) of the Foreign Awards Act?
(iii) Does Section 7(1)(b)(ii) of the Foreign Awards Act preclude the enforcement of the award
of the Arbitral Tribunal for the reason that the said award is contrary to the public policy of the
State of New York?
(iv) What is meant by 'public policy' in Section 7(1)(b)(ii) of the Foreign Awards Act?
(v) Is the award of the Arbitral Tribunal unenforceable as contrary to public policy of India on
the ground that- (a) it involves contravention of the provisions of FERA
 LEGAL PROVISIONS

 Section 7(1)(a)(v) of the Foreign Awards Act.

 Rule 801(c) of the Rules framed by the Bombay High Court under the Foreign Awards
Act.
 the Bombay High Court did not have the territorial jurisdiction to entertain the petition of
General Electric under Section 5 of the Act.
 General Electric had failed to comply with the mandatory requirement of Section 8(1)(a)
of the Foreign Awards Act and Rule 801(a) of the Rules framed by the Bombay High
Court under the Foreign Awards Act.
 CONTENTION OF PARTIES

 Renusagar raised an objection that the claims of General Electric did not fall within the
purview of arbitration clause in the Contract and challenged the arbitrability of the
claims.