Renusagar Power Co. Ltd. v. General Electric Co.
Public policy as a ground means Indian public policy and is confined to three narrow heads: fundamental policy of Indian law, interests of India, and justice or morality.
Facts
GE obtained an ICC award against Renusagar for unpaid amounts on a power plant supply contract and sought enforcement of the foreign award in India. Renusagar resisted enforcement contending it was contrary to the public policy of India, relying on alleged FERA violations and the magnitude of the interest/compensation awarded.
Issues
- What is the meaning of 'public policy of India' as a ground for refusing enforcement of a foreign award?
- Whether enforcement could be resisted on the ground of a mere violation of Indian law or error of law?
Arguments
Renusagar argued enforcement was contrary to public policy because the award contravened FERA and Indian law and was excessive. GE argued public policy must be construed narrowly so as not to permit a merits review and that mere illegality was insufficient to bar enforcement.
Held
The Court held that 'public policy of India' meant the doctrine of public policy as applied by Indian courts, not international public policy. Adopting the narrow view, it confined the ground to three heads: (i) fundamental policy of Indian law; (ii) the interests of India; and (iii) justice or morality. Something more than a mere violation of the law of India had to be shown, and no merits review of the award was permissible; only enforcement, not the award itself, had to be examined against public policy.
Ratio decidendi
Enforcement of a foreign award can be refused on public policy grounds only where it contravenes the fundamental policy of Indian law, the interests of India, or justice or morality; a mere contravention of Indian law or error in the award is not enough and no review on the merits is permissible.
Significance
The foundational decision defining the narrow scope of the public policy exception. Its three heads became the bedrock later adopted (and after the 2015 Amendment statutorily restored) for both S. 34 and S. 48. The narrow Renusagar standard was reinstated as the governing test by the 2015 Amendment and reaffirmed in HRD Corp v. GAIL and Ssangyong.
Related
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