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September 24, 1997


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ICA ruling is binding, but enforcement can be tricky

George Iype in New Delhi

The battle between the Government of India and the Suzuki Motor Corporation for supremacy in India's biggest car company, Maruti Udyog Limited, has shifted to the Paris-based International Chamber of Commerce.

The arbitration will take place in the International Chamber of Commerce's London-based International Court of Arbitration. Both the government and Suzuki will be select their own arbitrators. The two arbitrators will, in turn, decide on the third arbitrator, who will be the panel chairperson.

Suzuki has already requested ICC chief Lord Mustall to be its arbitrator in the court while the government is yet to nominate its representative.

London as the venue for the arbitration has been provided for in the joint venture agreement between the government and Suzuki, both owning 50 per cent of the stake.

Legal experts are of the opinion that the ICA's ruling will be "binding and final" to both parties. "The ICA verdict can be challenged in India where it is to be enforced. But challenging it is difficult to carry through and very rare," says G K Kwarta, executive director of the Indian Council of Arbitration.

Kwatra told Rediff On The NeT that ICC rulings have legal sanctity under the New York Convention, 1958, to which about 130 countries, including India, are signatories.

But Kwarta said it is not mandatory for the government to abide by an ICA verdict as the rules required its decision to be implemented in conformity with the public policy in India.

Initially, Kwarta said, under the fast-track arbitration procedure being favoured by the contending parties, the ICA panel will mediate between the two parties and bring about a conciliation.

In India, the ICA's ruling on Maruti will be enforced under the Arbitration and Conciliation Act 1996.

In the present case, Suzuki has moved the ICA against the government nominating R S S L N Bhaskarudu as managing director of Maruti Udyog Limited after the articles of association and other clauses of the joint venture were reframed in 1992. Ravindra Chandra Bhargava, the previous managing director, was chosen by Suzuki.

Kwarta and other legal experts believe the ICA award in the Maruti case could be delivered within a period of three months, if both the government and Suzuki are in a conciliatory mood.

However, O P Malhotra, an expert on international arbitration, warned of a longer timeframe. "The ICA award could take more than a year if the contending parties are not ready for reconciliation," he said.

He told Rediff On The Net that in case the government and Suzuki do not wish to reconcile, then a much longer process of arbitration will have to be followed by the ICA. "This involves a lengthy procedure including filing of claims and counter-claims, deposition and examination of witnesses and arguments and counter arguments," Malhotra added.

A leading Indian arbitrator, D C Singhania, said while the ruling will be binding, enforcement might be rejected. According to Singhania, a member of the New Delhi-based Singhania & Co, the ICA decree in the Maruti case will be binding for the government and Suzuki as it is part of the memorandum of understanding in the joint venture.

"Most countries endorse the ICA awards given as they are binding on the contending parties concerned," he said. Moreover, since India is a signatory to the New York Convention, the ICA award cannot be reviewed by Indian courts.

However, the Indian court which will enforce the award can, under the provisions of the Convention, reject the verdict if it finds that it is against the country's well-established public policy.

ICA has played a key role in the redressal of conflicts involving foreign and Indian companies in the past too.

Cases the ICA has arbitrated earlier between Indian firms and their foreign collaborators include the Oil and Natural Gas Commission versus an American oil company, the US-based Coside Ink versus the Steel Authority of India, Singer versus NTPC, and Sumitomo Heavy Engineering versus Singapore-based Sam Wang.

Another major case pending with the ICA is the government-owned National Fertilisers Ltd versus Karsan, a Turkish company.

Maruti AGM ratifies Bhaskarudu's appointment
Suzuki-govt tussle could affect Maruti's performance, feel analysts
Bhaskarudu to stay until arbitration court decides, rules Delhi HC
Bhaskarudu: The man Suzuki loves to hate
'Suzuki can leave Maruti'
Showdown With Suzuki
A successful marriage goes to court
India good testing ground for the global auto market
Suzuki takes govt to court over Bhaskarudu's appointment
Bhaskarudu takes over as MD of Maruti
Bhargava's secrets of success

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