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National Agricultural Cooperative Marketing Federation of India v. Alimenta S.A.


National Agricultural Cooperative Marketing Federation of India (NAFED) and Alimenta S.A entered into a contract for supply of 5000 metric tonnes of Indian HPS groundnut (Commodity) for year 1979–80 on January 12, 1980. According to clause 14 of the contract, prohibition of export by law the contract would be considered as cancelled.

NAFED applied for the permission to carry forward any export in the subsequent year. The permission was refused. The price of commodities was increased and NAFED claimed that it was unaware of requirement of permission. Later NAFED was by the government directed not to export the leftovers from previous years.

Alimenta, which was informed by NAFED that export is not possible due to restriction by Government, appealed arbitration before FOSFA. NAFED filed a petition before HC to restrict Alimenta from proceeding with arbitration before FOSFA. Despite that Alimenta appointed an arbitrator on behalf of NAFED and continued with arbitration.

HC decided there were no arbitration agreements and Alimenta invoked SC and filed a petition against the order given by HC. The court ordered FOFSA not to proceed further in investigation. FOFSA stated that the court had no rights and continued arbitration.
Arbitral award was passed that states NAFED should pay a sum of USD 4,681,000. NAFED filed an appeal before Board of Appeal and the request got rejected. Under section 5 and 6 of Foreign Awards act, NAFED filed its objections and HC stated that the award was enforceable. NAFED approached SC on November 24,2011.

Court noted that if proper notice of appointment of arbitrator is not given or a party was unable to present its case before the arbitrator, a foreign award in such a case is not enforceable. The arbitrator appointed on behalf of NAFED was in violation of stay order of high court. Court relied on that any order passed by any arbitration in spite of the knowledge of an order of the court is of no consequence as it remains a nullity. Court stated that enforcement of award would be against public policy of India.

National Agricultural Cooperative Marketing Federation of India v. Alimenta S.A

National Agricultural Cooperative Marketing Federation of India (NAFED) and Alimenta S.A entered into a contract for supply of 5000 metric tonnes of Indian HPS groundnut (Commodity) for year 1979–80 on January 12, 1980. According to clause 14 of the contract, prohibition of export by law the contract would be considered as cancelled.

NAFED applied for the permission to carry forward any export in the subsequent year. The permission was refused. The price of commodities was increased and NAFED claimed that it was unaware of requirement of permission. Later NAFED was by the government directed not to export the leftovers from previous years.

Alimenta, which was informed by NAFED that export is not possible due to restriction by Government, appealed arbitration before FOSFA. NAFED filed a petition before HC to restrict Alimenta from proceeding with arbitration before FOSFA. Despite that Alimenta appointed an arbitrator on behalf of NAFED and continued with arbitration.

HC decided there were no arbitration agreements and Alimenta invoked SC and filed a petition against the order given by HC. The court ordered FOFSA not to proceed further in investigation. FOFSA stated that the court had no rights and continued arbitration.
Arbitral award was passed that states NAFED should pay a sum of USD 4,681,000. NAFED filed an appeal before Board of Appeal and the request got rejected.
Under section 5 and 6 of Foreign Awards act, NAFED filed its objections and HC stated that the award was enforceable. NAFED approached SC on November 24,2011.

Court noted that if proper notice of appointment of arbitrator is not given or a party was unable to present its case before the arbitrator, a foreign award in such a case is not enforceable. The arbitrator appointed on behalf of NAFED was in violation of stay order of high court. Court relied on that any order passed by any arbitration in spite of the knowledge of an order of the court is of no consequence as it remains a nullity. Court stated that enforcement of award would be against public policy of India.

Source; https://main.sci.gov.in/

https://bit.ly/2ZNZmeQ



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