Arbitration Background: A Protracted Legal Battle
The dispute arose from a Letter of Comfort (LoC) issued by Minda India in June/August 2013 to secure obligations of its German subsidiary, Minda Corporation Germany, in its business dealings with Mercedes-Benz. However, Minda Germany went into insolvency on November 29, 2013, leading to legal proceedings.
Mercedes-Benz initiated arbitration before the International Chamber of Commerce (ICC) in Stuttgart, Germany under the ICC Rules, 2012, with the case being adjudicated by a three-member Arbitral Tribunal comprising Dr. Fabian Von Schlabrendorff, Dr. Ulrich Trost, and Mr. Arne Fuchs.
A Settlement Agreement was reached on August 30, 2021, where Minda Corp agreed to pay Euro 5.5 million (approximately Rs. 52 crore) to Mercedes-Benz. The ICC Tribunal subsequently issued a Consent Award on November 29, 2021.
Minda Corp’s ‘Double Dip’ Argument Rejected
Minda Corp, represented by Senior Advocate Sandeep Sethi, contested the enforcement, arguing that Mercedes-Benz had already recovered Euro 11 million through a separate settlement with Minda Germany’s liquidator, Wolfgang Bilgery. The company alleged that enforcing the award in India would result in an unfair double recovery.
However, Senior Advocate Rajshekhar Rao, appearing for Mercedes-Benz, countered that the Consent Award explicitly ruled out any double benefit, stating:
“Minda Corporation, India was quite aware of the previous settlement with the Liquidator for Euro 11 million; yet, the decree holder had agreed to take a haircut and consent to a settlement of Euro 5.5 million instead.”
Justice Anish Dayal concurred, noting that Minda India had been fully aware of the prior settlement and had willingly entered into the Consent Award. The court also cited Minda India’s communication dated September 28, 2021, which confirmed its consent to the arbitration outcome.
RBI Clears FEMA Violation Concerns
Minda Corp also attempted to block enforcement by citing alleged violations under the Foreign Exchange Management Act (FEMA), 1999, since the LoC was issued without prior RBI approval.
However, the Reserve Bank of India (RBI), in a letter dated May 13, 2022, granted post-facto approval for the remittance, stating:
“We do not have an objection for remittance of Euro 5.5 million by Minda Corporation Limited to Mercedes-Benz AG pursuant to the consent award passed in arbitration proceedings before the International Chamber of Commerce in Stuttgart, Germany.”
The RBI further clarified that while the issuance of the LoC was a FEMA contravention, the remittance was permitted subject to compounding of the violation.
Legal Precedents Favoring Enforcement
Mercedes-Benz cited key Supreme Court precedents, including Cruz City 1 Mauritius Holdings v. Unitech Limited (2017) and Vijay Karia v. Prysmian Cavi E Sistemi SRL (2020), which upheld the enforceability of foreign arbitral awards under the New York Convention.
Justice Dayal reaffirmed this principle, stating:
“The objective of the New York Convention is to ensure enforcement of foreign arbitral awards, notwithstanding that they may not align with national laws.” Given that RBI had already granted approval, and that Minda Corp had voluntarily agreed to the Consent Award, the court found no merit in the objections.
Final Ruling: Immediate Release of Funds
The Delhi High Court has directed the release of the Rs. 52 crore deposited by Minda Corp with the Registrar General of the Court, along with accrued interest, to Mercedes-Benz Group AG. The court further ordered Minda Corp to remit any outstanding balance within three weeks, warning that failure to comply would lead to execution proceedings under Order XXI of the CPC.
This ruling reinforces India’s pro-arbitration stance and underscores the enforceability of foreign arbitral awards under the Arbitration and Conciliation Act, 1996
.Read The Judgment Here
keywords: mercedes-benz arbitration case, delhi high court arbitration ruling, euro 5.5 million arbitral award, minda corporation dispute, fema violation arbitration, icc consent award enforcement
