The present case is a pivotal judgemnt whein the Apex Court allowed the enforcenment of a foreign arbitral award and held that only under exceptional cases an enforcement of foreign arbitral award can be declined on the grounds of bias. The Appellants in the present case contested the enforcement of a foreign award under Section 48 of the Arbitration Act. The High Court upheld the enforcement, allowing attachment orders to continue. Thereafter, the Respondnets alleged fraud in securing a US$ 60 million investment, leading to arbitration where damages were awarded. The Apex Court affirmed the arbitrability of fraud under Section 9. When the Appellants failed to comply, contempt proceedings ensued, resulting in imprisonment.

The Apex Court assessed objections under Section 48(2)(b), focusing on arbitral bias and public policy violations. Referring to Vijay Karia v. Prysmian Cavi E Sistemi SRL and Shipowner (Netherlands) v. Cattle and Meat dealer (Germany), the Apex Court stressed that challenges to enforcement have limited scope and should be justified only in exceptional cases of blatant disregard of Section 48. Further, the Court stated that the objection of bias must be first raised in the country of origin of award and not directly at the time of enforcement.

The Court made a reference to the New York Convention and cited  its decision in Ssangyong Engg. & Construction Co. Ltd. v. NHAI and concluded that the most basic notions of morality and justice under the concept og ‘public policy’ would include bias. 

The Apex Court highlighted the need for adopting international best practices in determining bias and emphasized that enforcement should only be refused in exceptional circumstances. After examining the implications of IBA Guidelines, the Court found no bias that violated fundamental notions of morality and justice. Consequemtly, the Apex Court upheld the High Court's decision.

In the present case, the Apex Court drew the distinction between ‘reference’ and ‘incorporation’ of arbitration clause in agreements. The Court discussed the law laid down in the case of MR Engineers and Contractors Private Limited vs. Som Datt Builders Limited  and discussed its points of distinctions from Inox Wind Limited vs Thermocables Limited.

Based on the judgment passed in the case of MR Engineers and Contractors Private Limited [supra], the Court observed that sub-section (5) of Section 7 of the Arbitration Act and opined that a reference to the document in the contract should be such that it shows intent to incorporate the arbitration clause contained in the document into the contract. In Inox Wind Limited, though the Apex Court agreed with the view held in MR Engineers and Contractors Private Limited, it has differed and held that though a general reference to an earlier contract is not sufficient for the incorporation of an arbitration clause in the later contract, a general reference to a standard form would be enough for the incorporation of the arbitration clause. Further, in Inox Wind Limited, the Apex Court held that it was a case of a ‘single-contract’ and not ‘two-contract case’ and, therefore, the arbitration clause as mentioned in the terms and conditions would be applicable.

The Apex Court opined that the present case was was a ‘two-contract’ case and not a ‘single contract’ case. It is not a case of ‘incorporation’ but a case of ‘reference.'  As such, a general reference would not have the effect of incorporating the arbitration clause of the other contract, especially since Clause 7.0 of the LOI i.e. the first contract clearly stated that the redressal of the dispute between the parties has to be only through civil courts having jurisdiction of Delhi alone. Consequently, the Delhi High Court's decision was overturned and the Appeals were allowed.