M/S Shriram EPC Limited vs. Rioglass Solar Sa: No stamp duty on foreign awards

To make India, arbitration friendly jurisdiction, legislature and judiciary are trying to make the enforcement process as simple as possible. The Supreme Court in M/S Shriram EPC Limited vs. Rioglass Solar Sa dealt with the issue as to whether a foreign award, which is not stamped can be enforced. There were conflicting opinions on the line of judgments rendered by several High Courts.


Respondent (Rioglass Solar Sa) filed a petition to enforce a foreign award delivered by ICC against the appellant (M/S Shriram EPC Limited). The single judge bench decided in favour of respondent and appellant challenged it further before the division bench of the Madras High Court. The division bench upheld the judgment of single bench. Further, the matter was challenged in Supreme Court on the ground that foreign award needs to be stamped in accordance with the Indian Stamp Act, 1899.

Contention of the parties-

Relying on Gujrals Co. v. M.A. Morris, the appellant challenged the ICC award on the ground that Indian Stamp Act, 1899 will also cover foreign award. Hence, if the stamp duty is not paid, the foreign award cannot be enforced. Article III of the New York Convention provides for fees and charges for recognition and enforcement of a foreign award. In Orient Middle East Lines Ltd., Bombay and Anr. v. Brace Transport Corporation of Monrovia and Ors the Gujarat High Court held that stamp duty being in the nature of fees and charges, New York Convention itself recognizes that foreign award may have to bear stamp duty for enforcement in the country in which they are sought to be enforced.

Relying on Naval Gent Maritime Ltd. v. Shivanath Rai Harnarain (I) Ltd. and Narayan Trading Co. v. Abcom Trading Pvt. Ltd., the respondent contended that Schedule 1 of the Indian Stamp Act 1899 doesn’t include foreign award. Also, the requirement enlisted for the enforcement of foreign award under Section 47 doesn’t prescribes that the award needs to be stamped. Also, if the foreign award were to be stamped, and not stamped, it will not be contrary to fundamental policy of India.

Judgment and Analysis-

The Supreme Court interpreted provisions of various statues and held that the word “award” till date has not been amended to accommodate “foreign award”. Thus, “Award” under item 12 Schedule 1 of the Indian Stamp Act, 1899 doesn’t include foreign award. It will cover award made in whole of India except the State of Jammu and Kashmir.

In Senior Electric Inspector and Ors. v. Laxminarayan Chopra and Anr., it was held that it would be unreasonable to confine the intent of legislature. The words should be interpreted in a manner to take new situation and new facts. However, the Supreme Court held that “award” couldn’t be interpreted in such a manner, which includes foreign award within its scope, as the concept of foreign award existed even then. Thus, the intention of the legislature was to exempt foreign award from stamp duty.

In M/S. Fuerst Day Lawson Ltd vs. Jindal Exports Ltd the Supreme Court held –“The only difference as found is that while under the Foreign Award Act a decree follows, under the new Act the foreign award is already stamped as the decree.” Also, in Thyssen Stahlunion GMBH v. Steel Authority of India Ltd. it was said that under the new Act, foreign award is already stamped. These two judgments, each given by two judge bench implies that foreign award, can never suffer stamp duty. However, in the present judgment, the two-judge bench was of the opinion that foreign award can suffer stamp duty, if provided by law and interpreted “stamped” as “regarded”. It is very clear from the current judgment that there is no bar for legislature to amend and accommodate foreign award within the definition of award.

While dealing with the public policy issue raised by the respondent, relying on Renusagar Power Co. Ltd. v. General Electric Co. and Associate Builders v. Delhi Development Authority the court held that any statue dealing with the economy of the country will come within the ambit of “ fundamental policy of India”. Indian Stamp Act, 1899 is a fiscal statue, which contributes to the economy of the country, reflects the fundamental policy of India. This implies that mere non- payment of stamp duty will obstruct the enforcement process on the ground of fundamental policy of India.

The court interpreted Article III of New York convention as- “ There is no doubt whatsoever that if stamp duties are leviable in India on foreign awards, the imposition should not be substantially more onerous than the stamp duty that is imposed on recognition or enforcement of domestic arbitral awards. For the said Article to apply, stamp duty must first be leviable on a foreign award, which, as we have held earlier in this judgment, is not the case.” This implies that stamp duty on foreign award has to be in accordance with Article III.

Conclusion –

The judgment clarifies that definition of award doesn’t include foreign award. The judgment can be considered as a pro- arbitration step as mere non- payment of stamp duty will not obstruct the enforcement of award. However, the Supreme Court also clarifies that foreign award can suffer stamp duty, if the legislature provides for it. Hence, this may result in numerous issues pertaining to the enforcement process and may become onerous for the parties.

Tag: arbitration#no stamp duty

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