Holding

The award is a foreign award enforceable under the Act; the appellant failed to meet the burden of proof, and no public policy violation exists, so the High Court decree stands.

Summary

Transocean Shipping Agency (P) Ltd appealed against a Bombay High Court decree that enforced a foreign arbitral award made in Ukraine in favour of Black Sea Shipping Co. The dispute arose from a 1992 agency agreement containing an arbitration clause referring disputes to the country where the owners were registered. After the appellant failed to appear, a sole arbitrator appointed by the respondent issued an award. The appellant challenged the award on three grounds: (1) that Ukraine, after the dissolution of the USSR, was no longer a "reciprocating territory" under the 1972 notification under Section 2(b) of the Foreign Awards Act; (2) that the composition and procedure of the arbitration were not in accordance with Ukrainian law, a burden of proof placed on the challenger under Section 7(1)(a)(iv); and (3) that the appointment of a high‑ranking officer of the respondent as arbitrator violated public policy. The Supreme Court held that the 1972 notification continues to cover awards made in the former USSR territories, including Ukraine, and that no fresh notification was required. It affirmed that the burden of proof lay with the appellant, which failed to produce Ukrainian law or any evidence of procedural defect, and that the appointment of an interested officer does not per se contravene public policy. Consequently, the High Court’s decree was upheld and the appeal dismissed.

Issues considered

The award made in Ukraine qualifies as a foreign award under Section 2(b) of the Foreign Awards (Recognition and Enforcement) Act, 1961 despite the dissolution of the USSR.
Whether the appellant discharged the statutory burden under Section 7(1)(a)(iv) to prove that the arbitrator’s composition or the arbitration procedure violated Ukrainian law.
Whether the appointment of a high‑ranking officer of the respondent as sole arbitrator renders the award contrary to Indian public policy.
Whether the arbitration clause of the 1983 agreement governs the dispute or the 1992 agreement supersedes it.

Legislation cited

Foreign Awards (Recognition and Enforcement) Act, 1961s. 2(b), s. 7(1)(a)(iv)
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958s. Article V

Subjects

foreign award enforcementNew York Conventionreciprocal territoryburden of proofpublic policyarbitrator impartialityUSSR dissolutionUkraineSection 2(b)Section 7arbitration clause

Judgment

A TRANSOCEAN SHIPPING AGENCY (P) LTD.
v.
BLACK SEA SHIPPING AND ORS.

JANUARY 14, 1998

B [SUJATA V. MANOHAR AND D.P. WADHWA, JJ.]

Foreign Awards (Recognition and Enforcement), Act 1961 : Section
2(b).

C Foreign Award-Enforcement of-Notification declared reciprocal
territories "to which the said Convention applies" S. 2(b)-"Convention"
in S. 2(b) referred to the Convention on Recognition and Enforcement of
Foreign awards made at New York on 10-6-1958 to which lndia was a
signatory-USSR, as it then was, acceded to the New York Convention on
D 24-8-1960-Ukraine acceded to the New York Convention 011 10-10-1960-
As per notification dated 7-2-1972 issued under S.2 by Ministry of Foreign ('-;
Trade, Government of India regarding reciprocating territory, awards made
in the territories of USSR could be enforced in lndia under the Act-
Dissolution of USSR took place in or around December 1991-Held: on
dissolution of USSR there was no requirement for issue of a new notification
E under S.2 recognising Ukraine as a reciprocating territory-Hence, award
made in Ukraine is a foreign award which can be enforced in India under
the Act. -

Section 7(/)(a)(iv)-Foreign award-Challenge of-Burden of proof-
Party seeking to enforce award filed affidavit in High Court under R. 80 l
F in Ch. XLJII of Bombay High Court Rules dealing with the Rules under the
Foreign Award Act-Party challenging the award failed to put up its case
before arbitrator and also failed to discharge burden before High Court-
Party challenging award sought permission to produce fresh documents or
evidence before Supreme Court for the first time to prove its case-Held: Jn
G the circumstances of the case, party challenging the award cannot be permitted
to do so-Bombay High Court Rules, R. 801 Ch. XL/II-Practice and
Procedure.

Section 7(I)(a) (iv)-Foreign award-Enforcement-Challenge of-On
the ground that the sole arbitrator was a high-ranking officer of the opposite
H party and award given by such arbitrator could not be enforced in India
130
TRANS. SHIP. AGENCY (P) LTD v. BLACK SEA SHIPJNG 131
because it would be against public policy-Parties agreed to be governed A
by the law of the county where arbitration was held-Held: In the circumstances
of the case, there is no violation of any public policy in enforcing the award
in India when it was valid under the law of that country-Further,
appointment of officer of one of the parties to the arbitration agreement, as
a sole arbitrator, does not ipso facto make the arbitration or the award
contrary to any public policy, especially if the officer had not personally
B
-- !-- handled any of the disputed transactions and is impartial.

The lst respondent, who was a wholly owned company of the then
Government of USSR, appointed the appellants as its shipping agents for its
business of shipping and carriage of goods to and from various India ports.
c
In or around December, 1991, dissolution of the USSR took place.
Several Socialist Republics, which had formed a part of the USSR, became
~ independent Sovereign States. The State of Ukraine also thus became an
independent Sovereign State. The lst respondent company became a company
,:""- owned by the State of Ukraine. D
On 18-5-1992 an agency agreement was executed between the appellants
and the lst respondent, which contained an arbitration clause requiring the
disputes to be referred to arbitration of the country where the owners were
registered.
E
The Convention referred to in Section 2(b) of the Foreign Award
(Recognition and Enforcement) Act, 1961 is the Convention on the Recognition
and Enforcement of Foreign Awards made at New York on l 0-6-1958 to
which India was a signatory. The USSR, as it then was, acceded to the New
York Convention on 24-8-1980. Ukraine acceded to the New York Convention
,..( on 10-10-1960. A notification dated 7-2-1972 was issued under Section 2 of F
'
the Act by the Ministry of Foreign Trade, Government of India regarding
reciprocating territory whereby awards made in the territories of USSR
could be enforced in India under the Act.

Disputes arose between the appellants and the 1st respondent and,
· therefore, the 1st respondent invoked the arbitration clause in the agreement
G
"""'( dated 18-5-1992. The second respondent was appointed as sole arbitrator to
settle the disputes by arbitration at Ukraine. The appellants, however, did not
file nay objections or reply to the statement of claim filed by the 1st respondent,
nor did they appear before the arbitrator. As a result the arbitrator made and
published her award in favour of the lst respondent, who thereafter filed a H
132 SUPREME COURT REPORTS [1998] l S.C.R.

A petition in the High Court for enforcement of the foreign award. The High
Court passed a decree in terms of the award made under the Act. Hence this
appeal.

On behalf of the appellants it was contended that, on the break-up of
the USSR in or around December 1991, in the absence ofa new notification
B recognising Ukraine as a reciprocal territory, awards made in Ukraine
could not be enforced in India under the Act; that the arbitration was not --"" "'
conducted in accordance with the law of Ukraine and, therefore, permission
should be granted to produce the arbitration law of Ukraine; and that the
arbitrator was a high-ranking officer of the 1st respondent and an award
C given by her cannot be enforced in India because it would be against public
policy.

On behalf of the respondent it was contended that the appellants did not
file any objections to the competence of the arbitrator in Ukraine; that the
respondents had filed an affidavit under Rules 801 of Chapter XLIII of the
D Bombay High Court Rules dealing with Rules under the Act stating that the
award had become final and binding as per Ukrainian law and that the
appellants had not controverted this.

Dismissing the appeal, this Court

HELD : 1. The notification of 7-2-1972 covers awards made in the
E
territories of the then USSR that included Ukraine as a part of it. Although
various republics, which formed a part of the territories of USSR, may have
separated, the territories continue to be covered by the notification of 7-2-
1972. Prior to 1992 an award made in Ukraine was an award made in a
reciprocating territory as notified and this position continues even after the
F political separation of various Soviet Socialist Republics. Ukraine continues
to be a signatory to the New York Convention and the notification of7-2-1972
continues to operate in the territories then forming part of the USSR,
including the territory of Ukraine. Although there may be various agreements
between India and the Russian Republic where India has recognised Russian
G Republic as a successor of the old State of USSR yet this makes no difference
to the recognition granted under the notification of 7-2-1972 to the entire
territory of USSR as then in existence as a reciprocating territory for the
purposes of Section 2 of the Foreign Awards (Recognition and Enforcement)
Act, 1961. There is no implied curtailment of the notification of 7-2-1972
as now applying only to that territory which forms a part of the Russian
H Republic. [138-B-E)
TRANS. SHIP. AGENCY (P) LTD v. BLACK SEA SHI PING 133
Franceso v. Gorakhram, AIR (1960) Born 91, held inapplicable. A
..-....
2.1. Under Section 7(l)(a)(iv) of the Act it is for the party against
whom a foreign award is to be enforced, to prove to the court dealing with
the case that the composition of the arbitral authority or the arbitral procedure
was not in accordance with the law of the country where the arbitration took
place. The burden to prove in this regard is expressly placed on the challenger B
~ f-_
by the Statute. This Section is in conformity with Article V of the New York
' Convention of 19-6-1958. The respondents have filed an affidavit under Rule
801 Chapter XLlll Bombay High Court Rules dealing with the Rules under
the Act stating that t~e award has become final and binding as per Ukrainian
law. The appellants have not controverted this by showing the relevant law.
A mere assertion by the appellants that the award is defective or not in
c
accordance with the law of Ukraine cannot be treated as establishing this
contention. On the contrary, the presumption would be in favour of the
validity of the award. It was, therefore, entirely for the appellants to prove
before the High Court that the appointment of the second respondent or the

- .-"""-. procedure of arbitration was not in accordance with the law of Ukraine. The
appellants, however, did not produce any relevant law of Ukraine in this
connection apart from raising the bare contention. The High Court, therefore,
rightly rejected this contention. (140-B-C; 141-F; 140-D-E; 141-B)
D

New York Convention dated 10.6.1958: Article V, referred to.
E
--~
2.2. The appellants cannot now be permitted to produce/pr.ove the
-'/
relevant law of Ukraine when they have failed to do so before the High Court
and their contention has been consequently rejected by the High Court. The
practice of filing fresh documents or evidence for the first time before this
Court when the High Court had rejected the claim in the absence of such
,..( material, must be deprecated. The appellants were in a position to produce F
.,.....
;
the relevant material before the High Court. They failed and neglected to do
so. They must take the consequence. (141-C-D]

3. The parties had agreed to be governed by the law of Ukraine as far
as the arbitration proceedings were concerned. If the award given by the
second respondent, a high-ranking officer of the 1st respondent, is valid
G
under the law of Ukraine, then there is no violation of any public policy in
~
enforcing it in In_dia. Often parties appoint an officer of one of the parties
to the arbitration agreement, as a sole arbitrator. Sometimes the agreement
in terms so provides. This does not ipso facto make the arbitration or the
award contrary to any public policy, especially ifthe officer had not personally H
134 SUPREME COURT REPORTS [1998) I S.C.R.

A handled disputed transaction and is impartial. [141-H; 142-A-B[
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 112 of 1998.

From the Judgment and Order dated 9. I0.96 of the Bombay High Court
in Arbitration Petition No. 22/96.
B
F.S. Nariman, Berjis Desai, Shaym Mehta, R. Karanjawala, Saida
Topkhanawala, Arvind Kumar, Ms. Nandini Gore and Mrs. Karanjawala for the
Appellants.

Dr. Shankar Ghosh, Ashok Sancheti, Bijan Ghosh, Pranab Kumar Mullick ,,>.
C and J.K. Das for the Respondents.

The Judgment of the Court was delivered by

MRS. SUJATA V. MANOHAR, J. Leave granted.

D Application for impleadment allowed.

This is an appeal from a judgment and decree of the High Court dated
9th of October, 1996 in Arbitration Petition No.22 of 1996 whereby the High
Court has allowed the petition and passed a decree, under the provisions of
E the Foreign Awards (Recognition and Enforcement) Act, 1961, in terms of the
foreign award dated 3rd of October, 1995, given by the second respondent-
arbitrator at Odessa, Ukraine.

In 1983 the 1st respondent-Black Sea Shipping Co. was a division of
Mis Sovefracht a wholly owned company of the then Government of the
F USSR. Under an agreement date 26.8.83 the 1st respondent appointed, inter
alia, the appellants-Mis Transocean Shipping Agency (P) Ltd. as their shipping
agents for the 1st respondent's business of shipping and carriage of goods
to and from various Indian ports. The engagement of the appellants by the
1st respondent was done under various agreements, the last of which was
G dated 26.8.1983. Under Clause 5.30 of the agreement of26.8.1983 all payments
between the owners i.e. the 1st respondent and the agents were to be effected
· in accordance with the terms of a payment agreement existing between the
USSR and India otherwise than in free convertible currency. All remittances
·•
from the appellants to the Ist respondent were, therefore, to be made in
accordance with rupee-rouble payment agreement between the USSR and
H India.
TRANS. SHIP. AGENCY (P) LTD. v. BLACK SEA SHIP. [SUJA TA V. MANO HAR, J.] 135

Clause 7 of the agreement of 26.8.1983 contains an arbitration clause A
~---< requiring the disputes, if not settled amicably, to be referred to the Maritime
Arbitration Commission of the USSR with the Chamber of Commerce and
Industry in Moscow for arbitration in accordance with the Rules and Procedure
of this Commission.

In or around December, 1991, dissolution of the USSR took place, B
~ /- Several Socialist Republic which had formed a part of the USSR became
independent Sovereign State. The State of Ukraine also thus became an
independent Sovereign State. The !st respondent company became a company
owned by the State of Ukraine, In January, 1992 the Reserve Bank of India
issued a directive that henceforth all trade and non-trade transactions with C
the State of Ukraine and the other Soviet countries would be effected only
in freely convertible currencies. All disbursements in respect of Ukrainian
vesseis and collection of rates will be in convertible rupees in dollar terms
only. At this time a sum of approximately Rs. 28.11 crores was lying with the
appellants to the credit of the 1st respondent in the form of non-c0nvertible
rupees. Because of the directive issued by the Reserve Bank of India, this D
amount could not be used by the appellants to meet disbursements in respect
of the vessels of the I st respondent. The 1st respondent, therefore, decided
to utilise this non-convertible rupee amount for purchasing different items
and commodities like tea, containers, gam1ents etc, in India after obtaining the
requisite permission from the Reserve Bank of India. In this manner, a sum E
of Rs. 21. 7 crores was utilised by the I st respondent and was disbursed by
the appellants on the instructions of the I st respondent after obtaining the
requisite Reserve Bank of India's permission.

On 18th of May, 1992 a fresh agency agreement was executed between
the appellants and the I st respondent. The I st respondent appointed the p
appellants as their agents in respect of their ships coming to and going from,
Indian ports on the terms and conditions stipulated therein. Under Clause 5.2
of the agreement dealing with freight, it was provided that the freight amounts
accepted by the shipper or receivers as well as other amounts relevant to
freight were to be remitted to the owners in accordance with the attached
Financial Addend urn to the agreement. Clause 5 .21 required all payments to G
be effected in free convertible 'currency, unless otherwise stipulated. The first
addendum relating to financial obligations provided in Clause 5 that any
balance due to the owners should be paid by the agents in accordance with
Clause 5.2 on owner's instructions. Clause 1 of this agreement contained an
arbitration clause. It provided as follows :- H
136 SUPREME COURT REPORTS [1998) 1 S.C.R.

A "Clause 7.1: All disputes between owners and Agents which may
arise in connection with the fulfilment of their Agreement are to be h.

settled amicable, but if impossible then to be referred to Arbitration
of country where the owners are registered."

In January, 1995 the appellants had with them a sum of Rs. 6,41,66,410-
B 60 as non-convertible balance amount of freight payable by them to the I st
respondent. The I st respondent directed the appellants to pay this amount """.
to Mis Akshay Exports, Calcutta in connection with a purchase contract for
coffee entered into between the I st respondent and Mis Akshay Exports.
I-
Permission of the Reserve Bank of India was sought for this payment. As the
c permission was declined, the appellants, could not pay this amount to Mis
Akshay Export. Thereafter disputes arose b~tween the appellants and the I st
respondent. The I st respondent claimed substantial amounts from the
. appellants pertaining to various payments made by them in India as shipping
agents of the appellants.

D The I st respondent invoked the arbitration clause in the agreement of ~
18th of May. 1992 in respect of their claim for Rs. 6,41,66,410.60. On I Ith
August, 1995 by Government Order issued by the Ministry of Transport of
Ukraine, Department of Merchant Marine and River Transport, the second
respondent was appointed as so le arbitrator in the matter of disputes between
t'
the State owned I st respondent and their agents in India- the appellants, as
E
well as another agent in Madras, to settle the issues by arbitration. The date
of arbitration was fixed 'in respect of the appellants as 3rd of October, 1995
at Odessa. The second respondent thereafter sent a letter to the appellants
dated 28th August, 1995 informing them of her appointment as sole arbitrator
and directing the I st respondent to file the statement of claim on or before
F I Ith of September, 1995 and directing the appellants to file their objections/ )- ........
reply on or before 26th of September, 1995. She also notified the parties that
a meeting would be held by her in her office at Odessa on 3rd of October,
1995. The appellants wrote a letter objecting to the appointment of the
arbitrator and raised various contentions therein. They, however, did not file
a any objections or reply to the statement of claim filed by the first respondent
G claiming a sum of Rs. 6,41,66,410.60; nor did they appear before the arbitrator.
As a result the arbitrator made and published her award dated 3rd of October, )'-

1995 awarding the sum of Rs. 6,41,66,410 to the I st re~pondent together with
interest and costs. The I st respondent has thereafter filed petition No. 22 of
1996 in the High Court for enforcement of the foreign award. Under the
H impugned judgment a decree has been passed in terms of the award under
TRANS. SHIP. AGENCY(P) LTD. v. BLACK SEA SHIP. lSUJAT~ V. MANOHAR,J.] 137
the Foreign Awards (Recognition and Enforcement) Act, 1961. A
The appeBants contend that the award in the present case is not a
foreign award as defined in Section 2 of the Foreign Awards (Recognition and
Enforcement) Act, 1961. The relevant portion of Section 2 of the Foreign
Award (Recognition and Enforcement) Act, I 961 is as foi[ows:-
B
"2. In this Act, unless the context otherwise requires, "foreign award"
means an award of differences between persons arising out of legal
relationships, whether contractual or not, considered as commercial
under the law in force in India, made on or after the 11th day of
October, 1960-
c
(a) ................................ .

(b) in one of such territories as the Central Government, being
satisfied that reciprocal provisions have been made, may, by
notification in the Official Gazette, declare to be territories to
which the said Convention applies." D
The Convention referred to in this section is the Convention on the
Recognition and Enforcement of Foreign Awards made at New York on 10th
of June, 1958 to which India is a signatory. The USSR, as it then was, acceded
to the New York Convention on 24.8.1960. Under the relevant constitutional
provision pertaining to the USSR, two of its republics Ukraine and Byelorussia E
had a right to enter into separate treaty arrangements. Accordingly,, Ukraine
acceded to the New York Convention on 10.10.1960.

The Foreign Awards (Recognition and Enforcement) Act, 1961 was
brought on the statute book to give effect to the New York Convention. The
• ·"-- Act expressly states that it is an Act to enable effect being given to the F
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
done at New York on the 10th day of June, 1958 to which India is a party and
for purposes connected therewith. Under Section 2 of the said Act which has
been reproduced earlier the Ministry of Foreign Trade issued a notification
dated 7th of February, 1972 in exercise of powers conferred by Section 2 of G
the .said Act. The notification states that the "the Central Government being
-: satisfied that reciprocal provisions have been made, hereby declares Union
of Soviet SociaHst Republics to be a territory to which the Convention on the
recognition and enforcement of foreign arbitral awarrls set forth in the schedule
to that Act applies." As a result awards made in the territories of the Union
of Soviet Socialist Republics could be enforced in India under the Foreign H
138 • SUPREME COURT REPORTS [ 1998] I S.C.R.

A Awards (Recognition and Enforcement) Act, 1961.

The appellants contend that on the break-up of the USSR in 1991-1992
it was necessary that a new notification under Section 2 should have been
issued by India recognising Ukraine as a reciprocal territory. In its absence
award made in Ukrair.e cannot be enforce in India under the Freing Awards
B (Recognition and Enforcement) Act, 1961. This contention has no merit. The
notification of 7th of February, I972 covers awards made in the territories of
the then existing USSR which included Ukraine as a part of it. Although
various republics which formed a part of the territories of the USSR may have
separated, the territories continue to be covered by the notification of 7.2.1972.
C Prior to 1992 an award made in Ukraine was an award made in a reciprocating
territory as notified and this position continues even after the political
separation of various Soviet Socialist Republics. Ukraine continues to be a
signatory to the New York Convention and the notification of 7.2.1972
continues to operate in the territories then fom1 ing part of the USSR, including
the territory of Ukraine. Although the appellants has relied upon various
D agreements between India and the Russian Republic where India has recognised
Russian Republic as a successor of the old State of USSR, this makes no
difference to the recognition granted under the notification of 7.2.1972 to the
entire territory of USSR as then in existence as a reciprocating territory for
the purposes of Section 2 of the Foreign Awards (Recognition and
E Enforcement) Act, 1961. There is no implied curtailment of the notification of
7.2.1972 as now applying only to that territory which forms· a part of the
Russian Republic.

The respondents have drawn our attention to a decision of the Bombay
High Court in Mis Francesco v. Mis Gorakhram, AIR (1960) _Born. Page 91,
F where in a converse situation the question arose whether Arbitration (Protocol }-...
and Convention) Act, 1937 had any force in India after 26th of January, 1950
when India was divided into two State - India and Pakistan. The Court held
that India, before partition being a State signatory to the protocol on arbitration
clauses set forth in the First Schedule to the Arbitration (Protocol and
Convention) Act, 1937 and to the Convention on the Execution of Foreign
G Arbitral Awards set forth in the Second Schedule to that Act, the obligations
undertaken thereunder continue to bind India after India was constituted a -~
Dominion and they continue to bind India thereafter. In that case the Court
had relied upon the Indian Independence (International Arrangements) Orders,
1947. This decision, therefore, does not directly apply to the present case. In
H view, however, of the notification of 7th of February, 1972 the contention of
TRANS. SHIP. AGENCY (P) LTD. v. BLACK SEA SHIP. [SUJATA V. MANOHAR, J.] 139

the appellants that the present award is not a foreign award as defined in A
Section 2 must be rejected. No new notification is necessary in respect of
Ukraine.

It is next contended by the appellants that the dispute between the
parties is under the old arbitration agreement of 26th of August, 1983 and,
therefore, arbitration could only be in terms of the arbitration clause 7.1 of that B
'"· J. agreement which required that the dispute should be referred to the Maritime
Arbitration Commission of the USSR with the Chamber of Commerce and
Industry in Moscow. This contention has to be rejected because the old
agreement has been superseded by the agreement of 18th of May, 1992 under
which, as per clause 5.2 and the I st Addendum, all claims relating to freight C
have to be decided under the new agreements. This would include a claim for
freight under previous agreements also. The High Court has, therefore, rightly
held that it is the arbitration clause in the agreement of 18th of May, 1992
which governs the parties.

The appellants have raised various disputes in relation to the arbitration. D
. The appellants has contended that the arbitration has not been conducted in
accordance with the law of Ukraine. They also contend that the Government
order appointing the second respondent as the sole arbitrator is not a valid
appointment of the arbitrator. They have also contended that the arbitrator
being an official of the first respondent, is an interested arbitrator. The E
appellants, however, did not produce before the High Court any material
including the law of Ukraine to establish that the award was invalid as per
Ukrainian law or the procedure was incorrect.

Under Section 7 of the Foreign Awards (Recognition and Enforcement)
Act, I 961 it is provided as follows :- F

"7. Conditions for enforcement of foreign award:

(I) A foreign award may not be enforced under this Act :-

(a) If the party against whom it is sought to enforce the award proves G
to the Court dealing with the case that :

(i) ..................................... .

(ii) ................................... ..

(iii) .................................. .. H
140 SUPREME COURT REPORTS [ 1998] 1 S.C.R.

A (iv) the composition of the arbitral authority or the arbitral procedure
was not in accordance with the agreement of the parties or, failing
such agreement, ~·as not in accordance \Vith the law of the country
where the arbitration took place.

B It is for the party against whom a foreign award is sought to be enforced, to
prove to the court dealing with the case that the composition of the arbitral
authority or the arbitral procedure was not in accordance with the Jaw of the
country where the arbitration took place. The burden to prove in this regard
is expressly pl<.:ed on the challenger by the statute. This section is in
C conformity with Article V of the New York Convention which provides "(I)
recognition and enforcement of the award may be refused at the request of
the party against whom it is invoked, only if that party furnishes to the
co111petent authority \Vhere the recognition and enforcement is sought, proves
that....(d) .the composition of the arbitral authority or the arbitral procedure
D was not· in accordance with the agreement of the parties or failing such
agreement was not in accordance with the law of the country where the
arbitration took place ........ ". It \Vas, therefore, entirely for the appellants to
prove before the High Court that the appointment of the second respondent
or the procedure of arbitration was not in accordance with the law of Ukraine.
The appellants, however, did not produce any relevant law of Ukraine in this
E connection apart from raising the bare contention.

Under Rule 801 of the Bombay High Court Rules, which forms a part
of Chapter XLlll dealing with Rules under the Foreign Awards (Recognition
and Enforcement) Act. 1961, it is provided as follows :-

F "80 I. Enforcement of foreign award-The party seeking to enforce a
Foreign award shall produce with his petition :

(c) An affidavit or affidavits showing
(1) .................. .
(2) ................. .
G
(3) that it was made in conformity with the law governing the
arbitration procedure and
(4) that it had become binding on the parties in the country in 1 ~-~
which it was made.
H
TRANS. SHIP AGENCY (P) LTD. v. BLACK SEA SHIP. [SUJATA V. MANO HAR, J] 141

The respondents did file an affidavit in this connection affirming that the A
award had been made in conformity with the law of Ukraine and that it was
binding on the parties under the law of Ukraine. It was for the appellants who
were challenging the validity of the award to have shown that appointment
of the arbitrator or the arbitration procedure was not in accordance with the
law of Ukraine. They failed to do so. The High Court, therefore, rightly B
rejected this contention.

The appellants have now sought _permission to produce before us the
arbitration law of Ukraine which according to them, is the prevailing law. This
is rightly objected to by the respondents. The respondents also contend that
what is sought to be produced is not the entire law on the subject. We do C
not propose to permit the appellants now to produce/prove the relevant law
of Ukraine when they have failed to do so before the High Court, and their
contention has been consequently rejected by the High Court. The practice
of filing fresh documents or evidence for the first time before this Court when
the High Court had rejected the claim in the absence of such material, must D
_...._ be deprecated. The appellants were in a position to produce the relevant
material before the High Court. They failed and neglected to do so. They must
take the consequence. The respondents have, in this connection, also pointed
out that any objections to the competence of the arbitrator, or any defect in
arbitration procedure could have been agitated by the appellants in Ukraine
before the prescribed authorities. They have, however, not taken any steps E
in accordance with the law of Ukraine to challenge the arbitration or the
award. Hence the award has now become ·final and binding. The respondents
have filed an affidavit stating that the award has become final and binding
as per Ukrainian law. The appellants have not controverted this by showing
the relevant law. A mere assertion by the appellants that the award is defective F
-"" or not in accordance with the law of Ukraine cannot be treated as establishing
this contention. On the contrary, the presumption would be in favour of the
validity of the award.

The last objection which is ta)<:en by the appellants is to the second G
respondent being appointed as arbitrator on the ground that she was a high
ranking officer of the first respondent. According to the appellants an award
- which is given by her cannot be enforced in India because it would be against
public policy. There is, however, no violation of any public policy in the
present case. The parties had agreed to be governed by the law of Ukraine
as far as the arbitration proceedings were concerned. If the award given by H
SUPREME COURT REPORTS (1998] l S.C.R.
( .
142
A the second respondent is valid under the law of Ukraine, then there is no
violation of any public policy in enforcing it here. Often parties appoint an
officer of one of the parties to the arbitration agreement, as a sole arbitrator.
. Sometimes the agreement in terms so provides. This does not ipso facto make
the arbitration or the award contrary to any public policy, especially if the
B officer had not personally handled disputed transactions and is impartial.
The High Court has, therefore, correctly passed a decree in terms of the -l_ ~
award. The appeal is dismissed with costs.

v.s.s. Appeal dismissed.