Delhi High Court Says No 'Straight Jacket Formula' For Limitation In Enforcing Foreign Arbitral Awards

The Delhi High Court has allowed enforcement of a €9.71 million International Chamber of Commerce arbitral award in favour of Spain-based travel technology company Amadeus IT Group S.A. against Ebix Cash Limited. 

The court rejected Ebix Cash's objections that the underlying transaction violated Indian public policy and held the foreign award enforceable in India.

Justice Jasmeet Singh also rejected Ebix Cash's contention that the enforcement petition was filed beyond the limitation period.

The court held that the right to seek enforcement of a foreign arbitral award does not invariably arise on the date the award is made and must be determined on the facts of each case.

"The right to apply in case of a foreign Award as contemplated under Article 137 of the 1963 Act, would mean a fact/bundle of facts which would trigger the Award Holder to take steps for execution of its rights under the Award, and the same is not fixed. There is no straight jacket formula for accrual of right to apply and it will vary from case to case and in the present case it will be from date of communication of the Award.", the court obsereved.

Amadeus and Ebix Cash entered into a Global Distribution Agreement on October 1, 2019, under which the Spanish company agreed to provide access to its travel distribution platform across the Asia-Pacific region. It also paid an advance incentive of about USD 15 million. Ebix Inc. guaranteed Ebix Cash's obligations under the agreement.

The agreement required Ebix Cash to acquire Yatra Online by December 31, 2019 and achieve specified airline booking targets. It also entitled Amadeus to recover the advance incentive if those conditions were not met.

Amadeus terminated the agreement after alleging that Ebix Cash had failed to acquire Yatra and had fallen short of the agreed booking volumes. Arbitration was subsequently commenced before the International Chamber of Commerce.

In February 2022, the arbitral tribunal awarded Amadeus more than €13.26 million, including contractual dues and costs, and held Ebix Inc. jointly and severally liable. After adjusting amounts recovered in proceedings in the United States, Amadeus sought enforcement in India of the outstanding €9.71 million.

Ebix Cash argued that the enforcement petition was time-barred as it had been filed more than three years after the award. It also claimed the underlying arrangement was a factoring transaction whose enforcement would violate India's public policy.

Amadeus countered that limitation began only when the signed award was communicated by the ICC Secretariat on February 21, 2022, making its petition timely. It also maintained that the transaction was a commercial arrangement and not a factoring transaction.

Accepting those submissions, the court held that the right to seek enforcement accrued only when the signed award was communicated to Amadeus and not on the date the tribunal pronounced it.

"The transaction in question is purely a commercial transaction and cannot be said to be in the nature of a 'Factoring business' transaction falling under the ambit of the Factoring Act.", the court noted.

It held that the agreement did not involve any assignment of receivables, which is an essential feature of a factoring transaction. It therefore rejected Ebix Cash's public policy objection and observed that the award did not violate the fundamental policy of Indian law.

The court also rejected the contention that proceedings before courts in the United States or the forbearance agreement had extinguished Ebix Cash's liability under the arbitral award.

"Neither the forbearance agreement nor the proceedings before the US Bankruptcy Court, on their own terms, effect a novation or extinguish the underlying obligations in accordance with the Award.", it held.

Having found no ground to refuse recognition of the award, the court held that the foreign arbitral award is enforceable in India.

For Petitioner (Amadeus IT Group S.A. (Spain)): Advocates Anuj Berry and Raghav Bhargava.

For Respondent (Ebix Cash Limited & Anr.): Senior Advocate Ankit Jain, along with Advocates Harsh Sethi, Ankur Garg, Sukhpreet Maan, Raghav Luthra, Eish Kesarwani and Parth Gautam.