Telangana High Court Dismisses Plea To Enforce €247.61 Million Arbitral Award Against RUSAL And Subsidiaries

The Telangana High Court has recently dismissed an execution petition filed by German company OWH SE i.L. seeking enforcement of London Court of International Arbitration (LCIA) awards against Russian aluminium producer United Company RUSAL International P.J.S.C. (RUSAL) and its subsidiaries. The court held that it lacked territorial jurisdiction to entertain the petition.

The court stayed the operation of its judgment until June 2, 2026, to enable OWH to prefer an appeal.

While doing so, Justice T. Madhavi Devi held that Qatar-based AL Plus Holding LLC and Russia-based International Limited Liability Company Gershvin LLC, subsidiaries of RUSAL, could be impleaded in the execution proceedings.

The court observed that third parties may be joined in arbitral award enforcement proceedings where it is alleged that assets were transferred to defeat enforcement.

However, the court clarified that such allegations must be examined by determining whether those entities are alter egos of the award debtor through piercing the corporate veil.

The bench observed, "It is clear that third parties also can be made parties to the enforcement of Arbitral Awards provided it is proved that the funds/shares/assets have been transferred in order to avoid enforcement of the Arbitral Tribunal Awards. Thus, in order to verify whether R2 and R3 are alter egos of R1, it is necessary to pierce the corporate veil to find out whether the companies have been formed/created for diversion of the assets of R1 only or whether the assets of R1 have been diverted to R3 and in turn to R2 to evade the enforcement of arbitral proceedings has to be seen."

The dispute arose from two LCIA awards passed under an International Swaps and Derivatives Association (ISDA) Master Agreement. The awards directed RUSAL and RTI Limited to pay more than €247 million, along with costs and continuing contractual interest.

After the English courts dismissed RUSAL's challenge, the awards attained finality. OWH then initiated enforcement proceedings in multiple jurisdictions where it claimed RUSAL or entities controlled by it held assets.

In India, OWH alleged that RUSAL had diverted assets through AL Plus Holding LLC and Gershvin LLC to place them beyond the reach of enforcement. It claimed that AL Plus Holding LLC ultimately held a 26% stake in Pioneer Aluminium Industries Limited. OWH thereafter filed an execution petition under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996.

The Registry initially objected to impleading the two subsidiaries. The court overruled the objection. It admitted the petition and restrained AL Plus Holding LLC from transferring its shares in Pioneer Aluminium Industries Limited pending further hearing.

OWH argued that the Arbitration Act permits enforcement against "persons" and not merely signatories. It also contended that the corporate veil should be pierced because RUSAL had allegedly diverted assets to its subsidiaries to evade the awards.

The respondents denied the allegations. They maintained that they were separate legal entities. They also argued that the Telangana High Court lacked territorial jurisdiction.

The court held that the allegations warranted an examination of whether the subsidiaries were alter egos of RUSAL. However, it concluded that it lacked territorial jurisdiction to proceed further.

The court observed that, under company law, jurisdiction follows the registered office of the company. Since Pioneer Aluminium Industries Limited is registered in Andhra Pradesh, the appropriate forum would be the Andhra Pradesh High Court.

It also held that the shares sought to be proceeded against belonged to AL Plus Holding LLC, a Qatar-incorporated company. Their legal situs was therefore in Qatar.

Holding that the Telangana High Court lacked jurisdiction under the Arbitration and Conciliation Act, the court dismissed the execution petition. It vacated the interim order restraining the transfer of the shares. The operation of the judgment was kept in abeyance until June 2, 2026, to enable OWH to file an appeal.

For OWH SE i.L. (Petitioner/Award Holder): Senior Advocate K. Vivek Reddy, Advocate Siva Kumar Vakkalanka.

For United Company RUSAL International P.J.S.C. (Respondent No. 1/Award Debtor): Senior Advocate K.K. Sharma.

For AL Plus Holding LLC (Respondent No. 2/Third Party): Senior Advocate K.K. Sharma.

For International Limited Liability Company Gershvin LLC (Respondent No. 3/Third Party): Senior Advocate K.K. Sharma.