Supreme Court holds that the limitation period applicable to enforcement of foreign awards is 3 years

Brief Facts

A dispute arose regarding the interpretation of a production sharing contract (“PSC”) executed between Vedanta Limited, Ravva Oil (Singapore) Pte. Ltd. and Videocon Industries Limited (“Respondents”) and the Government of India (“Appellant”) on the issue of recoverability of a certain head of costs that were incurred by the Respondents at the Ravva Oil and Gas Field. In 2011, the arbitral tribunal made an award (“Foreign Award”) in favour of the Respondents declaring that the Respondents had rightly interpreted the PSC and had correctly recovered costs incurred by them.

In 2014, the Appellant issued a show cause notice to the Respondents stating that since the Respondents had not formally sought enforcement of the Award before Indian courts, the Respondents could not rely upon the Award. Hence, the recovery of costs that was declared as proper by the Award was liable to be reversed. In view of this, the Respondents approached the High Court of Delhi for enforcement of the Award, which the Appellant contested as being time barred. The objection on limitation was rejected by the High Court of Delhi by judgment dated 19 February 2020, which also allowed enforcement of the Award. In an appeal by the Appellant, the Supreme Court of India (“Court”) upheld the enforcement of the Award and rejected the Appellant’s challenge on grounds of limitation and public policy.

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