Bombay HC DB Important Judgment on Res Judicata, Narrow Public Policy and Corporate Veil Principles Strengthens Foreign Award Enforcement
Judgment dated 30.12.2025 of the High Court of Bombay in Commercial Arbitration Appeal (CARBA)(L) No.38267 of 2024 of Imax Corporation Vs. E-City Entertainment (I) Pvt Limited and others
In 2000, there was Master Agreement with the Respondent No.1 for lease of six IMAX systems for 20 years extendable further for ten years.
In 2003-2004, the disputes between the parties arose and IMAX’s claim for USD 18.3 million with interest was referred to ICC, London.
ICC passed three Awards collectively. However, it is alleged that during the pendency of foreign arbitral proceedings the respondent no.1 had divested and diverted its substantial assets to the related companies of respondent nos.2, 3 and 4.
Therefore, the respondent nos.2, 3 an 4 were made parties to the enforcement petition and also to the appeal.
By the order dated 24.12.2024, the Single Bench dismissed IMAX enforcement / execution petition on the ground of limitation and it was contrary to the public policy.
HELD that this was not a case in which the enforcement of the foreign award could have been refused on the ground of breach of India’s fundamental policy. By attempting to elevate the mere and alleged violation of FEMA or the alleged non-consideration of expert evidence to the status of a public policy issue, the enforcement of the foreign award could not have been refused.
Full advantage was taken of the Master Agreement entered into in 2000, and by taking undue advantage of the pressure on the Indian court’s dockets, payments have been successfully resisted for all these years. During the pendency of the arbitral proceedings, the 1st Respondent improperly diverted its properties and assets worth Rs 210 crores to the associated companies, i.e. the 2nd and 3rd Respondents, with the sole objective of frustrating the execution of the awards or, in any event, further delaying the matters. 320. To borrow the words of the Hon’ble Supreme Court in Vijay Karia (Supra), the first Respondent is “indulging in speculative litigation with the fond hope that by flinging mud on a foreign tribunal award, some of the mud so flung would stick”. For all these reasons, we impose a cost of Rs 5 lakhs on the 1st Respondent, payable within 4 weeks to the Appellant, IMAX.
