Supreme Court India: Daiichi Sankyo Foreign Arbitral Award Execution Stalls

• Daiichi Sankyo informed the Supreme Court it is still struggling to execute a foreign arbitral award nearly ten years after it was secured.
• The arbitral award, obtained on April 29, 2016, is against former Ranbaxy promoters Malvinder Mohan Singh and Shivinder Mohan Singh.
• The current Supreme Court hearing involves challenges by banks and financial institutions to a Delhi High Court order for a forensic audit in the execution proceedings.
• A key point of contention is the conflicting claims surrounding Fortis Healthcare Limited shares, with banks blaming judgment-debtors and vice versa.
• Daiichi's counsel described the situation as a "spider's web," preventing the company from realizing the award despite being the decree-holder.

This ongoing saga serves as a stark illustration of the significant and protracted challenges in executing foreign arbitral awards in India, even when the nation's highest judicial body, the Supreme Court, is involved.

Japanese pharmaceutical giant Daiichi Sankyo recently informed the Supreme Court of India about its ongoing struggle to enforce a foreign arbitral award, nearly a decade after it was initially secured. The company, represented by Senior Advocate Arvind Datar, highlighted the significant delays in realizing the award against former Ranbaxy promoters Malvinder Mohan Singh and Shivinder Mohan Singh. Despite obtaining the arbitral award on April 29, 2016, and subsequently initiating execution proceedings, Daiichi Sankyo has yet to receive the awarded sum, underscoring the complexities inherent in Daiichi Sankyo foreign arbitral award execution India.

This protracted legal battle illustrates the formidable hurdles faced by decree-holders seeking to enforce international arbitration outcomes within the Indian jurisdiction. The company's counsel emphasized the decade-long wait for execution, a timeframe he described as exceptionally long for an international award. This situation casts a spotlight on the challenges of bringing foreign arbitral awards to fruition, even when the legal process has progressed to the execution phase.

The current proceedings before the Supreme Court involve a bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana. These hearings are primarily addressing challenges brought by various banks and financial institutions against directives issued by the Delhi High Court. The High Court had ordered a forensic audit as part of the execution proceedings initiated by Daiichi, a move contested by these financial entities.

Daiichi's counsel, Mr. Datar, articulated the intricate nature of the dispute, particularly concerning the fate of shares in Fortis Healthcare Limited (FHL) held by the judgment debtors. He pointed out that the banks and the judgment debtors have presented contradictory accounts regarding whether these Fortis Healthcare shares were encumbered, who was responsible for invoking the pledges associated with them, and ultimately, who sold the shares. This web of conflicting narratives complicates the Daiichi Ranbaxy arbitral award enforcement efforts, adding layers to the Supreme Court India arbitration execution process.

Mr. Datar vividly characterized the enforcement landscape as a "spider's web," a metaphor reflecting the tangled and convoluted nature of the ongoing disputes. At the heart of this complexity lies the contention over the Fortis Healthcare Limited (FHL) shares, which are crucial assets for the Malvinder Shivinder Singh award execution. The legal representative for Daiichi Sankyo detailed how the banks attribute blame to the judgment-debtors for the ambiguities surrounding these shares, while the judgment-debtors, in turn, point fingers at the banks.

This continuous cycle of mutual recrimination leaves Daiichi Sankyo, the rightful decree-holder, without any tangible relief. The inability to definitively trace and secure assets, particularly the FHL shares, due to these conflicting claims, significantly impedes the execution process. The lack of clarity on who controlled, pledged, or sold these valuable assets has created an impasse, preventing the Japanese pharmaceutical firm from recovering the sums awarded to it.

This ongoing saga serves as a stark illustration of the significant and protracted challenges in executing foreign arbitral awards in India, even when the nation's highest judicial body, the Supreme Court, is involved. The decade-long struggle faced by Daiichi Sankyo, despite having a clear arbitral award, highlights systemic difficulties that can arise in international arbitral award enforcement challenges within the Indian legal framework. The intricate interplay of various parties, conflicting claims over assets, and the sheer duration of the proceedings underscore the need for robust strategies when pursuing such enforcement.

The experience of Daiichi Sankyo provides a critical case study for international businesses and legal practitioners. It demonstrates that securing an arbitral award is often merely the first step, with the subsequent enforcement phase in India potentially involving extensive delays, complex asset tracing difficulties, and a need for persistent legal engagement. This situation reinforces the perception that while India is increasingly embracing arbitration, the practicalities of enforcing foreign awards remain a formidable hurdle.

This development underscores the significant and protracted challenges in executing foreign arbitral awards in India, even when involving the Supreme Court. Lawyers and compliance officers advising clients on international arbitration with Indian entities should anticipate complex enforcement proceedings and factor in potential delays and asset tracing difficulties when assessing risk and strategy.

Source: Reporting based on recent Supreme Court submissions.