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Receivers Appointed in $300 Million Arbitration Dispute

Published: 19 October 2014, in categories: Legal Updates | Commercial Litigation Updates | News and Updates

A multinational company which ‘fought tooth and nail’ to avoid having to honour a $300 million arbitration award has paid a high price for its stance after the High Court compulsorily appointed receivers over a raft of its overseas assets.

The Indian real estate company had been hit with the award in London following a dispute relating to a joint venture for the clearance and development of slums in Mumbai. It had more than sufficient assets to pay the sum due but had made it clear that it would do whatever it could to avoid meeting the liability.

Frustrated in its enforcement efforts, the winner in the arbitration, a Mauritian company, applied for receivers to be appointed over the Indian company’s shares in four other companies which were based in India, the Isle of Man and Cyprus.

The Indian company argued that to appoint receivers over the foreign assets of a foreign company was a ‘remedy of last resort’ which should only be granted where no other form of enforcement is feasible. It also submitted that, due to tight Indian exchange control rules, it could not honour the award without the permission of the Reserve Bank of India.

Granting the order sought, the Court noted of the Indian company, “It seems strange for a major publicly listed company engaging in international business to believe that it owes a duty to its shareholders to default on arbitration awards made pursuant to agreements freely entered into with the benefit of legal advice.” The company clearly had no intention of paying up voluntarily and it was thus ‘necessary and appropriate’ to appoint receivers.

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