Renusagar Power Co. Ltd. v. General Electric Co. [(1994) Supp (1) SCC 644] is a seminal case in Indian arbitration jurisprudence on the enforcement of foreign arbitral awards. The case interpreted the meaning of “public policy” under the Foreign Awards (Recognition and Enforcement) Act, 1961, which preceded the 1996 Act.
Case Background: General Electric (GE), a U.S. company, entered into a contract with Renusagar, an Indian company, for the supply of equipment. Disputes arose and were referred to arbitration in Paris under ICC rules. The tribunal passed an award in favor of GE. Renusagar resisted the enforcement of the award in India on the ground that it violated public policy.
Legal Issue: The key issue was: What constitutes “public policy” under Section 7(1)(b)(ii) of the 1961 Act, and whether the foreign award could be refused enforcement on that ground?
Supreme Court’s Observations: The Court held that the term “public policy” in the context of foreign awards has a narrower meaning than in the domestic context. It laid down that a foreign award could be denied enforcement only if:
- It was contrary to the fundamental policy of Indian law,
- It violated the interests of India, or
- It was contrary to justice or morality.
The Court ruled that the award did not violate public policy and allowed its enforcement.
Key Contributions:
- Introduced a restricted definition of “public policy” for foreign awards.
- Recognized the importance of upholding international contractual obligations.
- Demonstrated India’s willingness to honor international arbitration outcomes.
Impact on Indian Arbitration Law: This decision paved the way for greater confidence among foreign investors and business partners regarding arbitration in India. It aligned Indian enforcement standards with international norms and positioned India as a jurisdiction respectful of international commercial arbitration.
Legacy and Relevance: The principles laid down in Renusagar were later adopted and modified in the Arbitration and Conciliation Act, 1996, and the landmark BALCO judgment (2012) which differentiated between domestic and foreign-seated arbitrations. Even today, Renusagar is cited in matters involving enforcement of foreign awards and the interpretation of public policy.
Conclusion: Renusagar v. General Electric remains a cornerstone judgment that provided much-needed clarity on enforcing foreign awards. It helped build international credibility and fostered a pro-arbitration environment in India, laying the foundation for India’s growth as an arbitration-friendly jurisdiction.