The Bombay High Court has recently revived enforcement proceedings filed by IMAX Corporation to enforce foreign arbitral awards against E-City Entertainment (I) Pvt Ltd for breach of contractual obligations. The Court held that the principle of res judicata applies even at different stages of the same enforcement petition.

It ruled that once a limitation objection has already been decided, the Court cannot reconsider it merely because later judgments have taken a different view of the law.

A Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna, observed,

"The principle of res judicata applies also as between two stages in the same. litigation to the extent that a Court, whether the trial Court or a higher Court having at an earlier stage decided a matter in one way will not allow the parties to re-agitate the matter again at a subsequent stage of the same proceedings."

Background:

On September 28, 2000, the Appellant – IMAX Corporation (“IMAX”) entered into an agreement (Master Agreement) with the first Respondent, i.e. M/s. E-City Entertainment (I) Pvt. Ltd (“E-City”), providing for the lease of six IMAX systems for 20 years, with an option to extend for a further 10 years. Disputes arose between IMAX and E-City during 2003–2004, following which IMAX referred its claim of USD 18.3 million, along with interest, to arbitration before the ICC in London.

The arbitral tribunal passed a partial award on February 9, 2006, holding that the master agreement was binding, that E-City had breached it by failing to lease all six IMAX systems, and rejecting E-City’s claim that the agreement was unenforceable, while awarding damages to IMAX. This was followed by a final quantum award on August 24, 2007, directing E-City to pay IMAX more than Rs. 78 crores.

On July 22, 2008, E-City challenged the foreign arbitral awards via Arbitration Petition under Section 34 (Part I of the Arbitration Act) in Bombay High Court. IMAX contested this, arguing (Part II of the Arbitration Act) applies to foreign awards enforcement.

A single judge, ( Justice Anup Mohta) overruled IMAX on June 10, 2013, holding Part I applicable and the petition maintainable. IMAX appealed to the Supreme Court via Special leave Petition(SLP) filed on November 10, 2013, securing interim stay on December 19, 2013.

On March 10, 2017, the Supreme Court allowed IMAX's SLP, held that Part II of the Arbitration Act applies to the review of these England-seated arbitral awards governed by Singapore law, and dismissed E-City's petition under Section 34 . Thereafter, in April , 2018, IMAX filed a Commercial Arbitration Petition under Sections 47-49 of Part II of the Act seeking recognition and enforcement of the three ICC arbitral awards.

E-City raised an objection that the petition was barred by limitation, but a single judge rejected this objection and held that the petition was filed within time. E-City challenged this finding before the Supreme Court, but the challenge was dismissed on August 16, 2023, making the limitation issue final.

Despite this, at the stage of final hearing, another single judge refused to enforce the awards, holding that the petition was time-barred, contrary to public policy, and wrongly directed against companies belonging to the E-City group.

Court’s Ruling:

Allowing IMAX’s appeal, the Division Bench held that the issue of limitation had been finally decided by the Supreme Court and could not be reopened. It stressed that the principle of res judicata applies even at different stages of the same proceedings, and that a later change in legal interpretation does not permit reconsideration of earlier binding orders.

The Court also clarified that while enforcing a foreign arbitral award, the court cannot re-examine the merits of the case or widen the meaning of “public policy.”

The bench granted IMAX Corporation's appeal, overturned the single judge's order, and paved the way for executing the foreign arbitral awards against the E-City group.

The court imposed costs of Rs 5 lakhs on E-City for adopting delaying tactics and refused to grant any stay on the judgment, directing that the amount be paid to IMAX within 4 weeks.

Case Title: Imax Corporation vs E-City Entertainment (I) Pvt Ltd & Ors [Commercial Arbitration Appeal (CARBA) (L) No. 38267 of 2024]

Appearance:

For Appellant: Sr. Advocate Aspi Chinoy with Advocates Shanay Shah, Rahul Mahajan, Amit Surve, Simran Gulabani i/b Fortitude Law Associates

For Respondents: Senior Advocates Vikram Nankani, Navroz Seervai, Sharan Jagtiani with Advocates Sumeet Nankani, Pooja Tidke, Krushi N. Barfiwala, Shlok Bodas, Alisha Mohite, Ishika Lodha, Saket Mone, Gulnar Mistry, Shrey Shah, Shrushti Thorat, Archit Rao, Akshay Doctor, Siddharth Joshi, Avanti Divan, Samriddhi Lodha, i/b Parinam Law Associates, Vidhi Partners