24.  Despite Article 34(1) of the Model Law, the General Division of the High Court may, in addition to the grounds set out in Article 34(2) of the Model Law, set aside the award of the arbitral tribunal if ––

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(b) a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced.

… While generally speaking an assertion of a breach of the fair hearing rule does not require the degree of study of the Award and the record that the Judge undertook in this case, the allegations here that the impugned portions of the Award had no nexus to the case as actually presented to the Tribunal, required the exercise that the Judge undertook. If it takes time to make sense of an award to ascertain whether an important point was overlooked or addressed at all or whether the tribunal decided on a point that the parties did not have the opportunity to address, then the judge will have to look at the award, the pleadings, the submissions and any other documents that may throw light on what happened in the arbitral proceedings and what cases the parties were running. Then the judge will have to analyse the award in some depth in order to decide whether the allegations made by the party seeking to impugn the award on the basis of breach of natural justice have substance.

It was in view of these specific concerns that this court stated in AKN v ALC that we would only infer that the decision-maker had wholly failed to consider an issue if the inference was clear and virtually inescapable. That is not to say that the applicant who alleges such a breach of natural justice must do anything more than to establish its case on the balance of probabilities. In fact, the statement (at [46]) that the court will not draw the inference against the decision-maker “… if the facts are also consistent with the [decision-maker] simply having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal with [the] point …” [emphasis added] dovetails with the rule that the applicant must show that the facts are more consistent with the decision-maker having failed to consider the point entirely – that is to say, the applicant must show that this hypothesis is more likely than not.

… It will usually be a matter of inference rather than of explicit indication that the arbitrator wholly missed one or more important pleaded issues. However, the inference – that the arbitrator indeed failed to consider an important pleaded issue – if it is to be drawn at all, must be shown to be clear and virtually inescapable. If the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary (notwithstanding that this view may have been formed based on a misunderstanding of the aggrieved party’s case), then the inference that the arbitrator did not apply his mind at all to the dispute before him (or to an important aspect of that dispute) and so acted in breach of natural justice should not be drawn.

... the issue is whether the material could reasonably have made a difference to the arbitrator; rather than whether it would necessarily have done so. Where it is evident that there is no prospect whatsoever that the material if presented would have made any difference because it wholly lacked any legal or factual weight, then it could not seriously be said that the complainant has suffered actual or real prejudice in not having had the opportunity to present this to the arbitrator …

a. Whether any provisions of the CLA violated any provisions of the SHA or the SSA.

b. Whether the [claimants] were entitled to terminate the Agreements on 30 May 2016 given [the respondent’s] conduct in relation to the CLA and/or issuance of the MAC Notice in April 2016.

c. If the First and Third [claimants] were not entitled to terminate the Agreements such that their termination was wrongful, did [the respondent] subsequently affirm the Agreements with any of its conduct?

d. Whether [the respondent] has a claim arising from the [claimants’] alleged violation of [the respondent’s] rights under the SHA post 30 May 2016.

e. The parties’ entitlement to damages and if so, quantum.

The Respondents’ submission to the Claimant's argument of continuing repudiatory breach is two-fold: First, the authorities relied on by the Claimant are decisions on anticipatory breaches and do not apply to the current facts. Second, the position under Indian law is that termination after affirmation is not allowed (see Union of India v Kesar Singh and Section 27(2)(a) of the Specific Relief Act 1963), which is different from the English authorities that the Claimant relies on.

448. Further, in any event, for more than 2 years after the issuance of the Default Notice, the [respondent] purported to affirm the Agreements and sought specific performance of the SHA. The [respondent], having already elected to enforce the performance of the SHA, is estopped from subsequently electing to accept the alleged wrongful repudiation by the [claimants] to terminate the Agreements.

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451. In its letter dated 7 June 2016 to the [claimants], the [respondent] maintained that the Default Notice “does not fulfil the criteria laid down in the SHA to qualify as a Default Notice”. In doing so, the [respondent] denied that the SHA had been terminated.

452. In the Arbitration Notice, the [respondent] requested a “permanent injunction restraining [CUW and CUY] from acting in a manner contrary to the Agreements”, and also “restraining [CUW and CUY] from taking any action or decisions in contravention of Clause 6.14.3 of the SHA in relation to the ‘Reserved Matters’ under the SHA.” The relief sought by the [respondent] showed that it had not accepted the alleged wrongful repudiation by the [claimants], but was actively seeking to enforce the Agreements.

453. That being the case, the [respondent’s] extremely late attempt in its letter dated 25 July 2018 to retrospectively reverse its election and “accept” the alleged wrongful repudiation by the [claimants] in May 2016 is clearly invalid and contrived.

107. Even if [the respondent] did affirm the Agreements following the [claimants’] initial breach (which is denied), if the Tribunal finds that the [claimants] wrongfully terminated the Agreements then it follows that by continuing to treat the Agreements as terminated, the [claimants] committed a continuing or anticipatory repudiatory breach.

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112. Thus, to the extent that [the respondent] affirmed the Agreements after 30 May 2016 (which is denied), [the respondent’s] letter of 25 July 2018 was a valid acceptance of the [claimants’] continuing renunciation.

Secondly, the position under Indian law is different from that laid down by the English authorities relied on by [the respondent]. [The respondent] has not provided any Indian law authority that suggests that once a contract has been affirmed, such affirmation may at a later point be revoked. The position under Indian law is that termination after affirmation is not allowed:

(a) Union of India v. Kesar Singh held that once an innocent party elects to affirm a contract, it cannot then seek to repudiate it. In particular, the court emphasised that 6 months after affirming the contract was “too late in the day to cancel the contract”. Here, [the respondent] purported to terminate the Agreements nearly two years after first affirming them.

(b) Furthermore, Section 27(2)(a) of the Specific Relief Act 1963 provides that the court may refuse to rescind a contract where the plaintiff has expressly or impliedly ratified the contract. As explained before (see [183] above) [the respondent] had clearly and unequivocally ratified the Agreements. Therefore, under Indian law, the contract cannot be rescinded.

559. The Tribunal finds that the Claimant affirmed the Agreements subsequent to the First and Third Respondents’ termination of the Agreements reserving its right to raise all claims and contentions under the Agreements.

D. CONCLUSION ON LIABILITY ON CLAIMANT’S CLAIM — ISSUES 1 TO 3

560. In all the circumstances the Tribunal finds as follows:

a. The Respondents’ termination letter of 30 May 2016 stated clearly that the Claimant had committed a repudiatory breach of the Agreements which the Respondents accepted with effect from 18 April 2016, and it demonstrated a clear intention on the part of the Respondents not to perform the Agreements.

b. In the light of the Tribunal’s findings above, the Respondents wrongfully terminated the Agreements on 30 May 2016.

c. The Claimant’s 7 June 2016 response to the Respondents’ 30 May 2016 wrongful termination contained a clear reservation of rights including the right to treat the Agreements as discharged at a later date.

D. The Respondents continued to be in repudiatory breach of the Agreements until at least 27 June 2018. The Claimant was entitled to and did on 25 July 2018 accept the Respondents’ repudiatory breaches.

548. There is merit in the Respondents’ submissions that by the Claimant’s following conduct the Claimant clearly and unequivocally communicated its affirmation of the Agreements:

(a) The Claimant’s letter to Respondents dated 7 June 2016;

(b) The Claimant’s letter to Respondents dated 27 September 2016;

(c) The Claimant's letter to Respondents dated 28 December 2016;

(d) The Claimant's letter dated 2 February 2017, where it said that “the SHA is still very much in existence:, and sought to exercise its rights under the SHA to vote on Reserved Matters and to inspect [CUX’s] records; and

(e) The NOA dated 22 December 2017 sought affirmative action in performing contracts.

551. The [respondent] submit[s] among other things that by continuing to treat the Agreements as terminated after 30 May 2016, the [claimants] committed a continuing or anticipatory repudiatory breach which the [respondent] was entitled to accept on 25 July 2018.

… the [respondent] itself had filled in the [lender’s] loan application form, which identified the [respondent] as a “Promoter Company”. An email from Mr. [DDD] to [CUY], attaching the same document, confirms that the [respondent] was well aware of this. In fact, the [respondent], through Mr. [EEE], had submitted the “Promoter Appraisal information of [the respondent]” to [the lender].

Through its comments provided on 15 July 2014, [the respondent] took issue with several provisions of the draft CLA, including being named as a promoter. This was surprising to the [claimants] as [the respondent] itself had filled in [the lender’s] core promoter management evaluation form and confirmed and submitted the promoter entity appraisal information.

… In coming to its decision, the Tribunal has considered not only the positions of the Parties as summarised in this Final Award, but also the numerous detailed arguments made in their written and oral submissions. The Tribunal has taken into account all evidence, documents, arguments and submissions even if not referred to expressly, or not set out in full in this Final Award and they are subsumed in the Tribunal’s analysis.

… a general and self-serving paragraph can[not] operate, in itself, to immunise an award against an allegation that the tribunal has breached the fair hearing rule. … The law does not go so far as to allow a self-serving, boilerplate paragraph such as this to conclude the assessment in the tribunal’s favour.

In her report dated 6 November 2020 Ms [FFF] among other things opined as follows:

7.28 In this regard, I find that the word ‘Promoter’ is used in only one Article of the Draft CLAs which is germane to this Expert Report, as follows:

7.29 In this context, it is noteworthy that while Article 5.1.2 of the Draft CLAs requires the Memorandum and Articles of the Company to be amended such that [the respondent], [CUW] and the Individual Sponsor are identified as either ‘Promoters’ or ‘Sponsors’ of the Company, the [lender’s] Sanction Letter, in paragraph A (1), requires [the respondent] to be named as a promoter and, in paragraph A (15), requires that the Articles of the Company be amended to reflect [the respondent], [CUW] and the Individual Sponsor as 'Promoters' of the Company.

7.30 In light of the above, there do not appear to be any direct additional financial obligations on the Promoters arising from the terms of the Draft CLAs themselves, which are beyond those imposed on the Sponsors. However, under Indian law, there are situations where persons or companies who are named or categorised as 'promoters' of a company may be subject to certain obligations at law. The obligations which apply to 'promoters' vary depending on the definition of the term 'promoter' under the statutes imposing those obligations. Whilst I am not providing a general opinion on all of the Indian law obligations which might apply to anyone described as a 'promoter' under Indian law, as a general point, a person recognised or designated as a promoter of a company is generally presumed to be in control of such company. There are certain liabilities, pecuniary or otherwise, which are concomitant with such attribution and can often be severe. Illustratively, under the Companies Act, 2013 a ‘promoter’ is liable to compensate for gain resulting from non-disclosure or insufficient disclosure of information in the statement annexed to the notice of board meetings of a company. Similarly, under the Companies Act, 2013, in the course of winding up of a company on an application made by the official liquidator, the court may make the promoter liable for misfeasance or breach of trust.

The queries of the company have been examined with reference to law as applicable and corporate practices generally followed and prevalent as well as guidelines of the Regulatory Authorities where necessary in the context.

1.  The Company was incorporated as a private limited Company as stated supra in the Office of the Registrar of Companies, [Indian State] on [date]. The subscribers to the Memorandum of Association of the Company are [CUY] and Mrs. [BBB] and these are the first directors named in the Articles of Association of the Company who, as per the provisions of Companies legislation, will be treated as the first shareholders.

15.  To address the second query, based on the analysis of the obligations of [the respondent] (as briefed to me), I do not think [the respondent] qualifies as a promoter. In any event, I cannot pinpoint any law that would specifically require that promoters be identified and named in the financing documents. As regards whether or not lenders are advantaged by naming [the respondent] as promoter if the project runs in ordinary course, in addition to the obligations/acknowledgements that [the respondent] is liable to commit/furnish, I cannot see how the lenders will necessarily advantaged by naming [the respondent] as promoter in the financing documents if the project runs in ordinary course. That said, under certain circumstances, assuming [the respondent] were established as promoter, identifying [the respondent] as promoter (such as in cases of restructuring where guarantees of promoters are sought or cases of wilful default where promoters are to be held accountable/responsible) may be said to bear certain degree of evidentiary upside. This is in view of the provisions of Section 114 of the Evidence Act, 1872 (Evidence Act), whereby the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to facts of the particular case. Further, certain judicial pronouncements premised, inter alia, on Section 114 of the Evidence Act suggest that the effect of Section 114 of the Evidence Act is to make it perfectly clear that the Courts of Justice are to use their own common sense and experience in judging the effect of particular facts and they are to be subjected to no technical rules whatever on the subject. Further, Section 114 of the Evidence Act has been viewed as being wide enough to raise a presumption not only with regard to oral evidence but also with regard to documentary evidence.

Further and in any case, [the respondent] itself had completed and signed the Lenders’ entity appraisal forms where [the respondent] was already identified as a promoter. It is a clear afterthought and totally unreasonable for [the respondent] to belatedly argue that whatever perceived “evidential disadvantage” might arise from it also being named a promoter in the CLA therefore gave [the respondent] free rein to block the CLA, cause the Project to fail and waste the millions of dollars which parties had invested.

427. In the SHA only [CUW] is defined as "Promoter", and the [respondent] is defined as [“the respondent”]. Likewise, in the SSA. For some reasons which remained vague and indeed unexplained in the arbitration, the Lenders insisted not only on the [respondent] being named Promoter for the purposes of the CLA, they also required the definition of "Promoter" in [CUX’s] Articles of Association be amended accordingly. There was no backing down from this position.

428. The question which arises is why this intransigence in the face of the legal opinions obtained by both the [respondent] and the [claimants] that at least in some circumstances legal obligations inhere in a “Promoter” …

437. Indeed, on the strength of the Judge's endorsement of the legal opinion the [claimants] wrote to [the lender] on 15 October 2015 requesting the [respondent] not be classified as Promoter in the financing documents. And yet the Lenders did not ameliorate their position.

438. In these circumstances there is much to the submission of [the respondent’s] Counsel that by having the title of Promoter forced upon it the Claimant would incur additional liabilities as a matter of Indian law under the CLA which incorporates the [lender’s] letter by reference.

439. The Tribunal therefore finds that the requirement that the [respondent] be classified as Promoter violates Article 19.1 of the SHA.

In any case, the Claimant itself had completed and signed the Lenders' entity appraisal forms where the Claimant was already identified as a promoter.

All other aspects of the Project execution, other than the supply of BTG pursuant to Clause 16.4 above, shall, in principle, be undertaken by [VVV] subject to the provisions of Clause 6.7 above; provided that [VVV] shall guarantee unconditionally (including, without limitation, providing for guarantees of performance and taking full responsibility for any financial losses resulting therefrom) the quality, the performance and the time aspects (e.g. meeting material delivery schedules) of the Project as is customarily guaranteed, performed and undertaken by internationally reputable service providers in similar projects.

The [claimants] submit that [the respondent’s] demands to replace the agreed BTG/BOP contractual arrangements with a new commercial arrangement for a single EPC contractor was a failure to perform and/or act in compliance with the SHA. In so doing, the Claimant deprived the [claimants] of the benefit they were supposed derive from the BOP contract (that is, awarding the BOP contract to [VVV]) and was in repudiatory breach of the SHA.

524. Clause 16.5 of the SHA provides that “All other aspects of the Project execution, other than the supply of BTG ... shall, in principle, be undertaken by [VVV] ... provided that [VVV] shall guarantee unconditionally (including, without limitation ... the quality, the performance and the time aspects (e.g. meeting material delivery schedules) of the Project as is customarily guaranteed, performed and undertaken by internationally reputable service providers in similar projects”.

525. EPC contractor(s) were required to complete the BTG and BOP works. The Claimant wanted to engage one EPC contractor to carry out both works.

526. The Respondents say that because Clause 16.5 expressly reserved in principle the BOP works for [VVV] the Claimant's insistence on having one EPC contractor and opposition to [VVV] was unjustified and in breach of contract.

527. However, the SHA stipulated that [VVV] would guarantee the performance of the works to the standard of internationally reputable service providers. The Respondents have not suggested that [VVV] could provide such a guarantee. The Claimant had the experience and technical expertise of constructing [power] plants and in the view of the Tribunal it was not unreasonable for them to suggest that one EPC contractor undertake both tasks. In doing so, the Claimant did not act in breach of the SHA.

224. The interpretation of Clause 14.1 [of the SSA] which gives it meaning and substance is that [the respondent] may sue [CUY] in the same proceedings instituted against [CUW] and [CUX] but can enforce any award against [CUY] only after [CUW] and [CUX] have failed or refused to comply with it.

[CUY], being in Control of [CUW], shall be jointly and severally liable for the obligations and liabilities of [CUW] under this [SSA], provided, however, that in the event of any breach by [CUW] and [CUY] or [CUX] under [the SSA], [the respondent] shall first exhaust all legal remedies available to it under Applicable Law against the other Indemnifying Parties and thereafter seek recourse for any unsuccessful unappealable claims against [CUY]

The Indemnified Party I and the Indemnified Party III shall, for, the purposes of this Clause 13, collectively be referred to as the “Indemnified Parties” and individually as an “Indemnified Party”. The Indemnifying Party I, Indemnifying Party II and Indemnifying Party III shall collectively be referred, to as the “Indemnifying Parties” and individually an “Indemnifying Party”.

[CUY], being in Control of [CUW], shall be jointly and severally liable for the obligations and liabilities of [CUW] under this [SSA], provided, however, that in the event of any breach by [CUW] and [CUY] or [CUX] under [the SSA], the [respondent] shall first exhaust all legal remedies available to it under Applicable Law against the other Indemnifying Parties and thereafter seek recourse for any unsuccessful un-appealable claims against [CUY]

216. On a plain reading of Clause 14.1, the proviso in it makes a distinction between the joint and several liability of [CUW], [CUX] and [CUY] for the obligations of [CUW] and [CUX] under the SSA, and enforcement of any judgment obtained by the [respondent] in a claim for appropriate remedies for breaches by [CUW] and [CUX] of their SSA obligations.

…

224. The interpretation of Clause 14.1 which gives it meaning and substance is that the [respondent] may sue [CUY] in the same proceedings instituted against [CUW] and [CUX] but can enforce any award against [CUY] only after [CUW] and [CUX] have failed or refused to comply with it.

First, the [respondent] has not explained why their claims against [CUW] and [CUX] cannot proceed independent of their claims against [CUY]. Since the liability of the [claimants] is joint and several, the [respondent] can severally proceed against [CUW] and [CUX] before proceeding against [CUY].

In addition, as submitted by the respondent, it is difficult to see what liability [CUY] would have if not joint and several liability and no argument was made prior to the Award or, indeed, now that the liability should be other than joint and several.