Alternative Dispute Resolution

Renusagar Power Co. Ltd. v. General Electric Co.

1994 Supp (1) SCC 644

Facts

General Electric supplied equipment and services for Renusagar’s power project.
Disputes arose over payment and contractual liabilities.
Foreign arbitration resulted in an award in favour of General Electric.
GE sought enforcement in India under the Foreign Awards Act, 1961.
Renusagar resisted enforcement on several grounds, including:
alleged violation of Indian law;
foreign-exchange restrictions;
public policy;
and supposed errors in the tribunal’s interpretation.
The Supreme Court had to define the meaning of Indian public policy in the foreign-award context.

Public policy in foreign-award enforcement is narrow.
Enforcement may be refused only where it is contrary to:
the fundamental policy of Indian law;
the interests of India;
or justice or morality.
A mere:
legal error;
contractual error;
statutory irregularity;
or disagreement with the tribunal is insufficient.
The enforcement court cannot sit in appeal.
The objection must concern something fundamental to the legal order rather than an ordinary rule of law.

Renusagar’s objections invited the Court to reconsider:
the tribunal’s contractual findings;
the calculation of liability;
and the legal consequences of the transaction.
The Supreme Court held that foreign-award enforcement does not permit such review.
The New York Convention framework is based upon:
finality;
limited defences;
and international comity.
If every ordinary violation of municipal law were treated as public policy, enforcement would become a full rehearing.
The Court therefore examined whether the award required conduct fundamentally prohibited in India.
It found no such conflict.
The monetary obligations did not:
undermine the legal system;
injure India’s sovereign interests;
or offend the most basic standards of justice.
Any ordinary legal error was for the tribunal or the court of the seat, not the Indian enforcement court.
The award was consequently enforced.
The three-part Renusagar test became the foundation of Indian foreign-award law.
Shri Lal Mahal later reaffirmed that the broader domestic standard in Saw Pipes does not apply under Section 48.
Vijay Karia further emphasised the narrowness and discretion of the enforcement defences.
Although statutory amendments have refined the wording of Section 48, the core Renusagar principle remains controlling.

The Supreme Court enforced the foreign award.
It held that public policy in foreign-award cases is confined to fundamental and exceptional conflicts.
Ordinary errors of fact, contract or law do not justify refusal.
Use this case for: the foundational narrow public-policy test for foreign-award enforcement.