What should be the conversion rate when arbitral award / arbitration agreement is silent on it?

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A and B went into the arbitration and arbitrator decided in favor of A. The arbitrator awarded the amount in foreign currency. During the execution of award, dispute arises on date of which conversion rate should be taken. It was held that court cannot go behind the decree in execution. Where agreement is silent then conversion rate will be taken of date of decree become final. It is not necessary that the commercial transactions between Indian parties be confined to Indian territories alone. There may be transactions which may entail exposure in foreign currency. For the purposes of enforcement, no distinction can be made between decree/awards where amounts are awarded in foreign currencies on the basis of the nationality of the disputing parties.

 

(I)                 In Forasol v. Oil and Natural Gas Commission (1984) Supp SCC 263, the Supreme Court had considered the aforesaid question and had held that the date on which the decree had become final would be the relevant date for determining the applicable exchange rate.

 

(II)               This Court finds it difficult to accept that an Executing Court would determine the exchange rate to be used for enforcing decrees based on whether both the parties are Indian entities or not. It is not necessary that the commercial transactions between Indian parties be confined to Indian territories alone. There may be transactions which may entail exposure in foreign currency. For the purposes of enforcement, no distinction can be made between decree/awards where amounts are decreed/awarded in foreign currencies on the basis of the nationality of the disputing parties.

 

 

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