Can a foreign-seated arbitral tribunal grant a shareholder buy-out/transfer remedy, a relief typically granted by the National Company Law Tribunal (“NCLT”), and can Indian courts enforce such an award? This issue was recently analysed by the Hon’ble Delhi High Court (“Court”) in the case of Roger Shashoua and Ors v Mukesh Sharma and Ors [2025 SCC OnLine Del 5773], where the Delhi High Court enforced the arbitral awards directing transfer of shares between warring shareholders of a company. It rejected the arguments that such a relief was beyond the powers of an arbitral tribunal or contrary to public policy, affirming that tribunals can grant such remedies that flow from the Shareholders’ Agreement (“SHA”).

Background

• Dispute arose from an SHA that was entered into between investor Roger Shashoua (the Petitioner) and promoter Mukesh Sharma (the Respondent) in International Trade Expocentre Ltd. (“ITEL”), which created an equal joint venture structure and laid out the shareholding structure along with a detailed decision-making and deadlock resolution clause.
• Clause 4.7 of the SHA provided a deadlock resolution mechanism that, after short negotiation periods, referred unresolved issues to arbitration.
• Over the years, the relationship between the two Joint Venture (“JV”) partners turned sour due to acts of oppression, dilution of foreign investor’s (i.e., Roger Shashoua’s) shareholding, siphoning of funds, competing businesses and exclusion of the investor from management.
• Due to the ongoing tensions and disputes, the Petitioner invoked arbitration under the SHA and referred the disputes to the International Chamber of Commerce Tribunal in London (“ICC Tribunal”).
• The ICC Tribunal issued a partial award dated 5 January 2010 and a final award dated 1 August 2011, in which it directed the transfer of the Respondent group’s shares to the Petitioner group and prescribed a detailed buy-out remedy.
• After protracted litigation and challenges, an enforcement petition was filed before the Delhi High Court under Sections 47-49 of the Arbitration and Conciliation Act, 1996 (“A&C Act”). The Respondents resisted and claimed that the ICC Tribunal had exceeded its jurisdiction and that the remedy granted by it was a remedy that could only be granted by the NCLT/Company Law Board.

Questions before the Delhi High Court

The questions before the Court were:

1. Whether the ICC Tribunal had jurisdiction under the SHA to order a buy-out or transfer of shares as a remedy for a deadlocked JV, or whether such relief was outside the scope of the arbitration clause;
2. Whether a remedy that effects a change in ownership of a company amounts to a statutory corporate remedy for oppression and mismanagement that is non-arbitrable and therefore incapable of enforcement; and
3. Whether the buy-out remedy violated Indian public policy such that the award should be refused pursuant to Section 48(2)(b) of the A&C Act?

Court Ruling

The Court held that:

• the clauses of the SHA were framed broadly and specifically granted the arbitral tribunal the power to resolve disputes related to validity, interpretation, implementation and breach of the SHA and the scope and power of the ICC Tribunal was rooted in the arbitration agreement.
• the ICC Tribunal had expressly recognised that the SHA contemplated deadlock consequences including transfer of share and remedies aimed at restoring the contractual balance between the parties. The Court confirmed that once there is a deadlock and the ICC Tribunal is vested with the jurisdiction to resolve the deadlock, in terms of the SHA, it cannot thereafter be argued that the ICC Tribunal lacked jurisdiction, or that it exceeded its jurisdiction, or that the deadlock was not capable of settlement by arbitration. The Court further relied on the Supreme Court case of Mahanagar Telephone Nigam Limited v Canara Bank¹ wherein the Apex Court held that a commercial document should be construed in such a way that it gives effect to the parties’ agreement rather than invalidating it. Similarly, an arbitration agreement must be interpreted to uphold the intention of the parties and not defeat it on mere technicalities. On that basis, the Court treated the buy-out as a contractual relief rather than an encroachment on the exclusive statutory jurisdiction of the NCLT.
• while oppression and mismanagement claims may be non-arbitrable, contractual shareholder disputes are in fact arbitrable. The ICC Tribunal did not take over NCLT’s powers but gave effect to contractual rights. The Court acknowledged that:“while the disputes may appear, on the surface, to traverse the domain of statutory oppression and mismanagement, a closer examination reveals that they are, in substance, predicated on alleged breaches of contractual obligations under the SHA.”

• where a dispute is framed as arising from and remediable under the SHA, and the SHA itself contemplates specific deadlock outcomes, an arbitral tribunal can grant an effective contractual remedy even if the facts reflect conduct like statutory oppression.
• the ICC Tribunal, derived its authority from the SHA itself, was fully empowered to direct transfer of shares of the company, as such relief is inherently linked to and arises out of the contractual arrangement between the parties.
• The award was therefore, not invading the NCLT’s domain.

The Court further applied the statutory standard for public policy under Section 48(2)(b) of the A&C Act and held that the award was not violative of public policy since:

• the award was not induced by fraud or corruption and was not otherwise in conflict with the fundamental policy of Indian law or against the interest of justice and therefore did not offend public policy. The Court placed reliance on the Supreme Court case of Shri Lal Mahal Ltd. v Progetto Grano Spa² wherein the Supreme Court clarified the scope of the public policy exception in the realm of foreign awards and had held that “while considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award.” It further stated that under Section 48(2)(b) of the A&C Act, the enforcement of an award can be denied only if the enforcement is in contravention with the (a) fundamental policy of Indian Law; or (b) the interests of India; or (c) justice or morality. Thus, the Court in the present case held that the arbitral award directing a transfer of shares was not vitiated on the basis of the public policy exception.
• The court further held that “it would be within the public policy of India to allow a foreign investor, who has invested in an Indian joint venture company and has been in effect, been duped of the entire investment, to be allowed to take over the business and turn it into a successful venture.”
• there was no defect in the award and the award’s commercial objective of preserving the business by creating a clean exit for one party is consistent with India’s policy of promoting investment and business continuity, especially where the joint venture had become commercially unworkable and with irreconcilable deadlock.

The Court further examined the ICC Tribunal’s award and noted that the award went beyond simply ordering a buy-out. Instead, the award clearly set out how the transfer was to be carried out, including handing over the original share certificates, signing transfer deeds, depositing the consideration into a no-lien escrow account, and following a defined timeline with procedural safeguards. It also restrained the parties from dealing with the shares until the process was complete. These detailed directions, the Court observed, showed that the buy-out remedy was firmly grounded in the contract and could be implemented without disturbing company law requirements.

The Court recognised that in complex commercial disputes, simply awarding monetary relief would not truly resolve the conflict. It appreciated that the ICC Tribunal went to the core of the issue, which was ownership and control including the conduct of the Respondent in fraudulently taking over the company and siphoning of funds, and crafted a remedy that was within its domain and in accordance with the contractual terms of the SHA. The Court also noted that if arbitrators were prevented from granting such practical and fair solutions in the interest of businesses, it would defeat the very purpose of arbitration as an effective alternative to court proceedings.

Comments

The Delhi High Court’s ruling in this case enforces a commercially practical ICC award that ordered a buy-out in an equally held joint venture to break a deadlock and preserved business viability. The Court’s reasoning rested on the contractual scope of the SHA, the ICC Tribunal’s careful procedural steps and careful assessment of the limited scope of the public policy exception under Indian law. This outcome reinforces the importance of careful and precise drafting of agreements with clear commercial, operational and exit mechanisms and the viability of arbitration as a mechanism to secure effective, business friendly remedies in complex shareholder disputes.

This judgement significantly strengthens investor confidence in India’s arbitration landscape. By upholding enforcement of a foreign arbitral award that granted a buy-out remedy, the Delhi High Court has delivered a clear message that India will protect contractual rights even in complex corporate disputes. The judgement is of substantial significance as it provides a clear signal to investors that they can rely on arbitration with greater assurance that disputes framed as breaches of a shareholder or joint venture agreements will be resolved effectively and that arbitration tribunals will be encouraged to grant commercially and business friendly remedies in resolving commercial disputes, without fear of judicial intervention. While the matter will possibly be further litigated before the Supreme Court of India, the judgment of the Delhi High Court is a re-confirmation of the country’s commitment to fair play and is being widely welcomed by investors and businesses.

Endnotes:

¹ (2020) 12 SCC 767

² (2014) 2 SCC 433