Kiran Raj

The Delhi High Court, Single Bench of Justice Anish Dayal has enforced a foreign arbitral award against Minda Corporation Limited. The award, originating from an arbitral tribunal in Stuttgart, Germany, pertains to a settlement agreement between Mercedes-Benz Group AG (previously Daimler AG) and Minda Corporation Limited. The court stated that the award must be enforced as a decree of the court, rejecting objections raised by the judgment debtor.

The dispute arose between Mercedes-Benz Group AG (Decree Holder) and Minda Corporation Limited (Judgment Debtor) concerning a Letter of Comfort (LoC) issued by Minda India in favor of its subsidiary, Minda Germany. The LoC was issued in 2013 to support Minda Germany’s contractual obligations. However, Minda Germany later entered insolvency proceedings in 2013, which led to a financial dispute between the parties. Mercedes-Benz Group AG, formerly known as Daimler AG, initiated arbitration proceedings under the Rules of Arbitration of the International Chamber of Commerce (ICC) in Stuttgart, Germany.

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The arbitral tribunal comprised Dr. Fabian Von Schlabrendorff, Dr. Ulrich Trost, and Mr. Arne Fuchs. On November 29, 2021, the tribunal issued a Consent Award, following a settlement agreement executed on August 30, 2021. Under the settlement, Minda Corporation Limited agreed to pay Mercedes-Benz Group AG an amount of EUR 5.5 million in full and final settlement of all claims. The settlement was reached after extensive negotiations, including Minda Corporation’s request for certain clarifications on prior recoveries made by Mercedes-Benz Group AG from the liquidation of Minda Germany.

Minda Corporation objected to enforcement before the Delhi High Court, arguing that Mercedes-Benz Group AG had already recovered a portion of the outstanding amounts from Minda Germany’s insolvency proceedings, thereby making enforcement of the arbitral award an instance of "double recovery." It contended that its obligations under the LoC had already been met to an extent, and further payments would be unjustified.

Additionally, Minda Corporation raised concerns regarding compliance with India’s foreign exchange laws. It pointed out that the issuance of the LoC was a potential contravention under the Foreign Exchange Management (Transfer or Issue of Foreign Security) Regulations, 2004. However, the Reserve Bank of India (RBI), in a communication dated May 13, 2022, stated that while the issuance of the LoC was indeed a contravention under FEMA, post facto approval was granted for the transaction, subject to compounding of the contravention.

The Delhi High Court examined the objections under Section 48(2)(b) of the Arbitration and Conciliation Act, 1996, which permits refusal of enforcement if it is contrary to public policy. The court reviewed the terms of the settlement agreement and the arbitral award and found no merit in the objections raised by Minda Corporation.

Justice Anish Dayal noted that “the enforcement of the award will not result in a double benefit to the decree holder” and that “there was no overlap between the settlement with the liquidator of Minda Germany and the Consent Award with Minda India.” The court referred to several communications exchanged between the parties, including correspondence wherein Minda Corporation had acknowledged the settlement terms and its liability to make payments under the Consent Award.

The court further observed that the settlement agreement explicitly provided that “Daimler AG and MBAG confirm that Daimler AG and/or MBAG will not be benefited from any double dip by virtue of the payments agreed by Minda Corporation Limited under this Agreement.” This language, the court noted, indicated that the parties had pre-emptively addressed concerns regarding double recovery.

Moreover, the court referred to a communication dated September 28, 2021, where Minda Corporation confirmed to the arbitral tribunal that it consented to the issuance of the Consent Award. The communication stated: “On behalf of the Respondent, I hereby confirm that (i) it asks the Tribunal to render an Award by Consent as reflected in the draft circulated by the Tribunal, (ii) subject to and with incorporation of the modifications proposed by Claimant.” The court observed that having explicitly consented to the issuance of the award, Minda Corporation could not later challenge its enforcement on grounds that were known to it at the time of settlement.

The court also cited precedents, including Cruz City 1 Mauritius Holdings v. Unitech Limited and Vijay Karia v. Prysmian Cavi E Sistemi SRL, which affirm that enforcement of foreign arbitral awards should not be obstructed unless there are compelling reasons under Section 48 of the Arbitration and Conciliation Act, 1996. The court referred to the Supreme Court’s observation in Vijay Karia, which stated that “enforcement of a foreign award should not be refused merely because a party later finds grounds to dispute the award, particularly where it has participated in the arbitration proceedings and agreed to the terms of settlement.”

The Delhi High Court stated that the foreign arbitral award dated November 29, 2021, should be enforced as a decree of the court. Consequently, the court directed the Registry to release the deposited amount of INR 52 crores, along with accrued interest, to Mercedes-Benz Group AG in the specified Deutsche Bank AG account.

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Furthermore, the court directed Minda Corporation Limited to remit any remaining balance within three weeks. Should there be non-compliance, execution proceedings under Order XXI of the Code of Civil Procedure, 1908, will be initiated.

The objections are accordingly rejected.

Advocates Representing the Parties

For the Decree Holder (Mercedes-Benz Group AG): Mr. Rajshekhar Rao, Senior Advocate, along with Mr. Pallav Shukla, Mr. Aayush Chandra, Ms. Raashika Kapoor, and Mr. Arsh Rampal, Advocates

For the Judgment Debtor (Minda Corporation Limited): Mr. Sandeep Sethi, Senior Advocate, assisted by Mr. Manu Krishnan and Ms. Shruti Arora, Advocates

Case Title: Mercedes-Benz Group AG v. Minda Corporation Limited

Neutral Citation: 2025: DHC:1631

Case Number: O.M.P.(EFA)(COMM.) 3/2023

Bench: Justice Anish Dayal

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