SC terms foreign arbitral award against NAFED as 'unenforceable'

The Supreme Court on Wednesday held as "unenforceable" the international arbitral award of 1989 of the Federation of Oil, Seeds and Fats Associations Ltd (FOSFA) against India's NAFED for not supplying entire contracted quantity of 5,000 metric tonnes of groundnut to foreign firm Alimenta S.A in 1979-80.

The National Agricultural Cooperative Marketing Federation of India (NAFED) and the Alimenta S.A had entered into the contract for supply of 5,000 metric tonnes of Indian groundnut for the season 1979-80 and out of the contracted quantity, only 1900 metric tones could be shipped due to the damage caused to the crop by a cyclone in the Saurashtra region.

Ultimately, FOSFA on November 15, 1989 had passed an award against NAFED asking it to pay a sum of "USD 4,681,000 being the difference between the contract price of USD 765 per metric tonnes plus USD 15 per metric tonnes for double bags and the settlement price of USD 2275 per metric tonnes plus USD 15 per metric tonnes for double bags as damages."