Law: Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2011

Section: XVII,6

Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)--- ----S.6---Enforcement of foreign Award---Corporate veil, non-lifting of---Principle--Applicant sought enforcement of foreign arbitral award against M/s K-Electric (Company in Pakistan), which was not party to proceedings before London Court of International Arbitration (LCIA)---Plea raised by the applicant was that M/s KElectric (Company in Pakistan) was ultimately owned by the company party to the arbitration, therefore, corporate veil was required to be lifted---Validity---There was no allegation that ownership structure was designed in some way to create a fa ade or a sham or to perpetuate a fraud---There was also no allegation that M/s KElectric (Company in Pakistan) was acting as an agent of any of the companies in the ownership structure---Even if one was to consider it as Single Economic Unit , that too could not be sustained as ownership structure had clearly indicated that there was no one entity that was controlling all of the other entities in the structure; the ultimate ownership was divided among three companies and each was working for their own independent benefits---Where the veil was lifted, liability of the obligation usually would come to vest on the parent company---If plea of the applicant was sustained then liability on the contractual and statutory obligation would inversely come to be on the subsidiary company which would be altogether unique---Messrs K-Electric (Company in Pakistan)was neither a respondent nor was a party to the arbitration proceedings before LCIA and would clearly plead ignorance of such proceedings, let alone on any contractual and statutory obligation of respondent company---Ownership structure had in principle been in place for many years without objection from the applicant company and it could not be that the purchase of the share, held by one company, in respondent company, should be considered as an event to necessitate lifting of the veil---High Court declined to lift the veil as there was no legal basis of the same---Entire cause of action in respect of enforcement of award was in the Cayman Islands and…