Venture Global Engineering V Satyam Computer Services Law Commercial


In order to create the business known as Satyam Venture Engineering Services Ltd. [3], in which the appellant and respondent each hold a 50% equity shareholding, Venture Global Engineering [1], a company incorporated in the United States of America, and Satyam Computer Services Limited [2] entered into a joint venture agreement.

The Shareholders Agreement, which stipulates that conflicts must be settled amicably between the parties or, in the absence of such resolution, shall be submitted to arbitration, was also signed by the parties on the same day.

There were disagreements between the parties in February 2005. Respondent No. 1 claimed that because many venture companies went bankrupt and exercised their option to buy the appellant-shares company's in SVES at book value, the appellant had committed an event of default under the Shareholders Agreement.

Respondent No. 1 submitted a request for arbitration to the London Court of International Arbitration on July 25, 2005, and on September 10, 2005, Mr. Paul B. Hannon was chosen as the single arbitrator.

On March 4, 2006, the lone arbitrator issued a decision ordering the appellant corporation to transfer the shares to respondent No. 1.

Respondent No. 1 submitted a petition to the Eastern District Court of Michigan of the United States District Court on April 14, 2006, seeking recognition and enforcement of the award (US Court). By submitting a cross petition, the appellant made an appearance to defend this case before the US Court. The implementation of the Award, which ordered the transfer of shares, was contested in the aforementioned petition. This was done on the grounds that it contravened Indian laws and regulations, notably the Foreign Exchange Management Act, 1999 and its notifications.

The appellant filed a lawsuit, O.S. No. 80 of 2006, on April 28, 2006, asking the I Additional Chief Judge of the City Civil Court in Secunderabad to declare the judgement invalid and issue a permanent restraining order against the transfer of shares covered by the award.

District Court judgement

On 15.6.2006, the District Court issued an ex parte ad-interim order of injunction prohibiting respondent No.1 from attempting to transfer shares in accordance with the terms of the Award or in any other manner.

Respondent No. 1 appealed before the High Court of Andhra Pradesh, contesting the aforementioned ruling.

Actions taken in High Court proceedings

The High Court accepted the respondents' appeal and ordered the District Court's judgement to be temporarily suspended, but it was made plain that respondent No. 1 would not transfer any shares until further orders were issued.

On 27.2.2007, the High Court denied the appeal, ruling that the award could not be contested even if it went against the public interest and the law.

Concerning the revocation of a foreign arbitral award, the Court has jurisdiction under the Arbitration and Conciliation Act, 1996.