In a long-running commercial dispute that has stretched for over two decades, the Bombay High Court has delivered a detailed ruling in favour of IMAX Corporation, setting aside a 2024 order that had refused to recognise and enforce three foreign arbitral awards against E-City Entertainment (India) Pvt Ltd.
The Division Bench held that the earlier findings on limitation had already attained finality and could not be reopened, and that the refusal to enforce the awards on public policy grounds was legally unsustainable.
Background of the Case
The dispute traces back to September 2000, when IMAX entered into a master agreement with E-City for leasing six IMAX theatre systems in India for a period of 20 years, with an option to extend. Disagreements arose within a few years, prompting IMAX to initiate arbitration before the International Chamber of Commerce (ICC) in London.
Between 2006 and 2008, the ICC arbitral tribunal passed three awards on liability, quantum, and final costs holding E-City in breach and directing it to pay IMAX over USD 11 million, along with continuing interest. IMAX later claimed that E-City had stripped itself of assets through demergers during the arbitration to frustrate enforcement.
Journey Through Indian Courts
E-City initially challenged the foreign awards in India under Section 34 of the Arbitration and Conciliation Act. That challenge eventually failed before the Supreme Court, which clarified that foreign awards could only be tested under Part II of the Act.
In 2018, IMAX moved the Bombay High Court for recognition and enforcement of the awards. A Single Judge, in a 2019 order, rejected E-City’s objection that the enforcement petition was time-barred. That finding survived multiple challenges, including dismissal of a special leave petition and a review before the Supreme Court.
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However, in October 2024, another Single Judge revisited the issue at the final stage and refused enforcement, citing limitation, alleged violation of FEMA regulations, and public policy concerns.
Court’s Observations
The Division Bench, led by Justices M.S. Sonak and Advait M. Sethna, was unequivocal that the limitation issue could not be reopened.
“The finding that the enforcement petition was within limitation had attained finality and could not have been revisited at a later stage,” the Bench observed, emphasising that the principle of res judicata applies even between different stages of the same proceeding.
On public policy, the Court noted that enforcement of a foreign award can be refused only on narrow and clearly defined grounds. Mere disagreement with the arbitral tribunal’s appreciation of evidence or contractual interpretation does not qualify.
The Bench also rejected the argument that subsequent Supreme Court judgments overruling certain legal propositions automatically nullified earlier binding orders between the parties.
“There is a clear distinction between overruling a precedent and reversing a decision inter partes,” the judges said.
Issue of Related Companies
IMAX had sought to proceed not only against E-City but also against its related and holding companies, alleging diversion of assets to defeat the awards. While the Single Judge had deleted these entities from the case, the Division Bench held that such issues must be examined carefully at the enforcement stage, especially where allegations of asset stripping are raised.
Decision
Allowing IMAX’s commercial arbitration appeal, the Bombay High Court set aside the October 24, 2024 order that had refused enforcement of the foreign awards. The Court held that the enforcement petition was not barred by limitation, that public policy objections were incorrectly applied, and that the matter could not be dismissed on those grounds.
With this, the Court cleared the way for recognition and enforcement of the ICC awards in India, bringing IMAX a significant step closer to executing the long-pending arbitral claims against E-City.
Case Title:- IMAX Corporation vs E-City Entertainment (India) Pvt. Ltd. & Ors.
Case Number: Commercial Arbitration Appeal (L) No. 38267 of 2024
