Tune Talk Sdn Bhd v Padda Gurtaj Singh (W-02(IM)(NCC)-1712-10/2014)

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1 IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO.W-02(IM)(NCC)-1712-10/2014 BETWEEN TUNE TALK SDN. BHD. … APPELLANT AND PADDA GURTAJ SINGH … RESPONDENT [Dalam Mahkamah Tinggi Malaya di Kuala Lumpur (Bahagian Dagang) Saman Pemula No: 24NCC(ARB)-6-02/2014 Dalam perkara Kuala Lumpur Regional Centre for Arbitration, Timbang Tara No. 66-2012 di antara Tune Talk Sdn Bhd dan Padda Gurtaj Singh yang diadakan di bawah Kaedah-Kaedah UNCITRAL Dan Dalam perkara Awad Muktamad bertarikh 25.9.2013 yang dibuat oleh Samuel Wong Chat Chor, Penimbangtara Tunggal Dan Dalam perkara Seksyen 38 Akta Timbang Tara 2005 Dan 2 Dalam perkara Aturan 69 Kaedah-kaedah Mahkamah 2012 Antara Padda Gurtaj Singh … Plaintif Dan Tune Talk Sdn Bhd … Defendan] CORUM: ALIZATUL KHAIR OSMAN KHAIRUDDIN, JCA ABANG ISKANDAR ABANG HASHIM, JCA NALLINI PATHMANATHAN, JCA JUDGMENT OF NALLINI PATHMANATHAN Introduction [1] This appeal concerns the construction of section 38 of the Arbitration Act 2005 (‘the Act’) read together with Order 69 rule 8 of the Rules of Court 2012 (‘the RC 2012’) in relation to the registration and enforcement of an arbitration award. On the somewhat unique facts of this case, the arbitral award in question made no positive order capable of enforcement, save as to costs, and that too remained to be determined as to quantum, at the material time of registration of the award. [2] The substance of the award instead refused the grant of several declarations sought at the behest of the appellant above, Tune Talk Sdn. Bhd. (‘the appellant’) who was the claimant in the 3 arbitration proceedings. The net result of the arbitration award was that the appellant, in its capacity as the claimant, failed in its bid to procure several declarations to the effect that Padda Gurtaj Singh (‘the respondent’) in the arbitration proceedings could no longer remain a director of the appellant, given several conditions that subsisted between the parties. [3] In the award the arbitral tribunal took the view that the terms of certain conditional consents by the shareholders of the appellant, were ineffectual against the respondent as they were not specifically agreed to, or signed by him. The award therefore had the net effect of failing to grant the declarations sought by the appellant in relation to the respondent’s designation as a director of the appellant. In short, there was no positive act or declaration granted under the terms of the final award, save for costs, which as was stated earlier, had not been quantified. [4] In these circumstances, the respondent under the arbitration proceedings sought recognition and enforcement of the orders made in the arbitration, notwithstanding that no positive declarations or relief had been granted in his favour. The respondent sought in effect the enforcement of the negative declarations, as it were, under section 38 of the Act. An ex-parte order of registration and enforcement was granted by the High Court on 4 March 2014 and served on the appellant on 25 March 2014. [5] The appellant sought to set aside the order maintaining, inter alia, that Order 69 rule 8(2)(b) of the RC 2012 had not been complied with, and that the respondent had failed to provide full and 4 frank disclosure. The thrust of the argument on behalf of the appellant was that Order 69 rule 8 of the RC 2012 read together with section 38 of the Act comprised the jurisdictional basis for the registration and enforcement of an award. To that extent it was contended for the appellant that Order 69 rule 8 of the RC 2012 is jurisdictional in nature, rather than purely procedural. As such compliance with that rule of court could not simply be ignored. For ease of reference, Order 69 rule 8 of the RC 2012 provides as follows:- ‘(1) An application for permission to enforce an award in the same manner as a judgment or an order may be made without notice in an arbitration claim originating summons.

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(2) The arbitration claim originating summons shall ----

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(1) On an application in writing to the High Court, an award made in respect of an arbitration where the seat of arbitration is in Malaysia or an award from a foreign State shall, subject to this section and section 39 be recognized as binding and be enforced by entry as a judgment in terms of the award or by action.

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(2) In an application under subsection (1) the applicant shall produce - --

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(vii) and (b) of the Act. [11] Suffice to say that it is undisputed that the appellant does not invoke any of these situations under section 39 of the Act in order to set aside the registration of the award. Instead, the appellant maintains that it is entitled to set aside the registration of the award, primarily on the grounds that there is nothing to register or enforce under section 38 of the Act, because the award essentially refused 7 the declarations sought by the appellant, not the respondent. The latter was not the claimant or recipient of any form of relief, but was the successful party under the award. This in turn meant that there was nothing positive for the respondent to enforce for purposes of the registration of the judgment. [12] The argument for the necessity of complying with Order 69 rule 8 of the RC 2012, as set out above, was invoked on behalf of the appellant to substantiate the proposition that the said Order ought to be read harmoniously with sections 38 and 39 of the Act. Taken together they confer jurisdiction upon the court to register and enforce an arbitral award. To that extent it was contended that Order 69 rule 8, like Order 14 and Order 81 of the RC 2012, is jurisdictional. (see Lee Teng Siong v Lee Kheng Lian & Ors [2006] 4 CLJ 443). Issues for Determination in this Appeal [13] The primary issue for determination in this appeal is the interpretation to be accorded to sections 38 and 39 of the Act as well as Order 69 rule 8 of the RC 2012. More specifically the issue is whether compliance with Order 69 rule 8 of the RC 2012 as well as sections 38 and 39 of the Act is required, such that all three provisions are read harmoniously, or whether sections 38 and 39 of the Act are mandatory whereas compliance with Order 69 rule 8 of the RC 2012 is not necessary. [14] If section 38 of the Act is to be read harmoniously with Order 69 Rule 8(2)(b) of the RC 2012 (as well as section 39 of the Act), 8 this would then confer some degree of discretion on the court to examine an arbitral award with a view to ascertaining whether the award confers any act or thing capable of enforcement. [15] In other words the court would be entitled, under the permissive wording in Order 69 rule 8(2)(b) of the RC 2012 to exercise its discretion and consider whether or not there is any act or thing in the arbitral award that requires enforcement. [16] If there is no such positive act capable of enforcement then it would be open to the court in the exercise of this discretion to refuse to register the award on the grounds that there is nothing capable of enforcement, thereby rendering registration a futile or useless act. The binding nature of the arbitral award as between the parties would however remain. [17] If on the other hand Order 69 rule 8(2)(b) of the RC 2012 is construed as a mere adjectival requirement or proviso which does not require compliance or is simply viewed as redundant, then the converse would follow, namely that the High Court would be constrained to register an award notwithstanding its content or nature, so long simply as the requirements of section 38 of the Act were met. Background Facts [18] As stated in the arbitral award, the dispute is between the appellant and the respondent who is a shareholder and director of the company. It arose over an alleged breach of the shareholder 9 agreement dated 23 December 2008 (‘the shareholders’ agreement) and subsequent conditional consents said to have been agreed between the parties. The respondent is a minority shareholder and director of the appellant. [19] Under the shareholders’ agreement the respondent’s right to remain as a director of the appellant was conditional upon, inter alia, his employment with the company. [20] Under clause 12.2 (a) of the shareholders’ agreement, the respondent had undertaken with the appellant not to “carry on or be engaged or interested in any business in competition with the activities and operations carried on by the company in South East Asia….”. Any breach of this clause would result, pursuant to clause 10.2, to a compulsory transfer of all the respondent’s shares. [21] The respondent resigned from the appellant in 2009. The other shareholders of the appellant granted the respondent an exemption from having to comply with clause 12.2(a) of the agreement on condition that the respondent remains a shareholder. But they imposed another condition, namely that the respondent had to vacate his seat of director if he is associated “with another company in the mobile telecommunication industry”. This condition which was imposed vide a series of documents referred to as the consent documents, was signed by all the shareholders and all the directors of the appellant with the exception of the respondent. He had refused and took no steps to sign the consent documents. 10 [22] Then on 1 January 2010, the respondent joined a company known as Spice Bulls in Singapore as its president of mergers and acquisitions, without notifying the appellant. A show cause letter was issued to the respondent where, inter alia, the appellant through its chief executive officer stated that it had come to their attention that the respondent was providing services to “Spice Global” and his directorship could be revoked if he was found providing services to another telecommunications company. The respondent maintained that Spice Global was not a mobile telecommunications provider. However, the appellant did not accept this contention. [23] A dispute arose and this led to the commencement of arbitration pursuant to clause 16 of the shareholder’s agreement, which contained an arbitration clause specifying the Regional Center for Arbitration Kuala Lumpur and applying UNCITRAL Rules. [24] In the arbitration proceedings, the sole claim was by the appellant and this was dismissed. The arbitral tribunal took the view that the terms of the conditional consents by the shareholders were ineffectual against the respondent as they were not specifically agreed to, or signed off by him. [25] On 25 September 2013, the appellant’s claim was dismissed with no positive orders made save for costs, which was to be assessed by the arbitral tribunal in the future. [26] The appellant then passed a directors’ circular resolution in November 2013 to convene an Extraordinary General Meeting (‘EGM’) for shareholders to consider passing a resolution to formally 11 revoke the earlier consents. Consequently, they would then have to consider and vote on whether to remove the respondent as a director of the appellant. If the respondent did not have effective consent, then the original provisions of the shareholders’ agreement would apply. [27] On 7 November 2013 the appellant through its solicitors then requested that the respondent voluntarily resign from the board of directors. On 12 November 2013, the respondent rejected the request. [28] On 4 February 2014, the respondent filed an ex-parte application under section 38 of the Act as well as Order 69 rule 8 of the RC 2012 for recognition and enforcement of the award by entry as a judgment of the High Court. The application expressly recognized that the award made no positive orders and the only matter in relation to which enforcement might be available was that of costs, which had yet to be assessed. In short, there was nothing to specifically enforce under the arbitral award. [29] A month later on 4 March 2014, the respondent obtained the ex-parte order. [30] On 25 March 2014, the directors of the appellant passed a further directors’ circular resolution to convene an EGM for its shareholders to consider revoking earlier consents and whether or not to remove the respondent as a director of the appellant. The circular resolution was duly passed and notice of an EGM was given for 9 April 2014 to all relevant parties including the respondent. At 12 this time, the ex-parte order for registration of the award as a judgment was served on the appellant. [31] The notice of the EGM on 9 April 2014 prompted the respondent to initiate separate proceedings seeking relief under section 181 of the Companies Act 1965. [32] On 7 April 2014 the appellant applied to set aside the ex-parte order for registration of the arbitral award dated 4 March 2014. One of the grounds of the application was that the arbitral tribunal did not make any positive orders and there had not been compliance with Order 69 rule 8(2)(b) of the RC 2012. Additionally, it was maintained that the respondent had failed in his duty to provide full and frank disclosure of the fact that the sole positive order made was in relation to costs, which had yet to be assessed by the tribunal. [33] On 9 April 2014 the EGM was adjourned to 16 April 2014. The respondent did not appear on the adjourned date and was duly removed as a director of the appellant. [34] The appellant’s application to set aside the registration of the arbitral award was heard in July 2014 and dismissed in September 2014. The Decision of the High Court [35] The learned High Court judge dismissed the appellant’s application to set aside the registration and enforcement of the 13 arbitral award. The thrust of Her Ladyship’s reasoning for doing so, which we have adopted from the submissions of learned counsel for the appellant’s, is as follows:-

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(ii) Order 69 rule 8(2)(b) of the RC 2012 comprised a procedural requirement which had to be read together with section 38 of the Act. It was sufficient that the respondent had complied with section 38 of the Act;

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(iii) There is no prerequisite for a positive order before a court can grant recognition and enforcement of an arbitral award. An order that is declaratory may therefore be recognized and enforced; and

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(iv) Recognition and enforcement of an arbitral award may be refused only under one of the grounds set out in section 39 of the Act. Submissions of Counsel in the Court of Appeal [36] For the appellant, the appellant, it was contended by learned counsel Mr. Logan Sabapathy that the learned High Court Judge had erred in her conclusions by reason of the following matters. 14 [37] There had been insufficient appreciation of the purpose of Order 69 rule 8(2)(b) of the RC 2012. It was not merely procedural. It had moreover to be read in harmony with section 38 of the Act. [38] As stated at the outset, it was contended that Order 69 rule 8(b) like Order 14 and Order 81 of the RC 2012 is jurisdictional in nature, rather than purely procedural. As such, it had to be read in conjunction with section 38 of the Act in a situation where it was sought to recognize and enforce an arbitral award. [39] There had been a failure to appreciate that a positive order is a prerequisite for recognition and enforcement. As stated by the Federal Court in Takako Sakao v Ng Pek Yuen & Anor (No. 3) [2010] 2 MLJ 141 where a declaratory judgment was granted, no positive order ensued. The weakness of the remedy of declaration lies in the want of its enforceability. A declaration cannot be enforced by execution. In like manner in the instant case, there was a refusal to grant certain declarations at the behest of the appellant. So there is nothing to execute on the part of the winning party, the respondent (see also West Tankers Inc v Allianz SpA and another [2012] EWCA Civ 27 (see IA(P) 1, Tab 7, pages 56- 57 where the arbitral award took the form of a negative declaration.) In short, the appellant maintained that the learned High court Judge erred in holding that a negative declaratory award could be enforced. It was pointed out that there had been no consideration as to the utility or benefit to be derived from the enforcement of the award. The respondent had stated only that the appellant’s intention to remove him from the board of directors was an example of non-compliance with the award. However, this was refuted by the appellant on the 15 grounds that the award was open to interpretation and could not comprise an example of non-compliance. [40] The fact that the appellant was taking new steps to consider the removal of the respondent as a director was in relation to events arising subsequent to the arbitral award, and in respect of which therefore, there was no bar. The arbitral award, which was binding between the parties to the dispute, related specifically to whether the respondent was party to, or had signed off on the conditional consents. As the respondent maintained that he had not, the conditional consents were not binding on him which allowed the shareholders to then consider whether the original terms of the shareholders’ agreement required that he resign or be removed as a director, given his having left the employment of the appellant and his having joined Spice Global. [41] The proper approach to be adopted in dealing with applications for registration and enforcement is by meeting the requirements of section 38 of the Act read together with Order 69 rule 8(2)(b) of the RC 2012, rather than solely meeting the requirements of section 38 of the Act. Once the applicant has crossed this threshold only does the second stage arise, namely whether any of the situations in section 39 of the Act apply (see Agrovenus LLP v Pacific Inter-Link Sdn Bhd. and another appeal [2014] 3 MLJ 648 at paragraphs 13 – 15). This it is contended the learned High Court Judge failed to do without giving due consideration as to whether the appellant had satisfied the requirements of the first stage. 16 [42] The ex-parte application for registration and enforcement of the award imposed a duty on the respondent to make full and frank disclosure of all relevant material. It was contended that the respondent had failed to state expressly that there was a dispute over the interpretation of the award, which meant that he was aware of the possibility that the award recognized that the variation of the shareholders’ agreement vide the consents was not operative or effective and he was therefore not entitled to remain on the board in accordance with the original provisions of the shareholders’ agreement. The respondent also failed to disclose the existence of the director’s resolution whereby the appellant was proposing to put the question of his removal to its shareholders and that it was entitled to do so. [43] For the respondent on the other hand, learned counsel Ms. Shamala Balasundram contended vigorously that sections 38 and 39 of the Act are exhaustive. There was no room for any other substantive requirements to be satisfied for the recognition and enforcement of an arbitration award. Learned counsel for the respondent further maintained that Order 69 rule 8(2)(b) of the RC 2012 is a procedural requirement and not a substantive requirement. Therefore it followed that any non-compliance with the provision in question would not render an application to recognize and enforce an award fatal. Further and alternatively, learned counsel maintained that there was compliance as far as was possible with the procedural requirements as well as full and frank disclosure. 17 [44] Thirdly, it was submitted that any common law principle asserted by the appellant namely that an arbitration award in the form of a negative declaration which has no material benefit to the winning party cannot be enforced for example, cannot override clear statutory provisions such as sections 38 and 39 of the Act. Any such decision by this Court, it was contended, would lead to the weakening and diminishment of arbitration awards and their utility, contrary to the intent of the Act. [45] It was further pointed out that the purpose of the Act ought to be ascertained in interpreting sections 38 and 39. In this context this involved an examination of the words in the statutes to ascertain their meaning. If the words are unambiguous, plain and clear, they had to be given their ordinary and actual meaning and if the words are ambiguous a purposive approach ought to be applied. [46] Applying the foregoing it was contended by learned counsel that the exhaustive provisions for recognition and enforcement are to be found in section 38 of the Act. The use of the word “shall” denotes a mandatory requirement that must be adhered to. [47] More importantly it was pointed out that the word “shall” in section 38 of the Act means that there is no room for the exercise of discretionary power by the High Court provided the two substantive requirements in section 38 of the Act are fulfilled, and there are no grounds for refusal of recognition and enforcement under section 39 of the Act. There is no ‘general ground’, which would allow the High Court room to exercise its discretion to set aside an arbitration award. While learned counsel did not see this 18 as ‘rubber stamping’ as contended by learned counsel for the appellant, it was submitted that in registering and enforcing the award, the High Court would be applying the provisions of the Act as drafted and mandated by Parliament. In any event, the court did have a significant role to play in that it could refuse recognition and enforcement under section 39 of the Act. [48] This Court was also asked to consider the implications of invoking Order 69 rule 8(2)(b) of the RC 2012 as a substantive requirement to the registration and enforcement of arbitral awards. If this Order is construed as a necessary pre-requisite to the registration of an award then, it was submitted, arbitration awards must not contain anything that is merely declaratory or amounts to a negative declaration. In this context, all awards had to set out positive acts requiring compliance in order for them to be recognized and enforced by the Malaysian courts. Thus if a claim is dismissed in arbitration the successful party cannot seek the protection of the Malaysian courts. [49] It would also follow that the successful party to arbitration must wait until there has been non-compliance with the award before the award can be recognized and enforced. [50] Learned counsel also undertook a comprehensive review of legislation in other Commonwealth countries, pointing out that while registration and enforcement is permissive in other jurisdictions, it is mandatory in this jurisdiction. 19 Decision of this Court [51] As pointed out earlier the primary issues that arise for consideration before this Court on appeal are as follows:-

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(ii) Secondly, in the somewhat unusual situation where an arbitral award does not grant the successful party any relief capable of enforcement, is it tenable for the registering court to exercise its discretion to refuse summary registration and enforcement because the court finds it unnecessary; or alternatively

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(iii) Whether the registering court is mandatorily bound to register the arbitral award provided the stipulations or conditions in section 38 of the Act are met. Construction of section 38 of the Act and Order 69 rule 8(2)(b) of the Rules of Court 2012 [52] In determining the foregoing, it is necessary to consider whether Order 69 rule 8(2)(b) of the RC 2012 can be read 20 harmoniously with section 38 of the Act or whether the said order is simply a procedural requirement which can be ignored? [53] In R v O’Brien and another [1985] 1 All ER 971 at 975 and Raymond v Honey [1983] 1 AC 1 at 12 – 13 it was held by the High Court and House of Lords respectively (in the United Kingdom) that where subsidiary legislation is ambiguous, one possible effect being ultra vires and the other intra vires, preference should be given to the latter construction. [54] Moreover section 17A of the Interpretation Acts 1948 and 1967 was applied by the Federal Court in Palm Oil Research and Development Board Malaysia 7 Anor v Premium Vegetable Oils Sdn Bhd & Anor appeal [2005] 3 MLJ 97 as follows:- “…When construing a taxing or other statute, the sole function of the court is to discover the true intention of Parliament. In that process the court is under a duty to adopt an approach that produces neither injustice nor absurdity: in other words an approach that promotes the purpose or object underlying the particular statute albeit that such purpose or object is not expressly set out therein……” And in the Indian case of Maharashtra SBOS & HS Education v Paritosh AIR 1984 SC 1543 it was held as follows:- “The provisions contained in a statutory enactment or in rules/regulations framed thereunder have to be so construed as to be in harmony with each other…….” 21 [55] As such the preferred approach to be adopted, if possible, is that Order 69 rule 8(2)(b) of the RC 2012 be read harmoniously with sections 38 and 39 of the Act, rather than the rule of court being construed as redundant. Any such construction however should support and promote the purpose of the statute, namely the Arbitration Act 2005. [56] Order 69 rule 8(2)(b) of the RC 2012 when read together with section 38 of the Act discloses/makes clear the following:-

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(ii) If that is the case, whether there has been non-compliance with the award or a part of the award as of the date of the application;

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(iii) Where there is some positive act or thing that requires enforcement, then in accordance with section 38 of the Act and Order 69 rule 8(2)(b) of the RC 2012 read together the court can proceed to register and enforce the judgment.

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(iv) Where there is nothing to be complied with, as is the somewhat unusual case here, as in the form of a negative declaration or a failure to grant the claimant the 23 relief sought, the court may exercise its discretion to refuse summary enforcement because the court concludes that it is unnecessary. In short, it may in the exercise of its jurisdiction conclude that summary enforcement is unwarranted as there is nothing to enforce. In so doing, the court may consider whether there is any utility or benefit in making the order of recognition and enforcement. [59] To my mind such a construction of section 38 of the Act together with Order 69 rule 8(2)(b) of the RC 2012 makes for a harmonious construction of the Act as well as the Rules of Court

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(ii) exercise its discretion to refuse to register the award when there is no material benefit to be gleaned from such registration per se, particularly as the arbitral award is binding on the parties to the dispute notwithstanding non-registration of the same. [64] Put another way, the registering court may make a judicial determination whether it is appropriate to register a judgment in terms of the award. Where, as is the rare case here, there is nothing to be enforced or capable of enforcement, the court is not precluded from determining the validity or requirement for registration. In the West Tankers case (above) registration was granted but that was primarily because there was an appreciable risk of the losing party obtaining an inconsistent judgment in a member state, which the losing party might try to enforce within the jurisdiction. 26 [65] A similar sentiment was expressed in the Australian case of Tridon Australia Pty Ltd & Anor v ACD Tridon Inc (Incorporated in Ontario) [2004] NSWCA 146. Admittedly there too the statute, namely section 33 of their Commercial Arbitration Act 1984 is permissive in nature. However the reasoning for the grant of recognition namely for the purposes of enforcement, comes through. In other words, where there is no utility or material benefit for the registration and enforcement of an arbitral award the court may refuse or decline to do so. This, inter alia, is what was said in that case at paragraphs 11 - 12:- “…Enforcement is a plain word, and means something quite different from a restatement of the effect of the award in the form of a judgment. The summary procedure provided by s.33 of the Act is a procedure with a purpose, the purpose of enabling the victorious party in an arbitration to obtain the material benefit of the award in its favour in an easier manner than having to sue on the award. There has been nothing put forward in this case to suggest any occasion for enforcement of the declarations made in the interim award. They are binding on the parties and bind them for the balance of the arbitration and beyond that. I agree with Smart AJ’s view that there is no utility in making the order sought, but for the perhaps more fundamental reason that there is just no question of enforcement yet arising. In the absence of any question of enforcement arising, it would not be appropriate to grant leave to enforce the award.” [66] Although this provision deals solely with enforcement rather than registration and enforcement the rationale for the grant of leave to enforce, like the provisions for registration and enforcement here, particularly vide Order 69 rule 8(2)(b) of the RC 2012, envisage 27 that there is non-compliance in respect of which enforcement is necessary. Where that primary element is missing the question that comes to the fore is why the necessity for enforcement, given that the arbitral award is binding on the parties. In so ascertaining the materiality or benefit to be procured from the registration and enforcement of a judgment under section 38 of the Act, the court does act judicially and not ‘robotically’ (see IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 282 ALR 717 where it was stated at para 141:- “To act robotically is not to act judicially”). Declaratory Award [67] It is settled law that a declaratory judgment or award is not capable of execution or enforcement. As the Federal Court put it in Takako Sakao (f) v Ng Pek Yuen (f) & Anor (No. 3) (above):- “There is an added point in so far as staying the effect of the principal judgment is concerned. All that judgment does, inter alia, is to hold that the appellant is a beneficiary under a constructive trust of which the second respondent is a trustee. In short it declares the existence of a constructive trust. It makes no positive order. The weakness of the remedy of declaration lies in the want of its enforceability. A declaration cannot be enforced by execution. In Prakash Chand v SS Grewal (1975) Cri LJ 679, the court held as follows:- “ A declaratory decree cannot be executed as it only declares the rights of the decree-holder qua the judgement –debtor, and does not, in terms, direct the judgement-debtor to do or to refrain from 28 doing any particular act or things. Since there is no command issued to the judgement-debtor to obey, the civil process cannot be issued for the compliance of that mandate or command.” In other words, there can be no committal or other execution process issued to enforce a declaration.” [68] In the instant case as has been stated above, the arbitral award refused the declarations sought by the appellant to the effect that the respondent was in breach of his obligations under the shareholders’ agreement. It amounted to a negative declaration in effect in so far as the respondent was concerned. The respondent sought no positive relief or act vides the arbitral process. Accordingly, no positive act or thing was ordered under the award to be carried out by the appellant vis a vis the respondent. In such a case what is there for the respondent to enforce? The answer must be a compelling ‘nothing’. If indeed there is nothing to enforce, then the question of non-compliance does not arise, as there is nothing positive to comply with. [69] Order 69 rule 8(2)(b) of the RC 2012 clearly envisages that registration is for the purpose of ensuring enforcement. So does section 38 of the Act, which speaks of the recognition and enforcement of awards. If there is no material benefit or utility to be procured from the registration of a judgment, because there is nothing or no positive act or thing to enforce, then the court may in the exercise of its jurisdiction under these sections decline to register the award. This is because the registration of an award which cannot be enforced and where there has been no non- 29 compliance, serves no purpose. The award remains binding as between the parties and can be set up as a defence in any ensuing proceedings where it is sought to re-litigate that which has been determined by the arbitral award. Res judicata would apply to preclude such a result. [70] It has been argued for the respondent that there has been compliance as far as possible with Order 69 rule 8(2)(b) of the RC 2012 given the nature of the order. The learned High Court judge agreed with this submission. However we are unable to concur with the learned High Court judge or respondent in respect of this submission. If there has been no non-compliance stipulated or stated, because there was nothing to comply with, it cannot follow that Order 69 rule 8(2)(b) of the RC 2012 has in fact been complied with. There must be a real and not an illusory or perfunctory statement seeking to comply with the said order. In the instant case there was no compliance with Order 69 rule 8(2)(b) of the RC 2012 because there was no order handed down by the arbitral tribunal which required compliance. [71] It has further been argued for the respondent that non-compliance with the substance of the arbitral award has been made out by the ensuing acts of the appellant in trying to remove the respondent from the board of directors, subsequent to the handing down of the final award. This has been characterized as an attempt to circumvent the award. However it is apparent that the steps taken after the award to hold an EGM, related to matters arising subsequent to, or as a result of the outcome of the arbitration. The shareholders proceeded to ascertain whether in light of the fact that 30 the conditional consents were not binding on the respondent as pronounced by the arbitral tribunal, the original provisions of the shareholders’ agreement came into play. The appellant was entitled to take these steps given the fact that the original provisions of the shareholders’ agreement remained valid. Therefore in deciding to hold an EGM to ascertain whether the respondent’s position as a director stood effectively revoked, there was no non-compliance with the arbitral award. [72] The shareholders of the appellant were exercising their rights, available to them as a consequence of the findings of the award. The appellant was not going against the terms of the award or failing to comply with it. It was taking further steps in view of the findings of the arbitral tribunal. Therefore the contention that there was a ‘subsequent’ non-compliance by the appellant is without merit. In any event, it is non-compliance at the time of the application to register and enforce the award that is relevant. [73] Having reviewed the entirety of the comprehensive submissions filed by both learned counsel for the appellant as well as the respondent, I am of the view that:-