What did the Supreme Court decide in NAFED v. Alimenta?

It refused enforcement of the foreign award, treating breach of India’s export policy as a public policy ground under Section 48.

Did the Court follow the pro-enforcement bias under Section 48?

The Court’s extensive merits review raised doubts about pro-enforcement and minimal court interference expected by the New York Convention.

Why was export policy central to the outcome?

The contract adopted an embargo clause; when export restrictions applied, the Court viewed enforcement as contrary to India’s national/export policy.

How does this case compare with Renusagar or Shri Lal Mahal?

Those cases adopted a narrow public-policy test. NAFED is seen as broader, creating uncertainty about the standard.

What is the practical takeaway for contracts?

Draft clear force-majeure/embargo language and assess regulatory risk, as policy violations can derail enforcement.

National Agricultural Cooperative Marketing Federation of India v. Alimenta

National Agricultural Cooperative Marketing Federation of India v. Alimenta SA

Supreme Court of India 2020 2020 SCC OnLine SC 381 International Arbitration 7 min read

AUTHOR_NAME: Gulzar Hashmi • LOCATION: India • PUBLISH_DATE: 02 Nov 2025

PRIMARY_KEYWORDS: Section 48, public policy, foreign arbitral award, New York Convention SECONDARY_KEYWORDS: export policy, FOSFA clause, embargo, pro-enforcement bias

Quick Summary

The Supreme Court refused to enforce a foreign arbitral award against NAFED. It treated India’s export policy and an embargo clause as central, and held that enforcement would offend public policy under Section 48. The Court’s deep merits review sparked a debate: did this approach dilute the pro-enforcement bias promised by the New York Convention?

Issues

Does the Court’s extensive review fit Section 48’s pro-enforcement and minimal-intervention approach?
Can breach of export policy amount to “public policy” for refusing enforcement of a foreign award?

Rules

Section 48 of the Arbitration and Conciliation Act, 1996 permits refusal of enforcement on limited grounds, including public policy.
(Earlier law) Section 7(1)(b)(ii) of the 1961 Act mirrored the public-policy refusal ground for foreign awards.
Convention principle: courts should favour enforcement and avoid a re-trial on merits.

Facts (Timeline)

NAFED agreed to supply HPS groundnuts to Alimenta SA.

Contract incorporated FOSFA 20 terms with an embargo-cancellation clause.

Government export restrictions under the Export Control Order hit performance.

NAFED said exports could not proceed.

Dispute went to FOSFA arbitration; damages awarded to Alimenta; Board of Appeal affirmed.

Alimenta sought enforcement in India.

Supreme Court of India refused enforcement, citing public policy tied to export policy.

Triggered a debate on Section 48’s scope.

Timeline of events in NAFED v. Alimenta award enforcement dispute

Arguments

NAFED (Objector)

Export embargo under law triggered cancellation; performance was legally impossible.
Enforcement would breach India’s export policy—hit by public policy bar.

Alimenta (Award-holder)

Section 48 is narrow; courts should not re-examine merits.
Award should be enforced under New York Convention’s pro-enforcement approach.

Judgment

Enforcement was refused. The Court treated the export restrictions and the contract’s embargo clause as decisive, and considered that forcing performance would offend India’s public policy in export control. The reasoning involved a close look at contract performance and regulatory context.

The ruling widened the public-policy discussion for foreign awards in India.

Gavel over export document illustrating the NAFED v. Alimenta decision

Ratio

Public policy under Section 48 can include national export policy where the contract adopts an embargo clause and restrictions apply.
The decision reflects a broader examination of merits than the classic narrow Renusagar standard.

Why It Matters

It spotlights the tension between investor certainty and sovereign regulation. Parties trading in regulated goods must factor in policy risk—even at the enforcement stage of foreign awards.

Key Takeaways

Section 48 is limited—but courts may still scrutinize when policy bars loom.
Embargo/force-majeure clauses must be clear and synced with law.
Pro-enforcement is not absolute where national policy is engaged.

Mnemonic + 3-Step Hook

Mnemonic: POLICY > PAYMENT — When policy blocks exports, payment via award may be blocked too.

Check Clause: Is there an embargo/force-majeure term?
Check Law: Did a binding restriction apply?
Check Section 48: Would enforcement offend public policy?

IRAC Outline

Issue: Should a foreign award be enforced when export policy blocked performance?

Rule: Section 48 allows refusal for public policy; New York Convention urges minimal interference.

Application: Embargo clause met; export restrictions applied; Court viewed enforcement as against national policy.

Conclusion: Enforcement refused; debate on breadth of public policy revived.

Glossary

Public Policy (Section 48): A narrow refusal ground for foreign awards—expanded here to include export policy context.
FOSFA: Federation of Oils, Seeds and Fats Associations—industry arbitration body.
Pro-Enforcement Bias: Convention-driven preference to recognize and enforce foreign awards with minimal review.