US court sets aside arbitration tribunal's direction, clears former Sebi chief of $25-mn claim in Glocal dispute

The US Court observed that there was no evidence on record on which the Tribunal relied to make the finding.

An US court has set aside an award passed by a Chicago-based arbitral tribunal against former Sebi chief M Damodaran.

In March this year, the tribunal had held Damodaran to pay around $25 million (approximately Rs 206 crore) to US-based UpHealth Holdings. Now, the US States District Court, Northern District of Illinois, Eastern Division, has set this award aside.

Also read: Ex-Sebi head Damodaran faces Rs 206-cr claim following breach-of-contract lawsuit between two healthcare cos

A press statement issued by Shardul Amarchand Mangaldas, who advised Damodaran in the matter, stated, "Such challenges to arbitral awards rarely succeed as the standard for setting aside such awards is exceedingly high. Despite the above, the US Court allowed Mr. Damodaran’s challenge against the award on the ground that there was no evidence, on which the Tribunal relied upon, to hold Mr. Damodaran liable." Jenner & Block LLP had represented Damodaran in the US proceedings.

Damodaran had faced the claim running into millions of dollars following a ruling by the International Court of Arbitration (ICA) in America, which is run by the International Chamber of Commerce (ICC).

UpHealth, a global digital health company, won a $110.2-million (around Rs 915 crore) damages claim against Glocal Healthcare Systems, a platform that seeks to provide primary and secondary healthcare to underserved people. The dispute arose out of UpHealth's acquisition of Glocal pursuant to a Share Purchase Agreement (SPA) dated October 30, 2020, and the alleged breach of contractual obligations to relinquish control of Glocal to UpHealth. The claim was to be met by different entities: 34.38 percent to be paid by the founder and CEO Dr. Syed Sabahat Azim, 34.38 percent by Richa Sana Azim, 4.69 percent by Gautam Chowdhury, 22.54 percent by Meleveetil Damodaran, and 4.02 percent by Kimberlite Social India Private Ltd.

This claim was challenged by Damodaran in the US Court, which has now set the tribunal's award aside.

The press release issued by his legal team added that the U.S. Court has remanded the case to the Arbitral Tribunal as stated in the extract below. While doing so, the U.S. Court also rejected the challenge to the award by other Respondents.

The relevant extract of the US Court’s Order is as follows:

“…There was no evidence in the record on which the Tribunal relied to make the finding…”

“The Court grants Damodaran’s motion to vacate….”

“For these reasons, the Court grants in part and denies in part UpHealth’s Petition to Confirm Foreign Arbitral Award [1], grants Respondent Damodaran’s Motion to Vacate [47], and denies the Glocal Respondents’ Motion to Vacate [49]. The Court confirms the Award as to Glocal Healthcare Systems Private Limited, Dr. Syed Sabahat Azim, Richa Sana Azim, Gautam Chowdhury, and Kimberlite Social Infra Private Limited. The Court vacates the Award as to Meleveetil Damodaran only on the issues identified in this Opinion and remands to the Tribunal for further proceedings consistent with this Opinion."