Enforcement of foreign arbitral awards in India

With the influx of international trade, the bilateral and multilateral trade agreements have increased. As a result, there is an increase in trade disputes as well. With the advancement of technology and infrastructure, this trade can flourish through roads, seas, and air. In India, Arbitration is governed by Arbitration and Conciliation Act, 1996.

Foreign awards can be enforced in India via two methods. First, through the New York convention and second, through the Geneva Convention. There are two terms associated with foreign awards, these are enforcement and recognition of foreign awards.
Often there is a lot of dubiety between the usage of two terms nevertheless, the two terms have different meanings altogether. However, recognition of foreign awards means the securing and protection of foreign arbitral awards to set off any other claim qua arbitration between the same parties and same issues. However, if there are more issues which are discovered then arbitration can be consulted again.

Enforcement on the other hand means offensive mode to secure an arbitral award. Enforcing the arbitral award means recognizing as well as enforcing it by legal sanctions. In Brace Transport Corpn. of Monrovia v. Orient Middle East Lines Ltd, the Supreme Court held that: An award may be recognised, without being enforced; but if it is enforced then it is necessarily recognised. When a court is asked to enforce an award, it must recognise not only the legal effect of the award but must use legal sanctions to ensure that it is carried out. 

Enforcement of foreign award under New York convention

Arbitration and Conciliation Act, 1996 section 44 to 52 deals with Enforcement of foreign arbitral awards passed under New York convention. The New York Convention defines “foreign award” as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960-

1. In pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and
2. In one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies

 Procedure to enforce foreign arbitral award under New York convention

Pursuant to section 47 of Arbitration and Conciliation Act, it lays down the documents to be produced before the court to enforce foreign arbitral award. (a) original award or a duly authenticated copy thereof; (b) original arbitration agreement or a duly certified copy thereof; and (c) any evidence required to establish that the award is a foreign award. As per the new Act, the application for enforcement of a foreign award will now only lie to the High Court.

Opportunity to file objection

After the petition for enforcement is submitted in court, the other party has the right to file an objection on the following grounds. These are:

1. The parties to the agreement were under some incapacity.
2. The agreement in question is not in accordance with the law to which the parties have subjected it, or under the law of the country where the award was made (especially in case of foreign awards).
3. There is a failure to give proper notice of appointment of arbitrator or arbitral proceedings or the party against whom the award was rendered was otherwise unable to present his case.
4. Award is ultra vires the agreement or submission to arbitration.
5. Award contains decisions on matters beyond the scope of submission to arbitration.
6. Composition of the arbitral authority or the arbitral procedure is ultra vires agreement.
7. Composition of the arbitral authority or the arbitral procedure is not in accordance with the law of the country where the arbitration took place.
8. The award (specifically a foreign award) has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which that award was made.
9. Subject matter of the dispute is not capable of settlement by arbitration under Indian law.
10. Enforcement of the award would be contrary to the public policy of India.

Restriction of public policy

In Renu Sagar Power Co. Ltd. v. General Electric Co, the Supreme Court of India laid down a test to determine what is contrary to public policy as such rendering a foreign award unenforceable. Therefore, it held that to refuse the enforcement of a foreign award on the ground of being contrary to a) the fundamental policy of law of India; or b) the interests of India; or c) justice or morality.

Thus, the objections to enforcement on the ground of public policy must be such that it offends the core values of a member State’s national policy which cannot be expected to be compromised.

Enforcement of foreign arbitral award under Geneva convention

As per the Geneva Convention, “foreign award” means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924, –

1. in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and
2. between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and
3. in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter, an award shall not be deemed to be final if any
4. proceedings for the purpose of contesting the validity of the award are pending in any country in which it was made.

Enforcement of foreign award passed in reciprocating and non-reciprocating countries

There is a reciprocating treaty with the other nations and if the arbitral award is given by reciprocating treaties it can be enforced under New York convention under Arbitration and Conciliation Act and it may be enforced by filing an execution petition just like an execution of a decree under the court having appropriate jurisdiction under Section 44-A CPC, 1908.

On the other hand, foreign arbitral award can also be enforced in India in the manner laid down below:

Parties seeking enforcement of arbitral awards passed by non-reciprocating countries should file a fresh suit in the civil court having jurisdiction in accordance with Order 5, 6 & 7 of CPC, 1908. It is conducted like a normal suit where first pleadings are filed, then written statements are filed as per Order 8 and then issues are framed. After that the evidence is produced before the court. After hearing the parties, the court will pass a judgment and within 15 days of passing, the court draws a decree. Note that, the limitation period for filing for enforcement in the appropriate court is three years from the date on which the award was made. It is to be further noted that upon filing of a fresh suit, the foreign award annexed with the suit shall be treated as evidence by the court in terms with Section 86 of the Evidence Act, 1872.

Conclusion

Hence, it can be understood from the above paragraphs that India does have a proper legislation governing enforcement of foreign arbitral awards in India. Judiciary has laid down the procedure for enforcing foreign arbitral awards from non-reciprocating countries as well. Therefore, India can be a good option for enforcement of foreign arbitral awards.