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Foreign Awards In India : Recognition, Challenge And Enforcement

Asmita Singh
26 Oct 2019 2:53 AM GMT
Foreign Awards In India : Recognition, Challenge And Enforcement
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INTRODUCTION

The legislation applicable for recognition and enforcement of an arbitral award in India is the Arbitration and Conciliation (Amendment) Act 2019[1]. India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958[2] and the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927[3]. India has also entered into various Bilateral and Multilateral investment treaties, though the current status is most of them is under question. Typically, bilateral investment treaties contain a dispute resolution clause. However, India is not a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States[4] (ICSID Convention).

If a party receives a binding award from a country which is a signatory to the New York Convention or the Geneva Convention and the award is made in a territory which has been notified as a convention country by India, the award would then be enforceable in India. Before an award is enforced in India, the court examines whether the award complies with the requirements of the Act, and after these requirements (explained below) are satisfied, the award is enforced like a decree of the court.

JURISDICTION OF COURT FOR ENFORCEMENT

The competent court for filling an application for enforcement of a foreign award is before the court in whose jurisdiction the assets of the award debtor are located.[5] In case where the assets of the judgment debtor are located in the territorial jurisdiction of more than one court, the award holder can file execution petitions simultaneously in all of such courts.[6]

The judgment debtor can use the provisions of Order XXI Rule 41 of the Code of Civil Procedure, 1908[7] to make an application to the court requesting a disclosure of the assets held by the award debtor under provisions, in cases where the award holder is not able to distinguish the assets of the judgment debtor.

REQUIRED DOCUMENTATION

The relevant provision stating the documents required at the time when a party is applying for the enforcement of a foreign award is Section 47(1) of the Arbitration Act[8]. The relevant documents are:

(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;

(b) the original agreement for arbitration or a duly certified copy thereof;

(c) such evidence, if needed, to prove that the award is a foreign award.

TRANSLATION

In case a party is applying for the enforcement of a foreign award, which is in a foreign language, then the party seeking such enforcement will have to produce a translation of the award into English, certified as correct, by a diplomatic or consular agent of the country to which that party belongs.

As another alternative, the award may also be certified as correct in such other manner as may be sufficient according to the law in force in India. In such a case, a translated copy of the award must be certified as correct by a notary appointed under the Notaries Act 1952[9]. Further, the translation certified by the notary could be a translation of the award made by either the notary himself/herself, or any other person, but verified by the notary as correct.[10]

STAMPING, REGISTRATION AND COURT FEES

A foreign award require does not require any registration nor any stamping, and can be purely enforced as a decree of the court.[11] The Courts Fees Act 1870[12] prescribes the mandatory court fees to be paid in any judicial proceeding and the same applies for applications seeking enforcement of foreign award. Nevertheless, there exits amendments by various states to the Court Fees Act or in their own Court Fees Act. Therefore, the court fees payable is not uniform throughout the country and varies depending on the court in which the execution proceedings are filed, and must be checked accordingly.

INTERIM AWARDS

Section 2(1)(c) of the Arbitration Act[13] of defines the term, 'arbitral award' and includes in its meaning an interim award. The enforcement of any interim award is by the same procedure as that of a domestic award (Section 36 of the Arbitration Act[14]) and foreign award (Section 47 of the Arbitration Act[15]). Though the procedure for enforcement is the same, per say, but for an award to be enforced as a decree of the court, the conclusiveness of the award is one of the most important considerations. For an interim award to be enforced, it must entirely conclude over the issues or claims deliberated by it. Where the nature of the claim / interim award is such that it might still be altered by the final award, then such an award is not enforceable under the Indian law.[16]

LIMITATION PERIOD

The 1996 Act does not recommend any time limit within which a foreign award must be applied to be enforced. Nevertheless, various High Courts have given different interpretations regarding the limitation period within which a party may apply for the enforcement of a foreign award. For instance, the Bombay High Court in its judgment[17] on this issue has said that since a foreign award is not a decree (strictly speaking) and would be binding on the parties only after a competent court renders it as enforceable, it would follow a two-step method. Hence, the application for enforcement of a foreign award would fall within the provisions of the Schedule to the Limitation Act, and therefore, the limitation period would be three years. This limitation period of three years would start from the date the said award is recognized as a decree by a competent court.

GROUNDS FOR REFUSAL TO RECOGNITION

The grounds in the Indian law for refusing recognition of similar to the grounds provided under Article V of the New York Convention[18]. Thus, the grounds for refusing recognition and enforcement of a foreign award under Section 48(1) of the Arbitration Act[19] are:

  • the parties referred to in Section 44[20] are under some incapacity according to the law applicable to them, or the agreement is void according the law to which the parties have subjected to, or the award is deferred or set aside by the competent authority the country in which the award was made; or
  • the party against whom the award is invoked was not given proper notice of the appointment of the arbitral tribunal or wasn't able to present his/her case during the proceedings; or
  • the award is rendered on issues that were not contemplated at the time of signing of the agreement; or
  • the arbitral tribunal was not composed in accordance with the agreement with the agreement of the parties, or not in not in accordance with the law of the country where the arbitration took place; or
  • the award has not yet become binding on parties, or has been set aside or suspended by the competent authority of the country in which the award was made. It may be reasonable to adjourn enforcement proceedings if a challenge has been made by an award debtor in the country where the award has been made.[21] However, courts may order for the deposition of security while the execution proceedings are deferred.

A reading of Section 48(1)(e) of the Arbitration Act read with section 48(3) of the Arbitration Act implies that the 'competent authority' in section 48(3) is the authority of the country where the award has been made, and not the executing court in India.

Further, under section 48(2) of the Arbitration Act, enforcement of a foreign award may also be refused if the court finds that:

  • the subject matter is not arbitrable under the law of India
  • the enforcement would be contrary to the public policy of India.

Recent amendments to the Arbitration Act have clarified that an award would be considered to be in conflict with the public policy of India, only if:

  • the award was tainted by fraud or corruption or was in violation of Section 75 or Section[22] 81 of the Indian Evidence Act 1872[23];
  • it is in violation with the fundamental policy of Indian law; or
  • it is in conflict with the most rudimentary notions of morality or justice.

It is important to note that the grounds of challenge give are exhaustive and courts do not have the power to add more grounds to the above-mentioned grounds for refusal of enforcement. The court, on its own, cannot re-examine the award, where the execution petition has been filed. The executing court can in no case examine the merits of the case. The court can only review the award, and the same cannot be converted into an appeal. The court must make a preliminary enquiry as to enforceability of award and then hold that it is enforceable and subsequently enforce it.

APPEALS AGAINST REFUSAL TO GRANT RECOGNITION TO THE AWARD

According to Section 50 of the Arbitration Act[24], an appeal against a decision refusing to recognize or enforce a foreign award lies to the relevant High Court. No second appeal lies from an order passed under Sections 50 of the Arbitration Act. However, none of the provisions of the Arbitration Act take away the right of the parties to apply to the Supreme Court by a way of a Special Leave Petition under Article 136 of the Constitution of India[25].

CONCLUSION

There exist elaborate legal provisions for the enforcement of foreign awards in India, but the effectiveness of the said provisions does not work at its optimum pace in practice. Though the recent decision of the higher judiciary indicates a positive change in the trend but the same cannot be observed in homogeneousness at all levels across the country. India, even with its latest 2019 amendment to the Arbitration Act aims to welcome international investment and international arbitration with a pragmatic approach. As a country seeking foreign investment, it is imperative that both branches of the legal system, the legislative and the judiciary must work in harmony to provide effective and speedy remedies to the parties seeking assistance.

(The author is pursuing LLM(International Dispute Resolution) from Humboldt University of Berlin)



[1] The Arbitration And Conciliation (Amendment) Act 2019, Department of Justice, Ministry of Law and Justice, New Delhi. The full text is available at: https://upload.indiacode.nic.in/showfile?actid=AC_CEN_3_46_00004_199626_1517807323919&type=actfile&filename=a1996-26.pdf.

[2] Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. The full text is available at: https://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/New-York-Convention-E.pdf. (hereinafter called the New York Convention)

[3] Convention on the Execution of Foreign Arbitral Awards Geneva, 26 September 1927. The full text is available at: https://www.wipo.int/amc/en/arbitration/ny-convention/text.html

[4] International Centre for Settlement of Investment Disputes, 1966. The full text is available at: https://icsid.worldbank.org/en/Documents/icsiddocs/ICSID%20Convention%20English.pdf.

[5] Executive Engineer v Atlanta Limited 2014 11 SCC 619.

[6] Bulk Trading SA v Dalmia Cement (Bharat) Limited 2005 SCC Online Del 1389.

[7] The Code of Civil Procedure 1908, Department of Justice, Ministry of Law and Justice, New Delhi. The full text is available at: https://indiacode.nic.in/bitstream/123456789/2191/3/a1908-05.pdf.

[8] Supra note 1.

[9] The Notaries Act 1952, Department of Justice, Ministry of Law and Justice, New Delhi. The full text is available at:https://upload.indiacode.nic.in/showfile?actid=AC_CEN_3_46_00007_195253_1517807328336&type=actfile&filename=A1952-53.pdf

[10] KTC Korea Company Limited v Hobb International Pvt Ltd 2004, SCC Online Cal 179.

[11] M/s Shriram EPC Limited v. Rioglass Solar SA AIR 2018 SC 4539.

[12] The Courts Fees Act 1870, Department of Justice, Ministry of Law and Justice, New Delhi. The full text is available at: https://indiacode.nic.in/bitstream/123456789/2293/1/A1870-07.pdf.

[13] Supra note 1.

[14] Ibid.

[15] Ibid.

[16] National Thermal Power Corporation Ltd (NTPC) v Siemens Aktiengesellschaft 2005, DLT 36.

[17] NoyVallesina v Jindal Drugs Limited 2006 (5) BomCR 155.

[18] Supra note 2.

[19] Supra note 1.

[20] Supra note 1.

[21] Naval Gent Maritime Ltd. v. Shivnath Rai Harnarain (I) Ltd (2009) SCC Online Del 2961.

[22] The Indian Evidence Act 1872, Department of Justice, Ministry of Law and Justice, New Delhi. The full text is available at: https://indiacode.nic.in/bitstream/123456789/2188/3/a1872-1.pdf.

[23] Ibid.

[24] Supra note 1.

[25]The Constitution of India 1950, Department of Justice, Ministry of Law and Justice, New Delhi. The full text is available at: https://www.india.gov.in/sites/upload_files/npi/files/coi_part_full.pdf.

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