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ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA
Arbitration is one of the most common Alternative Dispute Resolution (“ADR”) mechanisms to resolve disputes of a civil and commercial nature. The primary legislation governing domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards, and conciliation matters is the Arbitration and Conciliation Act, 1996 (“the Act”) which has been amended multiple times in 2015, 2019, and 2021.
FOREIGN ARBITRAL AWARDS
A foreign arbitration is an arbitration conducted in a place outside India, and the resulting award is sought to be enforced as a foreign award. It has been defined under section 44 of the Act 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.
PROCEDURE FOR ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA
Enforcement of Foreign Arbitral Awards in India, as dealt with by Part II of the Act, provides for such enforcement either under the New York Convention or the Geneva Convention. The jurisdictions for such applications is before a High Court.
ENFORCEMENT OF AWARDS PASSED UNDER THE NEW YORK CONVENTION
Section 44 of the Act defines a foreign award as an arbitral award on disputes between persons that arise from a legal relationship, whether contractual or not. The dispute must be recognized as a commercial one under the law in force in India, on or after 11th October 1960. The two prerequisites for enforcement here are that the country needs to be a signatory to the New York Convention and the award must be made in the territory of another state that the Central Government notifies as a reciprocating territory.
Certain grounds have been provided under section 48 of the Act on which the other party gets the opportunity to file an objection against such enforcement. Finally, when the Court is satisfied under section 49 of the Act, with the enforceability of the foreign award under this Chapter, the award is then considered a decree of that Court.
ENFORCEMENT OF AWARDS PASSED UNDER THE GENEVA CONVENTION
Section 53 of the Act defines a foreign award as an arbitral award on disputes related to matters considered commercial under the law in force in India after 28th July 1924. The three pre-requisites for enforcement here are:
- The award is in pursuance of an agreement for arbitration to which the Geneva Protocol on Arbitration Clauses, 1923 applies.
- The award is between persons subject to the jurisdiction of reciprocating territories, as designated by the Central Government and where the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 applies.
- The award is made in a territory designated as a reciprocating one by the Central Government.
According to section 56 of the Act, the party applying for the enforcement of the foreign award in India is required to submit the following at the time of application:
- The original award or authenticated copy of the award.
- Evidence showing that the award has become final.
Evidence to prove that the award was made in pursuance of a valid arbitration under the applicable law.
ENFORCEMENT OF FOREIGN JUDGMENTS IN INDIA
Under section 2(6)(2) of the Civil Procedure Code (“CPC”), foreign judgments in India are defined as decisions of courts located outside the country that are neither formed nor sustained by the authority of the Central Government. The procedure for enforcing foreign judgments differs depending on whether the judgment is from a reciprocating or non-reciprocating country.
If it is from a reciprocating nation, the party seeking enforcement must file execution proceedings in India, whereas a non-reciprocating country’s decree requires a new suit to be brought in India. The deadline for filing an enforcement suit is three years after the verdict is delivered. Section 44A of CPC requires that a certified copy of the decree and a certificate from the superior court detailing the level of satisfaction or adjustment to be filed to execute a decree from a reciprocating nation.
Under section 13 of CPC, a foreign ruling can be conclusive as res judicata, but there are some restrictions. Courts have repeatedly maintained that if a party, does not willingly submit to the jurisdiction of a foreign court, they are not bound by it. If the plaintiff presents evidence, the court will rule on the merits.
The Supreme Court in R. Vishwanathan v. Rukn-Ul-Mulk Syed Abdul Wajid held that the enforcement of a foreign judgment will be incapacitated if the court fails to meet the bare minimum of natural justice criteria, or if the foreign court was forced or duped into issuing the verdict.
ENFORCEMENT OF FOREIGN JUDGMENTS FROM NON-RECIPROCATING COUNTRIES
To enforce a foreign decision from a non-reciprocating country in India, a legal claim needs to be submitted regarding the verdict. The plaintiff might sue based on either the foreign judgment or the original cause of action. If the litigation is unsuccessful, no further application for execution can be brought; but if it is successful, the decree can be carried out in India.
To enforce the foreign judgment, a certified copy of the judgment and an extra certificate from a representative of the Central Government of India in the foreign nation is necessary, and the judgment must pass the conditions set out in section 13 of the CPC before it may be enforced in India.
If the decree-holder takes efforts to execute a foreign decree in the nation where the decree was rendered and the decree is not fully satisfied, the decree-holder may file an execution petition in India within three years of the completion of the execution proceedings in the foreign country.
OBSERVATION
ADR mechanisms have witnessed significant growth over the past few decades owing to their several benefits. With the globalized world and the increased transactions between companies in different companies, disputes of a foreign nature arise quite often. In such cases, it becomes crucial to lay down guidelines as to how foreign awards can be enforced in a country and also provide for grounds to challenge such enforcement. In India, the same has been provided in detail by the Act, which has ensured uniformity in all such related matters. However, development regarding growing concepts and needs such as that of emergency arbitration in India needs better recognition and understanding.
HOW WE CAN HELP
●Our experts provides comprehensive assistance in navigating the complexities of the Arbitration and Conciliation Act, 1996, and the Code of Civil Procedure, 1908.
● Our team offers expert guidance on fulfilling procedural requirements, addressing objections, and ensuring the smooth enforcement of foreign awards and judgments.
● Our firm is adept at handling awards under the New York and Geneva Conventions, as well as judgments from both reciprocating and non-reciprocating countries.
For more information or queries, please email us at
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