File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Enforcement Of International Arbitration Award

With the growth in international trade and investment , international trade and contractual disputes and so with increase in International commercial arbitration to settle those disputes. The vast majority are of the assessment that resolution of dispute by litigation in court is time consuming and cost consuming whereas arbitration might speed the resolution and lower the costs of disputes. Anyway, to ensure the integrity of the arbitral cycle and safeguard the public interest, the courts should uphold and direct that interaction.

Then again, to forestall the certainty of clients of the arbitral system from being damaged, the degree of judicial control ought not be excessively high. The discussion in international commercial arbitration is what the future holds judicial intervention ought to be permitted. While it is contended that arbitration should be liberated from courts, to be effective, it is likewise acknowledged that arbitration needs the help of national courts to be effective.

The essence of the theory of 'transnational arbitration is that the institution of international commercial arbitration is an autonomous juristic entity which is independent of all national courts and all national systems of law."[1] "One of the primary purposes of transnationalist movement is to break the links between the arbitral process and the courts of the country in which the takes place."[2]

A Brief History of ICA

ICA's has its rebirth after World War II

During 1950, North-South conflict (between industrialised and newly independent states) and East-West tensions (the Cold War) resulted in eminent jurists being appointed to arbitrate infrastructure developments disputes, general norms were applied to various stages of the dispute resolution process to solve the dispute. From the early 1950s, the ICC began pushing for a multilateral treaty to further promote ICA.

This resulted in the 1958 NYC, which gained immediate success and became the most widely accepted multilateral convention promoted by the UN. At that time local courts needs to have a seat of the arbitration, as specified by the parties in their arbitration agreement, to refer to the arbitrators all disputes covered by that agreement rather than continuing on litigation. Arbitration gained increasing acceptance for more purely commercial disputes.

During 1980s, large US law firms venturing into European markets had introduced their sophisticated techniques for managing complex but mostly domestic litigation. This led to increasing criticism of a heightened level of formalisation particularly of ICA procedures. ICA began to lose its universalist character. During the 1980s, large Anglo-American law firms in the ICA was seen as dominant, and the major culprits behind a shift towards greater formalization of arbitral procedures.

Form the past it is more difficult to perceive and evaluate the present, namely what has happened to the evolving world of ICA world over the 1990s and in the first decade of the 21st century. In 1985 ML was a quite detailed template for updating arbitration legislation at the "seat" of international arbitrations, it further entrenched key principles of party autonomy and limited judicial intervention for a growing number of countries, especially in the Asia-Pacific region.

Some countries latter experimented by adding provisions to ML-inspired legislation which allowed for more informality in engaging the arbitral process (e.g., more liberal writing requirements for arbitration agreements triggering the process) or in pursuing it (e.g., allowing arbitrators to act as mediators). Arbitral institutions, especially at the "Centre" but also in our "periphery", competed over the late 1990s in improving their Rules.

In particular, they streamlined time limits for general proceedings, and creating "expedited procedures" for smaller or less complex claims. These institutions, and others involved in the more traditional ICA world, have also had to confront growing interest world-wide, among businesspeople and their legal advisors, in "multi-tiered dispute resolution" clauses and processes.

They are also increasingly involved in hybrid or pseudo-arbitration processes such as domain name dispute resolution, where the emphasis is often on prompt and more informal dispute resolution. many of these processes involve more informality. That is apparent particularly in a commitment to speedier proceedings, in turn often linked to improvements in information technology. Informality is also often furthered by the more global substantive law norms applied.

Structure of enforcement of Arbitral Award

The essential structure as respects the enforcement of arbitral awards is the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, called the New York Convention. The Convention facilitates the enforcement of arbitral awards in all the contracting states, that is to say, those nations which are a party to and are signatories to the Convention, one among which is India.

Before the New York Convention, enforcement of arbitral awards of one more country in the purview of one more State was accommodated in the Geneva Protocol on Arbitration Clauses, 1924 as well as the Geneva Convention on the Enforcement of Awards of 1927.

Because of India being a signatory to both the New York as well as the Geneva Conventions, The laws of India, have principally given all of the time to enforcement, within the local territory of India, of foreign arbitral awards. Instances of these incorporate the laws like the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961 which were in line with the Geneva and New York Convention, in that they give to enforcement of foreign arbitral awards in India, given that the parties have consented to the dispute being settled in the according to the law of the place picked for the procedure.

Nonetheless, today, the law that is in force is the Arbitration and Conciliation Act of 1996, enacted the two on the UNCITRAL Model Law on Arbitration as well as to patch up and replace the 1937 and 1961 laws on the equivalent. Accordingly, today, it is the 1996 Act that accommodates the enforcement of foreign arbitral awards in India.

Enforcement under Arbitration and Conciliation Act of 1996

As the Arbitration and Conciliation Act of 1996 is the great legislation behind the enforcement of foreign awards, it is fundamental to understand how the awards are enforced under the Act. One of the announced targets of the Arbitration and Conciliation Act, 1996 is that each last honor is to be enforced in a similar way as the decree of the Indian court would be.

The Act has two parts-Part I and Part II, every one of which deal with the enforcement of various sort of foreign arbitral awards. Part I, (Sections 44 to 52) modeled on the UNCITRAL Model Law, accommodates the enforcement of arbitral awards that are not covered under the ambit of either the New York or the Geneva Conventions. As set somewhere around the apex Court, Part I of the Act applies to foreign awards that are administered neither by the New York nor the Geneva Convention. Such enforcement of awards can be challenged in cases wherein the award is contrary to either the fundamental policy or interest of India or is obviously unlawful.

Part II (Sections 53-60 ) of the Act is in line with the provisions of the New York Convention. According to Section 46 of the Act, the provisions of Part II applies assuming the arbitral award is in compatibility of arbitration understanding under the Convention and the award is made in those States or in within the regional furthest reaches of such place that has been informed by the Government of India. Such recognition of a foreign State is done through method for a notification by the Government of India that arbitral awards in those places are qualified to be enforced in India as for the parties to the arrangement.[3]

Section 47 provides that the party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court:

  1. original award or a duly authenticated copy thereof;
  2. original arbitration agreement or a duly certified copy thereof;
  3. 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 High Court.[4]
    Once an application for enforcement of a foreign

Award is made, the other party has the opportunity to file an objection against enforcement on the grounds recognized under Section 48 of the Act.

The Amendment Act has restricted the ambit of violation of public policy for international commercial arbitration to only include those awards that are affected by fraud or corruption, or in contravention with the fundamental policy of Indian law, or conflict with the notions of morality or justice.

It is further provided that if an application for the setting aside or suspension of the award has been made to a competent authority, the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.[5]

Section 49 provides that where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

Section 56 provides that the party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court (a) original award or a duly authenticated copy thereof or evidence proving that the award has become final and evidence to prove that the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto and that the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure. As per the new Act, the application for enforcement of a foreign award will now only lie to High Court.

The conditions for enforcement of foreign awards under the Geneva Convention are provided under Section 57 of the Arbitration and Conciliation Act, 1996. These are as follows:
  1. the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;
  2. the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;
  3. the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;
  4. the enforcement of the award is not contrary to the public policy or the law of India.

Forum for enforcement of International Arbitral Award

The Supreme Court in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.[6] held that while enforcing a foreign award there in no such requirement under the statute to initiate separate proceeding seeking an order to file execution of a foreign award. Relying upon the Supreme Court judgment, the Bombay High Court in Noy Velissina Engineering Spa v. Jindal Drugs Ltd.[7] held that a person seeking execution of a foreign award can execute it as a decree of the court.

The term "court" is defined under the Arbitration Act, 1996 under Section 2(1)(e)[8] as:

  1. In the case of an arbitration other than international commercial arbitration, the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court, or any Court of Small Causes;
     
  2. In the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court.

It was held by the Supreme Court in State of Maharashtra v. Atlanta Ltd.[9] that the award-holder shall file the application for enforcement of a foreign arbitral award before the competent court in whose jurisdiction the assets of the judgment-debtor are located. Also, if in a situation, where assets of the judgment-debtor are located within territorial jurisdiction of multiple courts, the application for execution of the award can be filed simultaneously in all such courts having jurisdiction.

Moreover, the Supreme Court in Sundaram Finance Ltd. v. Abdul Samad[10] while providing some clarity as to the appropriate court to approach for enforcement of a foreign award held that a foreign award-holder can initiate execution of the award before any court in India having territorial jurisdiction where the assets are located. It is important to note that, after the establishment of commercial courts under the Commercial Courts Act, 2015[11] if the foreign award is of a specified value, the designated commercial court of the appropriate court having the territorial and pecuniary jurisdiction shall have the jurisdiction to enforce the award.

For the awards arising out of India seated arbitration although being an international commercial arbitration, after the introduction of the Commercial Courts Act, 2015 and Arbitration and Conciliation (Amendment) Act, 2015, the jurisdiction lies with the Commercial Division of the particular High Court, where assets of the judgment-debtor is situated.

Enforcement in case of award passed in reciprocating countries

Section 2(6) CPC, 1908[12] defines "foreign judgment" as "foreign judgment means the judgment of a foreign court". Therefore, any court which is outside the territorial jurisdiction of India and a judgment passed by it shall be deemed to be a "foreign judgment". The perplexity occurs for a party who is intending to enforce a foreign award in two situations, one when the award is passed by a reciprocating country and one when the award is passed by a non-reciprocating country.

A party seeking enforcement of an award passed by a reciprocating country may do so by filing an execution petition just like an execution of a decree under the court having appropriate jurisdiction under Section 44-A CPC, 1908. As explained above, the execution is filed in a court under whose jurisdiction the assets of the judgment-debtor are located. Also, after the establishment of commercial divisions in various high courts of the country, the execution shall be filed accordingly in the appropriate high court if there is money/claim which is to be realised out of the award passed. Otherwise, place of execution will depend on the location of the assets of the judgment-debtor.

On the other hand, if a party seeking enforcement of an award passed by a non-reciprocating country has to file a fresh suit in the court having appropriate jurisdiction in terms of Orders 5, 6 and 7 CPC, 1908. Thereafter, the suit will run like a routine civil suit wherein written statement would be filed as per Order 8 CPC, 1908, after completion of pleadings the issues would be framed as per Order 9 CPC, 1908 followed by evidence stage i.e., recording of evidence. 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
It is of paramount importance to remember that in both the cases, the execution or suit has to fulfil the essential criteria under Section 13 CPC, 1908, which postulates certain conditions which are to be fulfilled in order to hold the foreign judgment to be conclusive.

Those conditions are as below:
  1. Where it has not been pronounced by a court of competent jurisdiction?
  2. Where it has not been given on the merits of the case?
  3. Where it appears on the face of the proceedings to be founded on an incorrect view of incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable?
  4. Where the proceedings in which the judgment was obtained are opposed to natural justice?
  5. Where it has been obtained by fraud?
  6. Where it sustains a claim founded on a breach of any law in force in India?

Conclusion

At this point, it should be understood that despite the fact that there exists a procedure for the enforcement of foreign arbitral awards in India, such is anything but a smooth and efficient one and has come in for severe criticism. One of the primary criticisms is the fact that it isn't at all imaginable to be enforced in a rapid way as the Act stipulates that the award can be enforced just once the time accessible for the Court to strike down the award has passed.

This is incredibly inconvenient and one that prompts exorbitant deferrals in the enforcement of discretion arrangements as worries Indian Parties. Further, the critical job that the Courts play in what the future holds to the traditional judicial system is likewise a bone of dispute for some.

To close, it tends to be expressed that the Indian Legal System in all actuality does without a doubt have a very much set down and laid out the procedure for the enforcement of foreign awards in India. Notwithstanding, there is a rising need to reform something similar to make it more business-accommodating and diminish the burden on our all around exhausted judiciary.

End-Notes:
  1. Sir Michael John, Transnational Arbitration In English Law, 133, Current Legal Problems, 1984
  2. TDM Infrastructure (P) Ltd v UE Development India (P) Lid, (2008) 14 SCC 271, explaining the difference between the English and Indian provisions
  3. Section 46 of the Arbitration and Conciliation (Amendment) Act, 2015
  4. Section 47of the Arbitration and Conciliation (Amendment) Act, 2015
  5. Section 48of the Arbitration and Conciliation Act, 1996
  6. (2001) 6 SCC 356.
  7. 2006 SCC Online Bom 545. http://www.scconline.com/DocumentLink/Z547En23 accessed on 25th February 2022
  8. Section 2, Arbitration & Conciliation Act, 1996.
  9. (2014) 11 SCC 619.
  10. (2018) 3 SCC 662.
  11. Commercial Courts Act, 2015.

    Award Winning Article Is Written By: Mr.Skand Kumar Singh
    Awarded certificate of Excellence
    Authentication No: MR206982290878-10-0322

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers



Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


LawArticles

Section 482 CrPc - Quashing Of FIR: Guid...

Titile

The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of th...

How To File For Mutual Divorce In Delhi

Titile

How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Whether Caveat Application is legally pe...

Titile

Whether in a criminal proceeding a Caveat Application is legally permissible to be filed as pro...

The Factories Act,1948

Titile

There has been rise of large scale factory/ industry in India in the later half of nineteenth ce...

Constitution of India-Freedom of speech ...

Titile

Explain The Right To Freedom of Speech and Expression Under The Article 19 With The Help of Dec...

Copyright: An important element of Intel...

Titile

The Intellectual Property Rights (IPR) has its own economic value when it puts into any market ...

Lawyers Registration
Lawyers Membership - Get Clients Online


File caveat In Supreme Court Instantly