Enforcement of Foreign Awards in India

The Arbitration and Conciliation Act 1996 (hereinafter referred to as the Act) specifically provides for the manner in which a foreign award is to be dealt with for its enforcement. The Act of 1940 had no such provision.

The Foreign Awards are to be dealt with separately under the New York Convention and the Geneva Convention, both of which are dealt with under Chapters I and II of Part II of the Act.

According to Section 44 of Chapter I of the Arbitration and Conciliation Act 1996, foreign awards means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered commercial under the law in force in India, made on or after 11th October 1960 in pursuance of an agreement in writing for arbitration. The award must be passed in a jurisdiction with which India has a reciprocal treaty. Similar conditions are specified under Section 53 for the Geneva Convention Awards. The said awards can be executed as if it was a decree passed by the civil court of original jurisdiction in India as envisaged under Section 36 of the Act. For the execution of the award, the format laid down in Order 21 Rule 11 (2) of the Code of Civil Procedure, 1908 for the execution of a decree is  to be followed.

Under Section 48, the executing court shall enforce the award only after it is satisfied that the parties were not under some incapacity, were given proper notice, and that the disputes submitted to arbitration were not beyond the scope of the Arbitration Agreement.

Section 57 lays down some more conditions while dealing with the Geneva Convention Award, that the executing court shall enforce the award only after it is satisfied that these  conditions are fulfilled.

The party enforcing the award has to show beyond doubt that the award has become final in the country in which it was passed.

However, for awards falling under both the conventions, some rules are generally applicable, one of them being that there is no need to take out separate proceedings  such as an application for seeking an order from the court that the foreign award can be enforced as a decree of the court and a separate one for execution. The Hon'ble Supreme Court in the case of M/s Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd.  AIR 2001 SC 2293 observed that for the enforcement of foreign award, there is no need to take separate proceedings for deciding the enforceability of the award to make a rule of the court or decree and to take up execution thereafter. In one proceeding, as already stated above, the court enforcing the foreign award can deal with the entire matter.

In the case of Noy Velessina Engineering Spa Vs. Jindal Drugs Ltd., 2006 (4) Bom CR 155, the Hon'ble Court while considering the observations of the Hon'ble Supreme Court in the case of M/s Fuerst Day Lawson, held that from  the observations of the Supreme Court quoted above, it is clear that it is not necessary for the person who has a foreign award  in his favor to apply for recognition of the award by the court separately. He could make an application for execution of the award and in that application, a request for inquiry by the court as required by the statute to find out whether the award is enforceable, is implicit and the court in that application can make an inquiry as to the enforceability of the award and after recording its satisfaction that the award is enforceable, can proceed to execute that award as if it is a decree made by that court.

No notice is required to be issued to the judgement debtor in case the execution/enforcement has been proceeded within 2 years of the passing of the award in terms of Order 21 Rule 22 Code of Civil Procedure.

For the New York Convention Awards incorporated in Section 48 (2) of the Act, enforcement of the Arbitral Award may be refused on two grounds:

As per Section 57 (2) of the Act, for the Geneva Convention Awards, the executing court may refuse to enforce the award in case:

Provided that if the award has not covered all the differences submitted to the arbitral tribunal, the court may, if it thinks fit, postpone such enforcement, or grant it subject to such guarantee as the court may decide.

The courts can intervene only to limited extents as stated above and shall not be entitled to go into the merits of the case as the same has not been provided in the scheme of the Act. Some recent judgments such as that of ONGC vs. Saw Pipes (AIR 2003 SC 2629) have held that the award can be challenged only in case it is contrary to the public policy of India, which would mean that the award is against:

In case of a refusal for enforcement, an appeal would lie only to the Supreme Court under Article 136 on very limited grounds. This means that no appeal shall lie if the executing court approves of the enforcement.

Such decisions by the courts to limit intervention while executing foreign awards and the scheme of the Act to make foreign awards enforceable without  glitches only go on to affirm what Lord Mustill & Stewart C. Stated in Boyd QC's "Commercial Arbitration" 2001,

"Mutual recognition of awards is the glue which holds the international arbitrating community together, and this will only be strong if the enforcing court is willing to trust, as the convention assumes that they will trust, the supervising authorities of the chosen venue”.

Therefore, to file an execution for the enforcement of foreign awards passed in a country with which India has a reciprocal treaty, the procedure is as follows:

In cases of execution of such awards that are not passed in countries with which India has a reciprocal treaty, the award has to be filed as a regular civil suit, and the proceedings would be the same as applicable to a civil suit filed in India.