Enforecement of Foreign Arbitration Award in India
As per Enforcement Foreign Awards Act, 1961, foreign arbitration awards of New York convention countries can be enforced in India. The above said act was enacted by the Government of India to enable effect to the convention on the recognized and enforcement of foreign arbitration awards, done at New York in 1958. Government of India has notified a list of countries that are recognized for the purpose of execution of foreign arbitration awards.
The list of ‘reciprocating territories’ notified by the Government of India in the Gazette of India, for the purposes of S.44 of the Arbitration and Conciliation Act 1996 (‘1996 Act’) comprises the following 46 States: Austria, Belgium, Botswana, Bulgaria, Central African Republic, Chile, Cuba, Czechoslovak Socialist Republic, Denmark, Republic of Korea, Kuwait, Malagasy Republic, Malaysia, Mexico, Morocco, The Netherlands, Nigeria, Norway, Philippines, Poland, Romania, San Marino, Ecuador, The Arab Republic of Egypt, Finland, France, German Democratic Republic, Federal Republic of Germany, Ghana, Greece, Hungary, Italy, Republic of Ireland, Japan, Singapore, Spain, Sweden, Switzerland, Syrian Arab Republic, United Republic of Tanzania, Thailand, Trinidad and Tobago, Tunisia, UK, the United States of America and USSR.
In addition to the above list of countries, Government of India has recently taken a decision to notify China and Hong Kong also as countries recognized by India for the above said purpose. The firm has strong experience and expertise in handling execution of foreign arbitration awards and related litigation also.
Enforcement of domestic awards
After an award had been made, it had to be made a decree of the court, and the decree enforced against the defaulting party. For this purpose formal application was required and notice was to be given to both the parties and objections heard. If the losing party voluntarily made payment then in law, decree was not necessary.
Subject to the provisions for setting aside the award (Section 34 ) the award is enforceable in the same manner as if it were a decree of the Court (Section 36).
Enforcement of foreign awards under the conventions
- A foreign award can be enforced in India under the multilateral international conventions to which India is a party, namely, the Geneva Convention of 1927 and the New York Convention of 1958, if the said Convention apply to the arbitrations. The foreign award must have been made in a country which has ratified the Geneva Convention of 927 or the New York Convention of 1958. India has enacted legislation to implement the two Conventions. The Arbitration (Protocol and Convention ) Act, 1937 which came into force on 4th March, 1937 provided for the enforcement of foreign arbitral awards to which the Geneva Convention of 1927 applied. Similarly, the Foreign Awards (Recognition and Enforcement) Act, 1961 which came into force on 30th November, 1961 had been enacted pursuant to the New York Convention of 1958 and it prescribed the law and procedure for the enforcement of foreign awards in India to which the said Convention applied. The Geneva Convention ceased to apply to those awards to which the New York Convention applied.
- India had made two reservations while ratifying the Convention namely, (i) that it would apply the Conventions to the recognition and enforcement of an award only if it was made in the territory of another contracting State. In pursuance of the said reservation, the two implementing Acts of 1937 and 1961 provide that the Government of India will notify the names of countries to which the Convention would apply and which countries had made reciprocal provisions for the enforcement of Indian awards in those countries.The second reservation was that India would apply the Convention only to differences arising out of legal relationship which are considered ‘commercial’ under Indian Law. Courts have interpreted the term ‘commercial dispute’ under the two Acts, in certain decisions where the question was at issue.
- It has been held that the provisions of the Conventions and the 1937 and 1961 Acts are designed to subserve the cause of facilitating international trade or the promotion there-of. An expression occurring in such statutes must receive, liberal interpretation consistent with its literal and grammatical sense.The concept of commercial relationship in Section 2 of 1961 Act therefore takes within its ambit all relationship which arise out of or are ancillary and incidental to the business dealings between citizens of two States. The concept takes within its fold all legal relationships pertaining to international trade in all its forms between the citizens of different states.
The law, as settled by the Courts in the following cases under the repealed Act, continues to be valid under the new enactment:
- Consultancy services for the promotion of the sales of the aircraft manufactured by a foreign company are “commercial services”—RM Investment and Trading Co. Pvt. Ltd. V Boeing Co. (1974) Suppl. CLA 75/AIR 1994 SC 1136.
- A party from a country which has not ratified the New York Convention of 1958 cannot maintain its application seeking any benefit from the court under any enactment made on the basis of the Convention-Ramji Dayawala & Sons (P) Ltd. Vs Invest Import AIR 1981 SC 2085
- While questions of the existence, validity or effect of an agreement may be considered by the arbitral tribunal, the last word on all matters involving the jurisdiction of the tribunal will rest with the courts Renusurgar Power Co. Ltd. Vs. General Electric Co. Ltd (AIR 1985 SC 1156); Tarapore & Co Vs. Cochin Shipyard Ltd. (AIR 1984 SC 1022); Khardah Co. Ltd. V Rayman & Co (India) Ltd. (AIR 1962 SC 1810).
- An award will not be tenable if it is opposed to the public policy of the country in which it is to be enforced. Mere contravention of a public policy may not attract the bar. It must be repugnant to the fundamental policy of Indian Law or to justice or morality. Renusager Power Co. Ltd Vs General Electric Company (1994) Suppl CLAI/AIR 1994 SC 86; National Thermal Power Corfin.V Singer Co. (1992) 8 CIA 116 (c)
- Where an agreement has the closest connection with India and the Indian Laws and no connection with any foreign law, it will be governed by the laws in force in India. An agreement governed by the law of India will not be a foreign award. Gas Authority of India Ltd. V SPIE CAPAGSA (1994) Suppl. CLA 81 (Delhi)
The same scheme is maintained under the new law.
Procedure for enforcement under the Conventions
- The procedure for enforcement of foreign awards under the Geneva Convention of 1937 and the New York Convention of 1958 are much the same. Any person interested in enforcing a foreign award may apply in writing to any court having jurisdiction over the subject matter of the award. In addition to filing of the award and the agreement on which it is based as required by the Convention, the Act requires that evidence as to the award being a foreign award has to be filed.
- The competent court in which the award is to be filed is the court which will have jurisdiction over the subject matter of the award. The application will be numbered and registered in the court as a suit between the applicant as plaintiff and the other parties as defendants. The court will direct notice to be given to the parties requiring them to show cause why the award should not be filed. The court on being satisfied that the foreign award is enforceable under the Act will pronounce judgment according to the award. Upon the judgement so pronounced, a decree will follow as in the case of domestic awards. No appeal will lie from such a decree except in so far as the decree is in excess of or not in accordance with the award.
- The various High Courts, including the Bombay and Calcutta High Courts, have made rules regarding the procedure and forms to be used for applications for enforcement of foreign awards.
NRI Law Offices have a formidable track record in enforcement of foreign arbitral award dispute resolution with a reputation as a aggressive and result oriented dispute resolution law firm, and is considered to be one of the best law firm of the country by several Independent credential bodies for litigation and arbitration. Mr. Sunil Goel Advocate heads dispute resolution team, other lawyers work alongside with him, ‘he is able to present complex matters in a simple way’.