Definition
The arbitral award means the decision of an arbitral tribunal, whether in domestic or international arbitration. The arbitral award also includes an interim award.
Applicable Conventions
India is a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) and the Geneva Protocol on arbitration clauses of 1923, and the Geneva Convention regarding the foreign arbitral awards, 1927.
Types of arbitral awards are enforceable.
Money Awards, Awards are containing injunctions ordering or prohibiting the doing of acts. Decisions or awards by arbitral tribunals (including emergency arbitrators) granting provisional measures and declaratory awards.
Public Policy
The public policy of India applies to both domestic and international awards which are enforced in India. The term “Public policy” in Article V (2) (b) of the New York Convention means the doctrine of public policy as applied by the courts in which the foreign award is being enforced. The enforcement of the foreign award should not be contrary to the public policy or the law of India. The enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.
A. Enforcement under the New York Convention
Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015 deals with foreign awards passed under the New York Convention.
The New York Convention defines “foreign award” as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in effect in India, made on or after the 11th day of October 1960.
From the New York Convention, it’s clear that there are two pre-requisites for enforcement of foreign awards under the New York Convention. These are:
The country should be a signatory to the New York Convention.
The award shall be made within the territory of another contracting state which could be a reciprocating territory and notified intrinsically by the Central Government.
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
(a) original award or a duly authenticated copy thereof;
(b) original arbitration agreement or a duly certified copy thereof; and
(c) any evidence required to learn that the award is foreign. As per the new Act, applying for enforcement of a foreign award will now only lie to the High Court.
Once an application for enforcement of a foreign award is created, the opposite party can file an objection against enforcement on the grounds recognized under Section 48 of the Act. These grounds include:
The parties to the agreement cited in section 44 were, under the law applicable to them, under some incapacity, or the said agreement isn’t valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award is made; or
The party against whom the award is invoked wasn’t given proper notice of the appointment of the arbitrator or the arbitral proceedings or was otherwise unable to present his case; or
The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it has decisions on matters beyond the scope of the request to arbitration: only if, if the findings on the issues submitted to arbitration are often separated from those not so advanced, that a part of the award which has decisions on matters submitted to arbitration is also enforced; or
The composition of the arbitral authority or the arbitral procedure wasn’t after the agreement of the parties, or, failing such agreement, wasn’t per the law of the country where the arbitration took place; or
The award has not yet become binding on the parties or have been put aside or suspended by a competent authority of the country during which, or under the law of which, that award is made.
The subject-matter of the difference isn’t capable of settlement by arbitration under the law of India; or
The enforcement of the award would be contrary to the public policy of India.
The Amendment Act of 2015 has restricted the ambit of violation of public policy for international commercial arbitration only to include those awards that are:
Stricken by fraud or corruption,
In contrast with the necessary procedure 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 to a competent authority, the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and should also, on the application of the party claiming enforcement of the award, order the opposite party to allow suitable security.
Section 49 provides that where the Court is satisfied that the foreign award is enforceable under this Chapter, the prize shall be deemed to be a decree of that Court.
B. Enforcement under the Geneva Convention
Sections 53-60 of the Arbitration and Conciliation (Amendment) Act, 2015 has provisions about foreign awards passed under the Geneva Convention.
As per the Geneva Convention, “foreign award” means an arbitral award on differences referring to matters considered as commercial under the law influential in India made after the 28th day of July 1924.
Section 56 provides that the party applying for the enforcement of a foreign award shall, at the time of the applying, produce before the Court
(a) Original award or a duly authenticated copy its;
(b) Evidence proving that the prize has become last and
(c) Evidence to confirm that the award is made in pursuance of a submission to arbitration which is valid under the law applicable to that where the prize is being made by the arbitral tribunal provided for within the request to arbitration or constituted within the way agreed upon by the parties. As per the new Act, the application for enforcement of a foreign award will now only lie before the High Courts.
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:
The award is made in pursuance of a submission to arbitration which is valid under the law applicable to it;
The subject-matter of the award is capable of settlement by arbitration under the law of India;
The award is made by the arbitral tribunal provided for within the submission to arbitration or constituted within the manner specified by the parties and in conformity with the law governing the arbitration procedure;
The award has become final within the country during which it has been made, within the sense that it’ll not be considered intrinsically if it’s open to opposition or appeal or if it’s proved that any proceedings for the aim of contesting the validity of the award are pending;
The enforcement of the award isn’t contrary to the public policy or the law of India.
The Amendment Act has restricted the ambit of violation of public policy for international commercial arbitration to only include those awards that are:
Stricken by fraud or corruption,
Against the fundamental policy of Indian law, or
Conflict with the notions of morality or justice.
However, the said section lays down that whether or not the conditions mentioned above are fulfilled, enforcement of the award shall be refused if the Court is satisfied that:
The award has been annulled within the country within which it is made;
The party against whom it’s sought to use the award wasn’t given notice of the arbitration proceedings in enough time to enable him to present his case; or that, being under legal incapacity, he wasn’t adequately represented;
The award doesn’t pander to the differences contemplated by or falling within the terms of the submission to arbitration or that it has decisions on matters beyond the scope of the submission to arbitration: only 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 because the Court may decide.
Furthermore, if the party against whom the award has been made proves that under the law governing the arbitration procedure there’s the other ground, entitling him to contest the validity of the award, the Court may, if it thinks fit, either refuse enforcement of the award or adjourn the consideration its, giving such party a reasonable time within which to have the award annulled by the competent tribunal.
Filing of Enforcement Application
The enforcement of a foreign award in India is a two-stage process which is initiated by filing an execution petition.
- Initially, a court would determine whether the award adhered to the requirements of the Act.
- Once an award is found to be enforceable, it may be enforced like a decree of that Court.
However at this stage parties would have to be mindful of the various challenges that may arise such as frivolous objections taken by the opposite party, and requirements such as filing original/ authenticated copy of the award and the underlying agreement before the Court. A party seeking enforcement of a foreign award is not required to initiate separate proceedings – one for deciding the enforceability of the award to make it a rule of the Court or decree and the other to take up execution after that.
Procedure
The enforcement procedure for international awards has been set out in Part II of the A&C Act. An application for the enforcement of a foreign award is filed under Section 44 of the A&C Act.
Ex parte or on notice: At first instance, the respondent is notified of the proceedings as under the CPC.
Applicable Court: An application is filed before the principal civil Court of the original jurisdiction, including the High Court in the exercise of its ordinary original civil jurisdiction. This Court can decide on questions forming the subject-matter of the arbitration. The applicable Court does not include any civil court of a grade inferior to the principal civil Court, or any small claims court.
Limitation period: The limitation for filing enforcement proceedings for arbitral awards is three years. Once the enforcement is allowed, the award is decreed and
execution can effectively be done within 12 years from the date of the award.
Timing: The procedure should take (ideally) around six months.
Court fees: These vary for each Court and jurisdiction and depend on the value of the lawsuit.
Recourse: Appeals will be filed in the Court of appeal as under the A&C ACT.
Relevant Court for filing Enforcement Application
Section 47 of the Act, which is in Part II, whilst dealing with enforcement of specific foreign awards has stated that jurisdiction falls under a court within where the asset/person is located, against which/whom the enforcement of the international arbitral award is sought.
Documentary requirements
The documentary requirements are:
- An original award or copy of the award duly authenticated.
- The original arbitration agreement or duly certified copy of this.
- Such evidence is necessary to prove that the award is foreign.
If any of the documents are not in English, then English translation of the documents, certified as correct by a diplomatic or consular agent of the country to which it belongs to, or certified as accurate, is enough under Indian laws.
Judicial Interpretations
#1 The Supreme Court of India has dealt with the question of public policy in several cases. In the case of Shir Lal Mahal Ltd. vs Progetto Grano Spa [(2014) 2 SCC 433], it was held that, while considering the enforceability of foreign awards, the Court does not exercise appellate jurisdiction over foreign awards, nor does it enquire whether, while rendering a foreign award, some error has been committed by the foreign Court. Under Section 48(2)(b) of the Arbitration and Conciliation Act 1996, the enforcement of a foreign award can be refused only if such enforcement is contrary to:
- The fundamental policy of Indian law.
- The interests of India.
- Justice or morality.
Suppose objections raised by the judgment debtor do not fall into any of these categories. In that case, the foreign award cannot be held to be contrary to the public policy of India as contemplated under Section 48(2)(b) of the A&C Act.
#2 The Supreme Court of India in the case of Bharat Aluminium Company and Ors vs Kaiser Aluminium Technical Service, Inc. and Ors [(2012) 9 SCC 552)] dealt with, among other issues, whether Part I of the Arbitration and Conciliation Act 1996 (A&C ACT) applied to international arbitration.
The Constitution Bench of the Court held that an Indian court has no jurisdiction to set aside a foreign arbitral award under Section 34 (Part I), unless the arbitration agreement was made before 6 September 2012 (the date of the judgment). This judgment, famously known as the BALCO judgment, has made it clear that Indian courts have no jurisdiction to check the subject of the case when the seat of arbitration is outside India. Further in the Shir Lal Mahal Ltd case (above), the Supreme Court made it clear that Indian courts do not exercise appellate jurisdiction over foreign awards and the enforcement of a foreign award can be refused only if such enforcement is contrary to the fundamental policy of Indian law, the interests of India, or justice or morality.