Enforceability of Interim Awards of Foreign Seated Arbitrations in India

The altercation over the enforcement of foreign seated interim awards in India has been going
on for a long time. A domestic award refers to an award rendered in an Arbitration
proceeding seated in India. Part I of the Arbitration and Conciliation Act, 1996 [hereafter
“Arbitration Act”], applies to Domestic Awards. On the contrary, an award passed in an
arbitration, which is not seated in India, is a foreign award. A foreign award has been defined
in Section 44 of the Arbitration Act Chapter II of the Arbitration Act is applicable on Foreign
Awards.

There existed a conundrum on the treatment of applicability of Part I of the Arbitration Act
on foreign seated arbitrations. The Supreme Court of India, in the case of Bhatia
International v. Bulk Trading S.A. and Anr [hereafter “Bhatia International case”],
clarified that the provisions of Part I would apply even to foreign seated arbitrations unless
the parties agree otherwise. This was an attempt by the Court to provide clarity in whether
Indian courts can grant interim measures in foreign seated arbitrations. Through this
judgement, the question was answered in the affirmative. However, in the case of Bharat
Aluminium v. Kaiser Aluminium, the Apex Court, overruling the judgement of Bhatia
International, held that Indian courts cannot intervene in case of arbitrations seated outside
India.

The stance on this question of law was changed again, through the 2015 Amendment to the
Arbitration Act, which clarified, under Section 2(2) of the Act that the provisions of Section
9, 27 and Section 37(1)(b) and (3) shall apply to International Commercial Arbitrations,
unless the parties agree otherwise, and the awards of such arbitrations shall be enforceable
and recognised under Part II of this Act. Thus, reinstating the position taken by the Supreme
Court in Bhatia International, the legislature sought to clarify that Indian courts can intervene
even in foreign seated arbitrations, for the purposes of granting interim measures. The
conditions applicable to this rule are:

1. The Parties have not explicitly excluded the applicability of Part I of the Arbitration
Act and
 2. The Arbitral award should be made in such a place that is enforceable and recognized
under Part II of the Act 1996 i.e. the award must be made in a country that is a party
to the New York Convention or Geneva Convention and must be recognized by the
Central Government of India.

This blog post envisages two situations, associated with the enforcement of foreign seated
awards in India:
1. Interim measures granted by Indian courts, under Section 9.
2. Interim measures granted by an arbitral tribunal or emergency arbitrator

Interim measures granted by Indian Courts

By the virtue of the amendment brought to the Arbitration Act, in 2015, a party in an
International Commercial Arbitration, can now approach Indian courts for granting interim
measures, to protect their interests. This has also been reiterated by the Apex Court in the
case of PASL Wind Solutions v. GE Power. Furthermore, Section 2(2) provides that such
an award shall be enforceable under Part II of the Act. Therefore, its treatment will be
similar to a foreign award, and not a domestic award. Thus, interim award rendered by an
Indian Court, under Section 9, in international commercial arbitration, may be enforced
under Section 48 of the Arbitration Act.

Interim measures granted by a foreign seated Arbitral Tribunal or emergency

arbitrator

The Indian Arbitration Act does not have any provision corresponding to Section 17H of
the UNCITRAL Model Law, which provides that an interim measure by an Arbitral
Tribunal shall be recognised as final and binding, and subject to anything provided on the
contrary, it can be enforced before a competent court, irrespective of the country where it
was issued. This, void in Indian law was recognised by the Delhi High Court in the case of
Raffles Design International v. Educomp Professional Education. The court held that an
award delivered by an emergency arbitrator in a foreign seated arbitration is not enforceable
in India, as our law does not have a provision corresponding to Section 17H. However,
since the Arbitration Act does not distinguish between interim awards and awards rendered
at the final stage, under Section 44, it can be safely concluded that Section 44 also
envisages interim awards. Consequently, such an award can be enforced under Section 48
of the Arbitration Act.

The question of enforceability of an arbitral award rendered by an emergency arbitration in

an Indian-seated arbitration has been in the limelight again after the Supreme Court gave its
verdict in the case of Amazon v. Future Retail [hereafter “Amazon case”]. The court put
the rest the debate which had been going on for a long time, holding that in arbitrations
seated in India, an award rendered by an emergency arbitrator, can be enforced in India
under Section 17 of the Act. However, the court did not deal with the aspect of emergency
arbitrators’ award rendered in a foreign seated arbitration proceeding. This may also be
because Section 17 does not deal with foreign seated arbitrations. However, if we were to
follow the same reasoning given by the court given in the Amazon case, the enforcement of
such awards should also be recognised under the regime of the Arbitration Act, to uphold
party autonomy. Thus, there is a need for either, the courts to rule on this point of law, or
the legislature to amend the Arbitration Act, and make it in line with the Model Law, and
recognise emergency arbitrations in domestic as well as International Arbitrations.

Conclusion and Analysis

There is a need to bring legislative amendments to widen the scope of a few provisions of
the Arbitration Act. Although Section 2(1)(c) of the Arbitration Act provides that an
Arbitral Award also includes an interim award, the provision does not apply to foreign
seated arbitrations. Thus, we either need to expand the applicability of Section 2(1)(c) to
foreign seated arbitrations, or amend the definition under Section 44 of the Arbitration Act,
to also include interim awards. This will bring to an end, the skepticism around the
enforceability of foreign seated interim awards in India. In order to move closer to
achieving its goal of becoming an arbitration hub, India also needs to give recognition to
awards rendered by emergency arbitrators. This will uphold party autonomy and also
encourage parties to chose India as their seat of arbitration. These changes to the present
Arbitration regime, will aid in achieving the objectives of the Arbitration Act, which is
speedy dispute resolution.