JEMTEC SCHOOL OF LAW
(Affiliated to Guru Gobind Singh Indraprastha University, New Delhi)
ENFORCEMENT
OF
FOREIGN AWARDS
PRESENTED BY:- PRESENTED TO:-
HARSHPREET KAUR MS. AKANSHA GUPTA
35125503819 V ‘B’
INTRODUCTION
An arbitral award refers to the decision of an arbitral tribunal, whether in a domestic
or international arbitration, including any interim awards thereunder. In India,
enforcement and execution of arbitral awards are governed both by the Arbitration
and Conciliation Act, 1996 and the Code of Civil Procedure, 1908. This article
aims to look at the manner and procedure by which these arbitral awards, which are
passed or laid down outside our territorial limits, are enforced in India. The process
for the same is one that is mired in complexities and takes a lot of time to be enforced
and as shall be seen below, been muddled by judicial decisions on the matter.
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Historical
Background
While tracing down the path of development in the field of “enforcement” and “recognition” of
foreign arbitral award, India had two statutes i.e., the Arbitration (Protocol and Convention)
Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961 to deal with it.
The Arbitration (Protocol and Convention) Act, 1937 was an offspring of the Geneva Protocol,
1923 and the Geneva Convention, 1927. Whereas, the Foreign Awards (Recognition and
Enforcement) Act, 1961 came into picture as a result of the New York Convention, 1958.
The International Chamber of Commerce (ICC) formulated an International Convention for
smooth implementation of arbitration clause which used to be mentioned in definitive agreements .
The Arbitration Act, 1996 was enacted in consonance with the UNCITRAL Model Law and Rules.
Note that Part II of the Arbitration Act, 1996, deals with enforcement of a foreign award in India.
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Enforcement of Awards under the
Arbitration and Conciliation Act, 1996
As the Arbitration and Conciliation Act of 1996 is the prime legislation behind the
enforcement of foreign awards.
One of the declared objectives of the Arbitration and Conciliation Act, 1996 is that every
final award is to be enforced in the same manner as the decree of the Indian court would be.
The Act has two parts- Part I and Part II, each of which deal with the enforcement of
different type of foreign arbitral awards.
Part I, modelled on the UNCITRAL Model Law, provides for the enforcement of arbitral
awards that are not covered under the ambit of either the New York or the Geneva
Conventions.
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Contd.
As laid down by the apex Court, Part I of the Act applies to foreign awards that are
governed 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 patently illegal.
Part II of the Act is in tune with the provisions of the New York Convention. As per
Section 46 of the Act, the provisions of Part II applies if the arbitral award is in pursuance
of arbitration agreement under the Convention and the award is made in those States or in
within the territorial limits of such place that has been notified by the Government of
India.
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Differences between of ‘Foreign Award’ in
The New York Convention, 1958 and
The Geneva Convention, 1927
SECTION 44 OF THE NEW YORK SECTION 53 OF THE GENEVA CONVENTION,
CONVENTION, 1958 1927
The words ‘arising out of legal relationships, whether Section 53 failed to utilise these words, instead of this it
contractual or not’ as used in Section 44. use “relating to matters considered as commercial”.
The definition of ‘Foreign Award’ as given in Section 44 But Section 53 is devoid of this beginning
under the NYC (1958) begins with the non–obstinate clause
i.e., ‘under the context otherwise requires’.
Section 44 insists that the agreement must be in writing. Section 53 simply talks of agreement simpliciter, omitting
the words ‘in writing’.
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Procedure for Enforcement of Awards
It is upon the losing party to object to the arbitral award and file an application for setting
it aside.
However, if the objections to the award are not sustained or if no objections are filed
within the time limit, the award itself becomes enforceable as a decree of the court.
An award can be challenged and set aside only by way of an application under Section 36
of the Act and only the basis of the circumstances listed under it.
An application for setting aside an award must be made within three months of receipt of
the award by the applicant subject to a further extension of 30 days on sufficient cause
being shown. An application beyond this period is time-barred and further delay cannot be
condoned.
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Procedure for Enforcement
of Awards
For the purposes of the Arbitration and Conciliation Act, 1996, ‘court’ means the principal Civil
Court having original jurisdiction to decide the question forming the subject matter of the
arbitration if the same were a subject matter of a suit. The aggrieved party can, thus, bring its
application to set aside the award before the court where the successful party has its office or
where the cause of action in whole or in part arose or where the arbitration took place.
A foreign award will conflict with public policy only if it:
was induced by fraud or corruption;
contravenes the fundamental policy of Indian law; or
contravenes the basic notions of morality and justice.
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CONCLUSION
To conclude, it can be stated that the Indian Legal System does indeed have a
well laid down and established the procedure for the enforcement of foreign
awards in India. However, there is a rising need to reform the same in order to
make it more business-friendly and lessen the burden on our already
overworked judiciary.
At this juncture, it must be understood that although there
exists a procedure for the enforcement of foreign arbitral awards in India, such
is not a smooth and efficient one and has come in for severe criticism.
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Thank you
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