RECOGNITION AND ENFORCEMENT

OF ARBITRATION AGREEMENT AND

FOREIGN ARBITRAL AWARDS
By Dr. Anuttama Ghose
 ARBITRATION AND ARBITRAL AWARDS

• Alternative dispute resolution (ADR) methods have become the most favourable procedures to access
justice in all civil and commercial matters in the last few years due to the high pendency of cases in India.
• An arbitration award is the award granted by the arbitrator in their decision. This award can be money
one party has to pay to the other party. It can also be a non-financial award, such as stopping a certain
business practice or adding an employment incentive.
• Domestic awards are governed by Part I whereas foreign awards are governed by part II of the Arbitration
and Conciliation Act of India.
• Domestic Award: Section 2 to 43 of the Act.
• Foreign Award: Section 44 of the Act.
 WHAT DO YOU UNDERSTAND BY
RECOGNITION AND ENFORCEMENT OF AN
AWARD?
• RECOGNITION: When a court recognizes an award, it acknowledges that it is
valid and binding, thereby giving it an effect similar to that of a court judgment.
The award has an official legal status so the issue determined by the award
usually cannot be relitigated or re-arbitrated.

• ENFORCEMENT: On the other hand, means using whatever official means

available to carry out any mandate provided in the award.
 NEW YORK CONVENTION, 1958
• The convention was adopted by the United Nations on June 10, 1958 and
established rules which are aimed at granting recognition and enforcement of
arbitral awards.
• Article III of the convention states that contracting states “shall recognize
arbitral awards as binding and enforce them.
• This convention was an outcome of the Geneva Protocol on Arbitration Clauses
of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards
of 1927.
• The initial initiative was taken by ICC (International Chamber of Commerce) in
1953 followed by ECOSOC (UN Economic and Social Council) in 1955.
 OVERVIEW OF THE PROVISIONS
• Requirements for enforcement (article 1.1)
• Arbitral awards made in different states and not the requested state
• Award not considered as a domestic award in the requested state.
• Recognition and enforcement of an award may be refused by a local court following a challenge by a party on the
grounds stated in Article V(1) of the New York Convention.
• Incapacity or invalidity of the agreement to arbitrate under the applicable law;
• Absence of the proper notice of the appointment of the arbitrator or the arbitration proceedings or otherwise inability to
present one’s case;
• The tribunal’s incompliance with the mandate conferred to it by the parties;
• The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the
parties or the law of the place of arbitration; or
• The award has not become binding or is not final.
• Article V(1) protects the interests of the award-debtor. The court may invoke ex officio the following grounds stated
in article V(2) that serve to protect the vital interests of the forum state:
• Non-arbitrability of the subject matter of the dispute; or
 INTERNATIONAL PUBLIC POLICY VIS-À-VIS
DOMESTIC PUBLIC POLICY: STUDY OF THE
COMPARATIVE JURISPRUDENCE
• Article V (2) of the New York Convention, has a more limited scope than “domestic public policy”.
• Domestic public policy refers to the rules of law and morality that are established by a state’s constitution or other sources
of law.
• An Indian court may choose not to follow a foreign arbitral ruling on the grounds of public policy if it would be in
conflict with:
• (i) fundamental policy of Indian law; or
• (ii) the interests of India; or
• (iii) justice or morality” (Renusagar Power Electric Company V. General Electric Company, AIR 1994 SC 860).

• United world v. Krasny Yakor,, A43-10716/02-27-10 (2003)

• Dalmia Dairy Industries Ltd V. National Bank Of Pakistan, 2 Lloyd’s Rep 223 (1978).
 SCOPE OF SECTION 34 OF THE ARBITRATION
AND CONCILIATION ACT, 1996 (INDIA)
• The English Arbitration Act of 1889 served as the model for the first Indian Arbitration Act of 1899.
After the Indian Arbitration Act of 1940, the United Nations Commission on International Trade Law
(UNCITRAL) Model Law on International Commercial Arbitration (1985) served as the basis for the
Arbitration and Conciliation Act of 1996 which was passed by the Indian Parliament.
• 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.
• Section 34 of the 1996 Act makes reference to both Section 30 of the Arbitration Act of 1940 and
Article 34 of the UNCITRAL (United Nations Commission on International Trade Law) Model Law
on the subject of annulling an arbitral judgement.
• The Court may vacate an arbitral award for a variety of reasons, including the parties’ incapacity to
arbitrate, the agreement’s invalidity, the lack of notice to the other party, and the dispute’s
expansion into a subject outside the scope of the arbitration clause, as listed in Section 34(2)(a) of
the Arbitration and Conciliation Act, 1996.
• Parties to the agreement either are incapable of being parties to the agreement for reasons such as law
applicable for the award vis a vis the Indian law.
• The party was not given adequate notice to present his case as regards the arbitration proceedings or the
appointment of the arbiter.
• Award deals with matters beyond the scope of the arbitration agreement.
• The composition of the arbitral authority or procedure was not in conformity with the agreement of the
parties or the law of the land where the arbitration took place.
• The award is not binding on the parties or has been set aside by a competent authority where the award
was made.

• Case: Adarsh Kumar Khera v. Kewal Kishan Khera (2007).

• Case: India Yamaha Motor Pvt. Ltd. v. Divya Ashish Jamwal (2019)
 ENFORCEMENT OF FOREIGN AWARDS
PROCEDURE
• 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.
The different types of awards which are enforceable include money award, award containing injunction and a declaratory
award.
TIME LIMIT:
Any application filed under Section 34 of the Act for setting aside the award must be made within 3 months from receipt of
the same. This period can be extended by the court by a further period of 30 days on a sufficient cause being shown, but not
thereafter. The court normally allows a wide scope to the meaning of what constitutes ‘sufficient cause’ and if it is convinced
of the genuineness of the delay in filing an, the delay is condoned.