Open Access Research Article
CHALLENGES AND BEST PRACTICES IN ENFORCEMENT OF FOREIGN ARBITRAL AWARD UNDER NEW YORK CONVENTION: AN INDIAN PERSPECTIVE
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Article Details
“CHALLENGES
AND BEST PRACTICES IN ENFORCEMENT OF FOREIGN ARBITRAL AWARD UNDER NEW YORK
CONVENTION:
AN INDIAN
PERSPECTIVE”
AUTHORED BY - DIVYA MAAN & AYUSH
DADHICH
In today’s globalization world
arbitration plays a role, in resolving common conflicts that arise from
international contracts. Its flexibility, speed and impartiality make it the
preferred choice for addressing disputes over litigation which tends to be time
consuming, expensive and offers limited remedies. In a country like India a
developing nation with massive foreign direct investment in recent years,
arbitration is encouraged as a means of resolving disputes. This is because
there is always a need for a faster dispute resolution process when it comes to
clashes arising from contracts. However, enforcing an arbitration award, in one
country after it has been announced in another still poses challenges.
This research paper embarks on a
journey to explore the intricate realm of enforcing “foreign arbitral awards”
in India, with a focus on the New York Convention. India being a signatory to
it has right and obligation we are going to have an overview on these rights
and responsibilities through Indian legislative statutes and their amendments.
The execution of foreign arbitration awards according to the Geneva and New
York Convention is governed by the “Arbitration and Conciliation Act, 1996”
(hereinafter referred to as "Act").
Paper will focus on meaning and
enforcement of “foreign award” taking essence from the legislative act we will
further examine the essentials for enforcement of foreign arbitral award, its
registration and limitation period. This paper also discusses the procedure for
the enforcement of the foreign award. This paper explores obstacles
hindering the execution of foreign awards in India. It further highlights the influence
of public policy doctrine on international awards, along with an analysis on
the role of Indian judiciary their recent trends and guidelines by the apex
court through various landmark judgments. Finally, it offers proposals for how
to improve the arbitration system in general and solve the challenges by a
comparative analysis of enforcement of arbitral award in India to the other “New
York convention” signatory which will provide different perspective of
enforcing foreign award with minimum friction.
Keywords-
Arbitration, New York convention, Foreign Award, Enforcement, Judiciary
INTRODUCTION
Alternative Dispute Resolution (ADR)
has been part of our country's history, aiming to make justice accessible and
efficient. Over time, people have experimented with various procedures to
simplify the process and resolve disputes, including family and group
conflicts. In 1982, India introduced Lok Adalat, evolving into the Arbitration
Act of 1940 and later transforming into the “Arbitration & Conciliation
Act, 1996”, adapting to the dynamic global system. While domestic arbitration
awards are well-regulated under Indian law, challenges arise when enforcing
awards from foreign countries. The domestic courts have clear jurisdiction over
domestic awards, but international commercial arbitration presents a different
scenario. This report observes the enforcement trends in India, emphasizing the
country's efforts to become a leading arbitral jurisdiction in South-East Asia.
It discusses the general history of foreign arbitral awards, the competent
authorities handling their enforcement, the procedures involved, and the
limitations in the enforcement process. However, it points out that the
enforcement procedure lacks certain safeguards needed for efficiency.
Enforcing foreign arbitral award
demand collaboration on a national and international level, with the
international sphere governed by the “New York Convention” and the domestic
sphere by the “Arbitration & Conciliation Act, 1996”. Despite this, the
enforcement procedure needs enhancements for greater efficiency. The conclusion
suggests that India is on the path to a new era in international arbitration,
backed by sincere efforts from the government and evolving approaches from
national courts.
Alternative Dispute Resolution (ADR)
has been a part of our country's experience for a long time, dating back to
ancient times. Throughout legal history, people have tried various ways to make
justice more accessible, affordable, and convenient. Ancient dispute resolution
systems played a significant role in resolving family, group, and minor
disputes.
In 1982, India introduced Lok Adalat,
a form of dispute settlement court, which later evolved into the Arbitration
Act of 1940. With the changing landscape of globalization, it transformed into
the “Arbitration & Conciliation Act, 1996”. While domestic arbitration
awards are well addressed under Indian law, challenges arise when enforcing
awards from foreign countries. Some states may hesitate to recognize awards
from foreign legal proceedings.[1]
In international commercial
arbitration, the process of recognizing and enforcing awards differs from domestic
arbitration. This paper concludes with analysis on the trends in enforcement in
India, suggesting that the country is on its way to becoming a leading arbitral
jurisdiction in South-East Asia. The efforts of the Indian Government and the
evolving approach of courts toward arbitration matters indicate a positive
shift.
The report covers the general history
and definition of foreign arbitral awards, the competent authority for
enforcing these awards, the procedures involved, and the limitations in the
enforcement process. It emphasizes the need for both national and international
cooperation in enforcing foreign arbitral awards.
In conclusion, the paper suggests
that with the right approach, India has the capacity to grow into a significant
force in international arbitration, backed by government's efforts and the
changing stance of national courts.
NEW YORK
CONVENTION
The “New York Convention”, officially
“The Convention on the Recognition and Enforcement of Foreign Arbitral Awards”,
is a crucial international treaty adopted on June 10, 1958, and enforced from
June 7, 1959. This treaty is a big deal in the world of international trade
law, often seen as a cornerstone in the realm of global arbitration. The
convention requires courts in its member countries to honour arbitration
agreements when dealing with disputes covered by such agreements. Additionally,
these courts are obligated to recognize and enforce awards granted in other
countries, with only a few specific exceptions. Currently, 156 countries have
signed up to be part of this convention.
Primarily, it aims to boost positive
business relationships between countries and foster cooperation among states.
Importantly, it helps ease the burden on states when deciding which laws to
apply or which countries' procedures to follow in arbitration processes. Fairness
and efficiency in international arbitration are greatly enhanced by the
"New York Convention," which establishes a minimal degree of control
that member governments can exercise over arbitral rulings.
A convention for the recognition and
enforcement of awards from international arbitration has been developed by the
United Nations (UN). This agreement permits denunciation procedures,
considerations for federal states, and extension declarations. On the ninetieth
day after the third document of ratification or accession was deposited, it
came into effect. Article I of the UN convention deals with the recognition and
execution of arbitration awards made in a country other than the one where
enforcement is sought. This covers disputes involving individuals or companies,
whether they are formal or informal.
Every state engaged must recognize
written agreements when parties agree to arbitrate disputes as per Article II
of the UN convention. The requirements for acceptance and execution must not be
more onerous than those governing domestic arbitration verdicts. The party
requesting recognition and enforcement must present the court with the original
agreement as stated in Article II as well as an original or certified replica
of the award.[2]
If the party requesting the
application of Article V of the UN convention can provide evidence of specific
reasons, such as the parties' incapacity, the agreement's invalidity, inadequate
notice, the arbitration's scope being exceeded, the arbitral authority's
improper composition, the award's non-binding nature, or its suspension or
revocation by a competent authority, the request may be denied.
KEY
FEATURES OF NEW YORK CONVENTION
1. Global Handshake for Business
Harmony- The Convention is like a worldwide friendship pact for countries
involved in international trade. It's all about promoting healthy business
relations and reducing the hassle of figuring out which rules to follow or whose
procedures to use when dealing with cross-border disputes.
2. Foundation Stone of International
Arbitration- Think of the Convention as the cornerstone of international
arbitration. It sets the stage, laying down the rules that participating
countries agree to follow when it is about recognizing and enforcing arbitral
awards made outside their borders.
3. Minimum Control, Maximum Cooperation-
It establishes a basic level of control that countries can exert over arbitral
awards and agreements. It's not about imposing strict rules but ensuring a fair
and cooperative environment where everyone plays by the same rules.
4. Promoting Consistency and Order - The
Convention acts as a referee, making sure that when a country agrees to
arbitration, it follows through. It helps avoid chaos and promotes consistency,
making the enforcement of foreign awards a smoother process.
5. Reducing Decision-Making Burden on
States- Instead of burdening countries with deciding which laws to enforce or
which country's procedures to follow during arbitration, the Convention steps
in. It's like a helpful guide, streamlining the decision-making process.
6. Recognition and Enforcement- One of
the Convention's star features is its focus on making sure that if parties
agree to arbitrate, the resulting award should be recognized and enforced. This
ensures that the arbitration process isn’t just a formality but a meaningful
and binding resolution.
7. Protecting Limited Exceptions -While
the Convention encourages enforcement, it's not a blind supporter. There are
specific limited exceptions where a country can say, "Hey, we won't
enforce this award." These exceptions provide a safety net, ensuring
fairness and preventing misuse.
ENFORCEMENT
AND RECOGNITION OF FOREIGN AWARD UNDER NEW YORK CONVENTION
The initial step in dealing with
foreign arbitral awards involves recognizing them, as described in Article 1 of
the convention. This recognition comes with the responsibility of enforcing
these awards, as detailed in Article 3. To initiate the process, a state seeking
enforcement must present specific documents to the court, and it's up to the
court to ascertain whether it falls within the convention's scope.
Enforcing foreign awards under the “New
York Convention” is governed by Sections 44 - 52 of the “Arbitration and
Conciliation Act 2015”.
To ascertain whether an award is
subject to enforcement under this convention, two conditions must be met:
1.
The
country where the award originated must be a signatory to the “New York
Convention”.
2.
The
award should be granted within the territorial jurisdiction of other
contracting nation, which is officially recognized by the Central Government.
The process of enforcing a foreign
award begins with filing an execution petition. The court then carefully
examines whether the requirements outlined in the act are strictly followed. If
the award is deemed to comply with the law, it can be enforced similarly to a
court decree, as per Section 49 of the act.
However, parties involved should be
cautious as challenges may arise at this stage, including objections from the
opposing party. Certain prerequisites must be met, such as submitting the
original or duplicate copy of the award and the underlying agreement to the
court.
In the action of filing an execution
petition, the opposing party may raise objections to the enforcement of an
award, as per Section 48 of the act. This means the process involves a thorough
evaluation by the court, ensuring that all necessary conditions are met before
the award can be enforced. States signing this convention commit to recognizing
written agreements for arbitration and ensuring their enforcement. The
convention mandates that there should be no stricter conditions or higher fees
for recognizing foreign arbitral awards compared to domestic ones.
To seek recognition and enforcement, the
original award and the written agreement must be provided by the party making
the application. Refusal may occur only under specific conditions, such as
incapacity of parties, improper notice, or decisions beyond the arbitration's
scope. Additionally, the subject matter must be capable of settlement through
arbitration, and enforcement should not go against the country's public policy.
The convention allows for extension
declarations, considerations for federal states, and a process for denunciation.
On the "ninetieth day," following the deposit of the third document
of ratification, it became operative. The United Nations Secretary-General is
in charge of notifications, and the convention, available in multiple languages,
is stored in the UN archives.
PROCEDURE
FOR ENFORCING AN FOREIGN
ARBITRAL
AWARD
It's
crucial to be familiar with the rules of procedure when enforcing foreign
arbitral awards. The party that comes out victorious needs to navigate these
provisions to succeed. This chapter delves into the significant aspects of the
rules of procedure.
Firstly,
it explores the provision that governs these rules — whether they are dictated
by national law. Second, it looks at the procedures that need be followed by
the victorious party in order to enforce a “foreign arbitral award”. Thirdly,
it describes the steps an applicant must take in order to make such an award
legally enforceable. The ultimate goal is to ascertain whether the current
procedural regulation provisions are enough to guarantee the execution of all
types of foreign arbitral verdicts in accordance with relevant treaties in
India.
From
a legal standpoint a "foreign judgment" is any judgment by a court
outside the jurisdiction of India that was neither founded nor upheld by the union
Government, according to Section 2(6) of the CPC. Whether or not the nation of
origin is reciprocating determines whether or not foreign judgements may be
enforced there. The execution process can be started in India with a decree
from a reciprocating nation. A new lawsuit must be launched in the appropriate
Indian court in order to get a decree from a nation that does not reciprocate.[3]
In
a notable case, “Union of India v. Hardy Exploration and Production (India) Inc”,
the court addressed the issue of determining the "seat" of
arbitration when the agreement specifies "venue" but not the
"seat." This raised questions about the basis and principle for
determining the seat, crucial for applying the laws of a specific country in
post-award arbitration proceedings. The court suggested a larger bench review
due to conflicting decisions.
The
Supreme Court reversed the earlier rulings in “BGS SGS SOMA JV v. NHPC Ltd”., a
recent case. It made it clear that the arbitration venue is regarded as the
arbitration's seat unless the arbitration agreement says otherwise. This
emphasizes the importance of precision in arbitration agreements to avoid
ambiguity in determining the seat.
CONDITION
FOR ENFORCING AN FOREIGN
ARBITRAL
AWARD
Enforcing a “foreign arbitral award”
in India comes with specific conditions. As per Section 48(1), the award may
face obstacles if the opposing party can prove that the parties were unable to
fulfil the agreement due to legal reasons, or if the agreement itself was
invalid under the relevant laws. Another condition is if the tribunal that
issued the award did not conduct a fair trial. Furthermore, in the event that
the award extends beyond the parameters of the initial arbitration agreement,
that excess portion may be divided. Another obstacle is noncompliance with the
provisions of the arbitration agreement or the relevant legislation for the
nomination or composition of the arbitral authority. Moreover, enforcement may
be contested if the judgment has been stopped, annulled, or is not yet legally
binding in the nation where the arbitration was held.
Section 48(2) adds more criteria,
stating that a foreign award may be denied enforcement if the court in India
finds that the settlement of the award doesn't align with Indian arbitration
law or if the enforcement contradicts the public policy of India, applying in
cases of fraud, corruption, violation of the law, or contrary to fundamental legal
policies.[4]
It's important to note that while
Section 48 outlines grounds for refusal, it doesn't permit a detailed
examination of errors through an appellate inquiry. In the event that an
application is made to vacate or postpone the award, the court may decide to
postpone the enforcement decision and, if required, may require the party
requesting enforcement to furnish appropriate security. This ensures fair
process that adheres to the principles laid out in the law.
CHALLENGES
FOR ENFORCEMENT OF FOREIGN ARBITRAL AWARD IN INDIA-
Obtaining an arbitral ruling in your favour
from an overseas tribunal is just half the battle won; the other half lies in
seeing it through to implementation in India. Most arbitral awards are
voluntarily complied with. The issue arises when one party contests the award
and its enforcement becomes essential. In a number of instances, the opposite
party was unsuccessful to get a beneficial award enforced by an Indian court of
competent jurisdiction, even after receiving it.[5]
Such failure in enforcement might be
due to certain reasons such as award being challenged on grounds mentioned in
section 34(2)(a) and (b) of the act, Public Policy Doctrine, jurisdictional
issue and interpretational issue.
Public policy Argument
The most often exploited
justification for contesting the implementation of a foreign arbitral ruling is
public policy. A government may refuse to recognize and implement a foreign
arbitral ruling under the legal theory of "public policy" if doing so
would go against the core ideals and tenets of that nation's legal system. Have
elements such as
-
Fundamental
principle of law
-
protection
of rights
-
prohibition
of illegal activities
-
public
morality
-
safety
and security
The committee's report attempted to
restrict how public policy was applied, according to the NY convention. It is
important to understand how art.V.2 of the Convention undermines the
application of "public policy" in this context. Firstly, the word
"may" in the opening sentence allows the court to refuse without
having to, giving it discretion. Secondly, paragraph (b) makes it clear that
the award, as well as its recognition and enforcement, would be unlawful.[6]
“Public policy” meaning shift from
1996 act to 2015 amendment act in India-
The "public policy" was not
specified in the original 1996 Act. However, when it came to annulling or
declining to uphold arbitral awards—a topic we will cover in more detail in a
subsequent slide—Indian courts had a capricious understanding of public policy.
Significant modifications to the “1996
Act” were made by the “2015 Amendment Act”, one of which was a revision in the interpretation
of "public policy." The Act's Section 34(2)(b)(ii) addresses the
setting aside of arbitral awards and makes it clear that an award is against
Indian national policy only in the following situations:
1)
The award was made in a way that violated
section 75 or section 81, was influenced by fraud or corruption, or both;
2)
it goes against the core principles of Indian
law; or
3) It goes against the very fundamental ideas of justice or morality.
EVOLUTION OF
PUBLIC POLICY DOCTRINE
“Public policy”
doctrine had an interesting history before 1996 act after 1996 act and after
2015 amendment act, even today it is a much-disputed topic in Indian legal
system.
Held that the bar of public policy
will be attracted only when there is a violation of something more than Indian
Laws. The enforcement would be refused if the award is contrary to the
fundamental policy of Indian law or justice or public morality it was a pro
arbitration stand of judiciary even before 1996 act promote narrow
interpretation of public policy.[8]
2.
ONGC V. Saw pipes Ltd. 2003[9]
According to the ruling, any arbitral
decision that deviates from Indian statutes is "patently illegal" and
goes against "public policy." Contrary to the earlier Renusagar
decision, the meaning was widened by linking "patent illegality" to a
"error of law" and "public policy" to the unenforceability
of "public policy of India." In the arbitration community, this
division bench ruling expanding public policy was harshly and rightfully
criticized in the international commercial arbitration world.[10]
This judgement was followed in many cases
like Hindustan Zinc Ltd v. Friends Coal Carbonisation and many more.
3.
Shri Lal Mahal Ltd. V. Progetto Grano SpA [11]
This adopted a pro-arbitration
stance. The court determined that the interpretation of section 48(2)(b) of the
1996 Act would be consistent with what had been said in Renusagar about section
7(1)(b)(ii) of the Foreign Awards Act. As a result, the court determined that
section 48(2)(b) would only forbid the implementation of a foreign award if
doing so would violate either
1)
"The
fundamental policy of Indian law"
2)
"The
interests of India."
3)
“Justice
or morality”; moreover, the broader meaning of the term "public policy of
India" provided in section 34(2)(b)(ii), Saw Pipes, does not apply if an
objection is raised to the foreign award's execution under section 48(2)(b).
4.
The Law
Commission’s 246th Report and Western Geco
In 2014, the Law Commission of India
issued the 246th Report, recommending crucial amendments to the “Arbitration
and Conciliation Act, 1996”, with the objective of harmonizing Indian
arbitration practices with international standards. The recommendations
included restricting grounds for an award annulment on public policy to
violations of the “fundamental policy of Indian law or conflict with most basic
notions of morality or justice.” Furthermore, the report introduced a new
ground for setting aside domestic arbitration awards based on patent illegality
which was criticised as it should be era of pro arbitration not broadening the
scope of grounds for challenging the foreign arbitral award. The proposed amendment
to Section 28(3) aimed to replace 'in accordance with' with 'having regard to'
to overturn certain precedents. The subsequent Western Geco case[12]
in 2014 expanded court intervention, incorporating the Wednesbury principle
into 'fundamental policy of Indian law.' Associate Builders in the same year
affirmed Western Geco, emphasizing public policy grounds for setting aside
awards. Responding to criticism, the Law Commission issued a supplementary
report in 2015, condemning Western Geco's allowance of award reviews on merits
and recommending an additional explanation to prevent such reviews.[13]
This ultimately constitute to the pro arbitration amendment act of 2015.
5.
Vijay Karia & Ors v. Prysmian Cavi E Sistemi SRL & Ors (2020)[14]
Held that
it would not be against the fundamental policy of Indian law to enforce a
foreign award that violates a mandatory provision of the “Foreign Exchange
Management Act, 1999” (which Act replaced and repealed the Foreign Exchange
Regulation Act, 1973). This was a very pro-arbitration stance on the part of
the government.
Jurisdictional Issue in enforcement of foreign
arbitral award in India
The jurisdictional challenges in the
acceptance of foreign arbitral awards in India have undergone significant
scrutiny, marked by legislative amendments and pivotal judicial decisions. This
part of paper delves into the evolving landscape shaped by key judgments and
statutory modifications, focusing on the interplay between “the Arbitration and
Conciliation Act, 1996”, and international practices.
The study begins by examining
landmark judgments that have set the tone for jurisdictional debates. Notable
cases, including Union of India v Reliance Industries Ltd, delineate the
exclusion of Part I of the Arbitration Act 1996 when the juridical seat is
outside India or when non-Indian law governs the arbitration agreement. The
implications of these decisions on agreements predating September 6, 2012, are
explored, drawing insights from Balco II judgment, which clarified the
application of Part I to foreign-seated arbitrations entered before the
specified date that part 1 of the act will be applicable to the parties
involved in foreign seated cases unless parties themselves expressly or
impliedly excludes it.[15]
There were the conflicting decisions
in the Addhar judgment versus the Sasan judgment, wherein the Supreme Court
grapples with determining whether Indian parties can select a seat of
arbitration outside territorial jurisdiction of India without violating public
policy. The Madhya Pradesh High Court's departure from TDM Infrastructure[16]
and Addhar Mercantile in favour of Atlas Export Industries[17]
adds layers to the discussion, emphasizing that the mere foreign seat selection
does not automatically nullify the arbitration agreement.[18]
In wake of “Sasan Power Ltd. v. North
American Coal Corporation India Pvt. Ltd”,[19]
this paper elucidates the SC’s approach to the doctrine of public policy
concerning Indian parties opting for foreign seats. It examines the Court's
reluctance to conclusively decide on the issue, emphasizing the nature of the
agreement rather than directly addressing whether two nationals can participate
in foreign-seated arbitrations. The analysis extends to the Delhi HC’s stance
in “GMR Energy Limited v. Doosan Power Systems India Private Limited”,
reinforcing the autonomy of arbitration agreements and their independence from
the underlying substantive contracts.
The resurgence of jurisdictional
challenges in the Venture Global case, previously set aside by BALCO. The
dissenting views within the Supreme Court and the subsequent referral to a
larger bench underscore the complexity of issues surrounding enforcement and
jurisdiction, calling for a nuanced examination. It was examined if the seat is
outside India, Indian courts have limited jurisdiction in reviewing foreign
arbitral awards. This case clarified that Indian courts cannot review the
merits of an award made in a foreign-seated arbitration.
Procedural
issue in enforcement of foreign arbitral award in India
The procedural issue in the
enforcement of foreign arbitral awards in India revolves around stages of
enforcement and the computation of the limitation period for filing
applications for enforcement. The conflicting decisions by Indian courts have
created uncertainty regarding whether a “foreign arbitral award” ought to be
seen as a decree right away or wait until the court is convinced that it can be
implemented.
Three phases make up the
"Arbitration and Conciliation Act, 1996" process for enforcing a
foreign award. Initially, the party whose favour the award is delivered must
file an application under Section 47 of the "Arbitration and Conciliation
Act," together with all necessary supporting paperwork. Second, in order
to raise a defense in line with Section 48 of the legislation, the party
receiving the award must provide all pertinent evidence. Lastly, if the court
is convinced that the award is enforceable in light of all the facts put out by
the parties, it will carry out its implementation under Section 49 of the act. Which
is a lengthy when we compare it to arbitration hub Singapore
Sec. 49 of the “arbitration and
conciliation act” states that a foreign award, upon court satisfaction, shall
be deemed a decree here neither the” arbitration and conciliation act, 1996”
nor the “limitation act, 1963” has expressly provided the limitation period for
enforcement applications for determining the limitation Articles 136 and 137 of
the “Limitation Act,1963” have been referred. Art.136 stipulates a 12-year
statute of limitations for the implementation of a decree, while Art. 137
establishes a 3-year statute of limitations for any application that lacks a
restriction clause. Whether a foreign award should be regarded as a decree
right away determines whether a three-year or twelve-year time bar applies to
an enforcement application.
In “Noy Vallesina Engineering Spa v.
Jindal Drugs”, the Bombay High Court[20] adopted
a two-stage approach to enforcement, using Article 137 of limitations act during
the first three years and Article 136 if the award is taken to be a decree.
Same Bombay HC after taking into account the cases of Thyssen Stahlunion GMBH
case[21]
and Fuerst Day Lawson case[22],
the court in “Imax Corporation v. E-City Entertainment”[23] adopted
a different stance and that an enforcement petition falls under Article 136 (12
years). The Foreign Awards Act, 1961 was repealed, and its provisions were
compared with those of the Act, which succeeded it, by the apex Court of India
in the Thyssen case. The Foreign Awards Act required that a decree come first,
but the new Act branded a foreign award as a decree first, the Supreme Court
observed that awards are already enforceable decrees that can be carried out in
a single action. As a result, the Bombay High Court in Imax determined that in
order to further the Act's goals, the word "stamped" must be
interpreted as "regarded," and a foreign arbitral award must be
treated as a decree which was a pro arbitration move by the HC.[24]
The Supreme Court recently held in “Bank
of Baroda v. Kotak Mahindra Bank” that the statute of limitations for carrying
out a foreign decree under Section 44A of the Civil Procedure Code 1908
("CPC") is controlled by the reciprocating country's limitation law,
even though the court has not directly addressed the issue. It was noted that
Article 136 of the Limitation Act is not relevant because it is limited to
court orders in India. For three reasons, however, this judgement is not
applicable to arbitral verdicts made abroad. First off, even though an
arbitration decision is enforced as a decree, the CPC clarifies that it is not
included in a foreign decree due to the several legal realms in which
arbitration operates lastly, the reciprocity principle—which cannot be used in
the event of arbitral awards—was employed by the Supreme Court. Lastly, a foreign
award is not considered a "foreign" decree, but rather one that has
already been labeled as such.[25] Hence required a strong
framework by legislation with specified limitation period which shall comply
with the Article III of New York Convention and achieve the object of speedy
foreign arbitral enforcement and reduce supervisory jurisdiction of court.
Suggestion
and Conclusion
In
summary, India's experience with international arbitration, especially with
regard to the execution of judgments made by foreign arbitral, illustrates a
complicated situation. A deliberate attempt was made to expedite domestic
arbitration with the transition from Lok Adalat to the current “Arbitration
& Conciliation Act, 1996”. The enforcement of international awards is
impeded by intricate procedural details, jurisdictional complications, and
varying interpretations of "public policy."
The
regulatory framework is framed by the convergence of national and international
cooperation, which is controlled by the “New York Convention” and the “Arbitration
and Conciliation Act, 1996”. While admitting progress, India also recognizes
inefficiencies in the enforcement process and hopes to become a prominent
arbitral jurisdiction in South-East Asia.
The
enforcement of foreign arbitral awards in India presents significant
challenges, requiring a nuanced examination of legal principles and evolving
jurisprudence. Public policy challenges have evolved over time, with the 2015
Amendment Act attempting to provide a more specific definition of "public
policy" to limit its application and reduce abuse. However, lingering
debate and conflicting judgments indicate the need for a more unified and
clearer interpretation.
Jurisdictional
complexities in enforcing foreign arbitral awards have been scrutinized, marked
by legislative amendments and pivotal judicial decisions. The “Arbitration and
Conciliation Act, 1996”, and international practices, especially regarding the
exclusion of Part I when the juridical seat is outside India, add layers of
complexity. Conflicting decisions in cases like Addhar versus Sasan highlight
the need for more clarity and consistency in determining if two Indian parties
are allowed to choose an arbitral seat beyond India without violating public
policy.
Procedural
hurdles in the implementation of foreign arbitral awards in India revolve
around the stages of enforcement and the determination of the limitation
period. The need for a streamlined and efficient procedure, akin to arbitration
hubs like Singapore, becomes apparent.
Suggestions
for improvement include adopting a uniform enforcement system with better
clarity, aligning with municipal laws, and fostering a 'volksgeist' or common
consciousness among signatory member countries. An effort was made, however it
was futile where The International Law Association (ILA) made a number of
suggestions about public policy concerns related to the recognition and implementation
of foreign awards in a report that was given at its seventeenth conference,
which was held in April 2002 in New Delhi. But none of the contracting
governments agreed on these proposals, thus they were dismissed as unimportant[26].
Hence such reform and proposal should be appreciated at Global level. Legislative
reforms should be considered to provide clearer guidelines, and provisions or
precedents that limit court interference in the enforcement process are needed.
In
conclusion, addressing these challenges requires a concerted effort from
legislators, legal practitioners, and international organizations to foster an
atmosphere that would allow foreign arbitral rulings to be enforced in India.
[1] “Talat Chaudhary, Enforcement of Foreign Arbitral
Awards in India, 4 International Journal of Law Management & Humanities,
1477–1500 (2021)”
[2] Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (June 10, 1958)
[3] Enforcement of Foreign Arbitral Award - A Critical
Analysis of Public Policy of India
[4] “Praladh Choudhary, Recognition and
Enforcement of Arbitral Awards in India, 4 INDIAN J.L. & LEGAL Rsch. 1
(2022)”
[5] Muskan Agarwal, “Challenges in the
Enforcement of Foreign Arbitral Awards in India with Reference to Landmark
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[6] Komal & Neha Pallav, “Enforceability of
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[7] Renusagar Power Co. Ltd vs General Electric Co 1994 AIR 860
[8] “Anirudh Hariani,“Indian Arbitration and the Shifting Sands
of Public Policy', in Lawrence Boo and Gary B. Born (eds), Asian International
Arbitration Journal, (© Kluwer Law International; Kluwer Law International
2020, Volume 16 Issue 2) pp. 159 – 192””
[9] “Oil and Natural Gas Ltd v. Saw Pipes Ltd
AIR (2003) 5 SCC 705”
[10] Supra note 4
[11] Shri Lal Mahal Ltd. v. Progetto
Grano SPA5 AIR (2003) 3 SCR 691
[12] Oil & Natural Gas Corpn.Ltd vs Western Geco International Ltd CIVIL APPEAL NO.3415 OF 2007
[13] Supra note 4
[14] Vijay karia v. Prysmian Cavi E
Sistemi (2020) SCC Online 177
[15] Sheila Ahuja, 'Arbitration
Involving India: Recent Developments',“Asian Dispute Review, (© Hong Kong International
Arbitration Centre (HKIAC); Hong Kong International Arbitration Centre (HKIAC)
2016, Volume 18 Issue 3)”
pp. 132 - 139
[16] TDM Infrastructure Pte Ltd v UE
Development India Pte Ltd (2008) 14 SCC 271
[17] Atlas Exports Industries v Kotak
& Company (1997) 7 SCC 61.
[18]“Alabh Anant lal & Soham banerjee, The Public
Policy Doctrine in Arbitration: A Primer on its Effect on Challenges and
Enforcement of Awards, 60 Indian Arbitration Law Review (IALR) (2019)”
[20] Noy Vallesina Engineering Spa v.
Jindal Drugs, the Bombay High Court 2020 SCC Online SC 957
[21] Thyssen Stahlunion GMBH v. Steel
Authority of India AIR 2002 Del 255
[22] Fuerst Day Lawson v. Jindal
Exports 2012 SCC OnLine Del 5647
[23] Imax Corporation v. E-City
Entertainment Civil Appeal No. 3885 of 2017
[24]“The ambiguous time-bar for enforcement of foreign
awards in India Kluwer Arbitration Blog,
https://arbitrationblog.kluwerarbitration.com/2020/07/28/the-ambiguous-time-bar-for-enforcement-of-foreign-awards-in-india/
(last visited Sep 19, 2023)”
[25] Ibid
[26] “Suryansh singh khushwa et al., Foreign Awards in
International Commercial Arbitration: Recognition, Enforcement and Challenges
to an Award, 60 IJLIA (2017)”
Article Information
CHALLENGES AND BEST PRACTICES IN ENFORCEMENT OF FOREIGN ARBITRAL AWARD UNDER NEW YORK CONVENTION: AN INDIAN PERSPECTIVE
Authors: DIVYA MAAN, AYUSH DADHICH
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/01/16
- Issue 7
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International Journal for Legal Research and Analysis
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