What are foreign arbitral awards? Are they enforceable in India?

An arbitral award refers to the decision of an Arbitral Tribunal. Under section 2(c) of the Arbitration and Conciliation Act, 1996 an arbitral award includes an interim award. The award pronounced by the Arbitrator or the Arbitration tribunal is legally enforceable and binding on the parties. These arbitral awards are of two types, namely;

• Domestic awards- Sections 2 to 43 of the Arbitration and Conciliation Act, 1996 govern Domestic awards.
• Foreign awards- It is dealt with under Part II of the Arbitration and Conciliation Act, 1996.

A domestic award is a result of arbitration carried out domestically and it confines itself to the territory of India. The conditions for the same are that the parties should have a nexus or birth to Indian origin.

An award given by an arbitral institution in India or an award even if given by a foreign state for a dispute where both the parties are of an Indian origin and the nationality is also governed by the Indian laws, it shall also come within the purview of domestic arbitration.[i]

Foreign award is an arbitral award which relates to differences relating to the matters considered as commercial under the law in force in India and it’s a result of foreign arbitration.

Enforcement of foreign awards:

India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”) as well as the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (“Geneva Convention”). If a party receives a binding award from a country which is a signatory to the New York Convention or the Geneva Convention and the award is made in a territory which has been notified as a convention country by India3, the award would then be enforceable in India.[ii]

Part II of the Arbitration and Conciliation Act deals with ‘Enforcement of certain Foreign awards’ and it is divided into two parts, Chapter I deals with New York Convention awards and Chapter II deals with Geneva Convention awards.

Chapter I of the Arbitration and Conciliation Act, 1996:

1. The definition of a “foreign award” is given under section 44 of the Act. According to the section, For the purposes of Chapter I, “foreign award” means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960—
   • in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and
   • in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.
2. According to section 46 of the Act, “Any foreign award which would be enforceable under Chapter I of Part II shall be treated as binding for all purposes on the persons asbetween whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.”
3. When a party is seeking the enforcement of a foreign award, under section 47 of the Act, they are required to submit the following documents while making an application for the same before the court:
   • the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
   • the original agreement for arbitration or a duly certified copy thereof; and
   • such evidence as may be necessary to prove that the award is a foreign award.
4. The conditions for Enforcement of foreign awards are prescribed under section 48 of the Act. If the following conditions are proved, then enforcement of a foreign award may be refused:
   • The parties to the agreement were under some incapacity.
   • The agreement in question is not in accordance with the law to which the parties have subjected it, or under the law of the country where the award was made (especially in case of foreign awards).
   • There is a failure to give proper notice of appointment of arbitrator or arbitral proceedings or the party against whom the award was rendered was otherwise unable to present his case.
   • Award is ultra vires the agreement or submission to arbitration.
   • Award contains decisions on matters beyond the scope of submission to arbitration.
   • Composition of the arbitral authority or the arbitral procedure is ultra vires agreement.
   • Composition of the arbitral authority or the arbitral procedure is not in accordance with the law of the country where the arbitration took place.
   • The award (specifically a foreign award) has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which that award was made.
   • Subject matter of the dispute is not capable of settlement by arbitration under Indian law.
   • Enforcement of the award would be contrary to the public policy of India.
5. Section 49 of the Act states that If the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

Chapter II of the Arbitration and Conciliation Act, 1996:

1. Under section 53 of the Act, “foreign awards” are defined for the purposes of Chapter II.

It means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924,—

(a) in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and

(b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and

(c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made.

1. Section 55 of the Act provides that an award which satisfies the conditions of enforceability mentioned under section 57 of the Act is enforceable and is to be treated as binding for all purposes and also on persons as between whom it was made. It may be relied upon by the parties in any legal proceedings in India. Any references to enforcing a foreign award shall be construed as including references to relying on an award.
2. Section 56 lays down documents that are required to be produced while submitting an application for enforcement of foreign awards before the Court.

The party applying for the enforcement of a foreign award shall, at the time of application produce before the Court;

(a) the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;

(b) evidence proving that the award has become final; and

(c) such evidence as may be necessary to prove that the conditions mentioned in section 57 are satisfied.

1. Section 57 of the Act lays down the conditions necessary for the enforcement of foreign awards.

The following conditions under Section 57(1) need to be fulfilled for enforcement of a foreign award:

(a) the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;

(b) the subject-matter of the award is capable of settlement by arbitration under the law of India;

(c) the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;

(d) the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;

(e) the enforcement of the award is not contrary to the public policy or the law of India.

However, even if conditions under sub section (1) are fulfilled, the enforcement may be refused if;

(a) the award has been annulled in the country in which it was made;

(b) the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented;

(c) the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration.

• If the Court is satisfied that an award is enforceable under Chapter II, then according to section 58, it is deemed to be a decree of that Court.

“The views of the authors are personal“

Reference:

[i]http://www.legalserviceindia.com/legal/article-660-recognition-and-enforcement-of-arbitral-awards-in-india.html

[ii]http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Enforcement_of_Arbitral_Awards.pdf