NAME: - MANISH RANJAN

SEMESTER: - IX ‘A’

ROLL: - 278

Q. ISSUES IN ENFORCEMENT OF FOREIGN AWARD

Answer: - Part II of the Arbitration and Conciliation Act, 1996 (the Act) amended by the
Arbitration and Conciliation (Amendment) Act, 2015 deals with enforcement of certain foreign
awards. India recognises foreign awards under the New York Convention and the Geneva
Convention.

1. DEFINITION OF FOREIGN AWARD

According to Section 44 of the Act a foreign award means an arbitral award on disputes arising
between parties to arbitration, whether in contractual or non-contractual relationship, considered
as commercial under Indian laws enacted on or after the 11th day of October, 1960. But the
country must be a signatory to the New York Convention and recognised by the Central
Government of India as a Convention country and the award shall be passed in the territory of
another contracting country which is a reciprocating territory, i.e the Central Government of
India has notified it as Convention country in its Official Gazette.

2. POWER OF JUDICIAL AUTHORITY TO REFER PARTIES TO ARBITRATION

Section 45 of the Act empowers a judicial authority to refer the parties to arbitration at the
request of one of the parties or any person claiming through or under him except in the situation
when the agreement is found to be void, inoperative or incapable of being performed.

3. FOREIGN AWARD WHEN BINDING

Section 46 of the Act provides that any foreign award which would be enforceable under this
Chapter shall be treated as binding for all purposes on the persons as between whom it was
made. It may be relied upon by the parties in any legal proceedings in India.

4. EVIDENCE REQUIRED TO APPLY FOR ENFORCEMENT OF A FORIEGN AWARD

According to section 47 of the Act a person seeking to enforce a foreign arbitral award shall
make an application to a court, i.e. high court having jurisdiction in the matter as per the
provisions of the Amendment Act, 2015 and provide the original award or its certified copy;
original arbitration agreement or its duly certified copy; and if the award or agreement is in a
foreign language, the party seeking to enforce must produce a certified copy of a foreign award
translated into English and/or any other evidence to establish that the award is a foreign award.
The burden of proof is on the party seeking to enforce the foreign arbitral award to prove that it
is a genuine foreign award and the aforesaid documents form a prima facie evidence to establish
the same.

5. CONDITION FOR ENFORCEMENT OF FOREIGN AWARDS

As per section 48 (1) of the Act, a foreign award may not be enforced in India if it is proved by
the party against whom it is sought to be enforced that:

1. The parties to the agreement were under some incapacity to perform under the law to
which they were subjected to and in the absence of any mention of such law, the law of
the country where the award was made, i.e. the place of arbitration, or,
2. The agreement was invalid under the law to which the parties have subjected it and in the
absence of any mention of such law, the law of the country where the award was made,
or,
3. A fair trial was not conducted by the tribunal passing the award by failing to adhere to the
principles of fair hearing, or, the award passed was partly or wholly beyond the scope of
the arbitration agreement, in which case the part of the award exceeding the scope of
submission to arbitration may be separated from rest of the award, or,
4. The composition of the arbitral tribunal or authority and/or the procedure of its
appointment was not in accordance with the arbitration agreement or in the absence of
any mention of the same in the agreement, it was not in accordance with the law of the
country where the arbitration proceedings were held, i.e. the place of arbitration, or,
5. The award has not yet been made binding on the parties or has been set aside or
suspended by a competent authority of the country which is either the place or seat of
arbitration.
6. The court may call upon such party making an application under section 48 (1) to provide
evidence to prove the existence of any or all of the grounds for refusal of enforcement of
award as mentioned above.

As per section 48 (2) of the Act, a foreign award may not be enforced in India if it is found by
the court in India that:

a. The settlement of the award is not as per Indian arbitration laws, or

b. The enforcement of the award is contrary to the public policy of India. This defense
should be construed narrowly. It has to be something more than mere contravention of
law to attract this defense. An award is said to be in conflict with the public policy of
India if it has been affected by fraud or corruption; or it was in violation of the of the Act;
or it was in contravention with the fundamental policy of Indian law or basic principles of
morality or justice.

Section 48 only provides grounds for refusal of enforcement of foreign award as mentioned in A
and B and it does not permit the court to make a review of the foreign award on the merits of the
case; does not permit the court to exercise its appellate jurisdiction over the foreign award; and
does not permit the court to enquire as to whether some error has been committed by the tribunal
while passing the foreign award.

It is further provided that if an application for the setting aside or suspension of the award has
been made to a competent authority, the court may, if it considers it proper adjourn the decision
on the enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.

6. ENFORCEMENT OF FOREIGN AWARDS

As per section 49 of the Act if a court decides to uphold the foreign award and enforce it then it
shall be deemed to be a decree of the court and no appeal shall lie against the award so upheld
except for a discretionary appeal to Supreme Court of India under Article 136 of the Constitution
of India when it is a question of fundamental importance or public interest. But in the case of an
award held to be non-enforceable by the court, an appeal may be allowed under section 50 (1) (b)
of the Act.

The decree shall be executed, on application by the decree-holder, in accordance with the
provisions of CPC by the court which passed it.

7. CONVENTION RELATED

Article 1(i) of the New York Convention states that:

“This convention shall apply to the recognition and enforcement of arbitral awards made in the
territory of the state other than the state where the recognition and enforcement of such awards is
sought, and arising out of differences between persons, whether physical or legal”

Section 7 of the Act, which corresponds with the provisions of the New York Convention,
specifies that a foreign award may not be enforced if the party against whom the award is sought
to be enforced proves to the court enforcing the award any of the following:

(1) That the parties to the arbitration agreement were, under the law applicable to them, under
some incapacity, or the arbitration agreement was not valid under the law to which the parties
have subjected it (or, in the absence of any condition thereon) under the laws of the place of
arbitration;

(2) That there was no due compliance with the rules of fair hearing;

(3) The award exceeded the scope of submission to arbitration;

(4) The composition of the arbitral authority or its procedure was not in accordance with the
arbitration agreement of the parties or (failing such agreement) was not in accordance with the
law of the place of arbitration;

(5) The 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 the award was made;

(6) If the court dealing with the award is satisfied that (a) the subject-matter of the difference is
not capable of settlement by arbitration under the law in India; or (b) the enforcement of the
award will be contrary to public policy

An arbitration award made outside India is quite different from a foreign judgment, as can be
seen above. Identical with foreign judgments, the Act deals with the question of enforcement of
awards of a foreign reciprocating territory as defined in it. Any person who is interested in
enforcing a foreign award may apply in writing to any court having jurisdiction over the subject
matter of the award. The application will be numbered and registered in the court as a suit
between the applicant, as the plaintiff, and the other, as defendants. The court will direct a notice
to the parties requiring them to show cause why the award should not be filed in the court. The
court, on being satisfied that the foreign award is enforceable under the Act, will pronounce
judgment on it. A decree will follow. No appeal will lie from such a decree except insofar as the
decree is in excess of or not in accordance with the award.