Faculty of Law, Jamia Millia Islamia

Faculty of Law, Jamia Millia Islamia
FOREIGN ARBITRAL AWARDS AND THE INDIAN COURTS: THE

ENFORCEMENT UNCERTAINTIES
Report
(Clinical Course-I)
(Alternative Dispute Redressal)
Submitted By:
Name- Md Maaz Alam
Student ID: 20176355
B.A.LL.B. (7th Semester) (Regular)
Submitted to: Office of Dean, Faculty of Law, Jamia Millia Islamia, New Delhi
(19 November, 2020)
1
ACKNOWLEDGEMENT
I would like to express my gratitude towards my teacher, Prof. Karishma Sheikh, who gave
me this opportunity to work upon the topic “Foreign Arbitral Awards and the Indian Courts:
The Enforcement Uncertainties”, and who also helped me with her guidance.
I would also like to thank my parents and friends who helped me in completing this
assignment within the limited time frame.
-
- Md Maaz Alam
2
TABLE OF CONTENT
1. LIST OF ABBREVIATIONS..............................................................................5
2. LIST OF CASES..................................................................................................6
3. ABSTRACT..........................................................................................................8
4. INTRODUCTION................................................................................................9
5. RESEARCH METHODLOGY.........................................................................10
6. HISTORY OF ENFORCEMENT OF FOREIGN AWARDS IN INDIA.....10
7. BACKGROUND OF ENFORCING FOREIGN AWARDS IN INDIA.......12
7.1 Difference between the expression Recognition& Enforcement....................12
8. DEFINITION OF FOREIGN AWARD...........................................................14
8.1 Distinction between Foreign Award and Domestic Award............................16
9. GENERAL PROVISIONS................................................................................18
10. PROCEDURE FOR THE ENFORCEMENT OF FOREIGN AWARDS
ACCORDING TO THE ARBITRATION AND CONCILIATION ACT,
1996......................................................................................................................22
11. GROUNDS FOR NON-ENFORCEMENT OF FOREIGN ARBITRAL
AWARDS............................................................................................................25
11.1 Not being issued by a competent body.....................................................26
11.2 Non-compliance with Indian Law or court decision................................27
11.3 Improper summon and legal representation............................................28
11.4 Non-Arbitrability of the dispute...............................................................29
11.5 Non-Enforceability in the country where it is made................................29
11.6 Non binding awards.................................................................................31
11.7 Awards being against Public policy........................................................32
3
12. COMPETENCE OF THE COURT..................................................................34
12.1 Not considering the merit of the case.......................................................34
12.2 Ordering interim measures......................................................................35
13. JUDICIAL INTERPRETATION.....................................................................37
14. COMPRATIVE ANALYSIS.............................................................................42
14.1 United Kingdom.......................................................................................43
14.2 The United States of America...................................................................44
15. CONCLUSION AND SUGGESTIONS...........................................................46
16. BIBLIOGRAPHY..............................................................................................49
4
LIST OF ABBREVIATIONS
S.No. Abbreviation Full Form

1. BALCO Bharat Aluminium v. Kaiser Aluminium
2. Bhatia case Bhatia International Ltd v. Bulk Trading SA
3. CPC Civil Procedure Code, 1908

4. FAA Federal Arbitration Act, 1926
5. Geneva the Geneva Convention on the Execution of Foreign
Convention Arbitral Awards, 1927
6. ICA International Commercial Arbitration
7. New York The Convention on the Recognition and Enforcement
Convention of Arbitral Awards, 1958
8. Panama The Inter-American Convention on International
Convention Commercial Arbitration, 1975
9. PrIL Private International Law
10. The Act Arbitration and Conciliation Act 1996
11. The Bill The Bill proposing Arbitration and Conciliation Act
of 1996
12. UN United Nations Organization
13. UNCITRAL United Nation Commission on International Trade
Law
5
LIST OF CASES
1. Badat & Co. v. East Trading Co.; (1964) 4 SCR 19.
2. Bharat Aluminium Co. v. Kaiser Aluminium; (2012) 9 SCC 552.
3. Bharat Aluminium v. Kaiser Aluminium; (2012) 9 SCC 552.
4. Bhatia International Ltd v. Bulk Trading SA; (2002) 4 SCC 105.
5. Centrotrade Mineral & Metals Inc v. Hindustan Copper Ltd.; AIR 2006(11) SCC 245.
6. Chromalloy Aeroservices Inc. v. Arab Republic of Egypt; 939 F Supp. 907.
7. Daum Global Holdings Corp. v. Ybrant Dig. Ltd; No. 13 Civ. 03135 (AJN).
8. Dorstener Maschine (Germany) v. Sand Plast India; AIR 1995 Arb. LR 282(Del).
9. Food Corporation of India v. Joginderpal Mohinderpal; (1989) 2 SCC 347.
10. Gas Authority of India Ltd. v. SpieCapage S.A; AIR 1994 Del.75.
11. Harendra H. Mehta v. Mukesh H. Mehta; AIR 1999 SC 2054.
12. Hilmarton Ltd. v. Omnium de traitement et de valorization; 1994, 327.
13. Hiscox v. Outhwaite; 1991(3) WLR 297 (HL).
14. International Standard Electric Corporation v. Bridas Sociedad Anonima Petrolera,
Industrial Y Comercial; 745 F Supp 172 at 177.
15. Ludwing Wunscha & Co. v. Raunaq International; AIR 1983 Del. 247.
16. M/s Centrotrade Minerals &Metal Inc v. Hindustan Copper Ltd; (2006) 11 SCC 245.
17. Marriott International Inc & Others v. Ansal Hotels Ltd.; AIR 2000 DLI 377.
18. Metallgesellschaft A.G. v. M/V Capitan Constante; 790 F.2d 280, 283 (2d Cir. 1986).
19. Michaels v. Mariforum Shipping, S.A; 624 F. 2d 411, 414–415 (2d Cir. 1980).
20. N.T.P.C. v. Singer Co.; AIR 1993 SC 998.
21. O.N.G.C. v. Western Co of North America; AIR 1987 SC 674.
22. Oil & National Gas Corporation Ltd. v. SAW Pipes Ltd; AIR 2003 SC 2629.
6
23. Olex Focas Pvt. Ltd. & Others v. Skoda Export Co. Ltd.; AIR 2000 DLI 161.
24. Open Sea Maritime Inc. v. R. Pyarelal International Pvt. Ltd; AIR 1999 (2) Arb. LR
383(Bom.).
25. Orient Paper Mills v. Civil Judge; AIR 2003 (4) RAJ 479 (Ori).
26. Phulchand Exports Ltd. v. OOO Patriot; AIR 2011(4) Arb.LR 108(SC).
27. Renusagar Power Co. Ltd. v. General Electric Co. Ltd; AIR 1994 SC 860.
28. Serajuddin v. Michael Golodetz; AIR 1960 Cal. 49.
29. Shipping Agency v. Black Sea Shipping; AIR 1998(2) SCC 281.
30. Thyssen Sthlunion GMBH v. Steel Authority of India; AIR 1999 SC 3923.
31. U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd; AIR 1996 (2) SC 667.
32. Union of India v. G.S.Atwal & Co.; AIR 1996 (3) SC 568.
33. Union of India v. Popular Builders; AIR 2000 SC 1.
34. Venture Global Eng. v. Satyam Computer Services; AIR 2008 SC 1061.
7
FOREIGN ARBITRAL AWARDS AND THE INDIAN COURTS: THE
ENFORCEMENT UNCERTAINITIES
ABSTRACT
This paper tries to find out the legal framework for the enforcement of foreign arbitral
awards. Basically, the New York Convention of 1958 and Geneva Convention of 1927 deals
with foreign arbitral awards in India. The enforcement of foreign award in India takes place
under Section 58 and Section 49 of Indian Arbitration Act. Section 49 deals with the
enforcement of foreign award under New York Convention whereas Section 58 deals with the
enforcement of foreign award under Geneva Convention of the PART II of the Arbitration
and Conciliation Act. There are two parameters that are to be kept in mind while enforcing
these awards that are reciprocity and commercial reservation under Section 44(b) and
Section 53(c) of the Arbitration Act. We need to see that the government which country we
are trying to enforce the award there are equal and reciprocal provisions which are
maintained, furthermore the award which we trying to enforce has a commercial hold, if
these two parameters are more or less not compline then the award would not be enforceable
as whole, it is only enforceable If these two parameters are fulfilled. Under Section 34 of the
Arbitration Act which is, setting aside an award is also applicable while enforcing the
foreign award. We have laid down the period of one month to challenge the award. We have
to wait for that period to end and then enforce the award as stipulated under Section 34 of
the Arbitration Act. Section 48 and Section 57 are deal-breaker clauses for enforcing the
foreign award and it needs to be satisfied. In order to enforce an international award
effectively in India it must be within the parameters of Indian Arbitration and Conciliation
Act.
Keywords: Arbitration, Conventions, Enforcement, Foreign, International,
8
1. INTRODUCTION
In international trade, arbitration is the preferred method of dispute resolution rather than
litigation since; it is easier to enforce an arbitral award than a court decision in a foreign
State. From a practical point of view, this is because there are more multilateral conventions
and bilateral treaties facilitating enforcement of foreign arbitral awards than there are for
enforcement of court decisions. From a theoretical point of view, enforcement of arbitral
awards is easier, because of the contractual nature of arbitration. An arbitral award is the
consequence of a private dispute settlement procedure while a court ruling represents the
sovereignty of the State where they are issued. It is easier for a national court to enforce the
consequence of a contractual agreement between two private parties, than a decision
representing the sovereignty of a foreign State. Therefore, as seen, the tendency in
international convention and municipal laws is to facilitate enforcement of arbitral awards.
Indian Law is facilitative of enforcement of foreign arbitral awards, so far as they are not
covered by bilateral or multilateral treaties. As we know that, the law of arbitration in India
has gone through deep changes in recent decades. Regulations on enforcement of foreign
awards have significantly improved in recent years. Previous Indian Law did not make any
distinction between domestic and foreign awards, and no definition of a foreign arbitral
award was made. Therefore, it was assumed that foreign awards were subject to retrial and
challenge, and that the same legal procedure and scrutiny were applied to foreign awards as
those applied to domestic awards. Present Indian Law, however, in some aspects, goes
beyond the New York Convention, 1958 (the NYC, 1958) to facilitate enforcement of foreign
awards. After a brief review of the background to the issue of enforcing foreign arbitral
awards in India, and legal developments in this regard, those parts of the Arbitration Act,
1996 that address enforcement of foreign arbitral awards are examined. These parts of Indian
Law apply to foreign arbitral awards that can be enforced under international conventions or
bilateral treaties to which India is a party. Following an examination of general provisions of
Indian Law regarding enforcement of foreign awards, grounds for non-enforcement of such
awards are considered. Then, the competence of the court regarding foreign awards is
discussed.
9
2. RESEARCH METHODLOGY
The present study is doctrinal in nature. The study will employ historical, descriptive and
analytical approaches. The author has used primary sources such as statues, conventions,
Judgements of the Hon’ble Supreme Court of India as well as secondary sources such as
various journal articles and books in order to arrive at the conclusion. The author has ruled
out the empirical method of research due to its unsuitability to the present subject topic. The
research involves analysis of present rules, regulations and precedents on the current subject.
Thereafter, the author will review existing literature including commentaries, books, articles,
judicial pronouncements and other real world and examples.
3. HISTORY OF ENFORCEMENT OF FOREIGN AWARDS IN INDIA
Enforcement of foreign decree or an award has been an unavoidably contentious issue

through the history of the globe. From the beginning of the organised community system, the
governments strive to maintain their sovereignty over their subjects but with increasing
international trade, international disputes have become an indispensible part of the global
economy. Further, with the rise of international disputes, International Commercial
Arbitration has gained momentum as an alternative dispute resolution mechanism amongst
investors. Before the late 90s, The Arbitration Act, 1940 only dealt with domestic arbitration
and there was no substantive law on the subject of international arbitration. However, section
3 of both, The Arbitration (Protocol and Convention), Act, 1937 and the Foreign Awards
(Recognition and Enforcement Act), 1961 provided for conditions for enforcement of foreign
awards in India, a situation wherein if a party to any legal proceeding in any court in India is
a party to an arbitration agreement, then the court unless is satisfied that the agreement is null
or void or incapable of being performed or that the dispute at hand does not fall under the
agreement, shall make an order to stay the proceedings on being so requested by any of the
parties at any time after appearance and before filing a written statement or taking any other
step in the proceeding. Then in 1985, UN General Assembly adopted the UNCITRAL Model
Law on International Commercial Arbitration which suggested uniformity of arbitral
procedures and international commercial arbitration practices. The Supreme Court of India in
1989 in Food Corporation of India v. Joginderpal Mohinderpal1 suggested simplification of
1
(1989) 2 SCC 347.
10
arbitration law and releasing it from the shackles of strict technical rules of interpretation.
Then in 1996 Indian legislature came up with Arbitration and Conciliation Act (“The Act”)
part II of which dealt with enforcement of foreign awards. The Act which is analogous to the
UNCITRAL Model Law defines a foreign award under Section 44 for enforcement of an
award under New York Convention and under section 53 for enforcement of an award under
Geneva Convention; both these sections define a foreign award as an award on commercial
differences between persons arising out of legal relationships in pursuance of a written
agreement and passed in one of such territories as the Central Government may notify from
time to time on being satisfied that they have reciprocal provisions. If an award does not
satisfy the above conditions, it cannot be termed as a foreign award.2
Then how does one enforce an award from a non reciprocating country or a country which
although is a convention state, has still not been notified by the Central Government? This
confusion marred the arbitration procedure for a long time when in 2002 the Supreme Court
of India in Bhatia International Ltd v. Bulk Trading SA3, (“Bhatia case”) held that such award
can be enforced as a domestic award; unless provisions of Part I of the Act have been
excluded by agreement express or implied in which case it can be enforced as a foreign
decree. This further points to the elephant in the room i.e. if such is the case then what would
be the difference between litigating in Indian court or arbitrating in your home country and
then enforcing it in India like a decree which has nothing but a mere evidentiary value. Bhatia
case was overruled by the Supreme Court in Bharat Aluminium v. Kaiser Aluminium4
(BALCO) in 2012, which again leaves this question unanswered.
From past decade Indian legislature and the Judiciary have been trying to adopt a pro-
arbitration approach and the presence of such restrictive definition which is based not just on
the concept of reciprocity but also notification of the Central Government, has forced India to
remain one step behind the International Commercial Arbitration superpowers like
Singapore. As of today, the Indian Government has gazetted 47 out of 142 countries which
have signed the New York Convention, i.e. less than one-third of the total contracting states.
The countries such as China, United Arab Emirates and New Zealand which are regular seat
jurisdictions for international arbitrations have not been officially gazetted. The risks and
uncertainties which the parties have to face while going for a foreign seated arbitration in
2
Arbitration and Conciliation Act 1996, s 44 & s 53.
3
(2002) 4 SCC 105.
4
(2012) 9 SCC 552.
11
India created by the aforementioned reasons outweigh the benefits of the same, thus crushing
the pro-arbitration approach taken by the courts so far. The only resort left for answering this
issue now, is to study the principles of Private International Law in the light of current
mechanisms as are prescribed by the UNCITRAL Model law and implemented by arbitration
giants of the world.
4. BACKGROUND OF ENFORCING FOREIGN ARBITRAL AWARDS IN

INDIA
The international commercial activities were in existence to the present era as well. Of
course, its volume and participating units were limited. The advent of industrial revolution
technical and mechanical utilization and information technology explosion have made the
world very small in its reach and transactions have grown enormously between the different
nations. Where there are voluminous and numerous transactions (both at international &
domestic level), it is but natural that there shall be disputes as well. The settle these
international commercial disputes speedy and satisfactorily, as per international norms, in
India there were two separate Acts, namely:
a) The Arbitration (Protocol & Convention) Act, 1937: It was enacted as a result of
Geneva Protocol (1923) & Geneva Convention, 1927 (the GC, 1927) under the
auspices of League of Nations.
b) The Foreign Awards (Recognition & Enforcement) Act, 1961: It was enacted as a
result of the NYC (1958), under the auspices of United Nations Organization
After the enactment of the Arbitration Act, 1996, the two aforesaid Act stand repealed, and
with certain modifications, their close relevant provisions have been incorporated in Chapter
I with heading ‘Enforcement of Certain Foreign Awards’ and ‘New York Convention
Awards’ and Chapter II with heading “Geneva Convention Awards” respectively of Part II of
the present Act, 1996.
4.1 Difference between the expressions ‘Recognition’ And ‘Enforcement’
The Act only uses the expression ‘enforcement’ and does not use the expression
‘recognition’. The First Schedule to the Act uses both the expressions and so does the
Convention. The two expressions ‘recognition’ and ‘enforcement’ are distinct and connote
12
separate meanings. An award may be recognised without being enforced though when it is
enforced, it is necessarily recognised by the Court, which orders its enforcement. Recognition
alone may be asked for as a shield against re-agitation of issues with which the award deals.
Where a Court is asked to enforce an award, it must recognize not only the legal effect of the
award but must use legal sanctions to ensure that it is carried out. The expression
‘recognition’ is a defensive process as it is used as a shield against an attempt to raise in a
fresh proceeding same issues that have already been adjudicated upon and decided in an
earlier arbitration proceeding. A party, who receives a favourable award is entitled to object
to the subsequent arbitration with respect the dispute which was the subject matter of the
earlier arbitration. As opposed to the expression ‘recognition’, which is a defensive process,
‘enforcement’ is a weapon of offence as it involves recovery of the award amount, if money
is the subject matter.
However, the Supreme Court in Thyssen Sthlunion GMBH v. Steel Authority of India5 has
held that there is not much difference in the provisions of the Foreign Awards (Recognition
& Enforcement) Act, 1961 and the Arbitration Act, 1996 regarding enforcement of the
foreign award. The definition of ‘foreign award’ is also same in both the enactments. The
only difference appears to be that while under the Foreign Awards (Recognition &
Enforcement) Act, 1961 a decree follows, whereas under the present Arbitration Act, 1996, a
foreign award is already stamped as the decree.
The Part II of the present Arbitration Act, 1996 contains in Chapter I the primary provisions
of the New York Convention (1958) which deals and covers both arbitral agreement and
awards, having foreign texture and in Chapter II, likewise, the provisions of the Geneva
Convention, 1927 (the GC, 1927) are contained. Thus part II of the present Arbitration Act,
1996, regulates the awards made under the New York Convention (1958) in Chapter I or the
Geneva Convention (1927) in Chapter II for its enforcement.
Section 52 of the present Arbitration Act, 1996 provides that Chapter I of Part II excludes
the application of Chapter II but Chapter II does not exclude the application of Chapter I.
Excepting Section 52 (in Chapter I) of the Act, 1996, both the Chapters (Chapter I and
Chapter II) consist of 8 Sections each dealing with same issue and wording of the Sections is
also almost the same barring Section 47 of Chapter I and Section 57 of Chapter II which deal
with the enforcement of foreign awards.
5
AIR 1999 SC 3923.
13
5. DEFINITION OF FOREIGN AWARD
A foreign award has been defined in Section 44 of the present Arbitration Act, 1996. It gives
an understanding about the term of foreign awards as also the term Commercial6in context of
foreign award. Under this Section, the term ‘Foreign Award’ means an arbitral award made
on or after the 11th day of October, 1960 on differences between persons arising out of legal
relationships, whether contractual or not, considered as commercial under the law in force in
India.
It is undoubtedly true that the origin of foreign awards comes from foreign arbitration. In the
other word, the term ‘Foreign Award’ means the arbitral award made as a result of foreign
arbitration which is not a domestic arbitration. It becomes necessary to understand the term
‘foreign arbitration’. The Calcutta High Court in Case of Serajuddin v. Michael Golodetz,7
laid down the necessary conditions relations relating to term ‘foreign arbitration’ or essential
elements of a foreign arbitration, resulting into the foreign arbitral award -these are as
following points:-
a) Arbitration should have been held in foreign lands;

b) by foreign arbiter(s);
c) Arbitration by applying foreign laws;
d) As a party foreign national is involved. In the instant case since the case was decided
on the basis of American Arbitration Law, on foreign land involving a foreign party
under a foreign arbitration, it was held to be a foreign arbitration.
To interpret the term ‘Foreign Award’, the SC in N.T.P.C. v. Singer Co.8observed that
where in London an interim award was made which arose out of an arbitration agreement
governed by the laws of India. It was held that such an arbitral award cannot be treated as a
foreign award and it is purely a ‘Domestic Award’ because it was governed by the Indian
laws both in respect of agreement and arbitration.
In 1994, just a year had passed since the SC ruling in aforesaid case, the Delhi High Court in
Gas Authority of India Ltd. v. SpieCapage S.A.9examined in depth the historical
developments which led to the NYC (1958) and GC (1927) and their result implementation
6
Because it is necessary that the relationship should fall within the meaning of the word “Commercial” under
the law in force in India.
7
AIR 1960 Cal. 49.
8
AIR 1993 SC 998.
9
AIR 1994 Del.75.
14
under the two enactments i.e., The Arbitration (Protocol and Convention) Act, 1937 and the
Foreign Awards (Recognition and Enforcement) Act, 1961 which now repealed by the
Arbitration Act, 1996.
The definition of ‘Foreign Award’ for the purposes of the GC (1927) as contained in this
Section differs from the foreign award as defined in Section 44 under the NYC (1958). The
differences may be stated as follow:
Section 44 of the New York Section 53 of the Geneva

Convention, Convention,
1958 1927
The words ‘arising out of legal Section 53 failed to utilise these

relationships, whether contractual or not’ words, instead of this it use “relating
as used in Section 44. to matters considered as commercial”.
The definition of ‘Foreign Award’ as But Section 53 is devoid of this

given in Section 44 under the NYC beginning.
(1958) begins with the non–obstinate
clause i.e., ‘under the context otherwise
requires’.
Section 44 insists that the agreement Section 53 simply talks of agreement

must be in writing. simpliciter, omitting the words ‘in
writing’.
Table1: Differences between definitions of ‘Foreign Award’ in the New York Convention, 1958 and the
Geneva Convention, 1927.
15
5.1 Distinction between Foreign Award and Domestic Award
A Foreign award as distinguished from domestic award is one which has any of following
elements:
No Domestic Award Foreign Award
1 The parties should have their nexus One of the disputant parties is a
of birth or business to Indian origin. national of foreign State. But there can
Two Indians residing in a foreign be a situation where same Indian
State and carrying on their business national sharing property and business
in that State if agree to decide their in India and some foreign State have
disputes through arbitration resorted to decide their Dispute
regulated by Indian laws, the arbitral Through arbitration applying the foreign
award out of such arbitration law regarding their commercial
agreement shall be treated as domestic transactions it was held to be a foreign
even though it was given in foreign award. The case of Harendra H. Mehta
territory. v. Mukesh H. Mehta may be cited to
illustrate the point further
2 The range of issue remains confined The subject matter of arbitration

to Indian characteristics covering agreement is international in character.
business and its cognate expressions That is, it deals with international
within the limit of Indian territory. commerce, trade or investment and the
like.
3 The award is made in the territory of The award is made in a foreign State.
India, though an arbitral award given But in situation may be where in two
in a foreign State for the dispute of foreign parties carrying on business in
the two parties of Indian origin and India agree to resolve their disputes
nationality governed by the Indian through arbitration applying some
law shall also be a domestic award. nominated foreign law, it will be a
foreign award out of such arbitration
agreement, though given in the Indian
territory.
16
4 The domestic award confines itself The party should belong to that Sate
within the territory of India. with which the element of reciprocity
exists as per Notification in the Official
Gazette published by the Indian
Government. A State with which the
element of reciprocity is non-existent,
the award if any shall not be deal with
under the Arbitration Act, 1996.
Table 2: Distinction between the Foreign Award and Domestic Award
To illustrate the above distinction the decision of the Delhi High Court in Dorstener
Maschine (Germany) v. Sand Plast India,10 is cited wherein against the enforcement of
foreign arbitral award in Germany, an injunction was sought in India, the Delhi High Court
refused to grant an injunction. The disputes between the disputants were referred for
arbitration to Indo-German Chamber of Commerce. The arbitral tribunal consisted of two
arbiters were appointed by each of the party. In arbitration process the counter claim of the
Dorstener was rejected whereas the claim of Sand Plast was permitted. Since, Dorstener had
no assets in territory of India; Sand Plast on receiving of the copy of the award initiated the
proceedings regarding enforcement of the award in Germany. The respondent i.e., Dorstener
opposed the enforcement of arbitral award and prayed for an ad interim injunction. The court
while refusing to grant injunction held that in the view of the NYC (1958) the case being a
foreign award and agreement had a foreign element involving international commerce and
trade the German Company should not be permitted to restrain the Indian Company from
enforcing the award in Germany by way of injunction as such. Hence, the NYC (1958) was
applicable to the matter. It may be pointed out that the NYC (1958) deals with both, the
arbitration awards and arbitration agreements.
After 4 years, in Harendra H. Mehta v. Mukesh H. Mehta,11 the SC has clarified the issue. In
this case, two brothers were having their joint business in India as well as USA. They also
had properties in both States. When differences arose between them, they entered into an
10
AIR 1995 Arb.LR 282(Del).
11
AIR 1999 SC 2054.
17
arbitration agreement at USA for the distribution of their all properties and business between
them. The arbitral proceedings were held and award made in USA. The parties entered in to
settlement during the pendency of arbitral proceedings and the arbitral award was made in
terms of the said settlement. The issues on which the SC was deciding primarily were:-
1. The legal relation between the disputant.

2. The award came out of the settlement between the disputant hence it was not an
arbitral award.
3. The award was not made a decree by the USA Federal Court.
4. The arbitral award was not registered.
The SC after considering all the issues decided that the award was a Foreign award, and inter
alia, held that:-12
 The legal relationship of commercial nature under the Indian Law, though disputants
were brothers and this fact did not take the award out of the purview of the present
Act of 1996.
 Though the award was made in terms of settlement between the parties, but still it was
an award under the Act of 1996.
 The Indian Courts cannot refuse the enforcement of this award on the ground that
USA Federal Court had not issued a decree for the same because under the Arbitration
Act,1996 the award becomes directly enforceable without going to court for its
decree.
 The registration of award is not compulsory and necessary for its enforcement under
the present Act of 1996.
6. GENERAL PROVISIONS
Indian Law recognizes applying foreign laws in arbitration, whether in procedural or

substantive issues. As we have already seen, under the Arbitration Act, 1996, the disputant
parties to an arbitration agreement are allowed to choose the law applicable to the issue of
their disputes. They can subject their legal relationships to any monetary rule of law,
including foreign laws, international convention, bilateral treaties or model-format contracts.9
The most important provisions of Indian Law regarding enforcement of foreign arbitral
awards are Articles 44 and 49 of the Arbitration Act, 1996 taken in conjunction with each
12
Harendra H. Mehta v. Mukesh H. Mehta, AIR 1999 SC 2054.
18
other. Under Article 49, foreign arbitral awards are enforced in the same way that foreign
sentences and orders are enforced in India. This points to the adherence of the Indian
legislator to the fundamental attitude that does not consider international arbitral awards as
distinct from international judgments, and is, thus, not very much favourable to international
arbitration, in terms of enforcement. In this regard, too, Indian Law follows the English legal
pattern.
Articles 44 of the Act of 1996 provides that orders and awards made in a foreign State may
be granted leave to enforce in India on the same conditions that the concerned State enforces
the orders and awards issued in the India. The above provisions show that there has to be a
mutual policy of the enforceability of foreign awards between India and the relevant foreign
State.
The arbitral award should have been given in that territory where on the basis of reciprocity
the NYC (1958) is applicable. For territories to which the NYC (1958) is applicable, the
government of India, in its official Gazette shall be declaring the names of States and
territories where reciprocally the NYC (1958) will apply. The Foreign Awards (Recognition
and Enforcement) Act, 1961 was passed which nearly 44 State territories were declared
which had reciprocal acceptability of NYC (1958). The list so declared in 1961, 13 still remain
valid due to Section 85(2) (b) of the Arbitration Act, 1996.14 If an award is made in a country
which is not a signatory of NYC (1958), then the provisions of the Section shall not be
applicable to that award and that award shall not be treated as a foreign award under the
present Act, 1996. The SC in Bhatia International v. Bulk Trading S.A.15 observed that
awards in arbitration proceedings which take place in a non-convention country are not
considered to be ‘foreign award’ under the arbitration Act, 1996.they would thus not be
13
As per C.A. arbitration quarterly, Vol. XVIII, No.3 October-December 1993 the following countries have
reciprocal provisions in context to New York Convention, 1958:- Austria, Belgium, Botswana, Bulgaria, Cuba,
Czechoslovak Socialist Republic, Chile, Denmark, Ecuador, Arab Republic of Egypt, Finland, France,
Germany, Ghana, Greece, Hungary, Italy, Japan, Republic of Korea, Malagasy Republic, Mexico, Morocco,
Nigeria, Netherlands, Norway, Philippines, Poland, Romania, Spain, Sweden, Switzerland, Syria Arab
Republic, Thailand, Trinidad And Tobago, Tunisia, U.S.S.P., U.K., United Republic of Tanzania, U.S.A.,
Central African Republic, Kuwait, San Mario.
14
Section 85 of the Arbitration Act, 1996 reads as; “Repeal and savings.- (1) The Arbitration (Protocol and
Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards
(Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal,-- (a) the provisions of the said enactments shall apply in relation to arbitral
proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this
Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force; (b) all
rules made and notifications published, under the said enactments shall, to the extent to which they are not
repugnant to this Act, be deemed respectively to have been made or issued under this Act.”
15
AIR 2002 SC 1432.
19
covered by Part II. It is an acceptable approach for all members of the NYC (1958). For
instance, under English Arbitration Act, 1996, if an arbitral award is singed in a State which
is a party to the NYC (1958), English Court can hear an appeal from the award if it was made
under English law. In case Hiscox v. Outhwaite16 the English Court has held that the
disputants referred dispute arbitration in England on the basis of an agreement made under
English law. The arbitration concluded in an award which was signed by the arbiter in Paris
(France). The claimant appealed against the award for remission and for statement of further
reasons.
But as against this, the GC (1927) requires that the parties to the award must belong two
different signatory States, and then only the award may be recognized and enforced. In other
word, if the award has been made in a country which is not signatory to the GC (1927) or if it
is between persons who are not subject of jurisdiction of signatory State, it may not be
recognized and enforced. The principle of reciprocity in enforcing foreign awards is a
reflection of Article I (3) of the NYC (1958), where such a principle is emphasized. The
principle is adopted by most countries but not all.
Thus, when seized of a foreign award, in order to enforce it, it must be established that the
rendering country allows enforcement of awards made in India, and apply the same
conditions that are applied to the enforcement of Indian awards in that State. In other words,
it has to be proved that no more restrictive condition than those of Indian Law applies to the
enforcement of an Indian award in the said State. A refusal of enforcement of Indian awards
in that State leads to the denial of enforcement of awards rendered there in India. Also,
stricter conditions for enforcement of Indian awards in a State than those applied in India
triggers similar restrictions for enforcement of awards made in that State, if they are to be
enforced in India. There are two serious difficulties, however, with this requirement. First, the
Indian provision does not specify what the conditions referred to are. Second, there is no
mention of on that the burden of proof for the existence of the reciprocity condition is: the
requesting party or the Court. Such vagueness in the language of the Article can give rise to
disputes over its interpretation. It has been argued that if Article 49 means that the Indian
judge has to take into consideration exactly the same conditions for enforcing a foreign
award in India that are applied by the courts at the seat of arbitration when they enforce
awards made in India, this imposes a difficult task on the judge. This is because it is difficult
16
1991(3) WLR 297 (HL).
20
for a judge to know the conditions for enforcing a foreign award in another State.
Furthermore, unless there is a precedent or specific provision of law in the other State, it is so
difficult to prove that there is such a mutual policy. Imposing such a condition may result in
non- enforcement of an arbitral award.
In principle, a local judge should refer to the law of the seat of arbitration to acquaint himself
with provisions relating to the enforcement of foreign awards in that State. This is famous as
legislative exchange. He should also refer to international conventions or treaties concluded
between the country where the award is made and his own country. This is called diplomatic
exchange. More importantly, some formal procedures followed by a State in enforcing
another State’s awards are of little importance that neither are considered as an obstacle to the
enforcement of these judgments and award in the first State, nor are necessary to be followed
in the second country exactly accordingly, in order to meet the condition of reciprocity. It
should be noted, moreover, that international conventions and treaties usually function for the
purpose of relieving the courts of deciding on the conditions of reciprocity, as the
conventions are reciprocal by their nature.17 It would have been better, if Indian Law had
contained two different provisions regarding the enforcement of court rulings and arbitral
awards. In that way, it would have been possible to address issues more relevant to
enforcement of arbitral awards. For example, Article 44 can be interpreted as saying a foreign
award may be enforced as if it was a domestic Court decision in India, if the issuing State
treats awards made in India as if they were court decisions in that State. However, Indian
Law could have been more explicit in this regard, in order to avoid any misinterpretation.
Nevertheless, the principle of reciprocity expressed in Article 44 (b) of the Arbitration Act,
1996 significantly paves the way for the facilitation of enforcing foreign arbitral awards in
India.
In general, under Indian law, if enforcement of a foreign award is sought in India, it is Indian
Law that determines the enforcement procedure. This is in line with the general rule in has to
international conventions on enforcement of awards, according to which the law of the
enforcing country is applicable to enforcement procedure.18 If no multilateral or bilateral
treaty governs enforcement of a foreign award, its enforcement in India requires a court
decision.
17
Habib Mohd. Sharif al Mulla. “Conventions of Enforcement of Foreign Judgments in the Arab World”, Arab
Law Quarterly, vol. 14, issue 1 (1999).
18
For instance, Article III, the New York Convention, 1958.
21
7. PROCEDURE FOR ENFORCEMENT OF FOREIGN AWARDS
ACCORDING TO THE ARBITRATION AND CONCILIATION ACT, 1996
The Procedure for enforcement of a foreign award in India is governed by Part II of the Act
which accounts for enforcement of awards under both the New York Convention under
sections 44-52 as well as the Geneva Convention on the Execution of Foreign Arbitral
Awards, 1927 (“Geneva Convention”) under sections 53-60 of the Act. In India, Enforcement
of a foreign award is a two staged process. After filing of the execution petition by the
parties, the court first looks at whether the award adheres to the requirements of the Act as
are laid down under section 44 for an award under the New York Convention and section 53
for the Geneva Convention. Both these provisions are similar and section 44 defines a foreign
award and state that,
“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—
(a) in pursuance of an agreement in writing for arbitration to which the Convention
set forth in the First Schedule applies, and
(b) 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.”19
Therefore, the court has to satisfy itself that the award fulfils the following five conditions:
i. award must arise out of legal relationships (contractual or not)

ii. it must adjudicate upon a commercial dispute
iii. in pursuance of an agreement in writing
iv. the Convention set forth in First Schedule must apply
v. the territory has been notified in the official gazette by the Government of India after
being satisfied that the reciprocal provisions have been made.
Similarly, section 53 of the act, which deals with the enforcement of awards passed under
Geneva Convention, also lays down a similar definition of a foreign award wherein an award
19
Arbitration and Conciliation Act 1996, s 44.
22
passed in commercial matters in a territory that the central government, on being satisfied
that reciprocal provisions have been made, notifies in the Official Gazette can be termed as a
foreign award. After satisfying itself about the same, the party must be ready to face the
objections and challenges (which might turn out to be frivolous) put forth by the other party
in order to stall the process and buy some more time. Section 48 talks about grounds for
refusal to enforce a foreign award. Unlike section 34, which talks about setting aside of a
domestic award, Section 48 talks about refusal to enforce, which means that a foreign award
cannot be set aside by Indian courts? Further, Indian courts can refuse to enforce a foreign
award if the award has not yet become binding on the parties or has been set aside or
superseded by a competent authority of the country in which, or under the laws of which, the
award was made. 20 Once this stage is passed and all the objections are dismissed and rejected,
the court passes an enforcement order and the award can then be executed as a decree of that
court.
The above procedure is applicable when the award is passed in a territory which is a
reciprocating nation under any of the two conventions and is in turn also notified by the
government of India to be a reciprocating nation in the Official Gazette. In the current paper
we are concerned with the first stage of the enforcement of the award wherein an award is
decided and termed to be a foreign award as per the above requirements laid down under the
Act.
Keeping in view the current commercial system existing globally, investors and other people
associated with any business have a legitimate expectation that if an award is obtained from a
signatory country then it must be enforceable in India as well. The reservation made by India
at the time of signing the New York Convention also makes it an obligation on the part of
India to recognise and enforce all the awards made in the territory of any State, which is party
to the New York Convention. Thus, making the requirement under section 44 more onerous
than is intended by the Convention or the reservation made by India while signing of the
Convention.
Further, this requirement is counterproductive to the object and purpose of the Act and
Article I of the New York Convention because it creates an unnecessary ambiguity regarding
enforcement of the awards passed in Convention States which are not yet notified by the
20
Sumeet Kachwaha, ‘THE ARBITRATION LAW OF INDIA: A CRITICAL ANALYSIS’(Asia International
Arbitrational Journal, Volume 1, Number 2, Pages 105-126) , available at:
www.kaplegal.com/upload/pdf/arbitration-law-india-critical-analysis.pdf (last visited on November 1, 2020).
23
Government of India. 21 It has to be kept in mind that till date only 49 out of 145 signatories of
the New York Convention have been notified by the Central Government. They are:
Australia, Austria, Belgium, Botswana, Bulgaria, Canada, Central African Republic, Chile,
Cuba, Czechoslovakia Socialist Republic, Denmark, Ecuador, The Arab Republic of Egypt,
Finland, France, Germany, Ghana, Greece, Hungary, Italy, Republic of Ireland, Japan,
Republic of Korea, Kuwait, Malagasy Republic (Republic of Madagascar), Malaysia,
Mexico, Morocco, The Netherlands, Nigeria, Norway, People's Republic of China (including
the Special Administrative Regions of Hong Kong and Macao), Philippines, Poland,
Romania, San Marino, Singapore, Spain, Sweden, Switzerland, Syrian Arab Republic, United
Republic of Tanzania, Thailand, Trinidad and Tobago, Tunisia, United Kingdom, United
States of America and USSR.22 These are even less than one-third of the total contracting
states. Not only that, but no rules or regulations or legislations have been made till date which
gives a definitive test as to what would amount to satisfaction of the central government or
what should be the timeline within which the Central Government must notify a signatory in
the official gazette or how to make an application to the government asking them to notify a
territory which is a signatory, in the Official Gazette after carrying on the requisite inquiry
about their reciprocal provisions.
The Act is silent about the enforcement of the awards passed by a Convention State which
has not yet been notified by the government. The Act also does not refer to a situation where
an award is passed by a Non-Convention state. So, the questions that now arise are what
happen when an award is passed by a Convention State which has not yet been notified by
the Government? Or an award passed by a Non- Convention State? Are such awards
enforceable at all? What evidentiary value do they hold in the eyes of the enforcement
courts?
21
Subhiksh Vasudev, ‘Has India Truly Delivered on Its Obligations Under Articles I and V of the New York
Convention Over the Last 60 Years?’ (Kluwer Arbitration Blog, 29 November 2018), available at:
http://arbitrationblog.kluwerarbitration.com/2018/11/29/has-india-truly-delivered-on-its-obligations- under
articles-i-and-v-of-the-new-york-convention-over-the-last-60-years/ (last visited on November 5, 2020).
22
Dharmendra Rautray, ‘Enforcement of Foreign Awards in India’ (Asian International Arbitration
Journal) (2013) Volume 9 Issue 2 Kluwer Law International), available at: http://elibrary.gnlu.ac.in (last visited
on November 6, 2020).
24
8. GROUNDS FOR NON-ENFORCEMENT OF FOREIGN ARBITRAL
AWARDS
The Arbitration Act, 1996 provides for certain grounds for refusing enforcement of foreign
arbitral awards. In this respect, Indian Law generally follows the NYC (1958). Nevertheless,
there are some significant differences that are discussed in the following Sections. The main
difference is that while, under the Convention these grounds may, but not must, result in non-
enforcement of a foreign award, under Indian law, they shall have such a legal impact. In
other words, if there exists such a ground, the Convention provides judges with the discretion
to or not to enforce the award, but Indian Law clearly prohibits them from enforcing such an
arbitral award.
The Section 34 of Arbitration Act, 199623 covered some of the grounds for said aside which
are same with Section 48. This Section has been enacted on the basis of Article V of the NYC
(1958) and also Section 7 of the Foreign Awards (Recognition & Enforcement) Act, 1961.
The Section 48 of the Arbitration Act, 1996 had an occasion to elaborate and lay down proof
grounds for setting aside of award which are available in foreign awards. Briefly stated, these
grounds are:-
a) If the arbitral agreement is not valid.

b) Due process of law has been violated.
c) Arbiter has exceeded his authority.
d) Irregularity in the composition of Arbitral Tribunal or arbitral proceedings.
e) Award being set aside or suspended in the country in which, or under the law which,
that award was made.
f) Non-arbitrability of dispute.
g) Award being contrary to public policy.
Rest of the grounds which are same with Section 34 of the Arbitration Act, 1996 (which
explained previous Chapter), new grounds of Section 48 of the Arbitration Act, 1996 have
covered by researcher as follow:
23
Section 34 of the Arbitration Act, 1996 reads as; “Application for setting aside arbitral award.”
25
8.1 Not Being Issued by a Competent Body
Article 48(1) of the Arbitration Act, 1996 provides that a foreign award cannot be enforced, if
it has not been issued by a competent judicial authority, according to the international
jurisdiction rules of the country where it has been made. As we already know, under Article
49 of the Arbitration Act, 1996, the rules applying to foreign Court decisions also apply to
foreign awards. It can be argued that the extension of the above rule to foreign arbitral awards
means that such an award cannot be enforced in India, if it is not issued by a competent
arbitration tribunal according to the law of the country where it is made. If this interpretation
is plausible, Indian Law is more restrictive of the NYC (1958) and most other internationally
established rules, which do not explicitly refer to such a condition.
Some States (like Egypt 24 or Bahrain25, etc.) go beyond the requirement that a foreign
judgment or award may be enforced, if the issuing authority is competent according to the
international jurisdiction rules set out at the seat of judgment. They also require that, if a
foreign judgment is to be enforced in their territory, their domestic court must not have
jurisdiction to hear the case, according to their own rules of private international law, which
is considered as part of their public policy. In other words, joint jurisdiction between the
issuing and enforcing countries results in non-enforcement of a foreign judgment. This is so,
for instance, in the United Arab Emirates, the Dubai Court of Cassation ruled that if the
Dubai Court has jurisdiction over a dispute; a judgment rendered by a foreign court on the
dispute would not be regarded as res judicata, and would not be enforced.26
Although, like the NYC (1958),27 Indian Law explicitly consider the invalidity of arbitration
agreement, the incapacity of the parties to conclude the arbitration agreement, the wrong
composition of the tribunal or the excess of the jurisdiction of the tribunal, as grounds for
refusing enforcement of a foreign arbitral award. As we have seen in Chapter V of this thesis.
Since the above provision of Indian Law does not directly address the issue of the jurisdiction
of the rendering body, it does not deal with the possibility of an award being issued on a
dispute which is partially within the jurisdiction of the tribunal. Under most legal systems,
recognition and enforcement may be granted to those parts of the award in which the tribunal
24
Article 298(1) of the Egyptian Code of Civil and Commercial Procedure 13/1968.
25
Article 252 of the Bahrain Law No.12.
26
Danny Kabbani. “Enforcement of Foreign Judgments Relative to Project Finance in Islamic
Countries”, GCC Commercial Arbitration Centre Bulletin, issue 19 (June 2001).
27
Articles V (1) (a) to V (1) (c), the New York Convention (1958).
26
has acted within its jurisdiction, if such parts can be separated from the other parts. There is
no reason not attribute the same view to the Indian law. The difficulties and ambiguities
raised by the above provision of Indian Law once again indicate that it would have been
better, if Indian Law had addressed foreign awards differently from foreign court judgments
and orders.
8.2 Non-Compliance with Indian Law or a Court Decision
Article 48(1) (d) of Arbitration Act, 1996 provides that a foreign orders and award that entails
a breach of a rule of the laws practiced in India shall not be enforced. The problem with this
provision is that it does not specify which types of rules cannot be breached by the award. It
can be interpreted that they must not be against the ordinary law of India. This, however,
goes beyond the internationally established rules and particularly the NYC (1958), which
requires a foreign award not to be against the mandatory rules of law in the enforcing State.
Indian Law even goes further, and requires that a foreign orders and award the enforcement
of which is sought in India must not contradict orders and award already issued in India. This
implies the priority of an Indian court decision over a foreign judgment or award, in term of
their execution in India. Such a situation arises in the case of joint jurisdiction, when both the
Indian and foreign courts have jurisdiction to hear a dispute. As seen before, the exclusive
jurisdiction of a domestic court leads to non enforcement of a foreign award, even if no
domestic decision has yet been made.
On the other hand, it can be said that, if the judgment is made by the Indian court lacking
jurisdiction to hear the case, and the defendant did not made any objection to the competence
of the court, the judgment is considered as if it were made by the court having jurisdiction.
Such a judgment consequently has priority of enforcement over foreign sentences and awards
regarding the same dispute. Nevertheless, in other cases of lack of jurisdiction or joint
jurisdiction, there is no reason for the priority of a decision made by the Indian court over a
foreign arbitration award.
Under the above situation of Indian Law, filing a lawsuit with the Indian court does not bar
the enforcement of a foreign award, because enforcement of such an award may be barred
only if a contradicting Indian court sentence has already been made. The provision does not
also require denying enforcement of an award, if court proceedings on the same or a related
subject pending in India have begun before the foreign arbitral proceedings. Under many
legal systems, such as the English law, the losing party may request a stay of the order for
27
enforcement, pending determination of any application to set aside the award before the
competent foreign authority.28
It may also be asked whether the Indian court would enforce the foreign award, if a court
judgment has already been rendered, or court proceedings are pending in a third country.
India may or may not have a contract with the latter country for enforcing Court judgments.
India is under obligation to enforce court judgments rendered in countries with which it has a
bilateral or multilateral treaty. India is a party to several international conventions for
enforcement of foreign award.
8.3 Improper Summons and Legal Representation
The Orissa High Court in Orient Paper Mills v. Civil Judge,29 did not allow the summoning
the chairman of arbitral tribunal as a witness. The application was made under Articles 226 &
227 of the (Indian) Constitution for a direction to the Civil Judge for issuing summons. The
award was submitted by the tribunal. It rejected the claim with a full statement of reasons.
The ground on which the Chairman was sought to be summoned was that the tribunal
considered certain document behind the back of the party. The Court said that this ground, if
established, would have enabled the party to get the remedy of setting aside. In the presence
of such a crystal remedy, there was hardly any need for summoning the arbiter as a witness. 30
The Orissa High Court held that a foreign award can be enforced, only if both disputant
parties have been summoned to appear and legally represented. This decision is a reflection
of Article V (1) (b) of the NYC (1958).
Although Article 48(1) (b) of the Act, 1996 does not explicitly express equal treatment, fair
hearing, full and proper opportunity for the parties to present their case and having access to
the other party’s documents as conditions for the enforcement of a foreign award, it can be
interpreted as to prohibiting most types of failure to comply with fairness in arbitration
proceedings. For instance, the Arbitral Tribunal’s refusal to hold a hearing requested by one
28
Section 103(2), English Arbitration Act, 1996, and David Altaras, “Enforcement of Foreign Award: Dardana
Ltd v. Yukos OIL Co.”, Arbitration, vol. 68, no. 3 (2002), 316.
29
AIR 2003 (4) RAJ 479 (Ori).
30
Ibid.
28
of the disputant parties may be regarded as a violation of due process, and thus a ground for
denying enforcement of the award.31
8.4 Non-Arbitrability of the Dispute
Enforcement of an arbitral award may be refused if the court finds that the issue of the
difference is not capable of settlement by arbitration under the law of India. Article 48(2) (a)
of Arbitration Act, 1996 provides that the dispute about which a foreign award is made must
be arbitrable under Indian Law. This is equivalent of Article V (2) (a) of the NYC (1958). As
we have seen in chapter IV (Four) of this thesis, Article 2 of the present Act, 1996 implies
that almost any dispute arising from legal relationships between private and public entities
can be settled by arbitration. However, disputes that cannot be subject to reconciliation or
compromise cannot be settled through arbitration.
Generally speaking, almost all subject-matters in dispute, not being of a criminal nature, may
be referred to arbitration. Where the law has given jurisdiction to determine a particular
matter to specified tribunals only, determination of that matter by other tribunals is excluded.
The SC in Union of India v. Popular Builders32 held that the existence of arbitrable dispute is
a condition precedent for exercise of power by an arbiter. The Supreme Court in U.P. Rajkiya
Nirman Nigam Ltd. v. Indure(P) Ltd.33 has also emphasized that the arbitrability of a claim
depends on the construction of the clause in the contract and on this point the finding of the
arbiter is not conclusive and that ultimately it is the court that decides the controversy. That
was the position under the repealed Arbitration Act, 1940. Section 16 of the Arbitration Act,
1996 empowers the arbiters to decide such question. The decision of the arbiter in this respect
being appealable, ultimately the matter goes for the decision of the court. The same effect
was the decision of the SC in Union of India v. G.S.Atwal & Co. 34
8.5 Non-Enforceability in the Country Where It Is Made
Article 48(1)(e) of Arbitration Act, 1996 provides that a foreign arbitral award whose
enforcement is sought in India has to be enforceable in the country where or under the law of
which, it has been made. In other words, enforcement of foreign award may be refused if the
31
Sections 48(1) (b) of the Arbitration Act, 1996 (This is similar to Article V (1) (b), the New York Convention
1958) reads as “The party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case.”
32
AIR 2000 SC 1.
33
AIR 1996 (2) SC 667.
34
AIR 1996 (3) SC 568.
29
award has not yet binding on the disputants, or has been set aside or suspended by a
competent authority of the State in which that award was made. The SC in Centrotrade
Mineral & Metals Inc v. Hindustan Copper Ltd.35 has explained the phrase “ the country….
under the law of which, it has been made” in Article 48(1) (e) of Arbitration Act, 1996, refers
to the law of the State in which the arbitration has its seat rather than the sate whose law
governs the substantive contracts. Under Article V (1) (e) of the NYC (1958), a foreign
award may not be enforced, if it has not yet become binding on the disputant parties, or has
been set aside or suspended in the country where it is made. The above Indian provision is
probably intended to reflect the restriction expressed in the NYC (1958), as the requirement
of enforceability entails, among other things, that an award has not been set aside or
suspended, and is binding. However, Indian Law is similar with the Convention. Some States
require the award to be binding, under the law at the seat of arbitration or under the
applicable law, but Indian Law just requires it to be enforceable under the law at the seat of
arbitration. This means that if the award is made in another country under the law of a third
State, it cannot be enforced in India, unless it is enforceable in the State where it is made.
This imposes an extra restriction on enforcement of foreign awards in India. The
enforceability condition may amount to the need for double enforcement, at the seat of
arbitration as well as in the enforcing State.
This is while it has been a main purpose of the NYC (1958) to abolish the need for obtaining
leave to enforce twice, once in the State where it is made, and then in the country where its
enforcement is sought. Moreover, there are some legal regimes, including France and USA,
whose law is more facilitative of arbitration than the NYC (1958) is. The national laws of
these countries provide that an award defective under the law at the seat of arbitration or
under the applicable law can still be enforced. For instance, in Hilmarton Ltd. v. Omnium de
traitement et de valorisation, the French Court recognized an award set aside in
Switzerland.36 The French legislator has gone as far as omitting setting aside as a ground for
non- enforcement of an award, in the Amendment of the French Code of Procedure1981. In
the USA, in Chromalloy Aeroservices Inc. v. Arab Republic of Egypt, the Federal Court
enforced awards set aside in Egypt.37 In instant case, unlike the Egyptian law, the US Federal
Court enforced the award, since the US Federal law of arbitration did not consider a proper
35
AIR 2006(11) SCC 245.
36
Hilmarton Ltd. v. Omnium de traitement et de valorisation (OTV) Revue de l’arbitarge 1994, 327, English
excerpts in International Council for Commercial Arbitration, Yearbook Commercial Arbitration, XX (1995).
37
Chromalloy Aeroservices Inc. v. Arab Republic of Egypt, 939 F Supp. 907, at 909 (D.D.C. 1996).
30
implementation of the applicable law as a ground for vacation of an award. The court did so,
drawing upon Article VII of the NYC (1958) on the more favourable regime of enforcement.
8.6 Non-binding Awards
The system of double ‘exequatur’ (leave for enforcement) has been dispensed with by the
NYC (1958) which was not prevalent in the GC (1927), by using the word binding instead of
final. That means the enforcement of NYC awards can be sought in another State without
seeking leave for enforcement ‘exequatur’ from the State where the arbitral award was made.
The expression binding implies that arbitral award is binding on the disputant parties and is
effective so much so that it would no longer be open to ordinary means of recourse including
appeal against the foreign award.38
Under Article 48(1) (e) of Arbitration Act, 1996, a foreign award in order to be enforced in
India must be binding according to the law of the State where or under the law of which, it is
made. The SC of India in O.N.G.C. v. Western Co of North America39 said that the foreign
award can be said to have become ‘binding’ on the parties only when it has become
enforceable and the enforceability must be determined as per the law applicable to the award.
This provision, too, reflects Article V Para (1) (e) of the NYC (1958). The difference,
however, is that, under Article 1(2) (d) of the GC (1927), an award has to be final in order to
be enforced, whereas the NYC (1958) provides that the award must merely be binding. This
means that some types of interim awards, particularly conservatory measures, if they are
considered to be binding, can be enforced under the Convention, but not under the GC
(1927). Foreign awards that are not yet final may be revoked later, so their enforcement may
create practical difficulties. Thus, requiring awards to be final, under the GC, puts an extra
condition for enforcing foreign awards, compared to what is required by the NYC (1958).
Then, a binding arbitral award is enforceable but it is not final as long as it is ‘open to means
of recourse’. It is for this reason that the NYC (1958) avoided to use the term final (as is
found in Article 1(2) (d) of the GC, 1927) in place of binding.40
38
S.S.Misra.“Law of Arbitration & Conciliation in India with Alternative Dispute Resolution Mechanism.”, 2nd
Ed. Allahabad: Central Law Agency, (2010) 230.
39
AIR 1987 SC 674.
40
N.V.Paranjape.“Law Relating to of Arbitration & Conciliation in India”, 4th Ed. Allahabad: General Law
Agency, (2011).
31
8.7 Awards Being against Public Policy
As we have seen, the expression ‘Public Policy’ is subject to interpretation from place to
place and time to time as also to currently prevailing circumstances, the Arbitration Act,
1996 having not defined it.
Section 48 (2) (b) of the Act, 1996 empowers the Court to set aside the arbitral award made
outside India if it violates Public Policy. Similar provision is contained in Section 34(2) (b)
where the arbitral award is made in India. Under above Article, a foreign orders or award the
enforcement of which is sought in India must not contain anything against Public Policy.
The legislature of India used of the words “if the Court finds that” in the Section makes it
crystal that it is not necessary for the party to plead that the arbitral award violates Public
Policy but the duty is cast on the court itself to see that the arbitral award is not in violation of
Public Policy. In Renusagar Power Co. Ltd. v. General Electric Co. Ltd.41 which arose under
the Foreign Awards (Recognition & Enforcement) Act, 1961 which implemented the NYC
(1958) of 1958 relating to recognition and enforcement of foreign arbitral awards, the SC
inter-alia observed: “In order to attract the bar of Public Policy, the enforcement or the
award must involve something more than mere violation of the law of India. The enforcement
of a foreign award would be contrary to Public Policy if it is contrary to:
a) Fundamental policy of Indian Law;

b) The interests of India;&
c) Justice and morality.”42
After 9 years, the SC in Oil & National Gas Corporation Ltd. v. SAW Pipes Ltd.43 has
observed that the term “Public Policy” does not admit a precise definition. For the purpose of
Sections 34 & 48, the phrase “Public Policy” has to be given a wider connotation and the
award could be set aside if it is;
a) Fundamental policy of Indian Law;

b) The interests of India;
c) Justice and morality;
d) Is patently illegal; or
41
AIR 1994 SC 860.
42
Ibid.
43
AIR 2003 SC 2629.
32
e) It is so unfair and unreasonable that it shocks the conscience of the Court
The Bombay High Court in Open Sea Maritime Inc. v. R. Pyarelal International Pvt. Ltd.44
observed that wherein the enforcement of foreign award, is objected on the ground that suit
was filed by the petitioners in Bombay High Court on original said. This was in respect of the
same issue which was referred to for the arbitration. Notice in respect of the said suit was also
given to the arbiter. Hence the petitioners could not have preceded with the arbitral
proceedings. It was held that it amounted to fraud and hence the enforcement of the foreign
award would be contrary to the public policy of India. It is violation of Section 48 (2) (b) of
the Arbitration Act, 1996. This decision was approved by the SC in Phulchand Exports Ltd.
v. OOO Patriot.45
Likewise, The Supreme Court rejected the contention that enforcement of foreign arbitral
award made in Ukraine would be against Public Policy as the arbiter was an employee of one
the disputant parties and, therefore, would not be independent in case Transoccan Shipping
Agency v. Black Sea Shipping.46 It may, however, be stated that the phrase Public Policy has
been interpreted differently by courts depending on whether the arbitral award is made by
international or domestic arbitration tribunal. 47
An important feature of the Renusagar Power Co.48 and Oil & National Gas Corporation
Ltd.49 Cases are that the SC emphasizes the rules of morality and conduct as separate from
Public Policy. Under most other national laws, on the other hand, Public Policy is taken as
including the rules of morality. The NYC (1958) provides for the non-enforcement of awards,
if they contravene Public Policy of the enforcing country, without specifying ethical rules.50
The serious problem with the above Indian provision is that no clear distinction is made
between Domestic and International Public Policy. Moreover, it is not clear whether the
Indian court, when considering enforcement of a foreign award, takes into account
International Public Policy or otherwise. For instance, may a breach of a sanction regime
imposed by the UN result in the non-enforcement of an award made outside India.
44
AIR 1999(2) Arb. LR 383(Bom.)
45
AIR 2011(4) Arb.LR 108(SC).
46
AIR 1998(2) SCC 281.
47
N.V.Paranjape, 2011,op.cit., 263.
48
Renusagar Power Co. Ltd. v. General Electric Co. Ltd., AIR 1994 SC 860
49
Oil & National Gas Corporation Ltd. v. SAW Pipes Ltd., AIR 2003 SC 2629.
50
Article V (2) (b), The New York Convention (1958).
33
More importantly, the above Case of the SC does not specify which kinds of moral rules must
be complied with. Are awards assessed against fundamental moral rules or moral rules in
general? Also, it is not clear whether internationally accepted moral standards are the criteria
for refusing enforcement of foreign awards or moral standards prevalent in Indian society.
Indian society, as a traditional Hindu & Muslim society, has moral standards many of which
do not correspond with the moral values accepted in the other States particularly Secular
West. Although Indian Law does not explicitly refer to Hinduism or Islamic teachings as
standards of morality, such teachings are embedded in Indian culture.
Unfortunately, so far there has not been sufficient case law to clarify the above ambiguous
and complex issues in Indian law, and it is expected that when such questions arise in the
context of a legal case, there will not be an easy solution. Such ambiguities might dissuade
foreign parties from recourse to arbitration to settle their prospective disputes with Indian
parties. Probably, it would have been safer if the phrase “rules of morality” were not in the
Indian legal system, in order to avoid any controversy over its interpretation. It is heartening
to note that the Arbitration (Amendment) Bill, 2003 seeks to define the term Public Policy so
as to give it an exact meaning. 51
9. COMPETENCE OF THE COURT
9.1 Not Considering the Merit of the Case
Like India, most legal regimes do not permit a substantive review of foreign arbitral awards.
However, as discussed before, under Indian Arbitration Act, 1996, a foreign arbitral award
have not been reviewed on the basis of its merits, or more probably its proceedings might
have been reviewed, in order to ensure that procedural requirements, mandatory rules of
Indian law, public policy and good morals were observed. The Delhi High Court in Ludwing
Wunscha & Co. v. Raunaq International52 has held that Section 46 of the Arbitration Act,
1996 provides that a foreign award cannot be challenged on merits, be final, conclusive and
binding for all purpose, expert the circumstances set out in Section 48 of the Arbitration Act,
1996 in which enforcement thereof will be refused. Domestic courts cannot set aside or annul
a foreign award. The Court has only jurisdiction to decide whether the foreign award is
enforceable or not.
51
N.V. Paranjape. 2011,op.cit., 263.
52
AIR 1983 Del. 247.
34
The point is that from a strictly legal perspective, there was no text of law or any international
convention prohibiting the Indian Court from examining the issue of the dispute.
Nevertheless, in practice, the court recognized and granted leave to enforce awards made
outside India, even if they were made in favour of the foreign party, without reviewing the
subject-matter of the dispute.
The various grounds available for challenge of the arbitral award do not postulate a challenge
to the award on merits. This is so, because the exhaustive list of grounds enumerated in the
Section does not include a mistake in fact or law committed by the arbiter. Moreover, the
enforcing judge is confined to verify the justification of the objections on the basis of the
specified grounds and to weigh the violation of public policy of his State. It is also because
the principles of ICA do not allow judicial interference with the substance of arbitration by a
State court.
The Supreme Court in Renusagar Power Co. Ltd. v. General Electric Co. Ltd.53 observed that
in enforcement proceedings of a foreign arbitral award, the scope of enquiry before the court
in which award is sought to be enforced is limited to the conditions mentioned in Section 48.
This Section does not make provision which enables a party to the said proceedings to
challenge the award on merits. Thus, it is crystal that before a foreign arbitral award is
enforced the provisions of Sections 44 and 47 of the present Arbitration Act, 1996 are
required to be fulfilled.
Recent Indian laws are more explicit that Indian courts are not competent for the substantive
review of foreign judgments and awards. The Arbitration Act, 1996 does not include issues of
fact and law in the list of grounds for declining enforcement of such awards. However, there
are some provisions of Indian Law that might be interpreted as authorizing Indian courts to
investigate some of types of substantive matters of fact with regard to foreign awards. For
instance, under Article 48 (2) (b) (Explanation) of the Arbitration Act, 1996, a foreign orders
and award cannot be enforced in India, if it is based on fraud or corruption.
9.2 Ordering Interim Measures
Indian judicial systems, even before the present Arbitration Act, 1996, have been ready to
order interim or conservatory measures in disputes referred to domestic not international
arbitration. For granting of interim measures by a Court in context to foreign parties of an
53
AIR 1994 SC 860.
35
arbitral agreement, the question of jurisdiction of the Court arises. The question of whether
Article 2(2) the Arbitration Act, 1996 stripped Indian Courts’ jurisdiction to issue interim
measures in ICA held outside India was decided in the seminal case of Olex Focas Pvt. Ltd.
& Others v. Skoda Export Co. Ltd.54 The Delhi High Court vacated the ex parte interim
injunction
.Another authority to the same effect, in Marriott International Inc & Others v. Ansal Hotels
Ltd.55 arbitration was under the NYC (1958) at a place outside India, the Delhi High Court
refused to issue any interim order in such a matter. This decision was not approved by the SC
in Bhatia International v. Bulk Trading S.A.56 In instant case, the three Judges Bench of the
SC attempted to resolve the ambiguity of Article 2(2) of the Arbitration Act, 1996 by taking
the bold view that despite its contrary wording, the entire Part I of the Act, 1996 was also
applicable to ICA held outside India,57 thereby indisputably going against the conceptual and
architectural demarcations established by the Arbitration Act, 1996 between foreign and
domestic arbitrations. To uphold its holding, the Court reasoned that it was necessary to
determine whether the language of the Arbitration Act, 1996 was a very plain and
unambiguous as to admit only one interpretation.58 One may however question what
ambiguity exactly lies in “Scope; this Part shall apply where the place of arbitration is in
India.”59 Yet, finding that the language was uncertain and ambiguous, the Court engaged in a
lengthy discussion about the purpose of the Arbitration Act, 1996, reasoning that “the
conventional way of interpreting a statute is to seek the intention of its makers.”60 What
appears to be the driving force behind the Court’s decision is its belief that adhering to the
plain language of the Arbitration Act, 1996 would culminate in untenable results.61 Thus, the
Bhatia judgment rendered Part I—meant to deal with domestic arbitration in India—
applicable to arbitrations located outside India.
Although the intention of the Court may have been to assist arbitration by rectifying the
anomaly between the ML and the Arbitration Act, 1996, it may have gone too far in
expanding the scope of Part II by making Part I applicable to arbitration outside the territory
54
AIR 2000 DLI 161.
55
AIR 2000 DLI 377.
56
AIR 2002( 4) SCC. 105.
57
AIR 2002(4) SCC 110; providing that courts in India would have jurisdiction even in respect of an
international commercial arbitration because an ouster of jurisdiction cannot be implied, it has to be express.
58
Ibid.
59
Article 2(2) of the Arbitration Act, 1996.
60
Bhatia case, AIR 2002(4) SCC 105.
61
Ibid.
36
of India.62 The decision of the Court is in sharp contrast to the ML (1985) considering that the
ML (1985) it does not contemplate granting such broad powers to national courts.63
While the Bhatia decision has been hailed for attempting to assist ICA in interpreting the
1996 Act according to the NYC (1958) and the ML (1985), others have criticized it for
overreaching and judicial “law-making.”64 Extending the powers of Indian courts to ICAs
held outside India also opened up the possibility of challenging foreign-rendered awards in
Indian courts. Thus, the Bhatia judgment may have inadvertently vested Indian courts with
powers beyond those envisioned by the drafters of the ML (1985), and which could
potentially be adversely utilized against arbitration.
The Bhatia decision has been clearly described as “well-intentioned” but “seriously flawed,”
and “manifestly erroneous”65 because of its failure to read Part I of the Arbitration Act, 1996
—applicable to arbitrations seated in India—separate from Part II of the Act, 1996, which
deals exclusively with arbitrations seated outside India. This view has been reiterated by the
Supreme Court in Venture Global Eng. v. Satyam Computer Services.66
In doing so, the court failed to follow the letter of the law and instead relied on its own
conception of the 1996 Act’s intent.67 It is arguable whether the Court’s understanding of the
“spirit of the Act” is in line with the relevant legislative purpose of rendering arbitration more
efficient-including limiting judicial interference.
10. JUDICIAL INTERPRETATION
As discussed in the previous sub heads, getting a favourable award from a foreign arbitral
tribunal is only the job half done and the real work starts when the parties have to get it
enforced in India. The Act, as discussed, is silent on the subject of enforcement of the awards
from Convention Countries which have not been notified by the government of India and the
enforcement of awards of Non-Convention Countries. Even after going for arbitration, the
parties have to go for litigation in order to get their awards enforced, which the parties
wanted to refrain from in the very beginning itself. But it cannot be avoided as the Act
provides for a structured process for scrutiny by the courts. The law of Arbitration is one of
62
Especially considering that the Model Law itself does not contemplate granting such broad powers to national
courts.
63
Article 5 of the ML, which limits the courts’ involvement in international arbitration.
64
Fali S. Nariman & Remarks. “India and International Arbitration”, 41 Geo. Wash. Int’l L. Rev. (2009).
65
Ibid.
66
AIR 2008 SC 1061.
67
Ibid.
37
the most dynamic branches of law because it is still developing. In the past decade itself there
have been two major amendments and multiple landmark judgements which intend to fill the
loopholes in the legislation. But unfortunately, neither the 2015 amendment nor the 2019
amendment deal with this major problem of enforcement of award from a non- convention
state or an award from such convention state which has not been notified yet by the
government of India. There have been many judicial pronouncements which interpret the
position of law as it existed at that point of time. Unfortunately, today there is no judgement
which directly deals with the problem, but the Supreme Court at various occasions has
touched upon the issue of enforcement of such awards. In order to understand the various
solutions given by the Supreme Court at various points of time we have to divide the
discussion in three phases: Pre Bhatia, Post Bhatia and Post BALCO.
One of the first cases which discussed the issue of issue of enforcing a foreign award from a
Non-Convention country was Badat & Co. v. East Trading Co.68 In this case, the dispute
arose between Badat & Co., formerly carrying on business in Bombay and the East India
Company, a private ltd. company incorporated under the laws of State of New York, United
States of America regarding an American Spice Trading Contract for supply of Allepey
Turmeric Fingers. The matter was taken for arbitration, and award was passed by the
arbitrator in New York. The award was later confirmed by the Supreme Court of New York.
A suit was then filed in the Bombay High Court to recover the amount payable under the
award. The Bombay High Court rejected the suit on the ground that it did not have
jurisdiction to entertain the suit. The claim was allowed in an appeal to the division bench.
The appeal then went to the Supreme Court. The Hon’ble Court interalia held that,
“(54)...Before we do so, it would be desirable to examine the position regarding the

enforcement of foreign awards and foreign judgments based upon awards. Under the
Arbitration Protocol and convention Act, 1937 (6 of 1937), certain commercial awards made
in foreign countries are enforceable in India as if they were made on reference to arbitration
in India. The provisions of this Act, however, apply only to countries which are parties to the
Protocol set forth in the First Schedule to the Act or to Awards between persons of whom one
is subject to the jurisdiction of some one of such powers as the Central Government being
satisfied that the reciprocal provisions have been made, may, by notification declare to be
parties to the Convention, set forth in the Second Schedule to the Act. It is common ground
68
(1964) 4 SCR 19.
38
that these provisions are not applicable to the awards in question. Apart from the provisions
of the aforesaid statute, foreign awards and foreign judgments based upon awards are
enforceable in India on the same grounds and in the same circumstances in which they are
enforceable in England under the common law on grounds of justice, equity and good
conscience.
64. It will thus be seen that there is a conflict of opinion on a number of points concerning the
enforcement of foreign awards or judgments, based upon foreign awards. However, certain
propositions appear to be clear. One is that where the award is followed by a judgment in a
proceeding which is not merely formal but which permits of objections being taken to the
validity of the award by the party against whom judgment is sought, the judgment will be
enforceable in England. Even in that case, however, the plaintiff will have the right to sue on
the original cause of action. The second principle is that even a foreign award will be
enforced in England provided it satisfies mutatis mutandis the tests applicable for the
enforcement of foreign judgments on the ground that it creates a contractual obligation
arising out of submission to arbitration... The third principle is that a foreign judgment or a
foreign award may be sued upon in England as giving good cause of action provided certain
conditions are fulfilled one of which is that it has become final.”69
The above judgement clearly stated that any award rendered in a state which is not a state
party to the Protocol set forth under the Arbitration Protocol and Convention Act, 1937 could
not be enforced in India as it were a decree of the court.
This issue was again later discussed by the Supreme Court in Bhatia International v. Bulk
Traders S A.70 The court held that:
“(23) As is set out hereinabove the said Act applies to (a) arbitrations held in India between
Indians and (b) international commercial arbitrations. As set out hereinabove international
commercial arbitrations may take place in India or outside India. Outside India an
international commercial arbitration may be held in a convention country or in a non-
convention country. The said Act, however, only classifies awards as “domestic awards” or
“foreign awards”. Mr Sen admits that provisions of Part II make it clear that “foreign
awards” are only those where the arbitration takes place in a convention country. Awards in
arbitration proceedings, which take place in a non-convention country, are not considered to
69
Badat & Co. v. East Trading Co., (1964) 4 SCR 19.
70
(2002)4 SCC 105.
39
be “foreign awards” under the said Act. They would thus not be covered by Part II. An
award passed in an arbitration, which takes place in India, would be a “domestic award”.
There would thus be no need to define an award as a “domestic award” unless the intention
was to cover awards which would otherwise not be covered by this definition. Strictly
speaking an award passed in an arbitration, which takes place in a non-convention country,
would not be a “domestic award”. Thus the necessity is to define a “domestic award” as
including all awards made under Part I. The definition indicates that an award made in an
international commercial arbitration, held in a non-convention country, is also considered to
be a “domestic award”” 71
The Hon’ble Supreme Court in this case relied on section 2(f) of the 1996 Act, which defines
International Commercial Arbitrations and held that the definition does not differentiate
between International Commercial Arbitration taking place within or outside India. Further,
the court opined that the awards under Part II are related to awards passed in a Convention
state which has been notified by the Central Government in the Official Gazette and,
therefore, Part I would not be applicable in such cases. Furthermore, other awards passed in
non-convention countries or Convention countries not notified by the government of India,
would be enforceable under Part I of the Act, unless, application of Part I is expressly
excluded by way of contract. This further means that the grounds for setting aside such an
award are those given under section 34 which have much wider connotation then those under
section 48. However, in cases where the award is made in a Non-Convention state or a
territory which has not been notified by the government yet, the award would be enforced by
filing a suit on the award and the judgement obtained thereon from a Superior Court of that
country.
Although the Bhatia Judgement opened new gateways for enforcement of foreign awards
from Non- Convention States and Convention states which have not been notified yet but it
was also subjected to various criticisms. The most appalling of which was the increased
scope to challenge the award under section 34 of the Act. Further, as was held by the Hon’ble
Supreme Court in Renusagar Power Co Ltd v. General Electric Co72 and further clarified in
the case of Oil &Natural Gas Corporation Ltd v. Saw Pipes Ltd73 term public Policy under
section 34 includes patent illegality as a ground to set aside an award. Such ground cannot be
71
Ibid.
72
1994 Supp (1) SCC 644.
73
(2003) 5 SCC 705.
40
made applicable to a foreign award under the principles of Private International Law. This
was also held in the case of International Standard Electric Corporation v. Bridas Sociedad
Anonima Petrolera, Industrial Y Comercial,74The United States District Court, New York,
opined that allowing a court to set aside a foreign award on the basis of its domestic
substantive law would be contrary to the logic of the New York Convention and the nature of
international arbitration. The court stated that if every enforcing court undertook a de novo
review of a foreign award, it would result in chaos and that is not what the New York
Convention contemplated.75
Before, BALCO, Bhatia was the most significant judgement in Arbitration law. After the
Bhatia judgement, government defended its legislation in a Consultation Paper issued by the
Ministry of Law. The paper categorically states that,
“...the awards rendered in countries with which India does not have reciprocal arrangements
cannot be enforced in India as if it were a decree. Perhaps Badat’s case was not brought to
the notice of the court in Bhatia International v Bulk Traders S A case, which is why
observations pertaining to non-convention countries came to be made. As stated above
provisions of Part II which deals with enforcement of foreign award, is not and cannot be
made applicable to an international commercial arbitration which takes place in non-
convention country and where there is no reciprocal agreement between that country and
Central Government. Not only this, foreign award must be given in one of those territories in
respect of which reciprocal arrangement has been made. Section 44 of the Arbitration and
Conciliation Act, 1996 defines the term ‘foreign award”. According to Section 44, an arbitral
award is a foreign award if it is made in pursuance of an agreement to which New York
Convention [reproduced in First Schedule to the Act] applies and made in a territory to
which the New York convention applies on the basis of reciprocity”76
The interesting observation which can be made here is that although the paper talks about
enforcement of awards from non-convention countries, it conveniently does not speak about
the convention countries which have not yet been notified by the government of India in the
official gazette.
74
745 F Supp 172 at 177.
75
Sulabh Rewari, ‘From Bhatia to Kaiser: Testing the Indian Judiciary’s Self-Restraint’, Asian International
Arbitration Journal (2013) Volume 9 Issue 2 Kluwer Law International 97, 146.
76
Ministry of Law and Justice Government of India, Proposed amendments to the Arbitration and Conciliation
Act, 1996: A Consultation Paper (April 2010), available at:
https://www.legallyindia.com/images/stories/docs/Arbitration-Act-LawMin-ConsultationPaper-on- Arb-Act-
April2010-1.pdf (last visited on November 16, 2020).
41
Bhatia judgement was first doubted in the case of M/s Centrotrade Minerals &Metal Inc v.
Hindustan Copper Ltd,77 wherein the Hon’ble Supreme Court held that the domestic and
foreign awards have been put into two different and distinct compartments by the Arbitration
and Conciliation Act with some overlapping provisions. After a series of anti-arbitral
approach cases, the judgement in Bhatia was finally overruled in the celebrated judgement of
the Supreme Court in the case of Bharat Aluminium Co. v. Kaiser Aluminium78. The Court
held that a plain reading of section 2(2) makes it clear that Part I is applicable only to
domestic arbitrations i.e. arbitrations taking place in India. The Court further went on to hold
that exclusion of the non-convention awards from the scope of the Act was the intention of
the legislature and removal of any defect is the job of the Indian Parliament and not the
judiciary.
Even in this case the court did not talk about enforcement of awards from convention states
which have not yet been notified by the government of India in the official gazette. Even for
non-convention states the ball is back to square one from where it started and such awards
have a mere evidentiary value in the court of law which renders going for arbitration as
ineffective and leaves no difference between going for litigation and first going for
arbitration, obtaining an award, obtaining a favourable judgement from a Superior court in
that country and then going for litigation in India and proving the worth of the award in order
to enforce the same. The latter process becomes even more taxing than the former one and
stalls the process of dispute resolution which in turn obstructs economic growth of the
country.
11. COMPARATIVE ANALYSIS
India has gained a major place in Global arbitration regime but there are certain loopholes
and lacunas which still mar the system. The successful party of any arbitration has a
legitimate expectation for the award to be performed without delay. The risks and
uncertainties which the parties have to face while going for a foreign seated arbitration in
India do not help the cause at all. The gazetting requirement put under section 44 and 53make
the matters more complex when it comes to enforcement of a foreign award because this
requirement further places a more onerous caveat on the parties wherein they can enforce
their awards from a convention state only if such convention state has been notified by the
77
(2006) 11 SCC 245.
78
(2012) 9 SCC 552.
42
Central Government as having reciprocal provisions. In order to help us understand the global
trends, one should look at the corresponding texts of other states which are state parties to the
New York Convention and the Geneva Convention. For the purposes of this study, we will
focus upon the United States of America and the United Kingdom.
11.1 United Kingdom
Indian Arbitration regime is largely borrowed from the British jurisprudence. As per a study
conducted by University of London, in 2008, in UK most of the commercial awards are
carried out voluntarily and only eleven percent of the cases reach the courts for enforcement
and out of these only nineteen percent encountered difficulties when seeking to recognise and
enforce foreign arbitral awards. 79 UK, like India is a party to the New York Convention and
thus recognises and enforces all the awards made in the other contracting states provided that
the award is final and binding. Section 101 of the British Arbitration Act, 1996, talks about
recognition and enforcement of awards. It states that,
“101. RECOGNITION AND ENFORCEMENT OF AWARDS
(1) A New York Convention award shall be recognised as binding on the persons as
between whom it was made, and may accordingly be relied on by those persons by way
of defence, set-off or otherwise in any legal proceedings in England and Wales or
Northern Ireland.
(2) A New York Convention award may, by leave of the court, be enforced in the same
manner as a judgment or order of the court to the same effect. As to the meaning of
“the court” see section 105.
(3) Where leave is so given, judgment may be entered in terms of the award.”80
Thus, it becomes mandatory for the parties to enlist the assistance of the Court of the state
where the award is passed. Further, although recognition of a foreign award from a
79
Queen Mary: University of London & Price Waterhouse Coopers, ‘International Arbitration: Corporate
attitudes and practices’ (2008), available at: http://www.pwc.co.uk/en_UK/uk/assets/pdf/pwc- international-
arbitration-2008.pdf (last visited on November 16, 2020).
80
Arbitration Act 1996, s 101.
43
convention country is mandatory in UK the court may refuse its enforcements if it satisfies
any one of the eight criteria specified under section 103 of the Arbitration Act, 1996.
According to Redfern and Hunter on International Arbitration, there are four ways in which a
national legal system might provide for the enforcement of arbitral awards. The first arises
when the award is deposited, or registered, with a court or other authority, following which it
may be enforced as if it is a judgment of that court. The second arises when the laws of the
country of enforcement provide that, with the leave of the court, the award of an arbitral
tribunal may be enforced directly without any need for deposit or registration. The third
arises when it is necessary to apply to the court for some form of recognition, or exequatur, as
a preliminary step to enforcement. The fourth is to sue on the award as evidence of a debt, on
the basis that the arbitration agreement constitutes a contractual obligation to perform the
award. This last method is cumbersome and frequently leaves it open to the losing party to
reopen, by way of defence, the issues already determined by the arbitral tribunal. It is
therefore to be avoided, unless no other method is available. 81
A plain reading of the above provisions and methods shows that, unlike India, England has
no such Gazetting requirement which makes the already sluggish process of enforcement of
foreign awards through courts even more cumbersome, challenging and ambiguous for a
foreign party.
11.2 The United States of America
When it comes to the United States, it is the place where the New York Convention took
birth. The recognition and enforcement of International Awards in the US is governed by two
multilateral treaties, i.e. the New York Convention, 1958 and the 1975 Inter-American
Convention on International Commercial Arbitration (the Panama Convention). Both of these
have been implemented by the Federal Arbitration Act, 1926 (FAA). FAA talks only about
the most basic provisions related to arbitration. Therefore, it has been supplemented by
various laws to include necessary new provisions into the act. Uniform Arbitration Act, 2000
deals with more contemporary issues related to arbitration and brought new provisions in
addition to the old act. FAA was amended in 1970 to include the New York Convention
sections 201 to 208 talk about the New York Convention and in 1990 to insert provisions for
81
Blackaby Nigel, Constantine Partasides, Alan Redfern & Martin Hunter, International Arbitration (6th edition,
Oxford University Press 2015) 609.
44
Panama Conventions and section 301 to 307 talk about the Panama Convention. Section 207
of the 1926 Act, talks about Award of arbitrators; confirmation; jurisdiction; proceeding. It
states that,
“Within three years after an arbitral award falling under the Convention is made, any party
to the arbitration may apply to any court having jurisdiction under this chapter for an order
confirming the award as against any other party to the arbitration. The court shall confirm
the award unless it finds one of the grounds for refusal or deferral of recognition or
enforcement of the award specified in the said Convention.”82
The above section makes it mandatory for the US courts to recognise and enforce an award
which is passed in a foreign Contracting state or at a minimum deals with a subject matter
which is not entirely domestic on a commercial dispute. Further, it also states that the award
must be final and binding on the parties. Although not expressly required by the Conventions,
New York case law interpreting their provisions has developed a “finality” requirement for
an arbitrator’s decision to be deemed enforceable. In Daum Global Holdings Corp. v. Ybrant
Dig. Ltd, the court held that, “The Court lacks authority to confirm an award that is interim,
not final.”83
This requirement separates arbitrators’ actual “awards” from decisions that are more
appropriately considered as procedural or those which concern other interlocutory matters. In
Michaels v. Mariforum Shipping, S.A, the court held that, “concluding that allowing a court
to “review preliminary rulings of arbitrators” would “disjoint and unduly delay” arbitration
and undercut the pro-arbitration public policy in the United States.”84 Finality does not
require, however, that the award disposes of every issue in dispute between the parties. In
Metallgesellschaft A.G. v. M/V Capitan Constante, the court stated that, “a prior case law that
“endorse[s] the proposition that an award which finally and definitely disposes of a separate
independent claim may be confirmed although it does not dispose of all the claims that were
submitted to arbitration”85 Rather, courts in New York will consider an award “final” and
82
Federal Arbitration Act 1926, s 207.
83
No. 13 Civ. 03135 (AJN), 2014 WL 896716.
84
624 F.2d 411, 414–415 (2d Cir. 1980).
85
790 F.2d 280, 283 (2d Cir. 1986).
45
therefore subject to confirmation under the Conventions if it “finally and definitely dispose[d]
of a discrete and independent claim.” 86
Thus the formerly laid down provision shows that the US like The UK has a strong federal
policy in favour of enforcement and is not weighed down by an unnecessary and onerous
provision of notifying the reciprocating nations even though a state is a member to the
Convention.
12. CONCLUSION AND SUGGESTIONS
Recently, India has been trying to gain economic power and leave a mark on the world map
as one of the Economic superpowers of the world. Increasing international trade and
investment is accompanied by a growth in cross border commercial disputes, given the need
of an alternative dispute resolution mechanism; International Commercial Arbitration has
emerged as the preferred option for preserving business relationships. Although, India has a
systemized regime for arbitration in place which prima facie adheres to the current
international regime also, one can find various problems, risks and challenges which mar the
international arbitration process.
When it comes to international arbitration, enforcement of a foreign award plays a major role
and it is piece of cake if the award is passed in a country which is a signatory of New York
Convention or the Geneva Convention and has been notified by the central government in the
official gazette after being satisfied that they have reciprocal provisions. The problem arises
when the award is passed in a country which is either a non-convention state or when it is a
convention but has not yet been notified by the government.
The legislature disguises this provision as a requirement made under the reservation taken by
Government at the time of signing the Conventions. The Judiciary of India took it in its hands
to address the situation in Bhatia case but to no avail, the case was overruled by BALCO case
wherein the Hon’ble Supreme Court categorically stated that it was the job of the Legislature
86
Yasmine Lahlou, Andrew Poplinger & Gretta L. Walters, Enforcement of Foreign Arbitral Awards and
Judgments in New York (Kluwer Law International 2018).
46
to fill in the gaps of the law and Judiciary cannot overstep and do the same. The provision as
stated under section 44 and 53 of the Act is evidently more onerous and considerably more
restrictive than what is contemplated by the New York Convention. These requirements
increase the risks and uncertainties involved in enforcing of foreign awards especially if
obtained in a non Gazetted territory by increasing the ambiguity about enforcement in such
cases.
India has borrowed most of its jurisprudence in arbitration from the British laws and although
both the UK and the USA made the same reservation of recognising and enforcing foreign
arbitral awards from other convention states only, none of the two countries has such a
provision for notifying the territories with reciprocating provisions. It has been 61 years since
the New York Convention was signed and India has notified only 47 out of 152 member
states of the Convention, which shows the attitude of the executive towards the seriousness of
the matter.
Foreign Investors coming to India and doing business here have a legitimate expectation that
if an award is obtained from a convention state then it will be recognised and enforced in
India, but, that is not the case, and more often than not, they have to face heavy and time
consuming litigations is order to enforce such awards in India.
In order to tackle this situation and further the pro-arbitration approach of the judiciary and
the legislature, this paper suggests that the requirement of gazetting as is enumerated in the
definition of foreign award under section 44 and 53 of the Act must be omitted and India
should mandatorily recognise and enforce all the final awards passed in a convention state.
However, if the provision continues then the legislature should come up with rules for the
Central Government determining the time line within which a country has to be notified
along with definitive and objective tests to determine whether a country has reciprocal
provisions or not, because the current provision wherein, it is based on satisfaction of the
government is very subjective and gives unchecked power to the Central Government.
Further, a procedure must be added under which parties can file applications to the
government or to the court through which the procedure to find whether a country has
reciprocal provisions or not, can be started.
47
Application of one of these alternatives is the need of the hour if India wants to transgress
from its current position which contains many risks and uncertainties. In a nutshell, it can be
argued that Indian legal system has significantly moved towards creating a facilitative
environment for enforcing foreign arbitral awards. Nevertheless, some improvements are
necessary to bring India in line with advanced legal regimes in the world and to provide for
the needs of international arbitration. The first step, in this regard, should be enacting
legislation directly addressing foreign arbitration as distinct from foreign court decisions and
orders.
48
13. BIBLIOGRAPHY
BOOKS
1. Black’s Law Dictionary (9th edition, 2009).
2. Blackaby Nigel, Constantine Partasides, Alan Redfern & Martin Hunter,

International Arbitration (6th edition, Oxford University Press 2015).
3. N.V.Paranjape, Law Relating to of Arbitration & Conciliation in India, (4th edition,
General Law Agency 2011).
4. S.S.Misra, Law of Arbitration & Conciliation in India with Alternative Dispute
Resolution Mechanism,(2nd edition, Central Law Agency, 2010)
5. Yasmine Lahlou, Andrew Poplinger & Gretta L. Walters, Enforcement of Foreign

Arbitral Awards and Judgments in New York (Kluwer Law International, 2018).
ARTICLES
1. Dharmendra Rautray, ‘Enforcement of Foreign Awards in India’ (Asian

International Arbitration Journal) (2013) Volume 9 Issue 2 Kluwer Law
International) http://elibrary.gnlu.ac.in.
2. Ernest G. Lorenzen, ‘Huber's De Conflictu Legum’ (1919) 4563 Yale Law School
Legal Scholarship Repository: Faculty Scholarship Series.
http://digitalcommons.law.yale.edu/fss_papers/4563.
3. Subhiksh Vasudev, ‘Has India Truly Delivered on Its Obligations Under Articles I
and V of the New York Convention Over the Last 60 Years?’ (Kluwer Arbitration
Blog, 29 November 2018)
http://arbitrationblog.kluwerarbitration.com/2018/11/29/has-india-truly-delivered-
on-its-obligations- under articles-i-and-v-of-the-new-york-convention-over-the-last-
60-years/.
4. Sulabh Rewari, ‘From Bhatia to Kaiser: Testing the Indian Judiciary’s Self-
Restraint’, Asian International Arbitration Journal (2013) Volume 9 Issue 2 Kluwer
49
Law International.
5. Sumeet Kachwaha, ‘THE ARBITRATION LAW OF INDIA: A CRITICAL
ANALYSIS’ (Asia International Arbitrational Journal, Volume 1, Number2, Pages
105-126)http://www.kaplegal.com/upload/pdf/arbitration-law-india-critical-
analysis.pdf.
STATUTES AND CONVENTIONS
1. Arbitration Act, 1996

2. Arbitration and Conciliation Act, 1996
3. Civil Procedure Code, 1908
4. Federal Arbitration Act, 1926
5. The Convention on the Recognition and Enforcement of Arbitral Awards, 1958
(New York Convention)
6. The Geneva Convention on the Execution of Foreign Arbitral Awards, 1927
OTHER SOURCES
 Amarchand Mangaldas, ‘Enforcing a foreign non-convention country award in

India’ (In House Lawyer) www.inhouselawyer.co.uk/legal-briefing/enforcing-a-
foreign-non-convention-country-award-in-india/?share=email&pdf.
 Law Commission of India, The Arbitration and Conciliation Bill, 1996 (No. 26 of
1996, 16th August 1996) Para 4(v), 4(vii) and 4(ix)
http://lawcommissionofindia.nic.in/reports/Report246-II.pdf.
 Ministry of Law and Justice Government of India, Proposed amendments to the
Arbitration and Conciliation Act, 1996: A Consultation Paper (April 2010)
https://www.legallyindia.com/images/stories/docs/Arbitration-Act-LawMin-
ConsultationPaper-on-Arb-Act-April2010-1.pdf.
 Queen Mary: University of London & Price Waterhouse Coopers,

‘International Arbitration: Corporate attitudes and practices’ (2008)
http://www.pwc.co.uk/en_UK/uk/assets/pdf/pwc-international- arbitration-
2008.pdf.
50
 Subhiksh Vasudev, ‘Has India Truly Delivered on Its Obligations Under Articles I
and V of the New York Convention Over the Last 60 Years?’ (Kluwer Arbitration
Blog).http://arbitrationblog.kluwerarbitration.com/2018/11/29/has-india-truly-
delivered-on-its-obligations-under-articles-i-and-v-of-the-new-york-convention-
over-the-last-60-years/.
 UNCITRAL, ‘Status: Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (New York, 1958) (the "New York Convention")’ (United
Nations)https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_aw
ards/stat2.
51

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FOREIGN ARBITRAL AWARDS AND THE INDIAN COURTS: THE

(Alternative Dispute Redressal)

Name- Md Maaz Alam

Student ID: 20176355

B.A.LL.B. (7th Semester) (Regular)

(19 November, 2020)

6. HISTORY OF ENFORCEMENT OF FOREIGN AWARDS IN INDIA.....10

7. BACKGROUND OF ENFORCING FOREIGN AWARDS IN INDIA.......12

7.1 Difference between the expression Recognition& Enforcement....................12

8. DEFINITION OF FOREIGN AWARD...........................................................14

8.1 Distinction between Foreign Award and Domestic Award............................16

10. PROCEDURE FOR THE ENFORCEMENT OF FOREIGN AWARDS

ACCORDING TO THE ARBITRATION AND CONCILIATION ACT,

11. GROUNDS FOR NON-ENFORCEMENT OF FOREIGN ARBITRAL

11.1 Not being issued by a competent body.....................................................26

11.2 Non-compliance with Indian Law or court decision................................27

11.3 Improper summon and legal representation............................................28

11.4 Non-Arbitrability of the dispute...............................................................29

11.5 Non-Enforceability in the country where it is made................................29

11.6 Non binding awards.................................................................................31

11.7 Awards being against Public policy........................................................32

12.1 Not considering the merit of the case.......................................................34

12.2 Ordering interim measures......................................................................35

13. JUDICIAL INTERPRETATION.....................................................................37

14. COMPRATIVE ANALYSIS.............................................................................42

14.1 United Kingdom.......................................................................................43

14.2 The United States of America...................................................................44

15. CONCLUSION AND SUGGESTIONS...........................................................46

S.No. Abbreviation Full Form

3. CPC Civil Procedure Code, 1908

1. Badat & Co. v. East Trading Co.; (1964) 4 SCR 19.

2. Bharat Aluminium Co. v. Kaiser Aluminium; (2012) 9 SCC 552.

3. Bharat Aluminium v. Kaiser Aluminium; (2012) 9 SCC 552.

4. Bhatia International Ltd v. Bulk Trading SA; (2002) 4 SCC 105.

6. Chromalloy Aeroservices Inc. v. Arab Republic of Egypt; 939 F Supp. 907.

9. Food Corporation of India v. Joginderpal Mohinderpal; (1989) 2 SCC 347.

11. Harendra H. Mehta v. Mukesh H. Mehta; AIR 1999 SC 2054.

12. Hilmarton Ltd. v. Omnium de traitement et de valorization; 1994, 327.

13. Hiscox v. Outhwaite; 1991(3) WLR 297 (HL).

14. International Standard Electric Corporation v. Bridas Sociedad Anonima Petrolera,

Industrial Y Comercial; 745 F Supp 172 at 177.

20. N.T.P.C. v. Singer Co.; AIR 1993 SC 998.

21. O.N.G.C. v. Western Co of North America; AIR 1987 SC 674.

28. Serajuddin v. Michael Golodetz; AIR 1960 Cal. 49.

33. Union of India v. Popular Builders; AIR 2000 SC 1.

Keywords: Arbitration, Conventions, Enforcement, Foreign, International,

3. HISTORY OF ENFORCEMENT OF FOREIGN AWARDS IN INDIA

Enforcement of foreign decree or an award has been an unavoidably contentious issue

4. BACKGROUND OF ENFORCING FOREIGN ARBITRAL AWARDS IN

4.1 Difference between the expressions ‘Recognition’ And ‘Enforcement’

a) Arbitration should have been held in foreign lands;

Section 44 of the New York Section 53 of the Geneva

The words ‘arising out of legal Section 53 failed to utilise these

The definition of ‘Foreign Award’ as But Section 53 is devoid of this

Section 44 insists that the agreement Section 53 simply talks of agreement

No Domestic Award Foreign Award

2 The range of issue remains confined The subject matter of arbitration

Table 2: Distinction between the Foreign Award and Domestic Award

1. The legal relation between the disputant.

Indian Law recognizes applying foreign laws in arbitration, whether in procedural or

“Foreign Award” means an arbitral award on differences between persons arising

i. award must arise out of legal relationships (contractual or not)