TOPIC- FOREIGN AWARDS

A Final Draft, submitted in partial fulfilment of the course: ALTERNATIVE

DISPUTE RESOLUTION for the requirements of the degree B.A.,LL.B. (Hons.)
for the academic session 2020-21.

SUBMITTED BY : MAYANK KUMAR VERMA

ROLL NO 1937

SEMESTER : 6th

SESSION : 2018-2023

COURSE : B.A.,LL.B. (Hons.)

SUBMITTED TO : Mr.Hrishikesh Manu(Faculty of Alternate Dispute Resolution)

MARCH 2021
CHANAKYA NATIONAL LAW UNIVERSITY,
NYAYA NAGAR, MITHAPUR, PATNA – 800001.

1|Page
 ACKNOWLEDGEMENT

It is a fact that any research work prepared, compiled or formulated in isolation is inexplicable to
an extent. This research work, although prepared by me, is a culmination of efforts of a lot of
people who remained in veil, who gave their intense support and helped me in the completion of
this project.

Firstly, I am very grateful to my mentors Mr. Hrishikesh Manu, without the kind support and help
of whom the completion of this project was a herculean task for me. He donated her valuable time
from her busy schedule to help me to complete this project. I would like to thank him for his
valuable suggestions towards the making of this project.

I am highly indebted to my parents and friends for their kind co-operation and encouragement
which helped me in completion of this project. I am also thankful to the library staff of my college
which assisted me in acquiring the sources necessary for the compilation of my project.

Last but not the least, I would like to thank the Almighty who kept me mentally strong and in good
health to concentrate on my project and to complete it in time.

I thank all of them !

---

MAYANK KUMAR VERMA

Roll No. – 1937

B. A. LL. B. (Hons.)

Session –2018- 2023

2|Page
 DECLARATION

I hereby declare that the project entitled “FOREIGN AWARDS” submitted by me

at CHANAKYA NATIONAL LAW UNIVERSITY, is a record of bona fide project
work carried out by me under the guidance of our mentor Mr. Hrishikesh Manu. I
further declare that the work reported in this project has not been submitted and will
not be submitted, either in part or in full, for the award of any other degree or
diploma in this university or in any other university.

…………………..

(MAYANK KUMAR VERMA)

Roll no. – 1937

3|Page
TABLE OF CONTENTS

INTRODUCTION ...................................................................................................................... 5
CHAPTER I OF THE ARBITRATION AND CONCILIATION ACT, 1996: ............................. 8
CHAPTER II OF THE ARBITRATION AND CONCILIATION ACT, 1996: .......................... 11
Enforcement of foreign judgments in India ............................................................................... 14
Modes of Execution .............................................................................................................. 14
Enforcement of foreign arbitral awards and scope of judicial intervention ................................. 15
Legal background .................................................................................................................. 15
Arbitration and Conciliation Act ............................................................................................... 18
Need for amendment to Arbitration and Conciliation Act ...................................................... 18
Amendment........................................................................................................................... 20
Facts ..................................................................................................................................... 22
Arguments ............................................................................................................................ 25
Decision ................................................................................................................................ 26
Comment .............................................................................................................................. 27
RELEVANT CASES ................................................................................................................ 32
CONCLUSION......................................................................................................................... 33
BIBLIOGRAPHY ..................................................................................................................... 35

4|Page
INTRODUCTION

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

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

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

The enforcement of a foreign arbitral award in India is founded on the fundamental principle of
minimal judicial intervention in order to further India's pro-arbitration and consequently pro-
foreign investment climate. In order to achieve this goal, the laws relating to the enforcement of
foreign arbitral awards have been systematically amended to limit the scope of defences available
to unsuccessful parties and prevent the courts from undertaking a wide interpretation of the
available defences. As such, a large number of foreign arbitral awards are successfully enforced
in India.

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

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

5|Page
AIMS AND OBJECTIVES

1. To study the facts and develop an understanding of the relevant provisions to Foreign
Judgement.
2. To analyse and co-relate the relevant cases and recent development in enforcement of
Foreign Judgement.
3. To analyse the final verdict in essence of the related cases and other provisions.

HYPOTHESES

1. No Foreign Judgements can be implemented in context of India.

2. There are no clear provisions dealing with enforcement of Foreign Judgements in India.

RESEARCH METHODOLOGY
The researcher relies upon doctrinal mode of research.

SOURCES OF DATA
The researcher relies upon primary as well as secondary sources of data.

Primary Sources: Books

Secondary Sources: Internet

LIMITATIONS OF STUDY
The researcher suffers from various kinds of limitations in preparing the project which are as
follows:

6|Page
 1. The researcher suffers from limitation of time as the researcher has been allotted very
limited amount of time for the completion of this project
2. The researcher suffers from monetary limitations as the researcher is bound by financial
restraints and can incur only a limited amount of money on this project work
3. The researcher suffers from territorial limitations as the area of research is limited to nearby
areas only
4. The researcher is still a student and doesn’t have enough knowledge regarding the subject
but will still try to explore with the available knowledge

SCOPE OF STUDY
This research will help to get a clear view upon the provisions of Foreign Judgements and its
enforcement in the ambit and subject matter Alternate Dispute Resolution mechanism.

7|Page
CHAPTERISATION
1. Introduction: Introduction to the concept of Foreign Judgements and its actual meaning
in Indian context.
2. Chapter I of the Arbitration and Conciliation Act, 1996: Related Provisions to Foreign
Awards embedded in Chapter I of the act.
3. Chapter II of the Arbitration and Conciliation Act, 1996: Related Provisions to Foreign
Awards embedded in Chapter II of the act.
4. The Status of Foreign Judgements in Alternate Dispute Resolution: How is Doctrine
of Territorial Nexus embedded and incorporated in the Indian Constitution.
5. Related Provisions to Arbitration and Conciliation Act,1996: Section 42, 56 and other
related provisions.
6. Related Cases and their Stance towards Foreign Judgements: This chapter will deal
with stance of court towards Foreign Judgements and important precedents
7. Conclusion and suggestion: The Final conclusion and approach towards Foreign
Judgements.

8|Page
CHAPTER I OF THE ARBITRATION AND CONCILIATION ACT, 1996:

 The definition of a “foreign award” is given under section 44 of the Act. According to the
section, For the purposes of Chapter I, “foreign award” means an arbitral award on
differences between persons arising out of legal relationships, whether contractual or not,
considered as commercial under the law in force in India, made on or after the 11th day
of October, 1960—

in pursuance of an agreement in writing for arbitration to which the Convention set forth in the
First Schedule applies, and

in one of such territories as the Central Government, being satisfied that reciprocal provisions
have been made may, by notification in the Official Gazette, declare to be territories to which the
said Convention applies.

 According to section 46 of the Act, “Any foreign award which would be enforceable
under Chapter I of Part II shall be treated as binding for all purposes on the persons as
between whom it was made, and may accordingly be relied on by any of those persons by
way of defence, set off or otherwise in any legal proceedings in India and any references
in this Chapter to enforcing a foreign award shall be construed as including references to
relying on an award.”
 When a party is seeking the enforcement of a foreign award, under section 47 of the Act,
they are required to submit the following documents while making an application for the
same before the court:

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

the original agreement for arbitration or a duly certified copy thereof; and

such evidence as may be necessary to prove that the award is a foreign award.

 The conditions for Enforcement of foreign awards are prescribed under section 48 of the
Act. If the following conditions are proved, then enforcement of a foreign award may be
refused:

The parties to the agreement were under some incapacity.

The agreement in question is not in accordance with the law to which the parties have subjected
it, or under the law of the country where the award was made (especially in case of foreign
awards).

9|Page
There is a failure to give proper notice of appointment of arbitrator or arbitral proceedings or the
party against whom the award was rendered was otherwise unable to present his case.

Award is ultra vires the agreement or submission to arbitration.

Award contains decisions on matters beyond the scope of submission to arbitration.

Composition of the arbitral authority or the arbitral procedure is ultra vires agreement.

Composition of the arbitral authority or the arbitral procedure is not in accordance with the law of
the country where the arbitration took place.

The award (specifically a foreign award) has not yet become binding on the parties, or has been
set aside or suspended by a competent authority of the country in which, or under the law of which
that award was made.

Subject matter of the dispute is not capable of settlement by arbitration under Indian law.

Enforcement of the award would be contrary to the public policy of India.

Section 49 of the Act states that If the Court is satisfied that the foreign award is enforceable under
this Chapter, the award shall be deemed to be a decree of that Court.

10 | P a g e
CHAPTER II OF THE ARBITRATION AND CONCILIATION ACT, 1996:

I. Under section 53 of the Act, “foreign awards” are defined for the purposes of Chapter II.
It means an arbitral award on differences relating to matters considered as commercial under the
law in force in India made after the 28th day of July, 1924,—

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

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

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

I. Section 55 of the Act provides that an award which satisfies the conditions of enforceability
mentioned under section 57 of the Act is enforceable and is to be treated as binding for
all purposes and also on persons as between whom it was made. It may be relied upon by
the parties in any legal proceedings in India. Any references to enforcing a foreign award
shall be construed as including references to relying on an award.

II. Section 56 lays down documents that are required to be produced while submitting an
application for enforcement of foreign awards before the Court.
The party applying for the enforcement of a foreign award shall, at the time of application produce
before the Court;

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

11 | P a g e
(b) evidence proving that the award has become final; and

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

I. Section 57 of the Act lays down the conditions necessary for the enforcement of foreign
awards.
The following conditions under Section 57(1) need to be fulfilled for enforcement of a foreign
award:

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

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

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

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

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

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

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

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

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

 If the Court is satisfied that an award is enforceable under Chapter II, then according to

section 58, it is deemed to be a decree of that Court.

13 | P a g e
Enforcement of foreign judgments in India:

Section 2(6) of the CPC defines “foreign judgment” as “the judgment of a foreign Court,” which
refers to a Court situated outside India and not established or continued by the authority of the
Central Government.

At the time of enforcement of foreign judgments in India, two situations may arise depending on
whether the foreign judgment is passed by a court in:

(i). A reciprocating country;

(ii). A nonreciprocating country.

A party seeking enforcement of a decree of a court in a reciprocating country is required to file

execution proceedings in India while in case of a decree from a non-reciprocating country, a fresh
suit has to be filed before the relevant court in India. The time limit for filing a suit for enforcement
for such foreign judgments is three years from such judgment being delivered.

Modes of Execution

Since foreign awards, domestic awards and foreign judgments (from reciprocating countries) are
to be executed in India as a decree passed by an Indian court, the modes of execution for foreign
awards and judgments and domestic awards and judgments are also common.

On an application made by the decree-holder for execution of the decree/ award (whether foreign
or domestic), the court may order the execution of the decree / award by one or more of the
following modes:

 by delivery of any property specifically decreed

 by attachment and sale or by sale without attachment of any property
 by arrest and detention in prison
 by appointing a receiver
 by any other manner as the nature of the relief granted may require

14 | P a g e
Enforcement of foreign arbitral awards and scope of judicial intervention

The enforcement of a foreign arbitral award in India is founded on the fundamental principle of
minimal judicial intervention in order to further India's pro-arbitration and consequently pro-
foreign investment climate. In order to achieve this goal, the laws relating to the enforcement of
foreign arbitral awards have been systematically amended to limit the scope of defences available
to unsuccessful parties and prevent the courts from undertaking a wide interpretation of the
available defences. As such, a large number of foreign arbitral awards are successfully enforced
in India.

Further, the amended arbitration laws provide a simplified and settled one-stop-procedure. The
enforcement of a foreign award in India is initiated by filing a petition for enforcement. The
unsuccessful party can object to such petition as per the defences available under the Arbitration
and Conciliation Act 1996, after which the court will determine whether the award adheres to the
act. Once an award is found to be enforceable, it may be enforced in the same way as a court
decree. This simplified procedure has reduced the time that it takes the courts to render a judgment
on the enforcement of a foreign arbitral award. As the courts are in favour of prompt enforcement
of foreign arbitral awards, foreign parties which succeed in arbitration proceedings can generally
benefit from such proceedings in India.

However, in its recent decision in Campos Brothers Farms v Matru Bhumi Supply Chain Pvt Ltd
(OMP(EFA)(COMM) 1/2017), the Delhi High Court refused to enforce a foreign arbitral award
under the Arbitration and Conciliation Act. This article analyses the court's decision, its reasons
for refusing the enforcement of the award and whether this judgment is a step back for Indian
arbitration law.

Legal background

15 | P a g e
Foreign Awards (Recognition & Enforcement) Act The Foreign Awards (Recognition &
Enforcement) Act 1961 was the first in a series of laws on the enforcement of foreign awards.
Section 7 of the act is the foundational provision on which the enforcement of foreign arbitral
awards in India today is based.

Section 7(1)(a) contains technical and procedural grounds for refusing enforcement, which
include:

 the parties' legal incapacity;

 the arbitration agreement's invalidity as per the governing law or in the absence of a
governing law as per the law of the country where the award was rendered;

 a lack of awareness as to the appointment of the arbitrator or the arbitration proceedings;

 a party's inability to present its case;

 the award being rendered beyond the scope of reference;

 the composition of the arbitral tribunal or its procedure contravening the agreement
between the parties or the absence of an agreement in contravention of the procedural law
of the country in which the award was rendered; and

 the award not being binding between the parties, in any manner, as per the applicable law.

Further, Section 7(1)(b) provides grounds based on the substantive laws of India, which include:

 the subject matter being non-arbitrable as per Indian law; and

 the award rendered being against Indian public policy. 

The phrase 'public policy' is undefined and can be interpreted widely by the courts. In the landmark
judgment Renusagar Power Company Limited v General Electric Co1 (1994 Supp (1) SCC 644),

1
1994 Supp (1) SCC 644

16 | P a g e
the court interpreted that the term 'public policy' in Section 7(1)(b)(ii) has been used in a narrower
sense and that in order to rely on this ground, an award's enforcement must invoke something more
than a violation of Indian law.

17 | P a g e
Arbitration and Conciliation Act

The Foreign Awards (Recognition & Enforcement) Act was followed by the Arbitration and
Conciliation Act, Section 48 of which provides for the enforcement of foreign arbitral awards.
Section 48(1), which corresponds with Section 7(1) of the Foreign Awards (Recognition &
Enforcement) Act, sets out the technical and procedural grounds on which the enforcement of a
foreign arbitral award can be prevented. The Arbitration and Conciliation Act brought no effective
change. Further, the technical and procedural grounds which can result in the refusal of a foreign
arbitral award's enforcement remain unchanged following the amendments to the Arbitration and
Conciliation Act which took effect from 23 October 2015. Section 48(2) of the Arbitration and
Conciliation Act corresponds with Section 7(1)(b) of the Foreign Awards (Recognition &
Enforcement) Act and provides that any award whose subject matter is non-arbitrable under Indian
law and whose enforcement is contrary to public policy cannot be enforced.

The Arbitration and Conciliation Act did not represent a major overhaul of its predecessor, the
Foreign Awards (Recognition & Enforcement) Act. This was because Renusagar made clear that
it is not a foreign arbitral award but its enforcement that must be against public policy for the
public policy provision to apply. Renusagar further elaborated that a foreign award's enforcement
will be refused on the ground that it is contrary to public policy if such enforcement would be
contrary to:

 the fundamental policy of Indian law;

 national interests; or
 justice or morality.

The Supreme Court's narrow interpretation of public policy in Renusagar ensured a delicate
balance between the broadly worded provision and the legislative intent of minimal judicial
intervention. The Supreme Court also applied Renusagar's narrow interpretation under the Foreign
Awards (Recognition & Enforcement) Act when interpreting Section 48(2)(b) of the Arbitration
and Conciliation Act in Shri Lal Mahal Ltd v Progetto Grana SPA ((2012) 2 SCC 433).

Need for amendment to Arbitration and Conciliation Act

18 | P a g e
In 2014 the Supreme Court, while interpreting the term 'public policy' as provided for in Section
34 of the Arbitration and Conciliation Act, included the Wednesbury principles of reasonableness
within the phrase "fundamental policy of Indian Law" (ONGC Ltd v Western Geco International
Limited2 ((2014) 9 SCC 263)).

The court further added that:

If on facts proved before them the arbitrators fail to draw an inference which ought to have been
drawn or if they have drawn an inference which is on the face of it, untenable resulting in
miscarriage of justice, the adjudication even when made by an Arbitral Tribunal… will be open to
challenge and may be cast away.

This was followed by another Supreme Court judgment, Associate Builders v Delhi Development
Authority3 ((2015) 3 SCC 49), in which the court also interpreted the term 'public policy' widely.
This permitted the courts to review an award on the merits in enforcement proceedings.

Both of the abovementioned judgments interpreted the term 'public policy' as provided for in
Section 34 of the Arbitration and Conciliation Act, which concerns domestic awards.

The fact that the phrase 'public policy' appears identically in Section 48 of the Arbitration and
Conciliation Act deterred the courts from adopting the narrow interpretation of Renusagar in case
of enforcement of a foreign award. As such, it became imperative to amend the law.

2
((2014) 9 SCC 263)
3
((2015) 3 SCC 49)

19 | P a g e
Amendment

The anomaly regarding the enforcement of foreign awards was remedied in 2015 by amending the
Arbitration and Conciliation Act. The amendment added two explanations to the existing Section
48(2) of the act, which sought to regulate the discretion available to the courts while interpreting
the terms 'public policy' and 'fundamental policy of Indian law'.

According to the first explanation, a foreign award will conflict with public policy only if it:

 was induced by fraud or corruption;

 contravenes the fundamental policy of Indian law; or
 contravenes the basic notions of morality and justice.

The 2015 amendment further added a second explanation by which it clarified that a contravention
of the fundamental policy of Indian law will not entail a review on the merits of the dispute.

20 | P a g e
The below table sets out these changes:-

Foreign Awards
Arbitration and
(Recognition & Amended Arbitration and Conciliation Act
Conciliation Act
Enforcement) (Section 48(2))
(Section 48(2))
Act (Section 7(1)(b))
(a) the subject-matter of the difference is not
capable of settlement by arbitration under the law
of India; or
(b) the enforcement of the award would be
contrary to the public policy of India.
a. the subject-matter of
1. the subject matter of Explanation 1.—For the avoidance of any doubt,
the difference is not
the difference is not it is clarified that an award is in conflict with the
capable of settlement
capable of settlement by public policy of India, only if,— (i) the making of
by arbitration under
arbitration under the the award was induced or affected by fraud or
the law of India; or
law of India; or corruption or was in violation of section 75 or
b. the enforcement of
2. the enforcement of the section 81; or (ii) it is in contravention with the
the award would be
award will be contrary fundamental policy of Indian law; or (iii) it is in
contrary to the public
to public policy conflict with the most basic notions of morality or
policy of India.
justice.
Explanation 2.—For the avoidance of doubt, the
test as to whether there is a contravention with
the fundamental policy of Indian law shall not
entail a review on the merits of the dispute.

Following the 2015 amendment, the courts have consistently followed the minimal judicial
intervention approach when ruling on objections to the enforcement of a foreign award.

21 | P a g e
In GEA EGI Contracting Ltd v Bharat Heavy Electrical Limited4 ((2016) 233 DLT 661), the Delhi
High Court refused to prevent the enforcement of a foreign award, stating that although the award
was incorrect, it could be considered reasonable. The court also refused to interfere in a foreign
award's enforcement in Xstrata Coal Marketing AG v Dalmia Bharat (Cement) Ltd 5 (2016 SCC
OnLine Del 5861), in which it had to decide whether the calculation of damages provided for in
the award in the absence of any evidence contravened the fundamental policy of Indian law. The
court stated that the findings on the calculation of damages were not perverse and that the award
could be set aside only on limited grounds under Section 48 of the Arbitration and Conciliation
Act, which would not entail a review of the award on the merits.

Recently, in Daiichi Sankyo Company Limited v Malvinder Mohan Singh (2019 SCC OnLine Del
7836), the Delhi High Court held that the 'fundamental policy of India' under Explanation 2 to
Section 48(2)(b) of the Arbitration and Conciliation Act does not mean provisions of Indian
statutes, but rather the substantial principles on which Indian law is founded.

Facts

The petitioner in Campos Brothers Farms entered into three contracts with the first respondent and
one agreement with the second respondent for the sale of nonpareil in-shell almonds. One of the
conditions in the contracts was that the parties agreed to abide by the Uniform Almond Export
Contract (UAEC) 2007.

Clause 42 of the UAEC provides for arbitration in accordance with the Arbitration Rules of the
Combined Edible Nut Trade Association (CENTA Rules), which later came to be known as The
Nut Association (TNA). Further, as per Clause 41, the contract was to be governed by English law.

4
((2016) 233 DLT 661)
5
(2016 SCC OnLine Del 5861)

22 | P a g e
Disputes arose between the parties regarding the non-payment of delivered and accepted
shipments. In addition, the respondents refused to accept some shipments and cancelled one
shipment. The petitioner submitted a claim for:

 the value of the accepted shipments and the amounts outstanding;

 the value of the rejected shipments; and
 losses for the cancelled shipments.

The petitioner sent the respondents two separate legal notices dated 23 March 2016, in which it
invoked arbitration under the CENTA Rules and nominated its arbitrator. On 1 April 2016 the first
respondent replied, denying the existence of an arbitration agreement and contending that the
shipments had been made under purchase orders, the terms of which superseded the contracts. On
4 April 2016 the petitioner refuted the first respondent's claims and reiterated its demand for
arbitration. On 8 April 2016 the respondents jointly refuted the existence of an arbitration
agreement. However, in an email dated 19 June 2016, the petitioner advised the respondents that
if they did not appoint an arbitrator, its arbitrator would act as the sole arbitrator. The petitioner
subsequently requested the TNA to appoint its arbitrator as the sole arbitrator.

In a letter dated 25 April 2016, the TNA sought a confirmation of whether the dispute between the
parties was technical in nature and whether the contracts specifically provided that disputes were
to be adjudicated as per the CENTA Rules. Further, the letter stated that the TNA would give the
respondents another opportunity to appoint an arbitrator and would appoint the petitioner's
arbitrator as the sole arbitrator only if they failed to do so. In addition, the letter made it clear that
each contract would be regarded as the subject of a separate arbitration.

The petitioner immediately filed a common statement of claim stating that both respondents were
represented by the same person and that the first respondent had been appointed as the second

23 | P a g e
respondent's agent. The respondents did not file their reply; instead, in an email to the TNA dated
6 May 2016, the first respondent refuted the existence of the arbitration agreement and the
petitioner's claims on the merits. Subsequently, in an email dated 12 May 2016, the TNA – without
referring to the first respondent's email – requested the respondents to appoint their arbitrator by
19 May 2016. The respondents did not respond to the email and did not appoint an arbitrator.

On 7 June 2016 the sole arbitrator called on the petitioner and the respondents to submit additional
documents by 13 June 2016. On 13 June 2016 the respondents sent separate emails denying the
existence of an arbitration agreement and requesting the complete set of documents filed by the
petitioner, including all correspondence between the petitioner and the TNA. Further, the
respondents:

 refuted the statement of claim on the merits;

 submitted the requested documents; and
 requested that the issue of the arbitrator's jurisdiction be decided as a preliminary issue.

The respondents wrote additional emails on 22 June 2016 and 6 July 2016.

In an email dated 22 June 2016, the sole arbitrator asked the head of the TNA whether she had to
consider the material submitted after the prescribed date (ie, 13 June 2016). On 28 June 2016 the
head of the TNA advised the sole arbitrator to ignore the late submissions.

The sole arbitrator passed the final award for a total of $1,008,830.47 excluding interest and
arbitrator fees, which also had to be paid by the respondents. The award stated that the respondents
had not made the submissions in time (ie, before 13 June 2016). The sole arbitrator further reasoned
that although the purchase orders had not been submitted, they were in complete agreement with
the contracts and such contracts had been signed before the commencement of any shipment. The
arbitrator further found that the respondents had received five loads but had failed to pay for these.

24 | P a g e
The respondents had also refused the delivery of four loads and cancelled the delivery of one load,
thereby breaching the contracts and rendering them liable to pay damages. Under the award, both
respondents were jointly and severally liable for the total awarded amount.

Arguments

The petitioner initiated enforcement proceedings in the Delhi High Court. The respondent
challenged the enforcement on the following grounds:

The issue of the arbitration agreement's existence and the challenge to its maintainability had been
raised before the sole arbitrator and the TNA but the impugned award did not deal with these
matters.

The arbitration agreement had come into existence by way of two-tiered incorporation by reference
as:

the contract mentioned the UAEC terms and conditions which provide for the CENTA Rules to
apply; and

Clause 42 of the CENTA Rules provides for arbitration.

However, the contract itself made no specific reference to either arbitration or the CENTA Rules.
The respondents argued that an arbitration agreement cannot come into existence by way of such
two-tiered incorporation by reference.

The award violated the principles of natural justice as the sole arbitrator had not considered any of
the respondents' submissions; therefore, the award was against public policy. The finding in the
award that the respondents had not made submissions by the prescribed date (ie, 13 June 2016)
was factually incorrect.

The consolidated claims made by the petitioner were not maintainable.

The award made both respondents jointly and severally liable for the entire awarded amount, which
was impermissible as the respondents were separate legal entities.

25 | P a g e
Decision

The Delhi High Court rejected the respondents' argument that no arbitration agreement existed as
two-tiered incorporation by reference was impossible. The court relied on Inox Wind Ltd v
Thermocables Ltd6 ((2018) 2 SCC 519) to state that while a general reference to an earlier contract
is insufficient for the incorporation of an arbitration clause, a general reference to a standard form
of contract is sufficient. The court noted that the parties had been bound by the UAEC terms and
conditions, which in turn contained an arbitration clause. The parties were dealing in almonds and
these rules were unique to that commodity and known to the parties.

The court also noted that the award contained factually incorrect findings as it had been based on
the fact that the respondents had failed to make any submissions by 13 June 2016, whereas the
respondents' email of 13 June 2016 made it clear that they had made submissions to the sole
arbitrator which had not been considered. Again, the award incorrectly stated that the purchase
orders had not been submitted when the respondents had done so in their 13 June 2016 email. The
sole arbitrator made no finding as to why the respondents' submissions had been ignored.

The court noted that the sole arbitrator had granted the parties time to make submissions and that
the time limit had been duly complied with. Therefore, the arbitrator could not ignore the
submissions without giving a reason. The court held that without going into the merits of the
respondents' submissions, once it had found that the arbitrator had ignored the submissions in their
totality, the award could not be enforced as it violated the principles of natural justice and
contravened public policy as provided for in Section 48(2)(b) read with Explanation 1(iii) of the
Arbitration and Conciliation Act. The court submitted that while it could not go into the factual
mistakes or legal errors in the award, the complete absence of the contentions raised by the
unsuccessful parties rendered the award unenforceable.

6
((2018) 2 SCC 519)

26 | P a g e
The court further noted that the award included no reason for allowing consolidated arbitration
proceedings for distinct contracts and claims. The court also noted that even though the petitioner
had provided reasons for making a consolidated claim, said reason could not denude the
respondents of their separate legal status. Further, the award did not justify lifting the corporate
veil, and no reason was provided for this.

The court also noted that on reviewing the award, it could not be said whether the sole arbitrator
had considered whether claims under different contracts with separate entities could be
consolidated. Further, the sole arbitrator had clearly not considered whether the respondents could
be found jointly and severally liable without lifting the corporate veil.

The court noted that based on the facts of the case, separate claims had been levied against each
respondent. Further, the arbitration had also been invoked via separate notices addressed to each
respondent. Thus, from a prima facie view, there had been no reason for the arbitrator to find the
respondents jointly and severally liable. The court was careful to state that even though it could
not go into the sufficiency of the merits, in the complete absence of reasons, the award clearly
qualified as non-speaking and non-enforceable as it violated the principles of natural justice and
contravened public policy.

Comment

Campos Brothers Farms yet again proves that while the courts cannot go into the merits of and
reasoning provided in an award, a complete failure to consider the issues and contentions raised
by the losing party will trigger Section 48(2)(b) of the Arbitration and Conciliation Act and can
render the award unenforceable. In view of this, the non-enforcement of the award in this case was
within the realms of the law.

Campos Brothers Farms is an exception to the normal approach as the court refused to allow the
award's enforcement because it violated the principles of natural justice and contravened public

27 | P a g e
policy. The decision is significant and was relied on and discussed by the Supreme Court in its
recent decision in Vijay Karia v Prysmian Cavi E Sistemi SRL7 (2020 SCC Online SC 177).

Vijay Karia was an appeal of a decision of a single judge of the Bombay High Court, wherein
several final awards made by a sole arbitrator in London were held to be enforceable in India. The
appellants claimed that the awards violated Sections 48(1)(b) and 48(2)(b) of the Arbitration and
Conciliation Act (i.e, they contravened Indian public policy and violated the most basic notions of
justice, respectively).

The appellants argued that the tribunal had failed to rule on several contentions raised in their
counterclaim, which showed bias and perversity and amounted to a breach of the principles of
natural justice. The appellants argued that the Bombay High Court had also failed to make any real
determination on all of the points argued before it. Conversely, the first respondent argued that the
awards had considered every aspect of the matter argued by the parties. It also stressed the fact
that the appellants had made no challenge to the awards in the UK courts. The Supreme Court
agreed with the respondents and held that the awards had exhaustively discussed the evidence and
conclusively provided detailed findings for each of the issues, claims and counterclaims. The court
stressed the fact that the appellants had argued on the merits of the matter and reiterated that it
cannot go into the merits of a case to set aside the enforcement of a foreign award as this is
prohibited under Section 48 of the Arbitration and Conciliation Act as read with the New York
Convention. The court dismissed the appeal and imposed costs of Rs5 million on the appellants.

In dismissing the appeal, the Supreme Court discussed Campos Brothers Farms, observing that an
award may be set aside if it would contravene the most basic notion of justice and that the Delhi
High Court had been correct to do so.

7
2020 SCC Online SC 177

28 | P a g e
Therefore, the Supreme Court's approval of Campos Brothers Farms categorically shows that the
Delhi High Court's judgment is good law and that the principles set out therein should be followed.

The Supreme Court's recent judgment in National Agricultural Cooperative Marketing Federation
of India v Alimentia SA (Civil Appeal 667/2012, 22 April 2020) is a testament to the fact that the
courts continue to refuse the enforcement of foreign awards if they contravene Indian public policy
of India (for further details please see "Supreme Court refuses foreign award enforcement – return
of public policy challenge"). In this case, the parties entered into a contract for the supply of 5,000
metric tonnes of Indian handpicked and selected groundnuts. The petitioner was a canalising
agency of the government and required its express permission and consent to carry exports forward
from previous years. Further, according to the contract, if the government prohibited the export,
the contract would stand cancelled. The petitioner could not supply the agreed amounts of the
commodity to the respondent due to a cyclone in India. The government did not grant the petitioner
permission to carry the exports forward to another season. Accordingly, the petitioner informed
the respondent not to nominate its vessel for shipment of the commodity as the government had
prohibited it from carrying the exports forward to another season.

The respondent treated this request as a default in supply by the petitioner and invoked the
arbitration clause. The arbitration proceedings were conducted before the Federation of Oil, Seeds
and Fats Associations Ltd in London. The tribunal directed the petitioner to pay damages to the
respondent. The petitioner challenged the award before the Board of Appeal; however, the board
enhanced the interest provided for in the award. Interestingly, no plea of enhancement was made
by the respondent.

The respondent filed a petition before the Delhi High Court to enforce the award, which was
allowed. The respondent subsequently filed an execution petition. The petitioner challenged the
enforcement and execution of the award before the Supreme Court.

29 | P a g e
The Supreme Court observed that the contract provided for cancellation in the event that the
government prohibited the petitioner from exporting the commodity. The court held that since such
an event had occurred, the contract between the parties was void under Section 32 of the Contract
Act 1872. Thus, the court held that it would be against Indian public policy to enforce the
impugned award as any supply made by the petitioner would contravene Indian public policy as
regards the export which required the government's permission.

By refusing to enforce the award, the court once again reiterated the settled position of law that an
award that violates Indian law cannot be enforced on the grounds of Indian public policy.

However, in its recent judgment in Centrotrade Minerals and Metals Inc v Hindustan Copper Ltd8
(Civil Appeal 2562/2006), a three-judge bench of the Supreme Court allowed an appeal
challenging the enforcement of a foreign award and paved the way for its enforcement.

In terms of the agreement between the parties, a dispute arose over the dry weight of copper
concentrate delivered. Clause 14 of the agreement envisaged a two-tier arbitration agreement.
Under the first tier, disputes were to be settled by arbitration in India. Thereafter, if either party
was aggrieved with the result, they could appeal in a second arbitration before the International
Chamber of Commerce in London. Centrotrade commenced arbitration and its claims were
dismissed by way of a 15 June 1999 award. As per the agreement, it subsequently appealed against
the award but was successful. The matter reached the Supreme Court, which had to consider the
award's enforceability. The Supreme Court took an arbitration-friendly stance and allowed the
appeal, paving the way for the award's enforcement. Taking into account Vijay Karia, the Supreme
Court held that 'misconduct' as a ground for setting aside an award (as provided for in Section
8(1)(b) of the Arbitration and Conciliation Act) is conceptually much wider than a party being
unable to present its case before the arbitrator.

Following the 2015 amendment to the Arbitration and Conciliation Act, the Indian courts have
maintained their approach of minimal intervention in cases concerning the enforcement of foreign

8
Civil Appeal 2562/2006

30 | P a g e
awards. The courts have stepped in to prevent enforcement only on limited grounds and in a few
select cases. Even in such select cases, the threshold for convincing the court that an award should
not be enforced is high. Therefore, it appears that enforcement is the norm and refusal is the
exception. The fact that the law on the enforcement of foreign awards has been subject to several
changes has made India an Asian arbitration hub, and the courts have acted as a catalyst in the
enforcement of awards. This is positive, as otherwise the Arbitration and Conciliation Act's
purpose would not be fulfilled and it would become just another piece of legislation.

31 | P a g e
RELEVANT CASES

1. Raj Rajendra Sardar Maloji v. Sri Shankar Saran AIR 1962 SC 1737; R.M.V.
Vellachi Achi v. R.M.A. Ramanathan Chettiar

Equivalent Citations: AIR 1973 Mad. 141

2. Chormal Balchand Firm v. Kasturi Chand

Equivalent Citations: AIR 1938 Cal 511

3. Ramanathan Chettiar v. Kalimuthu Pillai

Equivalent Citations: AIR 1914 Mad. 556

4. HSBC Bank USA v. Silverline Technologies Ltd

Equivalent Citations: AIR 2006 Bom 134

5. Sankaran Govindan v. Lakshmi Bharathi & Others

Equivalent Citations: AIR 1974 SC 1764;

6. Satya v. Teja Singh

Equivalent Citations: AIR 1975 SC 105

7. Centrotrade Minerals and Metals Inc v Hindustan Copper Ltd

Equivalent Citations: (Civil Appeal 2562/2006)

8. GEA EGI Contracting Ltd v Bharat Heavy Electrical Limited

Equivalent Citations: ((2016) 233 DLT 661)

9. Xstrata Coal Marketing AG v Dalmia Bharat (Cement) Ltd

Equivalent Citations: (2016 SCC OnLine Del 5861)

10. Inox Wind Ltd v Thermocables Ltd ((2018) 2 SCC 519)

32 | P a g e
CONCLUSION

The enforcement of a foreign arbitral award in India is founded on the fundamental principle of
minimal judicial intervention in order to further India's pro-arbitration and consequently pro-
foreign investment climate. In order to achieve this goal, the laws relating to the enforcement of
foreign arbitral awards have been systematically amended to limit the scope of defences available
to unsuccessful parties and prevent the courts from undertaking a wide interpretation of the
available defences. As such, a large number of foreign arbitral awards are successfully enforced
in India.

Further, the amended arbitration laws provide a simplified and settled one-stop-procedure. The
enforcement of a foreign award in India is initiated by filing a petition for enforcement. The
unsuccessful party can object to such petition as per the defences available under the Arbitration
and Conciliation Act 1996, after which the court will determine whether the award adheres to the
act. Once an award is found to be enforceable, it may be enforced in the same way as a court
decree. This simplified procedure has reduced the time that it takes the courts to render a judgment
on the enforcement of a foreign arbitral award. As the courts are in favour of prompt enforcement
of foreign arbitral awards, foreign parties which succeed in arbitration proceedings can generally
benefit from such proceedings in India.

Following the 2015 amendment to the Arbitration and Conciliation Act, the Indian courts have
maintained their approach of minimal intervention in cases concerning the enforcement of foreign
awards. The courts have stepped in to prevent enforcement only on limited grounds and in a few
select cases. Even in such select cases, the threshold for convincing the court that an award should
not be enforced is high. Therefore, it appears that enforcement is the norm and refusal is the
exception. The fact that the law on the enforcement of foreign awards has been subject to several
changes has made India an Asian arbitration hub, and the courts have acted as a catalyst in the
enforcement of awards. This is positive, as otherwise the Arbitration and Conciliation Act's
purpose would not be fulfilled and it would become just another piece of legislation.

HYPOTHESES

33 | P a g e
 1. No Foreign Judgements can be implemented in context of India.
2. There are no clear provisions dealing with enforcement of Foreign Judgements in
India.

VERDICT ON HYPOTHESIS

1. The first hypothesis stands false to a reasonable extent as the foreign awards can be
implemented in India.

Under Indian law, foreign awards passed in New York Convention countries, to, inter alia, Singapore
and England are capable of enforcement in India. Once an award is passed, a certified copy of the award
and the original agreement for arbitration is required to be filed in a court of competent jurisdiction in
India. Upon such application, the court would issue notice to the counterparty giving it an opportunity
to either accept or object to such award.

2. The second hypothesis stands completely false as though there are adequate
provisions dealing with topic of enforcement of Foreign Judgements.

The major provisions dealing with enforcement of foreign judgements are:-

 Foreign Awards (Recognition & Enforcement) Act (Section 7(1)(b))

 Arbitration and Conciliation Act (Section 48(2))
 Amended Arbitration and Conciliation Act (Section 48(2))

34 | P a g e
BIBLIOGRAPHY

BOOKS

1. A.M.Khanwilkar (2012) Handbook on mediation 2012, High Court of Bombay 1862-

2012,

2. A.Padmavathi (August 1990) Violence in the Family: A Criminological View, Legal

News and Views

3. Avatar Singh(2007) Arbitration and Conciliation Act,1996, Law of Arbitration and

Conciliation, Eastern Book Company, Lucknow,Eight Edition.

4. Avatar Singh (2007), Alternative Dispute Redressal, Law of Arbitration and Conciliation,

Eastern Book Company, Lucknow, Eight Edition.

5. Alternate Dispute Resolution Act, 1996.

WEB PAGES

1. http://eprints.luiss.it/694/1/lembo-20100713.pdf (Retrieved on 8th March, 2021)

2. http://www.legislation.gov.uk/ukpga/1996/23/section/40 (Retrieved on 8th March, 2021)
3. https://www.sundayguardianlive.com/business/10161-experts-seek-legislative-
framework-address-cases-commercial-disputes (Retrieved on 8th March, 2021)

35 | P a g e