UNIT-III

Enforcement of Foreign Awards

SUBJECT - Alternative Dispute Resolution

Semester - VII

Mr. NITIN KUMAR (Adv.)

Visiting Faculty
Faculty of Law,
University of Lucknow,
Lucknow

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 FOREIGN AWARD - ENFORCEABILITY
INTRODUCTION

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. In order to be considered as a foreign award (for the purposes of the Act), the same
must fulfill two requirements.

 First it must deal with differences arising out of a legal relationship (whether
contractual or not) considered as commercial under the laws in force in India.
 Second requirement is that the country where the award has been issued must be a
country notified by the Indian Government to be a country to which the New York
Convention or Geneva Convention applies.

The provisions regarding conditions for enforcement of foreign awards made under the New
York Convention or the Geneva Convention are almost the same. Once an award is held to be
enforceable it is deemed to be a decree of the court and can be executed as such. Under the
Act there is no procedure for setting aside a foreign award. A foreign award can only be
enforced or refused to be enforced but it cannot be set aside.

ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

Chapters (I and II) of Part II of the Arbitration and Conciliation Act, 1996 deal with the
enforcement of certain foreign awards made under the New York Convention and the Geneva
Convention, respectively.

Sections (44 and 53) of the Act define the foreign awards as to mean an arbitral award on
differences between persons arising out of legal relationship, whether contractual or not,
considered commercial under the law in force in India made on or after the 11th day of
October 1960 in the case of New York Convention awards and after the 28th day of July 1924
in the case of Geneva Convention awards.

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 Awards made under New York convention or Geneva Convention

Any foreign award whether made under New York Convention or Geneva Convention, which
would be enforceable under the Act have been 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.

Bharat Aluminium Company (BALCO) v. Kaisar Aluminium Technical Services Inc

[(2012) 9 SCC 552] The Constitutional bench of Supreme Court HELD that the Act of 1996
has accepted the territoriality principle which has been adopted in the UNCITRAL Model
Law. Section 2(2) makes a declaration that Part I of the Arbitration Act, 1996 shall apply to
all arbitrations which take place within India.

In the opinion of Supreme Court, the provisions contained in Arbitration Act, 1996 make it
crystal clear that there can be no overlapping or intermingling of the provisions contained in
Part I with the provisions contained in Part II of the Arbitration Act, 1996.
In a foreign seated international commercial arbitration, no application for interim relief
would be maintainable under Section 9 or any other provision, as applicability of Part I of
the Arbitration Act, 1996 is limited to all arbitrations which take place in India.

In this case hon‟ble Supreme Court concluded that Part I of the Arbitration Act, 1996 is
applicable only to all the arbitrations which take place within the territory of India.
This has now partly been overruled by the 2015 Amendment Act.

 Conditions for Enforcement of Foreign Awards [Section (48 & 57)]

 The enforcement of a foreign award in India is a two-stage process which is initiated by

filing an execution petition.
 Initially, a court would determine whether the award adhered to the requirements of the
Act.
 Once an award is found to be enforceable it may be enforced like a decree of that court.
[Section (49 & 58)]

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Requirements for enforcement of Foreign Award [Section 47]

Section 47 of the Act provides that the party applying for enforcement of foreign award
“shall” at the time of application produce before the court

1. The original award or a duly authenticated copy thereof;

2. The original arbitration agreement or a duly-certified copy thereof; and
3. Such evidence as may be necessary to prove that the award is a foreign award.
4. Where the award or agreement is in a foreign language, the party seeking to enforce the
award is required to produce a certified translated copy in English.
5. Where the Court is satisfied that the foreign award is enforceable, the award shall be
deemed to be a decree of that Court.

Foreign Award when not enforceable [Section 48]

1. The Indian courts may refuse to enforce the foreign award on satisfactory proof of any of
the grounds mentioned in Section 48(1) of the ACT, 1996, by the party resisting the
enforcement of the award. The provisions set out in Section 48 are in the nature of
defenses available to the party resisting the enforcement application.
2. The party, against whom the award is invoked, may use any of the following grounds as
defence before the Court for the purpose of refusal of enforcement of the foreign awards:
 the parties were under some incapacity under the law applicable to them or the
arbitration agreement is not valid under that law; or
 the party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to
present his case; or
 the award deals with a difference not falling within the terms of submission to
arbitration OR
 the composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties or in the law of the country where the
arbitration took place; or

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  the award has not yet become binding, or has been set aside or suspended by a
competent authority of the country in which or under the law of which, the award was
made; or
 the subject-matter of the difference is not capable of settlement by arbitration under
the law of India; or
3. The enforcement of award would be contrary to the public policy of India. In the case of
Venture Global Engineering v Satyam Computer Services (2008), it was held by the SC
that the new procedure of enforcement requires is that a person seeking to enforce a
foreign award has not only to file an application for enforcement u/s 48 of the 1996 Act, it
has to meet an application u/s 34 of the 1996 Act seeking to set aside the award. The new
ground is that the award pass the New York Convention grounds incorporated in Section
48, it must pass the expanded „public policy‟ ground created under section 34 of the 1996
Act.

JURISDICTION – APPROPRIATE FORUM & LIMITATION

The Act does not confer jurisdiction on the Indian courts to annul an International
Commercial Award made outside India.

The power to annul an award is provided under section 34 in Part I of the ACT, 1996. The
applicability of that provision is limited to the awards made in India or domestic awards. The
powers of the Indian courts to set aside an award relating to ICA are confined to those seated
in India. Therefore, Indian courts do not have jurisdiction to entertain a challenge to a foreign
award on its merits.

The Supreme Court Sundaram Finance Ltd. v. Abdul Samad and Anr [(2018) 3 SCC 622]
clarified that an award holder can initiate execution proceedings before any court in India
where assets are located. In case the subject-matter of the arbitration is of a specified value
(not less than Rs. 1 crore), commercial courts established under the Commercial Courts,
Commercial Division and Commercial Appellate Division of High Courts Act, 2015
(“Commercial Courts Act”) would have jurisdiction, as given below:

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A. Award arising out of an India seated arbitration (being an ICA)
By virtue of the Commercial Courts Act and the Amendment Act, the Commercial
Division of a High Court where assets of the opposite party lie shall have jurisdiction for
applications relating to enforcement of such awards if the subject matter is money. In
case of any other subject matter, Commercial Division of a High Court which would have
jurisdiction as if the subject matter of the award was a subject matter of a suit shall have
jurisdiction, i.e., where the opposite party resides or carries on business or personally
works for gain.

B. Award arising out of an India seated arbitration (not being an ICA)

As per the Commercial Courts Act and the Amendment Act, for such cases, the
appropriate court would be the Commercial Court exercising such jurisdiction which
would ordinarily lie before any Principal Civil Court of original jurisdiction in a district,
as well as the Commercial Division of a High Court in exercise of its ordinary original
civil jurisdiction.

C. Foreign Awards
Where the subject matter is money, the Commercial Division of any High Court in India
where assets of the opposite party lie shall have jurisdiction. In case of any other subject
matter, Commercial Division of a High Court which would have jurisdiction as if the
subject matter of the award was a subject matter of a suit shall have jurisdiction.

APPROPRIATE FORUM

On a decree being passed, execution proceedings can be initiated for enforcement of the
decree. Section (36 to 74) and Order XXI of the CPC set out the provisions in respect of
execution. The person in whose favour a decree has been passed or an order capable of
execution has been made is known as a “decree-holder” while the person against whom a
decree has been passed or an order capable of execution has been made is known as a
“judgment-debtor”.

The proceedings to execute a decree must be initiated, in the first instance, before the court
which passed it. Where appropriate, such court may transfer the decree to another court for

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 execution for various reasons including the locus of the judgment debtor or the locus of the
property against which the decree is sought to be executed.

LIMITATION PERIOD

As per the Limitation Act 1963, the period of limitation for the execution of a decree (other
than a decree granting a mandatory injunction, in which case, it is three years) is twelve years
from the date of the decree. However, an application for execution of a decree granting a
perpetual injunction shall not be subject to any period of limitation.

ENFORCEMENT OF FOREIGN AWARD

Execution Petition made for Enforcement before

the High Court

ENFORCEABLE NOT ENFORCEABLE

Execution Petition + Documents [Sec. 47] If other Party furnishes proof given [Sec. 48]

APPEAL [Sec. 50]

Foreign Award deemed to be a Binding between the Parties
Decree of the Court [Sec. 49] [Sec. 46]

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