Enforcement of International

Arbitration
Award and Public Policy

DATE -:

Dr. Madhumita Kothari, Partner, HSA Advocates– Dispute Resolution Practice

 INTRODUCTION

 As stated by Herbert Read –

“I can imagine no society which does not embody some method of arbitration”

 The dictionary meaning of Arbitration is

“hearing and determining a dispute between the parties by a person or persons chosen by the parties”.

 In the English judgement, Collins v. Collins, 1858 28 LJ Ch 184: 53 ER 916 the court gave a wide definition to the concept of
Arbitration which reads as follows:

“An arbitration is a reference to the decisions of one or more persons either with or without an umpire, a particular matter in difference
between the parties”.
 
 The International Court of Justice in the case of Maritime Delimitation and Territorial Questions between Qatar and Bahrain
(Qatar v. Bahrain), stated that the word “arbitration” for the purpose of international law, usually refers to -
‘the settlement of disputes between states by judges of their own choice’.
 

Fundamentally arbitration is a dispute resolution mechanism through which the parties to the dispute sort out their dispute
through a third person called the arbitrator. Arbitration is the buzz word in the present day business contracts. The law bestows
a choice upon the parties to enter into commercial transactions knowing well that in case, of a dispute, they will refer their
dispute to this simple, quick, convenient and cost effective process saving them from tedious and complicated procedures of a
court.
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 HISTORICALASPECT

 The origin of Arbitration can be traced back to the reign of King Solomon, who used the biblical theory to settle

disputes between two mothers where each one was claiming the right on the baby boy and the issue was who the true
mother of a baby boy was Subsequently, all rulers used arbitration to resolve commercial and territorial disputes.
 
 For India, Arbitration is not a new concept; it has been in use since the Vedic times. The law for Arbitration has been
continuously evolving and developing throughout our country’s history.
 
 
 

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 HISTORICALASPECT

 During the industrial Revolution there was rapid growth in worldwide business and commerce. To keep up with
the rapid economic growth and in order to avoid drawn out litigation, arbitration is seen as the preferred dispute
resolution mechanism. Presently, the judicial system is still struggling with the high pendency of on-going cases
because of which a speedy redressal has become a dream for litigants, who fears the litigation because of the delay
in resolution of issue.

 As arbitration process promises a speedy remedy to the parties, it is considered as one of the most efficient
dispute resolution method. However, arbitration has its own shortcomings. These drawbacks of the arbitration
process are corrected time and again in order to develop a smooth and efficiently functioning process. Whenever
laws relating to arbitration are enacted, some loopholes are noticed, which led to the enactment of the present
Arbitration and Conciliation Act, 1996 which is based on the UNCITRAL model. This act has further been
amended in 2003, 2015 and 2019.

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 ADOPTIONOFMODELLAWININDIA

 Arbitration Law in India has always been trending since its inception, in 1940. The present date arbitration law is a
formation of several promulgations and ordinances passed by the government of India to meet the economic reforms
taking place in the country from time to time.

 Arbitration Law in India, is primary contained in the Act of 1996. An Act that was passed to consolidate the laws
relating to domestic, international arbitration and its enforcement. In an attempt to make arbitration a preferred mode of
settlement of commercial disputes and making India a hub of international commercial arbitration some major
amendments were introduced in the year to 2015 and 2019.

The current law is a composition of several such amendments with the latest amendments being introduced in 2019. The
Model law, with the exception of a few provisions, was adopted in its entirety in India, in the form of the Arbitration and
Conciliation Act 1996.

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 The following provisions were adopted by the act -:
 
 
 The form and definition of arbitration agreement.
The duty of the courts to refer the parties to arbitration where a suit is brought before the court in breach of
the arbitration agreement.
The power of courts and tribunals to provide interim measures of protection in support of an arbitration
agreement.
The composition of the arbitral tribunal.
Appointing arbitrators.
Grounds to challenge an arbitrator.
The termination of the mandate of an arbitrator because of his failure to act.
Provisions for substitution of an arbitration when his mandate is terminated.
The procedure for arbitration.
The Enforceability of arbitral awards and appeal against them.

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 Existing Legal Situation

The existing legal situation for the enforcement of foreign arbitration is governed under the various laws:

● “The Arbitration and Conciliation Act of 1996”

● “UNCITRAL Model Law on International Commercial Arbitration of 1985”

● “The Code of Civil Procedure of 1908”

● “The Foreign Awards (Recognition and Enforcement) Act of 1961”

● “The Arbitration (Protocol and Convention) Act, 1937”

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 ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA

What is an Arbitral Award?

 

 An arbitration award or an arbitral is a decision which is reached by an arbitration tribunal during the
arbitration proceeding. A decision made in a court of law is equal to an arbitral award.

 If all the claims of the claimants are rejected and none of the party is required to pay any amount then an
arbitral award may be non-monetary. Examples of an arbitral award include injunctive relief, clear
performance of a contract, rectification, cancellation of a deed, payment of money, declaration on a matter
that is to be decided in the arbitration proceeding, setting aside a deed.

 An arbitral award has been described under Sec. 2(1)(c) of the Arbitration and Conciliation Act as one that
includes an interim award. In simple terms an arbitral award is like a decree or order of a Court of law and the
decision is based on the merits of the case.

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 ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA

What is Foreign Arbitral Award and its enforcement in India? 

Sec. 44 of the Arbitration and Conciliation Act, 1996 defines the foreign award as an arbitral award on
differences that are related to the matters which are deemed commercial under the Indian law. For an award
to be a foreign award there are two requirements that should be met.

Firstly, it should resolve the discrepancies which result from a commercial legal relationship or a relationship
which is considered commercial under the Indian law.

Secondly, the country that is issuing the award must be a country which has been designated by the Indian
government as a country in which the New York Convention is made applicable. Only such awards that are
given by these countries are implemented and are known as international awards. Sec. 2 of the Act governs
the execution of these awards.

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 ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA

A three-step method is followed for the compliance of a foreign award. The party in whose favour the
award is made along with all the supporting documents will apply under Sec. 47 of the Arbitration and
Conciliation Act.
 The party to whom the award is made must raise a defence under Sec. 48 of the Act with all the facts.
Finally, the court will enforce the award under Sec. 49 if the court is convinced that the award is enforceable
based on all the facts provided by the parties. A foreign award can be set aside by an Indian court under Sec.
34 of the Act, according to the Supreme Court in Venture Global Engineering vs Satyam Computer Services
Ltd and Anr.
 If the subject matter of the foreign award is money then the Commercial Division of the High Court will
have the jurisdiction in whose jurisdiction the properties of the opposing party is located. If the award's
subject matter is not otherwise, the Commercial Division of the High Court that would have jurisdiction if
the award were the subject of a suit would have jurisdiction.

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 The Vedanta Judgement
Scope of Arbitration Clauses
The Vedanta judgment has been appraised by the legal jurist around the world as the right step taken by the
BACKGROUND Supreme Court for the enforcement of foreign awards. Before the verdict in the Government of India Vs.
Vedanta Ltd, it was widely considered that the Supreme Court had taken a regressive view in the enforcement
of the foreign award in the case of NAFED Vs. Alimenta S.A. and Venture Global Eng. LLC Vs. Tech Mahindra

The issue arose from a product sharing agreement entered between Government and Cairn India Ltd
(Later it was obtained by Vedanta) to separate gas and oil from the field. There was a dispute regarding cost
FACTS and the government retrieved $499 Million from Vedanta. The dispute soon moved into international
arbitration by the Malaysian Tribunal, the tribunal ruled in favor of Vedanta in 2011, there were many grounds
of appeal and the issue of enforcement came before the Delhi HC in 2018 and lastly in SC .

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 The Vedanta Judgement
Scope of Arbitration Clauses
DECISION

 The SC upheld that foreign award on the ground that the government has failed to establish that the enforcement of
the award would be against the public policy of the country. The SC had categorically mentioned that the courts should
be reluctant in not enforcing the arbitration award and should try to reduce the intervention of the judiciary.

Also, the SC held that Article 136 of the Limitation Act would not be considered as pertinent for the enforcement of the
international arbitration award since it is a declaration of the common court and it would be governed under Article 137,
thus the time for the enforcement of the award would be three years from when the option to apply gathers.

 Therefore, the SC in the Vedanta Judgement has taken a step for smooth enforcement of the foreign award by reducing
the gaps in the existing legislative framework and adopting a pro-enforcement bias approach.

Privileged & Confidential 12

ISSUES AND CHALLENGES IN ENFORCEMENT OF FOREIGN ARBITRAL
AWARDS IN INDIA

 The Indian courts refuse to enforce the foreign award on adequate proof of any of the grounds that have
been mentioned under Sec. 48(1) of the Act by the party opposing the enforcement of the award.

 The words "set aside or suspended" mentioned under Sec. 48(1)(e) cannot be interpreted to mean that the
international award sought to be imposed in India may be challenged on the merits in Indian courts. As a
result, the Act does not grant Indian courts the power to reverse an international commercial award made
outside of India. Sec. 34 of Part I Act, 1996 grants the authority to revoke an award. That provision only
applies to awards made in India or awards made within the country.

 The Indian courts' right to set aside an award in international commercial arbitration is limited to those
who are based in India. As a result, Indian courts lack the authority to hear an appeal to a foreign award on
its merits.

Privileged & Confidential 13

 SETTINGASIDEAFOREIGNARBITRALAWARDONALITIGATIONBASIS

Under Sec. 48 of the Act, an international arbitration award may be challenged. It specifies the grounds for challenging a
foreign arbitral award. The grounds are as follows -:
(1) One of the parties is under some incapacity
If either or both of the parties participating in the arbitral proceedings are incompetent under the applicable law then the
award cannot be upheld.. Involuntary incapacity, undue control, deception, duress, or misrepresentation are examples of
incapacity

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 SETTINGASIDEAFOREIGNARBITRALAWARDONALITIGATIONBASIS

(2) The Arbitral Award is beyond the scope of Arbitration

The terms of reference limit the jurisdiction of an Arbitration Tribunal. No court is supposed to defy these restrictions.
They are only expected to make decisions on the questions that have been submitted, and they are not allowed to go
beyond that. An award that goes outside the limits of arbitration is likely to be overturned by the courts. It is to be
noted that if it is possible to differentiate between awards made within the scope of the arbitration's terms and the ones
made by going outside those scope limits, then the former should be enforced.

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 SETTINGASIDEAFOREIGNARBITRALAWARDONALITIGATIONBASIS

(3) The legality of the Composition or Procedure of the Arbitration Tribunal

An award may be quashed if the tribunal was not formed following the parties' agreement, or the tribunal was not formed in
accordance with the parties' agreement. ii) The process adopted during the arbitration proceedings was not in line with the
agreement between the parties. iii) If the arbitration's composition or process is not in compliance with the law of the
country where the arbitration was held.

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 SETTINGASIDEAFOREIGNARBITRALAWARDONALITIGATIONBASIS

(4) Notice was not given to either party

It would be a breach of natural justice if none of the party obtained notice of the arbitrator's appointment or the arbitral
proceedings. These awards have to be set aside. However, if a party has willingly chosen to sit out of the arbitral
proceedings then those rewards will be upheld as the party did so of their own free will. Only such awards can be
contested if one of the party members was left out because of the circumstances that are outside their control

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 SETTINGASIDEAFOREIGNARBITRALAWARDONALITIGATIONBASIS

(5) Public Policy

In India, an award given in breach of the country's public policy shall be unenforceable. Awards made in breach of public
policy may be a shield against its compliance. The Indian courts are obliged to deny execution of an award which is contrary
to the Indian public policy. In Renusagar Power Co. Ltd vs General Electric Co, the Supreme Court resolved the question as
to what constitutes a violation of Indian public policy, holding that the bar of public policy would be drawn only when there
is a violation of anything other than Indian laws.

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 SETTINGASIDEAFOREIGNARBITRALAWARDONALITIGATIONBASIS

(6) Setting aside the award before its enforcement

It would be a breach of natural justice if none of the party obtained notice of the arbitrator's appointment or the arbitral
proceedings. These awards have to be set aside. However, if a party has willingly chosen to sit out of the arbitral
proceedings then those rewards will be upheld as the party did so of their own free will. Only such awards can be
contested if one of the party members was left out because of the circumstances that are outside their control.

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 ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA

(7) The dispute cannot be resolved under arbitration

If the existence of a conflict prohibits it from being resolved by arbitration, either because the subject matter is

incompatible with the laws currently in force in various countries, or because the subject matter is incompatible with

the laws currently in force in India. The court would fail to enforce the award in this situation.

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 PUBLIC POLICY DOCTRINE
Scope of Arbitration Clauses
Introduction to Public Policy

Justice Burroughs called ‘public policy’,

“an unruly horse when once you get astride it you never really know where it will take you”

 Public policy can be a very appropriate label for the unwillingness, for whatsoever reason, to deny the enforcement of
any arbitral award granted under the New York Convention.

 Public Policy doctrine is a barrier in the way of enforcement of international arbitral awards. There has always existed
an air of inconsistency when it comes to deliberating upon the pros and cons of the use of this exception.

 Public policy as an exception has been considered as a roadblock in the way of India being an arbitration-friendly
jurisdiction and acts as an obstacle in the way of India's ultimate goal of receiving greater Foreign Direct Investment and
becoming an international arbitration hub.

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 PUBLIC POLICY BARRIER : A NECESSARY EVIL

In 1853, the House of Lords in the UK defined public policy as a legal principle whereby no entity can legally carry
out any activity which can be considered contrary to “public good.”
Citing a public policy exemption seems to be a security mechanism that can be used under certain specific
circumstances where it would be untenable for a judicial system to enforce the award without relinquishing the
same premise upon which that system is based. It is appropriate that a State wishes to enjoy the ability to not
recognise and enforce an award that breaches that state's internal interpretations of domestic public policy.

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 PUBLIC POLICY BARRIER : A NECESSARY EVIL

It is pertinent to mention that there exist certain procedural defects and errors in the application of the public policy
barrier. Numerous judicial systems have approved the proposal that a substantive objection cannot be included
within the ambit of the public policy doctrine at the time of enforcement if it comes to light that it existed when the
arbitral proceedings were underway and it was possible to raise it before the tribunal, or if it has been brought up
and denied by the arbitral tribunal on merits.

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 PUBLIC POLICY BARRIER : A NECESSARY EVIL

 The English judiciary has agreed with the above proposition, that a party that was ineffective in bringing up a
substantive error with the tribunal, although it may have managed to do so, has rescinded the ability to do that at the
time of enforcement.

 With regard to the competency of any court to examine a foreign award on the grounds of public policy, Article
V(1) of the New York Convention offers that recognition can be denied “at the will of the party against whom it is
to be invoked,” whereas Article V (2)(b) denotes that enforcement can be denied in case the respective authority of
the enforcing state deems such enforcement and recognition to be violative of its public policy.

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 THE NEW YORK CONVENTION : HISTORY AND APPLICATION

 The Indian Parliament passed the Foreign Awards (Recognition and Enforcement) Act, 1961 to enforce the
New York Convention (which came into force in 1958) which India ratified on July 13, 1960. It is pertinent to
state that the United Kingdom did not ratify the Convention until 1975.

 The New York Convention, 1958 can undoubtedly be viewed as a milestone treaty for international
commercial arbitration. It is a breakthrough for the growth of international arbitrations by establishing a
scheme of cross-border recognition and enforcement of non-domestic arbitration awards. It is the backbone
of the international management for the enforcement of international arbitral awards.

An unvarying international arbitration system needs effective and systematic enforcement of non-
domestic awards. The Convention expects its member states to accept and enforce foreign arbitral awards.
Even so, as the New York Convention was enacted, numerous nations were quite cautious to become a
signatory. This tension emerged from the belief that perhaps the terms of the New York Convention were in
violation of the domestic statutory provisions of individual states.

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 THE NEW YORK CONVENTION : HISTORY AND APPLICATION

 To tackle the abovementioned concern, Article V of the Convention was relied upon. Article V(2)(b)
specifically offers a way through which a member state can choose to refuse implementation of an
international arbitral award if that award can be considered as conflicting with the public policy of the
enforcing state.

The New York Convention wants its member states to enforce the foreign arbitral awards granted by other
members, however, it also comprises of a public policy exception which permits any member state to refuse
enforcement of a foreign award if that award is in contravention of its public policy, the most fundamental
notions of principles of law morality of that state. Countries like the United Kingdom, Kuwait, the United
States, and Syria have narrowly construed the public policy exception.
 

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ARTICLE V(2)(B) OF THE NEW YORK CONVENTION - GLOBAL PERSPECTIVE

 In most of the member nations of the New York Convention, the “pro-enforcement” approach has been
consistently upheld. This pro-enforcement position is also undeniably perceived to be a public policy issue,
as correctly established by the English judiciary in the case of Westacre Investments Inc v. Jugoimport-
SPDR Holding Co Ltd.

 The method of the US Courts was succinctly laid down in the Sonatrach verdict where the court held that
the various rulings that unquestionably tilt the judicial scales in support of arbitration are those judgments
of the Supreme Court of the United States that actively endorse a biased solution to commercial disputes
with international parties.

 The landmark decisions such as Bremen v. Zapata Offshore Co., Scherk v. Alberto-Culver Co., and the
Mitsubishi case countered the restrictive bias of domestic courts over maintaining authority across
international commercial disputes.
 

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 AMENDMENT OR REMOVAL OF ARTICLE V(2)(B)

 Article V(2)(b) allows any member state to follow the international process of arbitration while permitting
the enforcing state to deny any award not found in consonance to its public policy. Such right to refusal is
conflicting with the object and purpose of the Convention and the international commercial arrangement.

 Therefore, it is only fitting that the New York Convention either be amended or Article V(2)(b) be
repealed. Amendment may be done to Article V(2)(b) to ensure that any member nation, on finding a foreign
award violative of its public policy, may call for intervention from a third neutral body to seek nullification of
that award. Another solution that has been suggested by many scholars is the complete deletion of Article
V(2)(b) from the Convention.

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 AMENDMENT OR REMOVAL OF ARTICLE V(2)(B)

 Any party which believes that a foreign award is unfair is free to turn to all the remaining provisions and
rules laid down in the New York Convention to check the validity and correctness of the award.
As a result, the party might seek cancellation of the award in the state where it was granted. Complete
elimination of Article V(2)(b) would eradicate the arbitrariness exercised by the enforcing state of foreign
awards.

 This elimination would actually give the satisfaction to the international community that any and every
arbitral award delivered will represent the disposal of the dispute resolution process and make it mandatory
for all signatory states to effectuate the enforcement of awards.

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 PUBLIC POLICY RULE IN INDIA AND ENGLAND

Background in India

 Public Policy in India previously comprised of the fundamental policy and interests of India, morality, and
justice which was successfully followed till a wide-ranging approach was taken. We will be discussing the
dichotomy that exists in the Indian judiciary concerning the public policy exception.

 The first-ever interpretation of the application of this exception was laid down in Renusagar Power Co. Ltd.
v. General Electric Co. (Renusagar), where a pivotal milestone was established that a court was not to evaluate
an award on its merits and that a bigger issue than a mere violation of the law would be required, adding that
the enforcement of the award can be denied in case the award is found in violation of the fundamental policy
of Indian law, interests of India, and the wide notions of justice or morality.

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 PUBLIC POLICY RULE IN INDIA AND ENGLAND

 Next in line was Oil and Natural Gas Co. v. Saw Pipes (Saw Pipes) in which a new ground of patent
illegality was added to the grounds computed in Renusagar. The Saw Pipes judgment laid down that an
award that is found to be patently violative of any statutory provision cannot be considered to be made
keeping in mind public interest and any award of this kind will unfavourably impact the administration of
justice.

 In the more recent judgments, the scope was revaluated by the Indian Judiciary. For instance, in Venture
Global Engineering LLC v. Tech Mahindra Ltd. (Venture Global) the court stated that any award which is
violative of the public policy of India will be overturned since Section 34(2)(b)(ii) of the Act also includes
those instances where the award may be induced by fraud. Cases like Venture Global reinforced that coping
with the exception of public policy continually appears to be a challenge for the Indian judiciary as this case
reopened the debate regarding patent illegality as a ground of breach of the public policy. 

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 PUBLIC POLICY RULE IN INDIA AND ENGLAND

 
 In the two most recent cases, Vijay Karia v. Prysmian Cavi E Sistemi SRL (Karia), and National Agricultural
Cooperative Marketing Federation of India v. Alimenta S.A. (NAFED), conflicting decisions by the judiciary
were observed, shedding light on the dichotomy that exists with respect to the enforcement of foreign awards
under the public policy exception.

 The Supreme Court in Karia reiterated the significance of minimum judicial interference in arbitral
proceedings while raising extraordinarily high costs in rejecting an appeal against the verdict of the Hon'ble
Bombay High Court to allow enforcement of foreign awards.

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 PUBLIC POLICY RULE IN INDIA AND ENGLAND

 The ruling in Karia declared that in order to prove a violation of the fundamental policy of the Indian legal
framework, a breach of that legal principle or statute is required which can be seen as most basic and cannot
be compromised. This case reinforced the time-honoured conceptions of fundamental policy and minimum
judicial interference as laid down in numerous previous judgments. While, the Court in NAFED ruled that
the contract between the two parties was a contingent contract under Section 32 of the Indian Contract Act,
1872, which would be unenforceable on account of the lack of permission from the government.

 Thus, it was against the fundamental public policy of India to enforce such an award. It is noteworthy that
the approach of the judiciary has been targeted towards limiting the ambit of the exception, especially after
the 2015 Amendment. However, like two sides to every coin, there exists an opposing approach that upholds
the public policy exception as a promising way to protect the basic principles of the legal system.

 As seen in Karia, the limiting approach has been accentuated while NAFED seems to be a huge setback to
the growth in the direction of minimum judicial interference. Therefore, it is evident that there exists a dire
need for a consistent approach towards the enforcement of non-domestic arbitral awards.

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 THE STATUS IN ENGLAND

 A catena of decisions has recently come before the courts in England dealing essentially with the
applications to set aside the awards under public policy as a result of the illegality. There is no rational
strategy adopted by the English judges rather these problems have been dealt with by the courts on a case-
tocase basis. - In one of the leading cases, Tinsley v. Milligan (Tinsley), the illegality exception was
scrutinized and the House of Lords established a rule-based reliance approach, popularly known as the
“reliance test”.

 Simply put, the test implied that if the defendant raised a defence of illegality, the court would have to
examine whether the claim “relied” on the claimant's own illegal act. However, this test has been criticized
time and again due to its drawbacks that it caused arbitrariness, ambiguity and could possibly result in
injustice. This was because it concentrated on procedural hiccups instead of the policy factors behind the
illegality, which raised confusion about what actually falls under the ambit of “reliance”.

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 INDIA AND ENGLAND IN CONTRAST

The public policy doctrine is undoubtedly governed by numerous standards and tests both in
Indian and England. We have observed in the previous section how India and England both have
shown their inclination towards a solely restrictive interpretation of the public policy exception
and application of a pro-enforcement approach.

 Indian courts have, on various occasions, tried to restrict implementation of the public policy
exception and made efforts to align its goal with that of the New York Convention. The moment
India started to receive appreciation for being able to control the unruly horse, the very recent
decision in Vijay Karia has breathed fresh life in the discussion once again. However, there are
still matters like NAFED which act as hurdles in the ultimate aim of making India an arbitration-
friendly jurisdiction for foreign investors.

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 INDIA AND ENGLAND IN CONTRAST

In the cases we have discussed, the English Courts’ approach to public policy has always faced a high
standard before refusal of enforcement of an arbitral award. England has clearly adopted a
unidirectional pro-enforcement bias. This brings us to the inference that it is high time India also
adopts a consistent approach taking inspiration from England and finally deciding on the level of
acceptable judicial interference and enforcement decisions.

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 CURRENT STATE OF AFFAIRS

 Judgments such as the NAFED verdict have serious implications regarding potential
investments in India since every foreign investor would inquire about the host country's conflict
resolution mechanism to establish if it really is powerful, safe, business-friendly, and so forth.

 Therefore, it became a necessity for India to make it crystal clear that the country will now be
undertaking an anti-judicial interference stance to deal with enforcement of foreign awards on
paper and in practicality. In this turbulent time came the much-awaited Vedanta ruling which
reinstated this in the minds of foreign investors.

 India recently amended its Insolvency and Bankruptcy Code, 2016 in light of the COVID-19
pandemic with a view of protecting businesses, but the suspension of insolvency proceedings
has led to India acting in breach of its Bilateral Investment Treaty obligations with respect to the
provision of fair and equitable treatment to its foreign investors.

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 CURRENT STATE OF AFFAIRS

This will inevitably lead to a higher number of disputes and substantially increase the
expenditure on fighting foreign claims. This further makes it unfavourable for foreign investors
to invest in India. Adding to these roadblocks is the recent Arbitration and Conciliation
(Amendment) Ordinance, 2020, which aims at imposing an unconditional stay on arbitral
awards induced by frauds. Arbitration has become an alternative for litigation as time passes by
but provisions like these hinder the confidence of investors to invest in India. Section 48 of the
Act already provides for grounds of fraud for foreign awards. This ordinance just portrays the
regressive approach undertaken by the legislature towards arbitration and takes India ten steps
back.

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 CURRENT STATE OF AFFAIRS

In a situation like ours, where India intends to successfully portray its proenforcement stance in the
international playfield, and there is still an inconsistency in the judiciary when it comes to the actual
implementation of this stance, the government has to step in and take on more responsibility for the
ultimate goal. Parties are challenging the foreign arbitral awards which are against them, to extract the
most out of their existing trade partners, however, the idea is not to challenge and get benefit out of
one foreign affiliation. Rather, the purpose is to solicit more investors and increase the opportunities
for FDI in the country.

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RECOMMENDATIONS AND SUGGESTIONS FOR BETTER ENFORCEMENT OF FOREIGN
ARBITRAL AWARDS

[A] Need for restructuring the Arbitral Institutions

1. Setup of the institution

One of the most serious challenges is the establishment of international arbitration institutions with hearing centers
in India's expanded jurisdiction. The question is if national arbitration should be governed by a single center or
whether multiple centers should be established across cities. China, for example, has 230 arbitral institutions,
whereas Singapore only has one. If having centers all over the country is desired, the cities were chosen, and the
criteria used to pick them to become crucial. It has been suggested that India should create a single central arbitral
institution with regional offices in major commercial cities such as Mumbai and Delhi, Bangalore, Hyderabad, etc.

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RECOMMENDATIONS AND SUGGESTIONS FOR BETTER ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

2. Upgrading the infrastructure of the institution

The next important concern is to create an eco-system that is stable and vibrant for the
international arbitral institution. Institutions must be reliable, autonomous, effective, and
transparent in and of themselves, which is difficult in India due to its diversity. Aside from
physical and technical facilities, the institution's leadership should be vibrant and assisted by
well-trained support staff for qualitative arbitration and library. Technology such as e-filing,
building case databases, big data analytics, Online Dispute Resolution, and video conferencing
must be scaled up and used extensively in the arbitration process.

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RECOMMENDATIONS AND SUGGESTIONS FOR BETTER ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

3. Creating a Dedicated Bar

Institutionalizing arbitration will also entail the creation of a dedicated bar composed of experts
capable of administering arbitration in compliance with the institutions' rules and offering
qualified, viable services. The dedicated arbitration bar's rules would help it stick to deadlines
and avoid resembling court proceedings. The body of trained arbitrators will also assist in the
strengthening and institutionalization of arbitral institutions. The International Bar Association
Arbitration Committee (the IBA Committee), for example, focuses on the rules, practices, and
procedures related to transnational conflict arbitration.

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RECOMMENDATIONS AND SUGGESTIONS FOR BETTER ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

4. Scaling the human capital

Without a pool of competent arbitrators who are capable, conflict-free, and above all, nonpartisan,
building physical infrastructure would be inadequate. The arbitrators should be knowledgeable,
technically proficient, and experts in their profession. As a result, arbitrators who act as a party's
lawyer on a tribunal should be discouraged, and their partial opinions should be dismissed.

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5. Generation of awareness

Strengthening arbitration in the country will have to go hand in hand with encouraging

arbitration as a conflict settlement method. This will involve stopping private players from

rushing to the courts without first exhausting the applicable arbitration clauses in the deal,

causing the work to be stalled.

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RECOMMENDATIONS AND SUGGESTIONS FOR BETTER ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

6. Institutionalizing Arbitration

In India, arbitrations are currently not conducted formally. As per the Law Commissions of
India’s 246th Report, the typical style in which the arbitration devolve into like that of a court
hearing is considered to be Ad Hoc arbitration with the result that adjournments are issued
regularly, and lawyers tend to appear in court instead of the arbitration proceedings. As a result,
it is suggested that India facilitate institutional arbitration, in which the arbitral mechanism is
aided and administered by a professional institution with a permanent character. Such agencies
can also appoint qualified arbitrators to determine the amount to be paid and the manner in
which documents must be submitted. This would imply a sense of autonomy (i.e., independence
from government control) among end-users, as well as income sources to support their
autonomy

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RECOMMENDATIONS AND SUGGESTIONS FOR BETTER ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

 Interference by courts has been established as one of the major causes of arbitration delays in India. the
award given in the case of White Industries vs. the Republic of India16 in 2011 can be considered as a leading
csaelaw. In this case, an Australian corporation successfully sought compensation from the Indian
government for judicial delays, which was equal to the value of the award. The above award raises two issues:
the first is the judicial intervention, and the second is arbitration delays.

 In terms of judicial intervention, it is generally argued and accepted that the judiciary should restrict its
participation in the arbitration, as is the case in several other jurisdictions. For example, in China, only the
Supreme Court has the power to participate in arbitration proceedings.

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 REQUIREMENT OF JUDICIAL ASSISTANCE

 Lack of continuity in Indian judicial judgments on arbitration and decisions rendered by arbitral
authorities has also been described as a source of concern. Because of India's federal system of States and
Central ties, and each State has its own Judiciary, the perspectives of individual Courts on objections filed
under Section 34 of the Arbitration and Conciliation Act differ depending on local requirements.

 This necessitates action on the part of judicial academies, which should be asked to provide instruction to
judges on how to deal with cases challenging and attempting to set aside arbitral awards, as well as ensuring
that judges holding such courts are not regularly moved.

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 [C] TO MAKE AS THE PREFERRED SEAT IN INTERNATIONAL ARBITRATION

To make India the global center of international arbitration, it is important to ensure that arbitration in
India takes less time and costs less money than arbitration anywhere else on the globe. The government will
have to put in place an enabling structure for formal arbitration, which would include arbitration events,
training, and conferences. Institutions must also commit to giving the agreement to arbitrate precedence.
This requires not only the right to administer arbitration but also the right to enforce the arbitral award
without intervention, except in cases of public interest.

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 CONCERNS REGARDING THE LEGISLATION

Legislative amendments to this can be attempted only after a fair amount of time has passed if it is considered that
12 months is too short. In the meantime, organizations can take over the administration of the arbitration
proceedings' time limits and case management, as well as develop techniques to monitor the arbitration
proceedings, making the whole procedure more transparent. The number of witnesses, the number and severity of
issues involved, the amount of record, the stakes involved, and the number of arbitrators should all be weighed
when assessing the time limit.

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 CONCLUSION

The Way Forward is India undoubtedly needs foreign investment for overall economic development. For
that, it is absolutely necessary that the dispute resolution framework or the arbitration process needs to be
way more robust cts as a catalyst in the path towards achieving this goal.
 
 It is no more a mystery that when foreign arbitral awards are not challenged over and over again,
investments would rise. Therefore, the country is aware of the implications, however, the concern regarding
implementation still remains.
 
 Looking on the bright side, India, over the past six years has called for foreign investment by promising to
provide a business-friendly environment. With this, India has managed to successfully scale upwards to the
63 rank in 2020 from 142 in 2014 in the World Bank's Ease of Doing Business Rankings finally becoming one
of the top ten destinations for FDI. In the same rankings, United Kingdom held the 8 rank all over the world
making it one of the strongest and most favourable destinations for business and investment.

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 THANK YOU

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