Execution of Foreign Arbitral Awards

Introduction

The last two decades have witnessed a sea of change in the landscape of international commerce which has resultantly led to a growing need to evolve efficient methods of commercial dispute resolution.

Arbitration has proved to be the chosen method of resolution between parties, given the flexibility it provides in procedure, and appointment of Arbitrators with specific technical qualifications in line with the subject-matter of dispute.

The Arbitration and Conciliation Act, 1996 recognizes and provides due procedure for execution and enforcement of foreign arbitral awards as a decree of the court and are specifically governed under the provisions of Part II of the Act.

Recognised Foreign Arbitral Awards

India being a signatory to the New York Convention and the Geneva Convention on execution and enforcement of Foreign arbitral awards, recognises binding arbitral awards from a country which is a signatory to either of the conventions or is made in such a territory in which the convention applies, then the award would be enforceable in India.

Procedure

1.    Assessment of Award Adherence:

• The process begins by evaluating whether the Arbitral Award complies with the requirements specified in the Act.
• If the award meets the necessary criteria, it can be recognized as valid.

2.    Application to the High Court:

• The party seeking enforcement of the award files an application before the High Court.
• This step applies to both Foreign Arbitration Awards governed by the New York Convention and those under the Geneva Convention.

3.    High Court Evaluation:

• The High Court examines whether the award satisfies the conditions outlined in the Act for either the New York Convention or the Geneva Convention.
• It verifies if the arbitral award can be recognized as such.

4.    Opposing Party’s Opportunity:

• The opposing party has the chance to raise objections based on the grounds enumerated in the Act.
• These objections are considered during the process.

5.   Court Order for Execution:

• After due consideration, the High Court issues an order allowing the award to be executed as if it were a decree passed by the Court.

This procedure ensures that arbitral awards are properly assessed and enforced.  

New York Convention

The parties applying for enforcement of the foreign award from a country which is a signatory to the New York Convention must produce the following at the time of filing an application for enforcement of the award:

1. Original award or a duly authenticated copy in the manner required by the country where it is made,
2. Original agreement or a duly certified copy,
3. Evidence necessary to prove the award is a foreign award,
4. If the award is in a foreign language, then a translated English copy of the award, along with a certificate by a diplomatic or consular agent of the country to which it belongs.

Grounds for Objection:

Upon an application for enforcement of a foreign arbitral award being made before the High Court, the other party may raise objections thereto upon several grounds provided under the provisions of the Act including but not limited to:

1. Parties to the agreement were under some incapacity.
2. The agreement in question is not in accordance with the law to which the parties have subjected to, or under the law of the country where the award was made.
3. Proper notice was not given to the other party for appointment of arbitrator, or they were unable to present their case.
4. The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration.
5. The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.
6. The award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which that award was made.

In addition to the aforesaid, the award may further be refused to be enforced by the Courts if they are of the opinion that the subject matter of the difference is not capable of settlement by arbitration under the law of India or if the enforcement of such award would be contrary to the public policy of India i.e., it is affected by fraud or corruption or it is in contravention with the fundamental policy of Indian Law or it is in conflict with the most basic notions of morality or justice.

Geneva Convention

The enforcement of a foreign award from a country which is signatory to the Geneva Convention is governed under the provisions set forth under Sections 53-60 of the Arbitration and Conciliation Act. For an award to be executed in accordance with the Geneva Convention it is imperative that:

1. The award is passed in pursuance of an arbitration agreement covered by the Geneva Protocol in Arbitration Clauses, 1923.
2. The award is between parties subject to the jurisdiction of reciprocating territories as designated by the Central Government and where the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 applies.
3. The award is made in a territory designated as reciprocating by the Central Government.
4. The award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto.
5. The subject matter of the award is capable of settlement by arbitration under the law of India.
6. The award has become final in the country in which it has been made, i.e. it is not open to appeal.
7. The enforcement of the award is not contrary to the public policy of the law of India.
8. Original award or a duly authenticated copy in the manner required by the country where it is made.
9. Evidence demonstrating that the award has become final.
10. Evidence proving that the award was made in accordance with a valid arbitration agreement under applicable law.

Contravention of Public Policy as Ground for Challenging Enforecement 

Indian Courts may refuse to enforce a foreign arbitral award if the same is opposed to the public policy of the Country. The Act by way of an explanation has limited the rather wide and ambiguous scope covered under public policy and the same is restricted to mean:



Indian courts have expressly held that the provisions of Indian statutes do not fall within the ambit of the “fundamental policy of Indian law” and as such the same contravention of any provision of law would not be sufficient ground to invoke the defence of public policy.  The scope of interference has been limited to matters which offend the core values of national policy, and which cannot be expected to compromise.

Specifically, the Honourable Supreme Court in Vijay Karia & Ors vs. Prysmian Cavi E Sistemi SRL & Ors has held that a foreign arbitral award may be enforced even if inconsistent with provisions of Foreign Exchange Management Act.

Limitation Period

An application seeking execution of a foreign arbitral award must be made within a period of three years from the date on which the right to apply accrues.

Re-Examination Not Permissible

The executing court before which an application for execution of the arbitral award is made cannot examine the award or merits of the case apart from ensuring that the same was passed as per procedure and satisfies the procedural criteria such as ensuring whether the same has been duly authenticated from the country where it was made.

Execution of an award cannot be treated as an appeal on merits of the award thus passed but is merely a review to ensure that the same has been passed in accordance with the provisions under law.

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