Under the Indian Arbitration and Conciliation Act, 1996, a “foreign award” refers to an arbitral award that is made in a country outside India in the context of international commercial arbitration. This concept is crucial for the enforcement of foreign arbitral awards in India and is governed by specific provisions under the Act, particularly under Part II.

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.

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.

Definition of a Foreign Award:

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.

In Bharat Aluminium Company (BALCO) v. Kaisar Aluminium Technical Services Inc, (2012) 9 SCC 552 case, 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 this case the 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.

Requirements for Enforcement of Foreign Award [Section 47]

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. [Section 47]
• Once an award is found to be enforceable it may be enforced like a decree of that court. [Section (49 & 58)]

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

• The original award or a duly authenticated copy thereof;
• The original arbitration agreement or a duly-certified copy thereof; and
• Such evidence as may be necessary to prove that the award is a foreign award;
• 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; and
• 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]

• 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.
• 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
  • 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
  • the enforcement of award would be contrary to the public policy of India.

In Venture Global Engineering v Satyam Computer Services (2008) case, it was held by the Supreme Court 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.

Foreign Awards When Binding:

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.”

Article III of the New York Convention enjoins upon each contracting State to recognize arbitral award as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the articles under the Convention.

Amendments and Judicial Interpretation:

The Arbitration and Conciliation (Amendment) Act, 2015 and subsequent amendments have clarified and streamlined the process of enforcement of foreign awards in India. The judiciary has also played a significant role in interpreting these provisions to align with international standards.

Challenges in Enforcement:

Despite the legal framework, practical challenges like delay in court proceedings and issues of public policy can sometimes hinder the enforcement of foreign awards.

Recent Developments:

Recent judicial pronouncements and legislative amendments have aimed to make India a more arbitration-friendly jurisdiction, with clearer guidelines on enforcing foreign awards and reducing judicial intervention.

New York Convention:

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958 (the New York Convention), is described as the most successful treaty in private international law. It is adhered to by more than 160 nations. Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015 deals with foreign awards passed under the New York Convention.

In its simplest terms, the Convention incorporated two radical principles which, at that time, revolutionised the resolution of disputes with international elements, namely, enforcement of arbitration agreements and enforcement of foreign arbitral awards. Whilst the former provision upholds the principle of party autonomy by requiring national courts to refer the parties to arbitration, the latter incorporates a system of recognition of foreign arbitral awards in States bound by the Convention subject to limited exceptions. Furthermore, the Convention establishes a minimum legal framework, but it permits national courts to enforce arbitral awards under higher standards than those included in its provisions.

Two pre-requisites for enforcement of foreign awards under the New York Convention. These are:

• The country must be a signatory to the New York Convention.
• The award shall be made in the territory of another contracting state which is a reciprocating territory and notified as such by the Central Government.

Geneva Convention:

Sections 53-60 of the Arbitration and Conciliation (Amendment) Act, 2015 contains provisions relating to foreign awards passed under the Geneva Convention. The conditions for enforcement of foreign awards under the Geneva Convention are provided under Section 57 of the Arbitration and Conciliation Act, 1996. These are as follows:

• the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;
• the subject-matter of the award is capable of settlement by arbitration under the law of India;

• 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;
• 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;
• the enforcement of the award is not contrary to the public policy or the law of India.

Jurisdiction:

In Sundaram Finance Ltd. v. Abdul Samad, (2018) 3 SCC 622 case, the Supreme Court 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:

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 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.

Conclusion:

The Arbitration and Conciliation Act, 1996, provides a comprehensive framework for the recognition and enforcement of foreign arbitral awards in India, in line with international conventions such as the New York Convention. It aims to facilitate cross-border trade and investment by ensuring that valid arbitral awards made in other jurisdictions can be effectively enforced in India. The Act establishes a clear process for parties seeking enforcement, stipulating the necessary documentation and the grounds on which Indian courts can refuse enforcement. While the grounds for refusal, such as incapacity, invalidity of the agreement, or contravention of public policy, provide necessary safeguards, they are intended to be applied narrowly to prevent undue interference in arbitral decisions. Over the years, judicial interpretation and legislative amendments have sought to make India more arbitration-friendly, emphasizing minimal court intervention and aligning with international best practices. However, challenges like procedural delays and varying interpretations of “public policy” can sometimes complicate enforcement.

In conclusion, the Act, supported by a progressively evolving legal landscape, offers a robust mechanism for the enforcement of foreign awards in India, promoting confidence in the country as a destination for international arbitration. Continued efforts to streamline enforcement and reduce judicial bottlenecks will further strengthen India’s position in the global arbitration community.