Recognition and Enforcement of Arbitral Awards
It is important to recognise the budding importance of international arbitration as a means of settlement of international commercial disputes i.e. the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This seeks to provide common legislation standards for the recognition of arbitration agreement and courts recognition and enforcement of domestic and foreign arbitral awards. The continuous growth of the international commerce has compelled to create an efficient means of resolution of disputes. It’s abstention from litigation has resulted in creation of dispute resolution such as arbitration and mediation.
Arbitral awards: Domestic and Foreign awards
Arbitral award means the decision of an arbitral tribunal, whether in a domestic or international arbitration. Arbitral award also includes an interim award[1]. In India, Domestic awards are governed by Part I whereas foreign awards are governed by part II of the Arbitration and Conciliation Act, 1996. Domestic arbitration is resulted in a domestic award which is why it confines itself within the territory of India.
In India, foreign awards are recognised under the New York Convention as well as Geneva convention. The principle objective of the convention is that foreign and non-domestic arbitral awards will not be discriminated against and it gratifies Parties to safeguard such awards are recognized and generally capable of enforcement in their jurisdiction in similar manner as domestic awards[2].
If a binding award is received by a party from a country that is a signatory to the New York or the Geneva Convention and the award is made in a domestic territory which has been notified as a convention country by India in its official gazette, the award would then be enforceable in India[3]. A Foreign award as per section 44 means an arbitral award which relates to differences relating to the matters considered as commercial under the law in force in India[4]. In Serajuddin v. Michael Golodetz[5], it was held that the essential elements of a foreign arbitration where it would be called foreign arbitral award were/are laid down as: Arbitration should have been held in foreign a foreign country; by a foreign arbitrator; Arbitration by applying foreign laws; and one of the parties consists of foreign nationals.
Enforcement of Foreign and Domestic Awards
In domestic awards, an award holder has to wait for the duration of three months after the receipt of the award prior to applying for enforcement and execution. The award can even be challenge, in accordance of section 34 of the Act, during the intervention period. After the aforesaid period, there wouldn’t be any challenge. After the Amendment Act[6] of 2015, the party, challenging the award, can seek a stay on the execution of an award by a separate application.
In case of the Foreign awards, if a party receives a binding award from any country which is signatory to the Convention or if the award is made within the notified territory of India, the award would be enforceable in India. It is a two-step process which can be initiated by filing the execution petition. Primarily, the court determines if the award can be enforceable. If it is enforceable, then it may be enforced like a decree of the court. In M/s Fuerst Day Lawson Ltd v. Jindal Exports Ltd[7], the supreme court held that a single proceeding can have different stages wherein the court can decide upon the enforceability of the award, and once it decided, it can take further effective steps for execution of the same.
The enforcement can be only given if it meets the following requirements which are as follows: the award should be made in the manner required by the country where it is made; duly certified coy (or the original agreement) is must; and if applicable, it is necessary to prove that it’s a foreign award.
The arbitral award can also be set aside under the AC Act. In Domestic Awards, the award holder also has the right to file enforcement following Code of Civil Procedure, if no case is filed for setting aside within 30 days. Some of the grounds on which the arbitral award can be set aside are as follows: if the arbitral award is conflicting the public policy of India; if the applicant is incapable; the subject-matter of the dispute is incapable of settling under arbitration law of India; agreement is not valid under the law; and composition of arbitral procedure not according to the act and with the agreement of parties[8].
The enforcement of foreign contract can be invoked of the party against whom it is appealed.
under the act. The grounds of the valid awards remain the same as domestic awards with some advancements, additionally, there are grounds on which the award can be set aside. If the party against whom the award is invoked has not given the proper notice of the appointment of the arbitrator, the arbitral award can be set aside. Moreover, other grounds are as follows: the awards have not yet been binding on the parties; the subject-matter of the dispute is not capable of settlement; the arbitration agreement isn’t valid under the law; the composition of arbitral procedure has not done in accordance with the law of the country where it had taken place; and the award deals with the dispute which was not contemplated by the terms of the submission to arbitration[9].
Conclusion
Parties to contract settle the dispute through arbitration to avoid litigation and preserve the higher commercial relations with the partners in business. The Arbitration and Conciliation Act, 1996 treats the foreign arbitral awards and foreign courts decision similarly, which is a major problem and needs improvements in bringing clarity on convention countries. India, however, does not carry anti-arbitration prejudice. Legal system of India attempts to facilitate the atmosphere for enforcement of foreign awards.
[1] Enforcement of arbitral awards in India: overview | Practical Law at content.next.westlaw.com, available at https://content.next.westlaw.com/Document/Id466b59b727111e598dc8b09b4f043e0/View/FullText.html?contextData=(sc.Default)&transitionType=Default&firstPage=true&bhcp=1 (last visited 14 June, 2020).
[2] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) at www.uncitral.org, available at https://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/New-York-Convention-E.pdf (last visited 16 June, 2020).
[3] Nishith Desai Associates, Enforceability of arbitral awards and decrees in India, Nishith Desai Associates (2019), available on http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Enforcement_of_Arbitral_Awards.pdf (last visited 14 June, 2020).
[4] Section 44, the Arbitration and Conciliation Act, 1996.
[5] Serajuddin v. Michael Golodetz, AIR 1960 Cal.49 (India).
[6] The Arbitration and Conciliation (Amendment) Act, 2015.
[7]M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd. 2001 (6) SCC 356 (India).
[8]Supra, note 1.
[9]Ibid.
This Article Written by Kalyani Paunikar, student of Maharashtra National Law University, Mumbai.
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