The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the

New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and
entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to
private agreements to arbitrate and to recognize and enforce arbitration awards made in other
contracting states. Widely considered the foundational instrument for international arbitration, it
applies to arbitrations which are not considered as domestic awards in the state where recognition and
enforcement is sought. Though other international conventions apply to the cross-border enforcement
of arbitration awards, the New York Convention is by far the most important.

Other advantages of international arbitration include the ability to select a neutral forum to resolve
disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose
flexible procedures for the arbitration, and confidentiality.

Once a dispute between parties is settled, the winning party needs to collect the award or judgment.
Unless the assets of the losing party are located in the country where the court judgment was
rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other
party resides or where its assets are located. Unless there is a treaty on recognition of court
judgments between the country where the judgment is rendered and the country where the winning
party seeks to collect, the winning party will be unable to use the court judgment to collect.

Countries which have adopted the New York Convention have agreed to recognize and enforce
international arbitration awards. As of 1 December 2012, there are 148 State parties which have
adopted the New York Convention: 146 of the 193 United Nations Member States, the Cook Islands (a
New Zealand dependent territory), and the Holy See have adopted the New York Convention.[1] 49
U.N. Member States have not yet adopted the New York Convention. A number of British dependent
territories have not yet had the Convention extended to them by Order in Council.
Summary of provisions

Under the Convention, an arbitration award issued in any other state can generally be freely enforced in
any other contracting state (save that some contracting states may elect to enforce only awards from
other contracting states – the "reciprocity" reservation), only subject to certain, limited defenses. These
defenses are:

1. a party to the arbitration agreement was, under the law applicable to him, under some
incapacity;

2. the arbitration agreement was not valid under its governing law;

3. a party was not given proper notice of the appointment of the arbitrator or of the arbitration
proceedings, or was otherwise unable to present its case;

4. the award deals with an issue not contemplated by or not falling within the terms of the
submission to arbitration, or contains matters beyond the scope of the arbitration (subject to
the proviso that an award which contains decisions on such matters may be enforced to the
extent that it contains decisions on matters submitted to arbitration which can be separated
from those matters not so submitted);

5. the composition of the arbitral tribunal was not in accordance with the agreement of the parties
or, failing such agreement, with the law of the place where the hearing took place (the "lex loci
arbitri");

6. the award has not yet become binding upon the parties, or has been set aside or suspended by a
competent authority, either in the country where the arbitration took place, or pursuant to the
law of the arbitration agreement;

7. the subject matter of the award was not capable of resolution by arbitration; or

8. enforcement would be contrary to "public policy".

Objectives

Recognizing the growing importance of international arbitration as a means of settling

international commercial disputes, the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the Convention) seeks to provide common legislative standards for the
recognition of arbitration agreements and court recognition and enforcement of foreign and non-
domestic arbitral awards. The term "non-domestic" appears to embrace awards which, although
made in the state of enforcement, are treated as "foreign" under its law because of some foreign
element in the proceedings, e.g. another State's procedural laws are applied.

The Convention's principal aim is that foreign and non-domestic arbitral awards will not be
discriminated against and it obliges Parties to ensure such awards are recognized and generally
capable of enforcement in their jurisdiction in the same way as domestic awards. An ancillary
aim of the Convention is to require courts of Parties to give full effect to arbitration agreements
by requiring courts to deny the parties access to court in contravention of their agreement to refer
the matter to an arbitral tribunal.
Legal Position in India

Part I of the Act applies to Domestic awards whereas Part II of the Act deals
with the Enforcement of foreign awards.

However, the Hon'ble Supreme Court of India in "Bhatia International v Bulk

Trading SA1", interpreted the scope of Part I of the Act to apply to arbitrations
held outside India and in turn applied Sec. 9 (interim relief) in support of
arbitrations seated outside India. The court held that where such arbitration is
held in India the provisions of Part I would compulsorily apply. In cases of
international commercial arbitrations held outside India, the provisions of Part I
would apply unless the Parties by agreement, express or implied, excluded all or
any of its provisions. In that case, the laws or rules chosen by the Parties would
prevail. Any provision of Part I specifically excluded will not apply.

Venture Global Engineering vs. Satyam Computer Services,

After Bhatia International's case, the Supreme Court went a step further and
held that the provisions of Part I of the Act would apply to all arbitrations including
international commercial arbitrations and where such arbitrations are held in
India, the provisions of Part I would be compulsorily applied to the extent permitted
by the provisions of Part I. It is also clear that even in the case of international
commercial arbitration held out of India provisions of Part I would apply unless the
Parties by Agreement express or implied, exclude all or any of its provisions.

Another interesting provision is section 34 of the Act which contains the grounds
for setting aside the award. It states that the grounds contained therein are the
"only" grounds on which an award may be set aside.

ONGC vs. Saw Pipes3,

The Supreme Court held that an award shown to be suffering from 'patent error
of law' could also be challenged under the head "award being in conflict with
public policy of India" thereby expanding the grounds for setting aside of a
foreign award.

In the case of Phulchand Exports Ltd. vs. OOO Patriot4, the Supreme Court has
affirmed this decision and further held that there is no distinction between the
interpretation of the term 'public policy' under S.34 or 48. Therefore, the rule set
out in ONGC vs. Saw Pipes continues to be applicable to the Enforcement of
Foreign Awards in India.
Phulchand Exports Ltd :

The court stated that in a case where judgment and decree is challenged before the
appellate court or the court exercising revisional jurisdiction, the jurisdiction of
such court would be wider. Therefore, in a case where validity of an award is
challenged there is no necessity of giving a narrower meaning to the term public
policy of India."

Execution of the award

Amid much controversy, it is noteworthy that the Chief Justice of India has
referred Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc5. to a
fivemember constitutional bench to enable the court to reconsider the ruling in
Bhatia and overrule it, if necessary. The case has been before the Supreme Court
since 10th January, 2012.

At the moment, a person who intends to enforce a foreign arbitral award must
apply to the court and produce the original award or certified/authenticated
copy of the same, agreement for arbitration and evidence as may be necessary to
prove the award is a foreign award. The only requirement of the court at that
stage is to see if the award is enforceable under Section 49 of the Act and the
award shall be deemed to be a decree of that court and that court shall proceed
further to execute the foreign award as a decree of that court.

One interesting feature of enforcement of a foreign award is that there is no

statutory appeal provided against any decision of the court rejecting objections
to the award. An appeal shall lie only if the court holds the award to be non-
enforceable. Hence, a decision upholding the award cannot be appealed against.
However a discretionary appeal would lie to the Supreme Court of India under
Article 136 of the Constitution of India. Such appeals are entertained only if the
Court feels that they raise a question of fundamental importance or public
interest. This is a positive approach adopted as it allows fewer opportunities to a
judgment debtor to delay the enforcement of an award, much to the relief of
many foreign clients.

Conclusion

The law governing arbitration proceedings in India is a controversial legislation and the Supreme
Court will review the Bharat Aluminium Co. case this year which promises to settle all
confusions. This is an encouraging signal as the Arbitration and Conciliation Act has received
wide criticism in the past. A positive and reliable interpretation from the apex court is eagerly
awaited by all.