JAIPUR NATIONAL UNIVERSITY,

JAIPUR

SEEDLING SCHOOL OF LAW AND GOVERNANCE

SUBJECT: ALTERNATE DISPUTE RESOLUTION

TOPIC: ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA

SUBMITTED TO: SUBMITTED BY:

Ms. Poojyashree Kumawat Manvendra Singh Bhati

Asst. Prof. BA.LLB. (Hons.)

Seedling School of Law & Governance 9 th Semester

Jaipur National University 5 th Year
INTRODUCTION

An arbitral award refers to the decision of an arbitral tribunal, whether in a domestic or

international arbitration, including any interim awards thereunder. In India, enforcement and
execution of arbitral awards are governed both by the Arbitration and Conciliation Act, 1996 and
the Code of Civil Procedure, 1908. This article aims to look at the manner and procedure by
which these arbitral awards, which are passed or laid down outside our territorial limits, are
enforced in India. The process for the same is one that is mired in complexities and takes a lot of
time to be enforced and as shall be seen below, been muddled by judicial decisions on the
matter.

FRAMEWORKS FOR ENFORCEMENT OF ARBITRAL AWARDS

The primary framework as regards the enforcement of arbitral awards is the 1958 United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the
New York Convention. The Convention facilitates the enforcement of arbitral awards in all the
contracting states, that is, those nations which are a party to and are signatories to the
Convention, one among which is India. Prior to the New York Convention, enforcement of
arbitral awards of another country in the jurisdiction of another State was provided for in the
Geneva Protocol on Arbitration Clauses, 1924 as well as the Geneva Convention on the
Enforcement of Awards of 1927.

The laws of India, as a result of India being a signatory to both the New York as well as the
Geneva Conventions, have primarily always provided for enforcement, within the local territory
of India, of foreign arbitral awards. Examples of these include the laws such as the Arbitration
(Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement)
Act, 1961 which were in tune with the Geneva and New York Convention, in that they provided
for enforcement of foreign arbitral awards in India, provided that the parties have consented to
the dispute being settled in the as per the law of the place chosen for the proceeding. However,
today, the law that is in force is the Arbitration and Conciliation Act of 1996, enacted both on the
UNCITRAL Model Law on Arbitration as well as to revamp and replace the 1937 and 1961 laws
on the same. Thus, today, it is the 1996 Act that provides for the enforcement of foreign arbitral
awards in India.

Further, the Code of Civil Procedure of 1908 does also play in the role in the enforcement of
foreign awards in India. The arbitral award has been accorded the status of a decree and thus the
procedure that applies to set aside or challenging of a decree applies in equal measure to an
arbitral award.

ENFORCEMENT OF AWARDS UNDER THE ARBITRATION AND

CONCILIATION ACT, 1996.

As the Arbitration and Conciliation Act of 1996 (hereinafter referred to as the ‘Act’), is the
prime legislation behind the enforcement of foreign awards, it is essential to understand how the
awards are enforced under the Act. One of the declared objectives of the Arbitration and
Conciliation Act, 1996 is that every final award is to be enforced in the same manner as the
decree of the Indian court would be.

The Act has two parts- Part I and Part II, each of which deal with the enforcement of different
type of foreign arbitral awards. Part I, modelled on the UNCITRAL Model Law, provides for the
enforcement of arbitral awards that are not covered under the ambit of either the New York or
the Geneva Conventions. As laid down by the apex Court, Part I of the Act applies to foreign
awards that are governed neither by the New York nor the Geneva Convention. Such
enforcement of awards can be challenged in cases wherein the award is contrary to either the
fundamental policy or interest of India or is patently illegal.

Part II of the Act is in tune with the provisions of the New York Convention. As per Section 46
of the Act, the provisions of Part II applies if the arbitral award is in pursuance of arbitration
agreement under the Convention and the award is made in those States or in within the territorial
limits of such place that has been notified by the Government of India. Such recognition of a
foreign State is done through means of a notification by the Government of India that arbitral
awards in those places are eligible to be enforced in India with respect to the parties to the
agreement.
However, there are certain circumstances where even if the agreement is one that is valid as per
Indian law and meets the requirements, it shall not be enforced on the following grounds if the
Court is satisfied that:-

 Parties to the agreement either are incapable of being parties to the agreement for
reasons such as law applicable for the award vis a vis the Indian law.

 Party was not given adequate notice to present his case as regards the arbitration
proceedings or the appointment of the arbiter.

 Award deals with matters beyond the scope of the arbitration agreement.

 Composition of the Arbitral Authority or Procedure was not in conformity with the
agreement of the parties or the law of the land where the arbitration took place.

 Award is not binding on the parties or has been set aside by a competent authority
where the award was made.


Section 48 of the Arbitration and Conciliation Act, 1196

Conditions for the enforcement of foreign award:-

1. Incapacity: the parties to the agreement were, under the law applicable to them, under some
incapacity. It could be the claimant’s incapacity or incapacity of both the parties. In the absence
of choice of law provision, the validity of the arbitral clause must be decided according to the
law of the seat of the arbitral tribunal.

2. Invalidity of Agreement: the agreement is not valid under the law to which the parties have
subjected it or failing any indication thereon, under the law of the country where the award was
made.

3. Inability to present his case:- He/she was not given proper notice of the arbitral proceedings or
any valid reason
4. Award exceeds reference: the award must not deal with questions not referred or contain
decisions on matters beyond the scope of the agreement. The award is not enforceable if it
decides disputes as to the arbitrator’s jurisdiction which by the which by the foreign law they
have no power to decide.

5. Legality of composition of arbitral tribunal and procedure : enforcement of any award may be
refused is

a) The composition of the arbitral tribunal was not in accordance with either the agreement or the
law of the country where the arbitration took place.

b) The arbitral procedure was not in accordance with the agreement or the law of the country
where the arbitration took place.

c) Award not yet binding, set aside or suspended.

6. Other grounds:- sub section (2) of Section 48 empowers the court to refuse enforcement on
two grounds

a) The subject matter of difference is not capable of settlement by arbitration under law in India.

b) Contrary to public policy.

Further, as regards the Geneva Convention. Part II of the Act still contains provisions from the
1937 Act which provide for enforcement of awards under the Geneva Convention, in the same
manner, as the New York Convention.

PROCEDURE FOR ENFORCEMENT OF AWARDS

At the outset, it is upon the losing party to object to the arbitral award and file an application for
setting it aside. However, if the objections to the award are not sustained or if no objections are
filed within the time limit, the award itself becomes enforceable as a decree of the court.
An award can be challenged and set aside only by way of an application under Section 36 of the
Act and only the basis of the circumstances listed under it. An application for setting aside an
award must be made within three months of receipt of the award by the applicant subject to a
further extension of 30 days on sufficient cause being shown. An application beyond this period
is time-barred and further delay cannot be condoned. The party, after the expiry of the time for
setting aside the arbitral award, as mentioned above, can file an application for execution before
the court of the competent jurisdiction for the enforcement of the arbitral award

The different types of awards which are enforceable include Money Award, Award Containing
Injunction and a Declaratory Award.

JURISDICTION

For the purposes of the Arbitration and Conciliation Act, 1996, ‘court’ means the principal Civil
Court having original jurisdiction to decide the question forming the subject matter of the
arbitration if the same were a subject matter of a suit. The aggrieved party can, thus, bring its
application to set aside the award before the court where the successful party has its office or
where the cause of action in whole or in part arose or where the arbitration took place.

TIME LIMIT

Any application filed under Section 34 of the Act for setting aside the award must be made
within 3 months from receipt of the same. This period can be extended by the court by a further
period of 30 days on a sufficient cause being shown, but not thereafter. The court normally
allows a wide scope to the meaning of what constitutes ‘sufficient cause’ and if it is convinced of
the genuineness of the delay in filing an, the delay is condoned.

FORMAT OF APPLICATION FILED BEFORE THE COURT

An application is filed before the court of the competent jurisdiction seeking enforceability and
execution of the award. The application should state all the important facts and issues framed by
the arbitral tribunal and findings of the arbitral tribunal. The claim as awarded should be
mentioned and specifically the extent to which the award for enforcement id sought. The
documents required for the same, include the original award or authenticated copy of the award
as well as an original or duly certified copy of the original arbitration agreement.

CONCLUSION

At this juncture, it must be understood that although there exists a procedure for the enforcement
of foreign arbitral awards in India, such is not a smooth and efficient one and has come in for
severe criticism. One of the main criticisms is the fact that it is not at all possible to be enforced
in a quick and speedy manner as the Act stipulates that the award can be enforced only once the
time available for the Court to strike down the award has passed. This is extremely inconvenient
and one that leads to inordinate delays in the enforcement of arbitration agreements as concerns
Indian Parties. Further, the significant role that the Courts play in what is essentially an
alternative to the traditional judicial system is also a bone of contention for many.

To conclude, it can be stated that the Indian Legal System does indeed have a well laid down and
established the procedure for the enforcement of foreign awards in India. However, there is a
rising need to reform the same in order to make it more business-friendly and lessen the burden
on our already overworked judiciary.