Foreign Arbitral Award

Enforcement of Certain Foreign Awards under the New York Convention: A Detailed
Analysis

The enforcement of foreign arbitral awards under the New York Convention is a cornerstone
of international arbitration. Codified in Part II, Chapter I of the Arbitration and
Conciliation Act, 1996, this legal framework enables the recognition and enforcement of
foreign awards in India, fostering confidence in international commerce and arbitration.

This detailed analysis examines the legislative intent, procedural framework, judicial
interpretation, and key issues surrounding the enforcement of New York Convention awards
in India.

Introduction

The New York Convention (1958), officially titled the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, is a multilateral treaty designed to ensure the global
enforceability of arbitration agreements and awards. India, as a signatory, incorporated its
provisions through the Arbitration and Conciliation Act, 1996.

This part of the Act specifically governs:

1. Recognition and enforcement of foreign arbitral awards (Sections 44–49).

2. The obligation of Indian courts to refer disputes to arbitration when covered by an
arbitration agreement (Section 45).

Key Provisions: Enforcement of New York Convention Awards

1. Applicability of Chapter I (Section 44)

Section 44 defines the scope of "foreign awards" under the New York Convention. For an
award to qualify as a foreign award:

1. The award must be made in a country that is a party to the New York Convention.
2. The award must be made in a country notified by the Indian government as a
reciprocating territory.
3. The dispute must arise out of a legal relationship considered commercial under
Indian law.

2. Referral to Arbitration (Section 45)

Section 45 obligates Indian courts to refer parties to arbitration if there is a valid arbitration
agreement, unless the agreement is "null and void, inoperative, or incapable of being
performed."
This provision reinforces the principle of kompetenz-kompetenz, emphasizing the autonomy
of arbitral tribunals to decide on their own jurisdiction.

3. Conditions for Enforcement (Sections 46–49)

Recognition of Foreign Awards (Section 46)

Foreign awards are treated as binding in India unless they fail to meet the enforcement
criteria under Section 48. Once recognized, they have the same effect as domestic decrees.

Procedure for Enforcement (Section 47)

A party seeking enforcement of a foreign award must produce:

1. The original award or a duly certified copy.

2. The original arbitration agreement or its duly certified copy.
3. Any necessary translations of the above documents into English, certified by a
qualified translator.

Refusal of Enforcement (Section 48)

Enforcement may be refused only under the following limited grounds:

1. Incapacity or Invalidity of the Arbitration Agreement: If parties lacked the

capacity to enter into the arbitration agreement under applicable law, or the agreement
is invalid.
2. Improper Notice or Inability to Present the Case: If a party was not given proper
notice of the arbitration or was unable to present its case.
3. Excess of Authority: If the award deals with matters beyond the scope of the
arbitration agreement.
4. Irregularities in Arbitration Procedure: If the procedure did not comply with the
agreement or applicable rules of the country where the arbitration occurred.
5. Award Not Binding or Set Aside: If the award has not yet become binding or has
been set aside by the relevant authority in the country where it was made.
6. Public Policy: If enforcement would be contrary to public policy in India. This
includes:
o Fraud or corruption in obtaining the award.
o Violation of the fundamental policy of Indian law.
o Breach of principles of natural justice.

Finality and Status (Section 49)

Once a foreign award satisfies the conditions for enforcement, it is deemed a decree of the
Indian court, allowing for execution as a domestic judgment.

Judicial Interpretation of Enforcement Provisions

Indian courts have played a significant role in interpreting the provisions of Part II, ensuring
compatibility with global arbitration practices while addressing domestic concerns.

1. Narrowing the Scope of Public Policy

The “public policy” exception under Section 48(2)(b) is a critical ground for resisting
enforcement. Indian courts have narrowed its scope through judicial precedents:

 Renusagar Power Co. Ltd. v. General Electric Co. (1994):

The Supreme Court restricted public policy to:
1. Fundamental policy of Indian law.
2. Interests of India.
3. Justice or morality.
 Shri Lal Mahal Ltd. v. Progetto Grano SPA (2013):
The court clarified that the broader public policy test applicable to domestic awards
(under Section 34) would not apply to foreign awards.
 Venture Global Engineering v. Satyam Computer Services Ltd. (2008):
The court initially expanded public policy to include Indian law contraventions but
was later restricted by the 2015 amendment to exclude such expansive
interpretations.

2. Fraud and Corruption

In ONGC v. Saw Pipes Ltd. (2003), the Supreme Court held that awards induced by fraud or
corruption would violate public policy. This principle was extended to foreign awards under
Section 48.

3. Fundamental Policy of Indian Law

The interpretation of “fundamental policy” has evolved, encompassing the basic structure of
Indian law without allowing routine violations of statutes to impede enforcement.

4. Scope of Review by Courts

Courts have consistently emphasized that they cannot revisit the merits of a foreign arbitral
award during enforcement. The review is limited to procedural and jurisdictional compliance
under Section 48.

Advantages of the New York Convention Framework

1. Global Recognition: With over 170 signatories, awards under the New York
Convention enjoy near-universal recognition.
2. Limited Grounds for Refusal: Narrow exceptions ensure minimal interference by
courts, promoting efficiency and certainty.
3. Pro-Enforcement Bias: The convention emphasizes the enforcement of awards
unless strong grounds for refusal exist.
4. Uniformity: The standardized framework facilitates predictable enforcement
globally.
Challenges in Enforcement

1. Public Policy Exception: Despite judicial narrowing, the interpretation of public

policy remains a subjective exercise, occasionally leading to unpredictability.
2. Delays in Enforcement: Procedural delays in Indian courts can hinder the swift
enforcement of foreign awards.
3. Translation Requirements: Stringent documentation requirements, including
certified translations, can create logistical hurdles.
4. Limited Notification of Countries: India has notified only a limited number of
reciprocating countries under the New York Convention, potentially excluding awards
from certain jurisdictions.

Impact of Amendments

The 2015 Amendment Act introduced several changes to align Indian arbitration law with
global standards:

1. Definition of Public Policy: Explicitly limited the scope of public policy to

fundamental principles, morality, justice, fraud, and corruption.
2. Automatic Stay Removed: Enforcement of awards is no longer automatically stayed
by a challenge, promoting quicker execution.
3. Pro-Arbitration Approach: Courts are now required to adopt a pro-arbitration
stance, reinforcing party autonomy and limiting judicial interference.

Conclusion

The enforcement of New York Convention awards under the Arbitration and Conciliation
Act, 1996, has positioned India as an arbitration-friendly jurisdiction. By adopting a pro-
enforcement approach and narrowing the grounds for refusal, Indian courts have aligned
domestic law with international standards.

However, challenges such as procedural delays and subjective interpretations of public policy
continue to pose hurdles. With continued judicial and legislative reforms, India is poised to
strengthen its position as a global hub for arbitration, ensuring the seamless enforcement of
foreign awards and fostering investor confidence.

Enforcement of Foreign Awards under the Geneva Convention

The Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (referred to
as the Geneva Convention) was one of the earliest international frameworks for the
enforcement of foreign arbitral awards. India incorporated this framework into its domestic
law through Part II, Chapter II of the Arbitration and Conciliation Act, 1996. Although
its relevance has diminished with the rise of the more modern New York Convention
(1958), the Geneva Convention still governs the enforcement of foreign awards from certain
countries that are parties to it.

This analysis discusses the legislative framework, key provisions, and grounds for refusal of
enforcement under the Geneva Convention as codified in the Arbitration and Conciliation
Act, 1996.

Legislative Framework under the Act

Applicability (Section 53)

For an arbitral award to be enforced under the Geneva Convention, it must satisfy the
following conditions:

1. Country of Origin: The award must be made in a country that is a party to the
Geneva Convention and has been notified as such by the Indian government.
2. Commercial Disputes: The award must arise out of disputes
considered commercial under Indian law.

This limited scope restricts the applicability of the Geneva Convention compared to the New
York Convention, which has a broader reach.

Key Provisions of the Act

1. Enforcement of Geneva Convention Awards (Section 54)

For an arbitral award to be enforceable, the following conditions must be satisfied:

 The award must have been made in pursuance of a valid arbitration agreement.
 The award must have been rendered in a dispute that is within the scope of the
arbitration agreement.
 The award must be final in the country where it was made.
 The award must be in conformity with the law governing the arbitration proceedings.

The party seeking enforcement has the initial burden of proving these conditions.

2. Grounds for Refusal of Enforcement (Section 57)

Section 57 outlines specific grounds on which Indian courts may refuse to enforce a Geneva
Convention award. These grounds are divided into two categories:
A. Grounds to Be Proven by the Party Resisting Enforcement

1. Incapacity of the Parties or Invalidity of the Agreement

o If the parties to the arbitration agreement lacked capacity or if the agreement
was invalid under the governing law.
2. Improper Notice or Inability to Present the Case
o If the party resisting enforcement was not given proper notice of the
arbitration proceedings or was otherwise unable to present their case.
3. Excess of Jurisdiction
o If the award deals with matters beyond the scope of the arbitration agreement,
enforcement can be refused for such matters.
4. Non-Compliance with Procedural Rules
o If the composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties or the law of the country where
arbitration took place.
5. Non-Binding or Annulled Award
o If the award has not become final or has been annulled in the country where it
was made.

B. Grounds Considered by the Court Suo Motu

1. Public Policy Violation

o Enforcement may be refused if it would be contrary to the public policy of
India.
o The public policy exception includes cases of:
 Fraud or corruption in the award.
 Violations of the fundamental policy of Indian law.
 Breaches of principles of natural justice.
2. Non-Arbitrability of the Subject Matter
o If the subject matter of the dispute is not arbitrable under Indian law, the
award cannot be enforced.

3. Procedure for Enforcement (Section 56)

To enforce an award under the Geneva Convention, the party applying for enforcement must
produce:

1. The original award or a certified copy of the award.

2. Evidence that the award has become final in the country where it was made.
3. Proof that the award complies with the requirements of Section 54.
4. A certified copy of the arbitration agreement.

Comparison with the New York Convention

Although the Geneva Convention laid the groundwork for the enforcement of foreign awards,
it is considered less effective compared to the New York Convention. Some key differences
include:

1. Burden of Proof
o Under the Geneva Convention, the party seeking enforcement must prove that
the award satisfies all the conditions for enforceability (Section 54).
o Under the New York Convention, the initial presumption favors enforcement,
and the burden of proof lies on the party resisting enforcement (Section 48).
2. Scope of Application
o The Geneva Convention applies only to awards from countries that are parties
to the Convention and are notified by the Indian government.
o The New York Convention has a broader scope, with over 170 signatories.
3. Pro-Enforcement Bias
o The New York Convention adopts a more pro-enforcement approach, reducing
judicial interference in enforcement proceedings.

Judicial Interpretation of Geneva Convention Awards in

India
Indian courts have rarely dealt with Geneva Convention awards due to their limited
applicability. However, the judicial principles established for the New York Convention often
serve as guidance for interpreting Geneva Convention provisions. Key aspects include:

1. Narrow Interpretation of Public Policy

o Indian courts have consistently restricted the scope of the public policy
exception to fundamental principles, ensuring minimal interference in
enforcement.
2. Finality of Awards
o Courts have emphasized that an award must be final in the country of origin to
be enforceable under the Geneva Convention.
3. Compliance with Procedural Rules
o Courts ensure that the arbitral process complies with the agreed procedure or
the rules of the arbitration seat.

Challenges in Enforcing Geneva Convention Awards

1. Limited Applicability
o The Geneva Convention applies only to a few countries, making it less
relevant in contemporary arbitration.
2. Burden on the Enforcing Party
o The requirement for the enforcing party to prove compliance with all
procedural and substantive requirements creates additional hurdles.
3. Overlap with New York Convention
 o In many cases, the New York Convention also applies, making the Geneva
Convention redundant.

Conclusion
While the Geneva Convention played an important historical role in establishing international
arbitration enforcement mechanisms, its relevance has declined with the advent of the New
York Convention. The procedural and evidentiary burdens placed on the enforcing party,
coupled with its limited geographical scope, make it less effective in contemporary
arbitration. However, the Geneva Convention remains part of Indian law, ensuring a fallback
mechanism for awards from specific jurisdictions.

By adopting the principles of minimal judicial intervention and pro-enforcement bias, Indian
courts have aligned the enforcement of Geneva Convention awards with global arbitration
standards, reinforcing India's commitment to international arbitration.

Grounds for Refusal of Arbitral Awards

Under the New York Convention and the Geneva Convention, the court can refuse the
enforcement of foreign arbitral awards on specific grounds that are primarily procedural and
jurisdictional in nature. These grounds are codified in Sections 48 (New York Convention)
and Section 57 (Geneva Convention) of the Arbitration and Conciliation Act, 1996. Here’s
an analysis of the grounds under both conventions:

Grounds for Refusal under the New York

Convention (Section 48)
The New York Convention’s enforcement provisions focus on ensuring the award's
procedural and legal integrity. Enforcement of a foreign award may be refused on the
following grounds:

A. Grounds to Be Proven by the Party Resisting Enforcement

1. Incapacity of the Parties or Invalidity of the Arbitration Agreement

o If the arbitration agreement is invalid under the law applicable to it, or the
parties lacked capacity to enter into such an agreement.
2. Improper Notice or Inability to Present the Case
o If the party against whom the award is invoked was not given proper notice of
the arbitral proceedings or was otherwise unable to present its case.
3. Excess of Authority
o If the award deals with disputes that fall outside the scope of the arbitration
agreement, or if it contains decisions on matters beyond what was submitted
 for arbitration. However, only the portion dealing with such matters may be
set aside.
4. Non-Compliance with Agreed Procedure
o If the arbitral procedure was not in accordance with the agreement of the
parties or the law of the country where the arbitration took place.
5. Non-Binding or Set Aside Award
o If the award has not yet become binding on the parties or has been set aside or
suspended by a competent authority in the country where the award was made.

B. Grounds Considered by the Court Suo Motu

1. Public Policy Violation

o Enforcement can be refused if the award is contrary to the public policy of the
enforcing country.
o In India, the concept of "public policy" is narrowly defined and includes:
 Fundamental policy of Indian law.
 Interests of India.
 Principles of justice and morality.
o Fraud, corruption, or violation of natural justice may also constitute grounds
under public policy.
2. Non-Arbitrability of the Subject Matter
o If the subject matter of the dispute is not capable of resolution through
arbitration under Indian law.

Grounds for Refusal under the Geneva

Convention (Section 57)
The Geneva Convention, incorporated under Chapter II of Part II of the Arbitration and
Conciliation Act, applies to fewer countries than the New York Convention. The grounds for
refusing enforcement are largely similar but include some distinct features:

A. Grounds to Be Proven by the Party Resisting Enforcement

1. Incapacity or Invalidity of Agreement

o If the arbitration agreement is invalid under the governing law, or if the parties
lacked the legal capacity to enter into it.
2. Improper Notice or Inability to Present the Case
o If the party against whom the award is invoked was not properly notified
about the arbitration process or was unable to present its case.
3. Matters Outside the Scope of Arbitration
o If the award includes decisions on issues that were not submitted to
arbitration.
4. Non-Compliance with Procedural Rules
 o If the composition of the arbitral tribunal or the arbitral procedure did not
conform to the agreement of the parties or the rules of the country where the
arbitration occurred.
5. Set Aside or Suspended Award
o If the award has been annulled or suspended by a competent authority in the
country where it was made.

B. Grounds Considered by the Court Suo Motu

1. Public Policy Violation

o Similar to the New York Convention, enforcement may be refused if the
award violates the public policy of the enforcing country.
2. Non-Final Nature of the Award
o If the award is not final according to the arbitration rules under which it was
made.
3. Non-Arbitrability of the Dispute
o If the subject matter of the award is not arbitrable under the law of the
enforcing country.

Key Differences between the Two Conventions

1. Scope of Application
o The New York Convention has broader international acceptance compared to
the Geneva Convention.
2. Proof Requirements
o Under the Geneva Convention, the party seeking enforcement must prove that
the award complies with the arbitration agreement and local laws of the
arbitration seat. In contrast, under the New York Convention, the burden is
primarily on the resisting party to establish grounds for refusal.
3. Public Policy
o The public policy exception is present in both conventions but is more
restrictive under the New York Convention due to modern interpretations
aimed at reducing judicial interference.

Conclusion
While both conventions allow refusal of enforcement based on similar grounds, the New
York Convention has gained prominence due to its wider applicability and pro-enforcement
approach. Indian courts, through judicial interpretation, have further narrowed the scope of
refusal, particularly under the public policy exception, ensuring that the refusal grounds are
applied sparingly and in line with international arbitration standards.