File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Enforcement Of Foreign Arbitral Awards Under The Indian Jurisdiction And A Comparative Analysis Between UAE And India's Arbitration System

International commercial or foreign arbitration awards are the rulings rendered by arbitrators in cases involving parties from other nations. The process of execution may be used in India to enforce these awards. The procedure for carrying out the decrees and judgments of foreign courts in India is outlined in the Code of Civil Procedure 1908. When implementing a foreign judgment or decree in India, the fundamental rule is to ensure that a superior court issues the decree with appropriate jurisdiction on the case's merits and that it is a decisive decree (as defined by Section 13).

Checking that a foreign arbitration ruling is enforceable under Indian law is the first step towards carrying it out in India. The Arbitration and Conciliation Act, 1996 (the "Act"), which controls the execution of foreign arbitration awards in India, must be complied with by the award. A foreign arbitration award made by a foreign arbitral tribunal and in writing may be enforced in India under the Act. Furthermore, the award must not be at odds with the public policy of India.

There are two options available to Indian law for enforcing a foreign ruling. First, by submitting an Execution Petition under CPC Section 44A (if the requirements therein are met). Second, by bringing a lawsuit based on the foreign ruling or decision. A decree issued by any Superior Court in any reciprocating territory is enforceable as a domestic court decree under Section 44A of the CPC. Consequently, the decree is not directly executable in India if it has nothing to do with a superior court or reciprocating territory as announced by the Central Government in the Official Gazette.

Suppose the decree relates to a nation, not a reciprocating territory. In that case, another suit must be brought in India based on that decree or judgment, which could be seen as a basis for the previous suit. The decree will be considered further evidence against the defendant in the new lawsuit.

New York Convention and Geneva Convention:

In line with the 2015 Arbitration and Conciliation (Amendment) Act. If applicable, the New York Convention or the Geneva Convention are the two channels via which foreign awards can be enforced in India.

Enforcement under the New York Convention:

The Arbitration and Conciliation (Amendment) Act, 2015 addresses foreign awards made pursuant to the New York Convention in sections 44 through 52.

As per section 44, unless the context indicates otherwise, the term "foreign award" refers to an arbitral decision resolving disputes between individuals stemming from legal relationships, whether arising from contracts or not, and considered as having a commercial nature under the laws enforced in India.

This award must have been issued on or after the 11th day of October 1960 and meet the following criteria:

  1. It must result from a written agreement for arbitration that falls under the Convention outlined in the First Schedule.
  2. It must have been issued in one of the territories that the Central Government, after ensuring that corresponding arrangements have been established, may officially designate as territories subject to the aforementioned Convention through notification in the Official Gazette.
It is evident from the requirements mentioned above that there are two prerequisites for the New York Convention's enforcement of foreign awards. These are the following:
  • The nation needs to be a New York Convention signatory.
  • The Central Government will notify the recipient that the award will be made in their territory, which is a reciprocating territory in another contracting state.
According to Section 47, the party requesting the enforcement of a foreign award must present the court with the following documents at the time of the application:
  1. the original award or a duly authenticated copy;
  2. the original arbitration agreement or a duly certified copy; and
  3. any other documentation necessary to prove the award is foreign.
The only court that can hear an application to enforce a foreign award under the new Act is the High Court. The other party can object against enforcement on the grounds allowed by Section 48 of the Act once an application for enforcing a foreign award is made.

These justifications consist of:
  • the parties to the agreement mentioned in section 44 were incapable of fulfilling their obligations under the law that applied to them, or the agreement is invalid under the legislation that the parties subjected it to or, in the absence of any indication to the contrary, under the law of the nation where the award was made; or
  • The party requesting the award was either not properly informed about the arbitrator's appointment or the arbitral processes, or he was unable to defend himself;
  • The award addresses a disagreement that was not addressed in the arbitration agreement, did not fall under its parameters, or includes rulings on issues not covered by the arbitration agreement. With the understanding that the portion of the award containing the decisions on subjects submitted to arbitration may be enforced if the decisions on those matters can be distinguished from those that were not;
  • either the arbitral authority's composition or the arbitration process did not follow the parties' agreement, or in the absence of one, did not follow the laws of the nation in which the arbitration was held;
  • The parties have not yet accepted the award as legally binding or have been revoked or suspended by a national body acting in accordance with the applicable laws;
  • either the implementation of the decision would be against Indian public policy;
  • or the subject matter of the dispute cannot be resolved by arbitration under Indian law.
The Amendment Act has limited the range of awards that fall under the purview of public policy violations for international commercial arbitration to those that (i) are impacted by fraud or corruption, (ii) go against the core fundamentals of Indian law, or (iii) are at odds with morality or justice.

Furthermore, it states that the Court may, if it deems appropriate, postpone the decision regarding the enforcement of the award and, upon the request of the party seeking enforcement of the award, order the other party to provide appropriate security. This applies if an application for setting aside or suspending the recognition has been submitted to a competent authority.

As per Section 49, in cases where the Court finds that the foreign award is legitimately enforceable under this Chapter, it will be considered the Court's decree.

Enforcement under the Geneva Convention:
As per section 53, "In the context of this Chapter, the term 'foreign award' refers to an arbitration decision dealing with disputes related to matters recognized as commercial under Indian law, provided that it was made after the 28th day of July 1924, and meets the following criteria:
  1. It must result from an arbitration agreement falling under the Protocol detailed in the Second Schedule.
  2. The arbitration must involve parties, one of whom is subject to the jurisdiction of a country that the Central Government, after ensuring that reciprocal arrangements exist, designates as a party to the Convention outlined in the Third Schedule. In contrast, the other party is subject to the jurisdiction of a different country among the mentioned Powers.
  3. The arbitration must have taken place in a territory designated by the Central Government, following the satisfaction of reciprocal provisions, through an official notification in the Official Gazette, as a territory subject to the said Convention.
For this Chapter, an award is not considered final if any ongoing proceedings contesting its validity occur in the country where it was issued."

According to Section 56, the party seeking the enforcement of a foreign award must present the court with the following documents at the time of the application: (a) the original award or a duly authenticated copy of it; (b) proof that the award has become final; and (c) proof that the award was made in accordance with a submission to arbitration that is lawfully valid under the applicable laws; and (d) proof that the award was made by the arbitral tribunal specified in the submission to arbitration or constituted in accordance with the parties' agreement and the law governing the arbitration procedure.

The new Act's design is predicated on the idea that it will give both domestic and foreign investors access to a quick and effective dispute resolution process. It is appropriate to cite Sir LJ Earl Warren, "It is the spirit and not the form of law that keeps the justice alive."

Definition of foreign awards under the Civil Procedure Code, 1908:
Section 2 of the Civil Procedure Code, 1908 outlines the definition of foreign judgment and foreign court.

Section 2: Definitions
(5) "foreign Court" means a Court situate outside India and not established or continued by the authority of the Central Government;]

(6) "Foreign judgment" means the judgment of a foreign Court; "

Proceeding with section 13 outlines instances where the foreign judgments are not conclusive.

Section 13: When foreign judgment not conclusive�A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except�
  1. where it has not been pronounced by a Court of competent jurisdiction;
  2. where it has not been given on the merits of the case;
  3. where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable;
  4. where the proceedings in which the judgment was obtained are opposed to natural justice;
  5. where it has been obtained by fraud;
  6. where it sustains a claim founded on a breach of any law in force in India.
Foreign courts are those courts established outside a nation's territorial jurisdiction. The Indian central government has no power to develop or function foreign courts. The central government is devoid of any authority over the foreign courts. For example, Indian courts cannot interfere in the courts of the United Kingdom; they are sovereign in their respective spheres and territories.

Section 13 states that a foreign judgment will be conclusively related to any matter adjudicated between the parties litigating under the same title except for the six grounds provided under section 13.
  1. where it has not been pronounced by a Court of competent jurisdiction: Where the judgment or the decree has been passed by a foreign court devoid of competent jurisdiction, such a judgment will not be considered conclusive. The foreign court should have the authority of competent jurisdiction to pronounce the judgment or pass a decree. The Ramanathan Chettyar and Others v Kalimuthu Pillay and Others established a precedent that clarifies the conditions under which a foreign court is deemed to have competent jurisdiction:
    • "where the defendant is a subject of the country in which the judgment was passed;
    • where the defendant is a resident of the country in which the action was commenced;
    • where the defendant has, in a previous case, filed a suit in the same forum;
    • where the defendant has voluntarily appeared; or
    • where the defendant has contracted to submit itself to the foreign court's jurisdiction."
  2. where it has not been given on the merits of the case: Merits of the case include cognizance+ facts+ evidence+ examination. After considering all the abovementioned, then the court can pronounce a judgment. The court should answer all the questions of law and the questions of facts. For example, dismissing for the default of the parties without taking cognizance of the case will not fall under the merits of the case.
  3. where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable: A foreign court passing a judgment contravening an Indian law as well as the international law will not be conclusive.
  4. where the proceedings in which the judgment was obtained are opposed to natural justice: If the judgment has been pronounced contravening the principles of natural justice, equity, and good conscience, then such a decision will not be conclusive.
  5. Where it has been obtained by fraud: If a judgment or a decree passed by a foreign court has been obtained by fraud, then the same will not be conclusive.
  6. where it sustains a claim founded on a breach of any law in force in India: If any claim is found to be contravening any existing laws in India, then such a judgment will not be conclusive.

Procedure For Enforcement Of The Foreign Award:
A foreign decision that meets the requirements of Section 13 of the code as conclusive may be enforced by:
  • commencing execution procedures following Section 44-A and Section 13 of the Code of "reciprocating territories"-as defined below�occur or
  • Initiating a civil suit based on the ruling in the non-reciprocating nation's case.
India has bilateral treaties with several governments pertaining to cooperation and reciprocity in the execution of foreign decrees and judgments, although not being a party to the Convention on the Recognition and Execution of Foreign Judgments in Civil and Commercial Matters.

"Reciprocating territory" is defined in Section 44A of the code as a nation that its central authority has declared to be such in the Official Gazette. The United Kingdom, Aden, Fiji, Singapore, the United Arab Emirates, Malaysia, Trinidad and Tobago, New Zealand, the Cook Islands (including Niue), and the Trust Territories of Western Samoa, Hong Kong, Papua and New Guinea, and Bangladesh are currently the nations that have been notified as reciprocating territories.

Is there a legal distinction between the recognition and enforcement of a judgment?
Any enforcement procedure must first meet the requirements outlined in Section 13 of the code for recognizing a foreign judgment. A foreign decision cannot be executed unless it fulfills the conclusiveness standard in Section 13 of the Code of Civil Procedures. However, Section 44A of the code addresses the enforcement of foreign judgments originating from both reciprocating and non-reciprocating territories.

Whether a foreign decision originates from a reciprocating territory determines how easy it will be to execute. A reciprocating territory's judgment shall be interpreted in accordance with Section 44A of the code as though an Indian district court rendered it. However, to enforce a ruling from a non-reciprocating territory, a civil lawsuit on the foreign judgment must be brought before the appropriate court. As a result, carrying out a decision from a reciprocating territory is generally more effective.

Section 44A of the code specifies the formal and documentation criteria for the enforcement of foreign judgments and decrees from reciprocating territories:

The judgment or decree must be from a superior court of a reciprocating territory.
  • The district court or a high court with original civil jurisdiction is where the decree must be submitted.
  • To allow for execution, a certified copy of the decree must be filed.
  • It is necessary to file a certificate issued by the foreign court specifying the degree of satisfaction or adjustment�if any�obtained with the ruling thus far.
  • In case of a non-reciprocating territory, the judgment holder must file a civil suit on the foreign judgment or decree and annex a certified copy of the judgment or decree.
The Limitation Act of 1963 is equally applicable because the Code of Civil Procedure stipulates that international judgments and decrees from reciprocating territories may be enforced in India as decrees issued by Indian courts. Thus, the statute of limitations is as follows:
  • Three years from the date of the order or the performance date for the execution of a decree granting a mandatory injunction.
  • If the decree calls for the payment of money or the delivery of property to be made at a specific date or within a recurring period, the period for execution of any other decree will run out after 12 years from the day the decree becomes enforceable. However, if the decree requests the execution of a decree granting a perpetual injunction, the period for execution will not run out until the payment or delivery is not made as agreed.

Under the Limitation Act, judgment holders from non-reciprocating territories who wish to pursue a remedy must bring a civil complaint before the appropriate Indian court within three years of the date of the foreign judgment or decree.

Formal Procedure For Seeking Recognition And Enforcement Of A Foreign Judgment:
The decree holder must apply to the competent Indian court (i.e., the relevant district court) to have a foreign judgment or decree from a reciprocating territory enforced. It is also necessary to produce a certified copy of the decree and a certificate from the foreign country's superior court indicating the amount�if any�satisfied by the decree.

The party seeking execution will be asked to justify why the decree should not be carried out by the executing court after the application has been filed. If the individual for whom execution is sought protests to the execution, the court will hear the objections before making its decision.

The following are the phases of an execution process that can be started in India to carry out the enforcement of a decree under Section 44A of the Code of Civil Procedure:
  • Application for execution: the decree holder must apply to the execution of the decree before the competent court.
  • Notice to show cause: the court will then issue notice to the person against which execution is sought, requiring such person to show cause as to why the decree should not be executed.
  • No contest: if the person against which the decree is to be executed does not appear or show cause as to why the decree should not be executed, the court will order the decree to be executed.
  • Where the defendant contests under Section 44A, read with Section 13 of the Code of Civil Procedure, it can argue why the decree should not be enforced. In this case, the court will consider the application and determine whether the foreign judgment falls under any exceptions under Section 13. While this order is not appealable, a review or revision may be sought.
  • Court issues process: if there is no contest or the court holds that none of the exceptions under Section 13 apply, it will issue a process and appoint an appropriate officer, including a judge, to execute the decree.
  • Once the process is issued, the decree-holder can apply to the court to provide directions to the judgment debtor, instructing it to disclose any assets and liabilities. If these assets are announced, the court will proceed with the attachment and sale of such assets.
The judgment holder must bring a lawsuit on the foreign judgment or decree if the jurisdiction in question does not reciprocate. Order 21 of the Code of Civil Procedure states that the suit cannot be carried out as a domestic decree unless approved.

One to two years is a suitable amount of time to satisfy a foreign judgment or decree, provided that the enforcement of the judgment or decree is not challenged. On the other hand, it may take three to four years for recognition if the foreign judgment or decree's enforcement is opposed for any of the reasons listed in Section 13.

Problems faced while implementing a foreign arbitration award:
  • The domestic courts may hear challenges to an award.
  • The A&C Act's Section 48 gives domestic courts broad discretion to reject requests to execute overseas awards, as follows:
    1. The agreement is invalid under the nation's laws where the award is intended to be implemented or the Parties were incapable of entering into the contract.
    2. To properly prepare the case and select an arbitrator, the party was not notified by serving notice.
    3. The dispute's subject matter was either outside the purview of the arbitration or incapable of being resolved by arbitration.
    4. The award is against Indian public policy.
  • The fundamental goal of speed in arbitration proceedings is defeated by the courts' temporary hold on the enforcement of foreign awards until the captioned subject is decided.
  • Extensive authority granted to the courts to consider a petition contesting the foreign arbitration verdict on grounds such as public policy, patent illegality, etc.
  • Lack of rules for expediting the processing of the petition to execute international arbitral awards.
  • Bilateral and multilateral treaties are not enforceable.

Comparative Analysis between UAE and India
UAE is a reciprocating territory under section 44A of the Arbitration Act. In the rising era of commerce and trade, the UAE also amended its arbitration act to enforce foreign awards in its territory.

On May 15, 2018, the UAE published Federal Arbitration Law No. 6 of 2018�also known as the "UAE Arbitration Law." Significant enhancements have been made to implementing arbitral awards by the Law.

The conditions for the enforcement of foreign awards

To date, the UAE has two different regimes for the enforcement of arbitration awards as follows:

First Regime: The UAE Arbitration Law:
The process for enforcing arbitral awards that fall within Article 2 of the UAE Arbitral Law is outlined in Article 55 of that document. A request to ratify and implement an award must be submitted to the Chief Justice of the Court of Appeal together with the appropriate paperwork, per Article 55 of the UAE Arbitration Law:
  1. The original award or a certified copy thereof;
  2. A copy of the Arbitration Agreement;
  3. An Arabic translation of the arbitral award, attested by a competent authority, if the award is not issued in Arabic; and
  4. A copy of the minutes of deposit of the award in court.
As a result, it is evident that the UAE Arbitration Law has implemented a quick procedure for the enforcement of arbitration verdicts through the filing of a petition with the Chief Justice of the Court of Appeal, or with a representative designated by him to carry out that duty. Within sixty days of the petition's filing date, it must be decided.

Second Regime: The UAE Civil Procedure Law:
As previously stated, the UAE Civil Procedure Law's provisions regarding enforcing foreign judgments and arbitral awards remain in effect. These provisions will continue to govern the enforcement of foreign awards for two months following the publication of Cabinet Decision 57 of 2018 in the Official Gazette. Article 235 of the UAE Civil Procedure Law lays out the requirements for the enforcement of foreign decisions in the UAE.
  1. Judgments and orders issued in a foreign country may be ordered to be enforced in the UAE on the same conditions as prescribed in the laws of that country for the enforcement of similar judgments and orders issued in the UAE.
  2. An enforcement order shall be applied under the normal litigation procedures in the court of first instance within whose jurisdiction the enforcement is required. Enforcement may not be ordered until the following has been verified;
  3. The UAE courts do not have jurisdiction in the dispute in which the judgment has been given or the order made, and the foreign courts that issued it have jurisdiction therein under the international rules for legal jurisdiction prescribed in their law:
    • that a court with jurisdiction under the laws of the nation where the judgment or order was issued.
    • that the parties in dispute in the case where a decision was made were called to attend and did so on time.
    • that under the laws of the court that issued the decision or order, it has become a fait accompli.
    • that nothing in it violates UAE public morals or order and that it does not clash with a ruling or order that a UAE court has already rendered.

Article 236 states that "arbitration awards issued in a foreign country" are subject to Article 235. It also specifies that these awards must be enforceable in the nation they were made and must have been issued in an arbitrable matter as defined by UAE law.

It is imperative to acknowledge that Article 238 stipulates that the regulations outlined in the preceding articles, namely Articles 235 and 236, shall not supersede the terms of any agreements that may exist between the United Arab Emirates and other nations about this matter.

It is evident that the arbitration community now has an effective and quick system for enforcing arbitration verdicts thanks to the UAE Arbitration Law.

It is evident that as the UAE has also signed and ratified the New York and Geneva Conventions, it is trying to establish an expediting system for its arbitration.

Both India and UAE share their enforcement of foreign arbitral awards in some spheres:
  1. In terms of the conclusiveness of the foreign judgment
  2. Competent jurisdiction
  3. The production of the certified copies of the foreign judgment
  4. That it should not violate any UAE's public morals

Conclusion:
Foreign arbitration awards can be enforced in India through the Code of Civil Procedure 1908. The Arbitration and Conciliation Act 1996 controls the execution of foreign arbitration awards in India. Two options are available to Indian law for enforcing a foreign ruling: submitting an Execution Petition under CPC Section 44A or bringing a lawsuit based on the foreign ruling.

The only court that can hear an application to enforce a foreign award under the new Act is the High Court. The prize must result from a written agreement for arbitration that falls under the Convention outlined in the First Schedule. In the end, the comparative analysis with UAE and India has also been provided to highlight how reciprocating territories are expediting towards the enforcement of the foreign awards.


Award Winning Article Is Written By: Ms.Rishita Srivastava
Awarded certificate of Excellence
Authentication No: AP448078217119-23-0424

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers



Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


LawArticles

How To File For Mutual Divorce In Delhi

Titile

How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Increased Age For Girls Marriage

Titile

It is hoped that the Prohibition of Child Marriage (Amendment) Bill, 2021, which intends to inc...

Facade of Social Media

Titile

One may very easily get absorbed in the lives of others as one scrolls through a Facebook news ...

Section 482 CrPc - Quashing Of FIR: Guid...

Titile

The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of t...

The Uniform Civil Code (UCC) in India: A...

Titile

The Uniform Civil Code (UCC) is a concept that proposes the unification of personal laws across...

Role Of Artificial Intelligence In Legal...

Titile

Artificial intelligence (AI) is revolutionizing various sectors of the economy, and the legal i...

Lawyers Registration
Lawyers Membership - Get Clients Online


File caveat In Supreme Court Instantly