Authored by Rahul P Jain, Khushboo Rupani and Mahafrin Mehta
Being time efficient, procedural, and enforceable, arbitrations as a means of dispute resolution has gained traction in the past two decades across the globe. Having an arbitration clause in commercial contracts, arbitration has become the preferred mechanism for resolving commercial disputes, especially in cross border transactions. In this note, we shall focus on the execution/enforcement of foreign Arbitral Awards in India. For the execution of a foreign award, the successful party has to move an application (a single application shall hold good for enforcement as well for the execution of foreign award) by way of a petition to the court of competent jurisdiction for the enforcement of the award and if the court is satisfied that the award is enforceable then, the foreign award can be proceeded to be executed just like a decree of the court by virtue of the objective laid down in the Arbitration & Conciliation Act, 1996 (Arbitration Act) itself, which states that every final arbitral award shall be enforced in the same manner as a decree of the court. The execution of a decree is governed by Order 21 of the Code of Civil Procedure, 1908.
Section 44 of the Arbitration Act defined a foreign award as an award passed in foreign countries, which are signatories to either the New York Convention or the Geneva Convention; and the Government of India has issued a notification in the official Gazette declaring the said foreign country to be the territory to which the above conventions applied. It is to be noted that a notification under section 44 (b) is passed by the Government of India’s on its satisfaction that reciprocal provisions have been made in the country in which the award is passed.
Section 47 of the Arbitration Act provides that every application for the enforcement of a foreign award under the act shall be accompanied with the original award or the copy of the award as authenticated as per the requirement of the country in which it is made; the original arbitration agreement or a copy of arbitration agreement; And any evidence that is necessary to prove that the award that is rendered is foreign in nature; In case the award is in the local language of the country in which the award is made then an English translation of the award is to be accompanied with the application. The translation is to be verified by the consulate of the country in which it is made.
Section 48 of the Arbitration Act list out the conditions when the Foreign Award cannot be enforced, which include arbitration agreement was not valid under the law to which parties to the agreement were subjected to and parties were not under some legal incapacity in the country in which the said award is made; party to arbitration was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or the party was unable to present the case; the same deal with the differences not contemplated in the submission to arbitration or contains decision on matters beyond the scope of submission to arbitration; the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made; the subject-matter of the difference is not capable of settlement by arbitration under the law of India; the enforcement of the award would be contrary to the public policy of India. If the award is not subject to any of the above conditions, then the Court would order for execution of the said Award.
The limitation period for enforcement of a foreign award would be the limitation period for execution of decrees, as is provided under Schedule I- item 136 of Limitation Act, 1963 i.e., twelve years from when the decree or order becomes enforceable or where the decree or any subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurring periods, when default in making the payment or delivery in respect of which execution is sought, takes place: Provided that an application for the enforcement or execution of a decree granting a perpetual injunction shall not be subject to any period of limitation.
Considering the above we can say that there exists is a thorough procedure for the enforcement of foreign arbitral awards in India. To enforce a foreign award effectively and expeditiously in India the award holder should get the award certified by a court in whose jurisdiction the Arbitration took place (i. e competent court). In the first stage, the Court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that foreign award is enforceable it can suo-moto proceed to take further effective steps for execution of the same. There arises no question of making the foreign award as a rule of court/decree again. It can be said that our legal system has a well-established procedure for the enforcement of foreign awards in India.