FAQs ON ARBITRATION

ENFORCEMENT OF CERTAIN FOREIGN AWARDS

Part II of The Arbitration and Conciliation Act, 1996, Chapter 1 deals with New York Convention Awards. Unless the context otherwise requires, ‘foreign award’ means an award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law enforced in India, made on or after 11^th October, 1960 –

 (a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and

 (b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to the territories to which the said Convention applies. (Section 44).

The term ‘First Schedule’ refers to the New York Convention on the recognition and enforcement of foreign arbitral awards.

Is a foreign award within the meaning of New York Convention, binding ?

Any foreign award which would be enforceable under Chapter 1 of Part II shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in Chapter 1 Part II of the said Act of 1996, to enforcing a foreign award shall be construed as including references to relying on an award.  (Section 46)

What evidence has to be produced at the time of applying for the enforcement of a foreign award ?

The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court–

the original award or a copy thereof, duly authenticated in the manner required the law of the country in which it was made;

If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. (Section 47)

Enforcement of a foreign award may be refused at the request of the party against whom it is invoked, only if that party furnishes to the court proof that –

the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some incapacity, or the said 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; or

the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

However it has been provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

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 arbitration took place; or

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.

Explanation – Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. (Section 48)

Where the court is satisfied that the foreign award is enforceable under chapter 1 of part II, the award shall be deemed to be a decree of that court. (Section 49)

No second appeal shall lie from an order passed in appeal, but nothing shall affect or take away any right to appeal to the Supreme Court. (Section 50)

What happens if a party institutes an action in a matter in respect of which the parties have made an agreement referred to in Section 44, that is, the chapter relating to the enforcement of certain foreign awards under the New York Convention ?

In such cases the court shall at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. (Section 45)

What happens if Chapter 1 of Part II relating to New York Convention Awards applies? Does Chapter 2 relating to Geneva Convention Awards also apply ?

It may be noted that there are two chapters in part II relating to foreign awards and the enforcement thereof. Chapter 1 relates to New York Convention Awards. And Chapter 2 relates to Geneva Convention Awards. Chapter 2 relating to Geneva Convention Awards shall not apply in relation to foreign awards to which Chapter 1 relating to New York Convention Awards applies. (Section 52). Both these conventions cover mutually exclusive areas relating to foreign awards.

The Geneva Convention ( covered in Sections 53 to 60 of the 1996 Act) contains practically similar provisions as those relating to New York Convention Award (Sections 44 to 52 of the said Act). Hence no further questions need be framed relating to Geneva Convention Awards.

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