The Indian Code of Civil Procedure, 1908 (CPC) lays down the procedure for enforcement of foreign judgments and decrees in India. The basic principle which is followed while enforcing a foreign judgment or decree in India is to ensure that the judgment or decree is a conclusive one, passed on the merits of the case and by a superior court having competent jurisdiction.
What is a foreign judgment or a foreign decree?
A foreign judgment is defined under section 2 (6) of the CPC as a judgment of a foreign court. A foreign court, under section 2(5) of CPC, means a court situated outside India and not established or continued by the authority of the Central Government.
A foreign decree is defined in Explanation II to section 44A of the CPC as, "Decree" with reference to a superior court means any decree or judgment of such court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty, but shall in no case include an arbitral award, even if such an award is enforceable as a decree or judgment.
Foreign judgment or decree to be conclusive
A foreign judgment or decree should be conclusive as to any matter adjudicated by it. The test for conclusiveness of a foreign judgment or decree is laid down in section 13 of the CPC which states that a foreign judgment shall be conclusive unless:
- It has not been pronounced by a court of competent jurisdiction;
- It has not been given on the merits of the case;
- 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;
- The proceedings in which the judgment was obtained are opposed to natural justice;
- It has been obtained by fraud;
- It sustains a claim founded on a breach of any law in force in India.
Thus, before enforcing a foreign judgment or decree, the party enforcing it must ensure that the foreign judgment or decree passes the seven tests above. If the foreign judgment or decree fails any of these tests, it will not be regarded as conclusive and hence not enforceable in India.
Mode of enforcement of a foreign judgment or decree
There are two ways in which a foreign judgment or decree can be enforced in India depending on whether the judgment or decree has been given by a court in a reciprocating territory or not.
1. Foreign decree of a reciprocating territory be executed as an Indian decree
By virtue of section 44A of the CPC, a decree of any superior court of a reciprocating territory shall be executed in India as a decree passed by the Indian district court.
A reciprocating territory is defined in Explanation I to section 44A as: "Reciprocating territory" means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section, and "superior courts", with reference to any such territory, means such courts as may be specified in the said notification.
A judgment from a court of a reciprocating territory can be directly enforced in India by filing an execution application. Section 44A (1) of the CPC states that where a certified copy of a decree of any superior court of a reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court (meaning that the entire scheme of execution of decrees as laid down in Order 21 of the CPC will be applicable).
While filing the execution application the original certified copy of the decree along with a certificate from the superior court stating the extent to which the decree has been satisfied or adjusted has to be annexed to the application.
2. Filing a suit in case of decrees from non-reciprocating territories
Where a judgment or decree is not of a superior court of a reciprocating territory, a suit has to be filed in a court of competent jurisdiction in India on that foreign judgment or on the original cause of action or both.
In Marine Geotechnics LLC v/s Coastal Marine Construction & Engineering Ltd. 2014 (2) Bom CR 769, the Bombay High Court observed that in case of a decree from a non-reciprocating foreign territory, the decree holder should file, in a domestic Indian court of competent jurisdiction, a suit on that foreign decree or on the original, underlying cause of action, or both.
He cannot simply execute such a foreign decree. He can only execute the resulting domestic decree. To obtain that decree, he must show that the foreign decree, if he sues on it, satisfies the tests of section 13 of the CPC (as discussed above).
A suit on a foreign judgment/decree must be filed within a period of three years from the date of the judgment/decree.
Foreign currency conversion rate
In a foreign decree the amount awarded is generally in a foreign currency. While attempting to enforce the foreign decree in India, the amount has to be converted into Indian currency. The question therefore arises as to which date to use for the currency conversion calculation.
In Forasol vs. ONGC 1984 AIR 241, 1984 SCR (1) 526, it was held that the date of the decree should be used for the calculation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.