India: Enforcement Of Foreign Awards Against Indian Companies In An International ICC Arbitration

Introduction

An international commercial arbitration which is governed under the arbitration regime of International Chamber of Commerce ('ICC') can either be seated in India or be seated in a foreign country. While the enforcement and execution of an Indian seated arbitral award would be governed by the Part I of the Arbitration & Conciliation Act, 1996 ("Indian Act"), the enforcement of foreign seated awards would be governed by the provisions of Part II of the Indian Act.

In India "foreign awards" are acquiescent under Part II of the said Act which specifically is in consonance with the provisions of the 1958 – New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention") or the Convention on the Execution of Foreign Arbitral Awards 1927 – ("Geneva Convention"). India is a signatory to both the New York Convention as well as Geneva Convention. Section 44 of the Indian Act provides that in order for a foreign award to be recognized as such under Part II, Chapter I (New York Convention Awards) certain conditions need to be fulfilled, which are as under:

  1. The territory should be signatory to the New York Convention
  2. The Indian Central Government should have notified in the Official Gazette that it has reciprocal provisions with such a territory.

Therefore any foreign award received by a party/country under the ICC arbitration regime who is a signatory to either New York Convention or the Geneva Convention can get the same enforced within the territory of India.

Enforcement

The enforcement of a foreign award under the ICC arbitration regime in India is a binary process. The dualistic approach begins with filing of an execution petition in an Indian court, wherein the Court at the first instance shall ascertain whether the foreign award had adhered to the requirements of the Arbitration & Conciliation Act, 1996. These requirements are listed as under:

  1. Whether the original award or an authenticated copy in accordance with the act was filed.1
  2. Whether the original agreement or certified copy of the arbitration agreement in accordance with the act was filed.2
  3. Whether necessary evidence to prove that the award is a foreign award was filed.3

Once the Court is satisfied that the foreign award is found to be enforceable, the same shall be enforced like a decree of that Court.4 While doing the same, Indian Courts are mindful of the following conditions as set out under Section 48 of the Indian Act, which may be met before execution of such awards. These conditions can also be the grounds adopted by the other/aggrieved party for challenging the said award. These conditions/grounds which shall render the foreign award unenforceable are listed as under:

  1. That the subject agreement is not in accordance with the law to which the parties have subjected it or under the law of the country where the foreign award was made.
  2. The award is ultra vires to the agreement.
  3. The award contains decision on matters beyond the scope of arbitration.
  4. The arbitral procedure was not in accordance with the law of the country where the arbitration took place.
  5. The foreign award has not yet become binding on the parties or was set aside by the higher authority of the country in which that award was made.
  6. Enforcement of foreign award will be contrary to public policy of India.
  7. Subject matter of the dispute is not capable of settlement under the Indian Arbitration & Conciliation Act, 1996.

Once the award has survived the challenge and the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court5. After this stage it can be executed under Order XXI of the Code of Civil Procedure, 1908 in the same manner as a decree from an Indian court. Where the subject matter of the foreign award is money, the Commercial Division of any High Court in India where assets of the opposite party lie shall have jurisdiction. In case of any other subject matter, the Commercial Division of a High Court which would have jurisdiction as if the subject matter of the award was a subject matter of a suit shall have the jurisdiction.

Footnotes

1 Section 47 of the Indian Act

2 Section 47 of the Indian Act.

3 Section 47 of the Indian Act

4 M/s Fuerst Day Lawson Ltd. V. Jindal Exports Ltd. 2001(6)SCC 356 – "In one proceeding there may be different stages. 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 proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of court/decree again."

5 Section 49 of the Indian Act.

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.

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