Globalization of the economy has opened new horizon for the businesses which were a distant dreams earlier in closed economy. As business transaction has taken a whole new dimension across the border hence there are various problems which were earlier not faced by the people. The emergence of disputes across the border is also a genre of globalization of business. In these disputes, jurisdiction may also be outside India and when a decree is passed by a foreign court, its execution or validity is also a question which was not easy to answer.
This article focuses on the binding nature of the foreign decrees given by courts of reciprocating foreign territories. It also talks about the ambit of section 13 of C.P.C with respect to section 44A and the enforcement of foreign arbitral awards.
LAW RELATED TO ENFORCEMENT OF FOREIGN DECREE:
Multilateral trade and international commercial transactions have led to a steep rise in international commercial disputes. India is a major global player in the world economy; therefore laws related to enforcement of foreign judgments are of utmost importance to the foreign investors interested in entering the Indian market. Foreign decrees in India are enforced solely according to the provisions of the Code of Civil Procedure, 1908 (CPC).
A decree is defined in section 2(2) of the CPC and judgment is defined in section 2(9). A judgment decides the rights and liabilities of the parties, whereas a decree follows the judgment and is its operating part. The civil procedure code also provides for the definition of a foreign judgment under section 2(6). The bare perusal of this section suggests that, a 'Foreign judgments' is a judgment given by a court that is situated outside India or where the cause of action in a case arises out of India.
A foreign judgment in India can be enforced in the following ways:
- Decrees from Courts in "reciprocating territories" can be enforced directly by filing before an Indian Court an Execution Decree.
- Judgments from "non-reciprocating territories," such as the United States, can be enforced only by filing a law suit in an Indian Court for a Judgment based on the foreign judgment. The foreign judgment is considered evidentiary. - The time limit to file such a law suit in India is within three years of the foreign judgment.
Execution of foreign Decrees by reciprocating territories in India is governed by section 44A, CPC. The said section explains the execution of any decree passed by a reciprocating territory, i.e. any country or territory outside India which is declared to be a reciprocating territory by the central government.
"Reciprocating Territory" is defined in explanation 1 to Section 44A of Civil Procedure Code as:
"Any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare as a reciprocating territory."
The List of Reciprocating Territories under the Civil Laws in India are United Kingdom, Singapore, Bangladesh, UAE, Malaysia, Trinidad & Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua and New Guinea, Fiji, Aden.
In case of R.I. Ltd. vs. I.G Ltd2 it was held by Hon'ble Supreme Court that "Where People's Republic of Bangladesh was declared as the reciprocating territory for the purpose of section 44A, the decree passed by courts of district and subordinate judges in Bangladesh specified as superior courts could be filed and executed under section 44A"
The essence of section 44A was best explained by the Supreme Court in the case, M. V. AL. Qumar v. tsavliris salvage (international) Ltd3., where the court held that, "S.44A is an independent provision enabling a set of litigants whose litigation has come to an end by way of a foreign decree and who is desirous of enforcement of the same. It is an authorization given to the foreign judgments and the section is replete with various conditions and as such independently of any other common law rights and is an enabling provision for a foreign decreeholder to execute a foreign decree in this country."
Further, in the case of M.V AL. Qumar (Supra) it was held that, "Section 44A gives a new cause of action irrespective of its original character and as such, it cannot be termed to be emanating from the admiralty jurisdiction as such....and also that, enforcement of a foreign decree is different from scheme of domestic execution"
Enforcement under section 44A is barred by the exceptions enshrined in section 13 of the CPC. These exceptions are:
a) Where it has not been pronounced by a Court of competent jurisdiction; Where it has not been given on the merits of the case;
b) 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;
c) Where the proceedings in which the judgment was obtained are opposed to natural justice;
d) Where it has been obtained by fraud;
e) Where it sustains a claim founded on a breach of any law in force in India.
Thus, "A combined reading of section 13 and 44A makes it clear that a decree of a reciprocating territory can be executed through a district court, and the judgment debtor is entitled to contest the execution petition if it can be shown that the judgment is not conclusive, i.e., it comes within any of the exceptions under section 13 to (f ).4"
ARBITRATION AND CONCILIATION ACT, 1996:
In India, Arbitration and Conciliation Act, 1996 provides for a statutory framework for the enforcement of foreign arbitral awards under Part II of the act. India is also a signatory to the New York Convention (1960) and the Geneva Convention (1924), which governs the execution of foreign arbitral awards in India.
Foreign award by definition means an award passed in such territory as the Central Government by notification may declare to be a signatory to the Geneva and New York convention. About 40 countries have been notified so far by the Indian government. The United States of America, United Kingdom, France, Germany, Japan and Singapore are among the countries notified by India. A foreign award is enforceable in India if, it involves a dispute of commercial transaction and there is a valid and written agreement between the parties. Such an award must also not be ambiguous. One interesting feature of enforcement of a foreign award is that there is no statutory appeal provided against any decision of the court rejecting objections to the award. An appeal shall lie only if the court holds the award to be non-enforceable. Hence, a decision upholding the award cannot be appealed against. However a discretionary appeal would lie to the Supreme Court of India under Article 136 of the Constitution of India. Such appeals are entertained only if the Court feels that they raise a question of fundamental importance or public interest. This is a positive approach adopted as it allows fewer opportunities to a judgment debtor to delay the enforcement of an award, much to the relief of many foreign clients.
Thus, analysis of the legal provisions involved in enforcement of foreign decrees in India emphasizes the need for the Indian courts not to treat the summons received from foreign courts casually and to efficiently adjudicate whether; the foreign courts had decided that matter judiciously or not. Lastly, it can be concluded that foreign decree in India can only be executed if the same is passed by the courts of reciprocating territory and should pass the tests as laid down in Section 13 of the Code of Civil Procedure, 1908.
1. 5th Year Student of Amity Law School, Ip university
2. AIR 2005 Cal 47 (50)
3. AIR 2000 SC 2826
4 Yazman Hume Quarries S.D.N, B.H.D vs. Chellappan, (1998- 1) 122 Mad 141 (DB)
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