An ever-growing increase in cross border transactions has given rise to a growing number of international disputes. A country's ease of doing business index factors in the mode and manner of outcome of disputes much specifically the enforcement of judgements & decrees where the subject matter of disputes situate. This article seeks to briefly outline the enforcement procedure of foreign judgments and awards in India.
A. Enforcement of Foreign Judgments in India
A 'judgement' under the Code of Civil Procedure,1908 ('CPC') has been defined as the statement given by the Judge on the grounds of a decree or order1. A 'foreign judgement' under the CPC has been defined as the judgement of foreign court2
Thus, it can be deduced from aforesaid that a foreign judgment is a statement given by the judge of court not being within the territory of India on the grounds of decree or order.
The CPC deals with the execution of foreign judgements in India. The same is governed under Section 44-A read with Section 13 of the CPC.
Where a decree is passed by a superior court of any reciprocating territory, the decree may be executed in India as if it had been passed by the District Court3
Enforceability of Judgements of reciprocating territories:
A reciprocating territory means any country/territory outside India which the Central Government may, by notification, in the official gazette declare to be a reciprocating territory. Further, superior court, with reference, to any such territory, means such Courts as may be specified in the said notification.4
Malaysia, UAE, New Zealand, United Kingdom, Fiji, Canada & Burma are some of the countries classified as reciprocating territories by the Government of India.
Pertinently, direct enforceability of a foreign judgement requires satisfaction of the conditions laid out in Section 13 of the CPC which prescribes that a foreign judgement should be conclusive. In order for a foreign judgement to be conclusive, the conditions under Section13 are:
- Judgement should be pronounced by a court of competent jurisdiction;
- Judgement should be given on the merits of a case;
- Judgement should not appear 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;
- Judgement should not have been obtained by fraud.
Thus, once a foreign judgment of a reciprocating territory is conclusive in nature, in line with the conditions laid down in Section 13 CPC, the foreign judgement can be enforced as per procedure prescribed under Order XXI of the CPC, which contains provisions of execution of decrees and orders.
Enforceability of Judgements of non-reciprocating territories:
In order to enforce a judgement of a non-reciprocating territory, a fresh suit must be filed before the Indian court and a decree must be obtained. In such proceedings the decree passed by a superior court of the non-reciprocating territory is considered evidentiary. Significantly, once the decree in the fresh suit filed in the courts of India has been obtained, the same shall be executed in line with the procedure prescribed under Order XXI of the CPC.
- The Hon'ble Supreme Court whilst adjudicating upon the aspect of limitation for executing a foreign decree, in the case of Bank of Baroda V. Kotak Mahindra Bank Ltd.5held that "the limitation period for executing a decree passed by a foreign court (from reciprocating country) in India will be the limitation prescribed in the reciprocating foreign country."
- The Hon'ble Bombay High Court deciding the law on decrees of a court of non-reciprocating territories has observed in the case of Marine Geotechnics LLC vs. Coastal Marine Construction and Engineering Ltd.6 had observed that any person holding a decree of a non-reciprocating foreign territory has an option to file in a domestic Indian Court of competent jurisdiction, a suit on that foreign decree or on the underlying cause of action, the resultant domestic decree can then be enforced.
- The Hon'ble Supreme Court in the case of M.V. AL. Qumar V. Tsavilris salvage (international) Ltd7has held that "Section 44-A is an independent provision enabling a set of litigants whose litigation has come to an end by way of foreign decree and who is desirous of enforcement of the same. It is an authorization given to the foreign judgements 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 decree holder to execute a foreign decree in this country."
B. Enforcement of Foreign Awards in India:
The enforcement procedure of 'Foreign Awards' in India is governed by the Arbitration and Conciliation Act, 1996 ('Arbitration Act') and the Code of Civil Procedure, 1908 ('CPC').
Significantly, under the Arbitration Act there are two conventions under which a 'foreign award' can be enforced in India, namely;
- Convention on the recognition and Enforcement of Foreign Arbitral Awards, 1958 viz. The New York Convention;
- Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 viz. Geneva Convention.
It can be said that if an award is obtained by a party in a dispute from a country which is a signatory to either of the aforesaid conventions and has been notified as a convention country by India, then in such case, the award would enforceable in India, subject to, conditions contemplated under the Arbitration Act.
- New York Convention:
Definition - Foreign Award is defined as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after 11.10.1960-
- in pursuance of an agreement in writing for arbitration to which the convention in the First Schedule applies, and;
- 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 be territories to which the said convention applies.8
Evidence9 - Evidence to be adduced while applying for enforcement of a foreign award shall be -
- original award or copy, duly authenticated as per the manner required under law of the country in which it is made, original or duly certified copy of arbitration agreement & such other evidence as may be necessary.
Condition precedent for enforcement10 - The wording of the conditions prescribed under this convention are adversarial and worded in a manner to provide for grounds of refusal for enforcement, if the parry against whom the award is passed proves:
- parties to the arbitration agreement were under some incapacity or the said agreement is invalid under law to which parties have been subjected;
- party against whom the award is passed was not given proper notice of appointment of arbitrator or of the arbitral proceedings or was unable to present his case and;
- award deals with matters not contemplated by or not falling within terms of submission to arbitration or the decision is on matters beyond the scope of submission to arbitration;
- composition of arbitral authority or procedure was not in accordance with agreement;
- award has not become binding on parties, set aside or suspended by a competent authority of the country in which it is made.
- Geneva Convention
Definition11: Foreign Award means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924-
- in pursuance of an agreement for arbitration to which the protocol set forth in the Second Schedule applies;
- between persons of whom one is subject to the jurisdiction of some one of such powers as the Central Government, being satisfied that reciprocal provisions have been made by the, may, by notification in the official gazette, declare parties to the Convention set forth in the third schedule, and of whom the other is subject to the jurisdiction of some other of the powers aforesaid, and;
- in one such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said convention applies.
Evidence12: Evidence to be adduced while applying for enforcement of a foreign award shall be -
- original award or copy, duly authenticated as per the manner required under law of the country in which it is made, evidence proving award has become final and evidence to prove that conditions laid down under section 57 of Arbitration Act are satisfied.
Condition Precedent13: Conditions to be complied for enforcement of foreign award under the convention are:
- award has been made in pursuance of a submission to arbitration which is valid under law applicable thereto;
- subject-matter of award is capable of settlement by arbitration under the law of India;
- award has been made by arbitral tribunal provided for in submission to arbitration or constituted in the manner agreed upon by parties and in conformity with law governing arbitration procedure;
- award has become final in country in which it is made, in the sense that it will not be considered open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;
- enforcement of award is not contrary to public policy of India.
Under both the conventions, when the court is satisfied that the foreign award is enforceable, the award shall be deemed to be a decree of that court.
Court of Enforcement:
A 'court' for the purposes of enforcement of an award or any other subject matter falling under the Arbitration Act, would be the Principal civil court of original jurisdiction in a district including High Court having jurisdiction to decide the questions forming subject matter of the arbitration, if the same was the subject matter of suit.
This would mean that an award can be executed before any court in India within whose jurisdiction the assets or interests, which are subject matter of the arbitration situate.
Since the advent of the Commercial Courts Act, 2015, the legislature has provided for establishment of various Commercial Courts and Commercial in the High Courts and subordinate courts to reduce and ensure speedy disposal of inter-alia enforcement of foreign awards.
- Limitation periodfor enforcement of foreign awards: The Hon'ble Supreme Court in the case of Government of India V. Vedanta Ltd.14has inter-alia observed that the time-limit for enforcement of foreign award under the Arbitration Act would be three years from when the right to apply accrues thereby coming under the ambit of Article 137 of limitation act. Further, the holder of a foreign award can file an application for condonation of delay, if required.
- Appropriate Forum for enforcement of foreign arbitral award: The Hon'ble Supreme Court in the case of Brace Transport Corp of Monrovia V. Orient Middle East Lines Ltd15held that the party seeking to enforce an award in an international commercial arbitration may have a choice of country in which to do so. Since the purpose of enforcement proceedings is to ensure compliance of award, the legal proceedings must be initiated in the state within which property or other assets of the losing party are located.
- Recognition of Emergency Arbitration in India: The Hon'ble Supreme Court in the case of Amazon.com NV Investment Holdings LLC V. Future Retail Ltd & Ors.16 has held that the emergency arbitration awards are recognized under Section 17 of the Act. Further, the Apex court has observed that the words "arbitral proceedings" are not limited by any definition and thus encompass proceedings in an emergency arbitration including interim awards that are passed by emergency arbitrators.
- Grounds of challenge of enforcement of foreign award: The Hon'ble Supreme Court in the case of Renusagar Power Co. Ltd. V. General Electric C.17held that " the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality."
1. Section 2(9), Civil Procedure Code, 1908
2. Section 2(6), ibid
3. Section 44-A, ibid
4. Explanation I of Section 44-A, ibid
5. Civil Appeal No.2175 of 2020
8. Section 44, the Arbitration and Conciliation Act, 1996
9. Section 47, ibid
10. Section 48, ibid
11. Section 53, ibid
12. Section 56, ibid
13. Section 57(1), ibid
14. CA NO.3185 OF 2020
15. 15 1995 SUPP (2) SCC 280
16. CA NO.4492-93 OF 2021
17. AIR 1994 SC 860
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.