Foreign arbitration awards, also known as international commercial arbitration awards, refer to decisions made by arbitrators in disputes between parties from different countries. These awards can be enforced in India through the process of execution.
The first step in executing a foreign arbitration award in India is to ensure that the award is enforceable under Indian law. The award must comply with the provisions of the Arbitration and Conciliation Act, 1996 (the “Act”), which governs the enforcement of foreign arbitration awards in India.
Under the Act, a foreign arbitration award can be enforced in India if it is made by a foreign arbitral tribunal and is in writing. Additionally, the award must not be in conflict with the public policy of India.
Once it is determined that the award is enforceable, the next step is to file a petition for the execution of the award with the appropriate court. This is done by submitting the original award or a certified copy of the award, along with a translation of the award into the English language. The court must then grant permission for the execution of the award, after which the award can be enforced in the same manner as a domestic arbitration award. This includes the use of various enforcement mechanisms such as attachment of assets, arrest and detention of the judgment debtor, and appointment of a receiver.
It is important to note that there are certain grounds under which the execution of a foreign arbitration award can be opposed in India. These include:
Grounds under which the Foreign Arbitration Award can be opposed
- If the award is in conflict with the public policy of India
- If the award is in conflict with the fundamental principles of Indian law
- If the award is in conflict with the provisions of the Act
- If the award is in conflict with the terms of the arbitration agreement
It’s important to note that the execution of a foreign arbitration award can be opposed by the party against whom the award is made within a period of three months from the date of the award or from the date on which the award was made known to that party.
Challenges for Executing a Foreign Arbitration Award in India
There are several challenges that may arise when attempting to execute a foreign arbitration award in India. These include:
Public policy: Indian courts have the power to refuse the enforcement of a foreign arbitration award if it is deemed to be in conflict with the public policy of India. This can be a significant challenge as the concept of public policy is not clearly defined under Indian law, and courts have wide discretion in determining what constitutes a violation of public policy.
Delay in the execution process: The process of executing a foreign arbitration award in India can be time-consuming and may be subject to significant delays. This can be due to various factors, including a backlog of court cases, and the need to obtain translations of the award.
Recognition and enforcement of foreign arbitration awards: Indian courts have to recognize a foreign arbitration award before it can be enforced. This process can be complex and time-consuming, as it involves determining the enforceability of the award under Indian law.
Grounds of opposition: As previously mentioned, a party against whom the award is made, can oppose the execution of the award on certain grounds, such as the award being in conflict with the fundamental principles of Indian law, the award being in conflict with the public policy of India, or if the award is in conflict with the provisions of the Arbitration and Conciliation Act 1996.
Lack of expertise: Indian courts may lack the expertise to properly understand and interpret complex foreign arbitration awards, which can lead to delays and difficulties in the execution process.
Limited enforcement options: Indian courts have limited options for enforcing foreign arbitration awards, and the enforcement process can be difficult and time-consuming.
Step-by-step procedure of filing the executing petition for the enforcement of Foreign Arbitration Award
The step-by-step procedure for executing a foreign arbitration award in India is as follows:
Determine enforceability: The first step is to ensure that the foreign arbitration award is enforceable under Indian law. This includes ensuring that the award is in writing, made by a foreign arbitral tribunal, and does not conflict with the public policy of India.
File a petition for execution: Once it is determined that the award is enforceable, a petition for the execution of the award must be filed with the appropriate court. This is done by submitting the original award or a certified copy of the award, along with a translation of the award into the English language.
Obtain permission for execution: The court must then grant permission for the execution of the award. This will be granted if the award is deemed to be enforceable under Indian law.
Identify assets: Once permission for execution is granted, the next step is to identify assets of the judgment debtor that can be attached or seized to satisfy the award.
Attach assets: The assets identified in step 4 can then be attached or seized by the court to satisfy the award. This can include property, bank accounts, or other assets.
Appointment of Receiver: The court may also appoint a receiver to take control of the assets and manage them until they can be sold to satisfy the award.
Arrest and detention: The court may also issue an arrest warrant for the judgment debtor and detain them until the award is satisfied.
Sale of assets: Once the assets are attached or seized, the court will order for the sale of those assets in order to satisfy the award.
Satisfy the award: Once the assets are sold, the proceeds will be used to satisfy the award.
Obtain a certificate of satisfaction: Once the award is satisfied, the court will issue a certificate of satisfaction, which serves as evidence that the award has been fully satisfied.
Relevant Sections of The Arbitration & Conciliation Act 1996 and Code of Civil Procedure
The Arbitration and Conciliation Act, 1996 (the “Act”) governs arbitration in India, including the enforcement of foreign arbitration awards. Section 48 of the Act lays out the process for the enforcement of a foreign award, which is substantially similar to the process for the enforcement of a domestic award under Section 36 of the Act. As per Section 48 of the Act, a foreign award may be enforced in India if:
- It has been made by a competent authority;
- It is binding on the parties;
- It is in respect of a matter that is capable of settlement by arbitration under the laws of India;
- It is not in conflict with the public policy of India;
Furthermore, under section 48 of the act, the party seeking to enforce a foreign award must file a petition for enforcement in the court that has jurisdiction over the matter. The court may then proceed to hear the petition and pass an order for the enforcement of the award or for setting it aside.
The Code of Civil Procedure, 1908 (CPC) also contains provisions for the enforcement of foreign awards. As per Order 37 Rule 1 of CPC, a foreign award may be filed before the court, and the court may pass a decree in accordance with the award. Similarly, Order X, Rule 2 of the CPC provides for the procedure for filing a petition for the enforcement of a foreign award in India.
Views of the Supreme Court of India:
The Supreme Court of India has dealt with several cases related to the enforcement of foreign arbitration awards in India. Some of the key cases are discussed below:
Renusagar Power Co. Ltd. v. General Electric Co. (1994): This case dealt with the issue of whether a foreign award could be enforced in India if it was in conflict with the public policy of India. The Supreme Court held that a foreign award could be enforced in India if it was not in conflict with the fundamental policy of Indian law. The court further held that a foreign award would be in conflict with the public policy of India if it was contrary to the most basic notions of morality or justice.
Bhatia International v. Bulk Trading S.A. (2002): This case dealt with the issue of whether Indian courts had the jurisdiction to set aside a foreign award. The Supreme Court held that Indian courts did not have the jurisdiction to set aside a foreign award, but they did have the power to refuse to enforce a foreign award if it was in violation of the fundamental policy of Indian law.
Venture Global Engineering v. Satyam Computer Services Ltd. (2008): This case dealt with the issue of whether Indian courts had the power to stay the enforcement of a foreign award. The Supreme Court held that Indian courts did not have the power to stay the enforcement of a foreign award and that the enforcement of a foreign award could only be stayed if the award was in violation of the fundamental policy of Indian law.
White Industries Australia Ltd. v. Alstom India Ltd. (2011): This case dealt with the issue of whether a foreign award could be enforced in India if it was in conflict with the laws of India. The Supreme Court held that a foreign award could be enforced in India even if it was in conflict with the laws of India, but it would be unenforceable if it was in violation of the fundamental policy of Indian law.
Vodafone International Holdings BV v. Union of India & Ors (2012): In this case, the court considered the scope of the public policy in the context of foreign award enforcement, and held that the term ‘public policy’ must be given a narrow interpretation, and should not be used as a tool of harassment or to seek an unfair advantage.
Conclusion:
In conclusion, the process of executing a foreign arbitration award in India involves ensuring that the award is enforceable under Indian law, filing a petition for execution of the award with the appropriate court, and then enforcing the award through the use of various enforcement mechanisms. However, it’s important to be aware of the grounds on which the execution of a foreign arbitration award can be opposed in India.