MATS Law School

Conflict of Laws

Project on:
Foreign Awards under New York

Convention
SUBMITTED TO:

SUBMITTED BY:

Mr.Akash Sharma

Shubham Patel

Asst. Professor

B.B.A.LL.B

MATS Law School

Semester -6th

MATS University

MU12BBALLB19

ACKNOWLEDGEMENT

We, hereby, want you to know that we thank our college MATS LAW SCHOOL for providing
us with intellectual and co-operative faculty of Conflict of laws (Mr. Akash Sharma) who
allotted us the project topic: Foreign Awards under New York Convention and gave us the
opportunity to research on the topic and gain knowledge and command over it.
we would also like to thank our Director sir Dr. G.P. Tripathi for providing very informative,
full of knowledge and great variety of books in the college library, at the same time we would
like to thank the librarian Mr. Anil Dewangan to allow us to the refer the books and spend
ample of time in the library. Foreign Awards under New York Convention on which proved to
be a boon for us and our project helped us a lot in understanding the basics of the topic.
Next, we convey our sincere thanks and gratitude to my friends and family for rendering
constructive and valuable suggestions and comments that have helped a lot in improving the
quality and content of the project and also helped us for completing the project in limited time
frame.

Thank You
Shubham Patel
B.B.A.LL.B

DECLARATION

We are here to present project work entitled Foreign Awards under New York Convention
submitted to the MATS University is the original work done by us under the guidance of
Mr.Akash Sharma, MATS Law School, Gullu, Arang, and this project has not performed the
basis for the award of any Degree or diploma and similar project if any. Its for our personal
interest and knowledge.

TABLE OF CONTENTS
S.No.
1
2
3
4
5
6
7
8

Topic
Introduction
Old laws
The Geneva Convention
The Geneva Treaties Critized
The New York Convention
Objective
Provisions
Foreign Arbitral Award in

Page No.
5
6
6
8
10
11
12
14

Indian law
An overview of provision in

14

10

Arbitration and Conciliation Act

Conclusion

27

INTRODUCTION:
With the expansion of international trade in recent years, the business world has been
increasingly reluctant to litigate in courts of law for differences arising from
international commercial transactions. Ability to communicate and commute with

distant places with the utmost speed enables a merchant today, in a few minutes or
hours, to conclude a contract abroad which a generation ago would have taken weeks
or months. When, however, it becomes necessary to resort to the machinery of justice
to settle a dispute connected with that contract, to enforce a judgment in another
country is still a complicated, time-consuming and expensive operation. It is not
surprising, therefore, that businessmen have been turning with increasing frequency
to arbitration as a quicker and simpler means of settling international commercial
disputes.
There has been a noticeable movement in favor of arbitration. Arbitration facilities
and institutions have increased. The favorable trend towards arbitration has been
reflected also in legislative enactments, international treaties, and other measures by
which arbitration has gradually acquired a more solid legal standing.
India today is very much important part of the global economy. The ever-increasing
level of globalization has led to raise international business disputes too. In this
context, the enforcement of foreign judgment and foreign Arbitral Awards becomes
significant. A foreign judgment may be enforced in India by (i) proceedings in
execution and (ii) by a suit upon it, CPC, 1908. An arbitral award is a determination
on the merits by an arbitration tribunal in arbitration, and is analogous to a judgment
in a court of law. Arbitration is particularly popular as a means of dispute resolution
in the commercial sphere. One of the reasons for doing so is that, in international
trade, it is often easier to enforce an arbitration award in a foreign country than it is to
enforce a judgment of the court. The enforcement of foreign arbitration awards is
governed by the Arbitration and Conciliation Act, 1996 through New York
Convention and Geneva Convention and a Non-conventional award will be
enforceable in India under the common law grounds of justice, equity and good
conscience.

The Old Law

Prior to January 1996, the law of enforcement of arbitration awards in India was
spread between three enactments. Enforcement of domestic awards was dealt with
under a 1940 Act. Enforcement of foreign awards was divided between two statutes
a 1937 Act to give effect to the Geneva Convention awards and a 1961 Act to give
effect to the New York Convention awards.
The Geneva Convention
On the international level, there are numerous bilateral treaties including provisions
for the enforcement of arbitral awards. As to multilateral treaties, the most significant
developments since the First World War have been the Geneva Protocol on
Arbitration Clauses of 1923, the Geneva Convention on the Execution of Foreign
Arbitral Awards of 1927, and the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 1958.
The application of both treaties is limited to persons who are subject to the
jurisdiction of different contracting states. Under the Protocol, an arbitration
agreement relating to existing or future differences is recognized as valid, that is,
irrevocable. The agreement may relate to any matter capable of settlement by
arbitration, but the contracting states may limit their obligations to commercial
contracts. If a suit is brought despite the arbitration agreement, courts are required to
refer the parties to the arbitrators, except where the agreement or the arbitration
cannot proceed or has become inoperative. The Convention is supplementary to the
Protocol in that it applies to awards made pursuant to arbitration agreements covered
by the Protocol. Only states parties to the Protocol may become parties to the
Convention. Each contracting state is required to recognize as binding and to enforce,
in accordance with the procedure of the forum, awards rendered in the territory of

another contracting state, on the following conditions:

the award was rendered pursuant to arbitration agreement valid under the law
applicable to the agreement;
The object of the award is capable of settlement by arbitration under the law of the
country of the forum;
The award was rendered by the arbitral tribunal provided in the arbitration
agreement or constituted as agreed by the parties and in conformity with the law
governing the arbitration procedure;
The award has become final and no proceedings are pending for the purpose of
contesting the validity of the award. An award still subject to opposition or appeal or
the equivalent is not regarded as final;
The recognition or enforcement of the award would not be contrary to public policy
or the "principle of the law" of the forum.
Even where these conditions have been met, recognition and enforcement of the
award must still be refused, if the court finds that
(a) The award has been annulled in the country where it was rendered; or
(b) The party against whom the award has been invoked did not have sufficient
notice, or being under a legal incapacity, was not properly represented; or
(c) The award deals with a dispute not included under the terms of the agreement, or

the award goes beyond the scope of the agreement. Furthermore, a court may refuse
enforcement or give the losing party reasonable time to seek annulment if that party
proves that under the law of the country where the arbitration took place, there is a
ground (other than those specified in the Convention) to contest the validity of the
award in a court of law.
The Geneva treaties have been criticized for legal and practical reasons:
a) There is some ambiguity in the expression subject to the jurisdiction of different
Contracting States, which defines the scope of application of the treaties. It is not
clear whether it means subject to the sovereignty of a state in the sense of nationality,
or subject to the jurisdiction of the courts of a state by reason of residence, domicile,
or other criteria.
b) It has also been observed that a plaintiff seeking enforcement in one country
would find it particularly difficult to prove that the arbitral tribunal was constituted in
conformity with the law of another country and that the award has become final in
that country.
c) Finally, the possibility of contesting the validity of an award on grounds other than
those listed in the Convention has been regarded as making it too easy for a
recalcitrant defendant to avoid the enforcement of an award by resorting to
obstructionist tactics.

Later Developments
This state of affairs prompted the International Chamber of Commerce, which had
originally taken the initiative leading to the Geneva Convention, to submit to the

United Nations Economic and Social Council a proposal for a new convention on the
enforcement of international arbitral awards. In the opinion of the ICC the main
defect of the Geneva Convention was the condition that, to be enforced, an arbitral
award must be strictly in accordance with the rules of procedure laid down in the
law of the country where arbitration took place. In order to meet the requirements of
international trade, the ICC advocated the idea of an international award, i.e., an
award completely independent of national laws, and suggested that arbitral awards
based on the will of the parties should be automatically enforceable. The ICC draft
sought to attain this purpose mainly by widening the scope of application and
providing that, as a condition for enforcement, the composition of the arbitral
authority and the arbitral procedure must be in accordance with the agreement of the
parties. Only in the absence of such agreement, must they conform to the law of the
country where arbitration took place. The other conditions for enforcement in the
ICC draft did not differ greatly from those of the Geneva Convention, except for the
omission of the requirement of finality of awards, regarded by the ICC as
encouraging dilatory measures.

THE NEW YORK CONVENTION

The United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards

History
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards
aims to facilitate the recognition and enforcement of arbitral awards generally
between private parties. It succeeds the 1927 Geneva Convention on the Execution of
Foreign Arbitral Awards and the 1923 Geneva Protocol on Arbitration Clauses (which
also provided for reciprocal recognition and enforcement abroad of certain arbitration
agreements and awards, but had serious shortcomings).
It is described as the most successful treaty in private international law and is adhered
to by more than 140 nations. The Convention was established as a result of
dissatisfaction with the Geneva Protocol on Arbitration Clauses of 1923 and the
Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. These
conventions suffered from certain shortcomings. For example, they excluded from
their application awards rendered in a state not a party to the Geneva Convention,
and required orders enforcing the award in the country where the award was rendered
as well as the enforcing country. They also placed the burden of proof on the party
seeking to enforce the award, while at the same time making it all too easy for a
recalcitrant defendant to avoid enforcement by resorting to delaying tactics. The New
York Convention sought to remedy these problems.
The initiative to replace the Geneva treaties came from the International Chamber of
Commerce (ICC), which issued a preliminary draft convention in 1953. The ICCs
initiative was taken over by the United Nations Economic and Social Council, which
produced an amended draft convention in 1955. That draft was discussed during a
conference at the United Nations Headquarters in May-June 1958, which led to the
establishment of the New York Convention.
Objectives

The following briefly describes the two basic actions contemplated by the New York
Convention:
a) The recognition and enforcement of foreign arbitral awards, i.e., arbitral awards
made in the territory of another State: This field of application is defined in article I.
The general obligation for the Contracting States to recognize such awards as binding
and to enforce them in accordance with their rules of procedure is laid down in article
III. A party seeking enforcement of a foreign award needs to supply to the court: (a)
the arbitral award; and (b) the arbitration agreement (article IV). The party against
whom enforcement is sought can object to the enforcement by submitting proof of
one of the grounds for refusal of enforcement which are imitatively listed in article V,
paragraph 1. The court may on its own motion refuse enforcement for reasons of
public policy as provided in article V, paragraph 2. If the award is subject to an action
for setting aside in the country in which, or under the law of which, it is made (the
country of origin), the foreign court before which enforcement of the award is
sought may adjourn its decision on enforcement (article VI). Finally, if a party
seeking enforcement prefers to base its request for enforcement on the courts
domestic law on enforcement of foreign awards or bilateral or other multilateral
treaties in force in the country where it seeks enforcement, it is allowed to do so by
virtue of the so called more-favorable-right-provision of article VII, paragraph 1.
b) The referral by a court to arbitration: Article II, paragraph 3, provides that a court
of a Contracting State, when seized of a matter in respect of which the parties have
made an arbitration agreement, must, at the request of one of the parties, refer them
to arbitration.
The influence of the New York Convention on the development of international
commercial arbitration has been phenomenal. The New York Convention solidified
two essential pillars of the legal framework by providing for the obligatory referral

by a national court to arbitration in the event of a valid arbitration agreement and for
the enforcement of the arbitral award. The New York Convention is probably the
main reason why arbitration is the preferred method for the resolution of international
business disputes.
Provisions
The New York Convention applies to all arbitral awards rendered pursuant to a
written arbitration agreement in a country other than the state of enforcement. The
New York Convention also applies to arbitral awards not considered as domestic
awards by the enforcing state. The term arbitral award is not defined, but includes
awards made by ad hoc tribunals as well as permanent arbitral tribunals. The
nationality of the parties is irrelevant for purposes of the convention. Under Article I
(3), contracting states can choose to limit the application of the convention to arbitral
awards rendered in another contracting state or to awards relating to commercial
disputes.
In order to obtain recognition and enforcement of an arbitral award under the New
York Convention, a party has only to supply the enforcing court with a certified copy
of the arbitral award and the arbitration agreement. If an arbitral award is
encompassed by the New York Convention, contracting states must recognize the
award as binding and enforce it in accordance with local rules of procedure. They
may not impose more onerous conditions, higher fees, or charges on the recognition
or enforcement of the award than prevail with respect to domestic arbitral awards.
If a party objects to enforcement, it has the burden of proving that the award should
not be enforced. The objecting party must argue from Article V (1) which provides a
list of grounds for refusing enforcement:
a) Invalidity of the arbitration agreement;

b) Violation of due process;

c) Excess by arbitrator of his authority;
d) Irregularity in the composition of the arbitral tribunal or in the arbitral procedure;
and
e) Award not binding, suspended or set aside in the country of origin.
Additionally, the court can refuse to enforce the award under Article V (2) if its
subject matter is incapable of settlement by arbitration under the enforcing country's
laws or if recognition or enforcement of the award would violate the enforcing
country's public policy.
As the Geneva Convention became virtually otiose (by reason of Art VII of the New
York Convention), enforcement of foreign awards, for all practical purposes, came
under the 1961 Act and domestic awards came under the 1940 Act. The enforcement
regime between these two statutes was, however, quite distinct. The 1961 Act
confined challenge to an arbitral award only on the limited grounds permitted under
the New York Convention.
C. THE NEW REGIME
In January 1996, India enacted a new Arbitration Act. This Act repealed all the three
previous statutes (the 1937 Act, the 1961 Act and the 1940 Act).The new Act has two
significant parts. Part I provides for any arbitration conducted in India and
enforcement of awards there under. Part II provides for enforcement of foreign
awards. Any arbitration conducted in India or enforcement of award there under
(whether domestic or international) is governed by Part I, while enforcement of any
foreign award to which the New York Convention or the Geneva Convention applies,
is governed by Part II of the Act.

FOREIGN ARBITRAL AWARDS IN INDIAN LAW:

An Overview of the Provisions in the Arbitration and Conciliation Act

This is covered by Part II of the 1996 Act, though due to a recent Supreme Court
decision, the distinction between the grounds and procedures in Part I and Part II has
got blurred. The provisions of Part II of the Act give effect to the New York
Convention and the Geneva Convention.
1. Foreign Award Defined
In order to be considered as a foreign award (for the purposes of the Act), the same
must fulfill two requirements. First it must deal with differences arising out of a legal
relationship (whether contractual or not) considered as commercial under the laws in
force in India. The expression commercial relationship has been very widely
interpreted by Indian courts. The Supreme Court in the case of RM Investments
Trading Co Pvt. Ltd v Boeing Co & Anor, while construing the expression
commercial relationship, held:
The term commercial should be given a wide interpretation so as to cover matters
arising from all relationships of a commercial nature, whether contractual or not. The
second requirement is more significant and that is that the country where the award
has been issued must be a country notified by the Indian government to be a country
to which the New York Convention applies.
The second requirement is more significant and that is that the country where the
award has been issued must be a country notified by the Indian government to be a
country to which the New York Convention applies. Only a few countries have been

notified so far and only awards rendered therein are recognized as foreign awards and
enforceable as such in India.
An interesting issue came up before the Supreme Court as to what would happen in a
case where a country has been notified but subsequently it divides or disintegrates
into separate political entities. This came up for consideration in the case of
Transocean Shipping Agency Pvt. Ltd v Black Sea Shipping & Ors. Here the venue
of arbitration was Ukraine which was then a part of the USSR a country
recognized and notified by the Government of India as one to which the New York
Convention would apply. However, by the time disputes arose between the parties the
USSR had disintegrated and the dispute came to be arbitrated in Ukraine (which was
not notified). The question arose whether an award rendered in Ukraine would be
enforceable in India notwithstanding the fact that it was not a notified country.
Both the High Court of Bombay (where the matter came up initially) and the
Supreme Court of India in appeal, held that the creation of a new political entity
would not make any difference to the enforceability of the award rendered in a
territory which was initially a part of a notified territory. On this basis the court
recognized and upheld the award. This decision is of considerable significance as it
expands the lists of countries notified by the government by bringing in a host of new
political entities and giving them recognition in their new avatar also. At another
level the judgment demonstrates the willingness of Indian courts to overcome
technicalities and lean in favor of enforcement.
2. Comparison with Domestic Enforcement Regime
There are two fundamental differences between enforcement of a foreign award and a
domestic award. A domestic award does not require any application for enforcement.
Once objections (if any) are rejected, the award is by itself capable of execution as a

decree. A foreign award, however, is required to go through an enforcement

procedure. The party seeking enforcement has to make an application for the said
purpose. Once the court is satisfied that the foreign award is enforceable, the award
becomes a decree of the court and executable as such. The other difference between
the domestic and foreign regime is that (unlike for domestic awards) there is no
provision to set aside a foreign award. In relation to a foreign award, the Indian
courts may only enforce it or refuse to enforce it they cannot set it aside. This
lacuna was sought to be plugged by the Supreme Court in the recent decision of
Venture Global where the Court held that it is permissible to set aside a foreign award
in India applying the provisions of s 34 of Part I of the Act.
3. Conditions for Enforcement
The conditions for enforcement of a foreign award are as per the New York
Convention. The only addition being an Explanation to the ground of public policy
which states that an award shall be deemed to be in conflict with the public policy of
India if it was induced or affected by fraud or corruption.
Indian courts have narrowly construed the ground of public policy in relation to
foreign awards. In Renu Sagar Power Co v General Electrical Corp , the Supreme
Court construed the expression public policy in relation to foreign awards as
follows:
This would mean that public policy in s 7(1)(b)(ii) has been used in narrower sense
and in order to attract to bar of public policy the enforcement of the award must
invoke something more than the violation of the law of India Applying the said
criteria it must be held 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.
4. Judicially Created New Procedure and New Ground for
Challenge to Foreign Award
As noticed above, there is no statutory provision to set aside a foreign award under
the 1996 Act. Foreign awards may be set aside or suspended in the country in which
or under the laws of which the award was made but there is no provision to set aside
a foreign award in India. This fundamental distinction between a foreign and a
domestic award has been obliterated by the Supreme Court in the recent case of
Venture Global. Here, the Supreme Court was concerned with a situation where a
foreign award rendered in London under the Rules of the London Court of
International Arbitration (LCIA) was sought to be enforced by the successful party
(an Indian company) in the District Court, Michigan, United States of America
(USA). The dispute arose out of a joint venture agreement between the parties. The
respondent alleged that the appellant had committed an event of default under the
shareholders agreement and as per the said agreement it exercised its option to
purchase the appellants shares in the joint venture company at book value. The sole
arbitrator appointed by the LCIA allowed the claim and directed the appellant to
transfer its shares to the respondent. The respondent sought to enforce this award in
the USA. The appellant filed a civil suit in an Indian district court seeking to set aside
the award. The district court, followed by the High Court, on appeal, dismissed the
suit holding that there was no such procedure envisaged under Indian law. However,
the Supreme Court on appeal, extending its earlier decision in the case of Bhatia
International v Bulk Trading, held that even though there was no provision in Part II
of the 1996 Act providing for challenge to a foreign award, a petition to set aside the
same would lie under s 34 Part I of the 1996 Act (i.e. it applied the domestic award
provisions to foreign awards). The court held that the property in question (shares in
an Indian company) is situated in India and necessarily Indian law would need to be

followed to execute the award. In such a situation the award must be validated on the
touchstone of public policy of India and the Indian public policy cannot be given a go
by through the device of the award being enforced on foreign shores.
The Venture Global case is far reaching as it creates a new procedure and a new
ground for challenge to a foreign award (not envisaged under the 1996 Act). The new
procedure is that a person seeking to enforce a foreign award has not only to file an
application for enforcement under s 48 of the 1996 Act, it has to meet an application
under s 34 of the 1996 Act seeking to set aside the award. The new ground is that not
only must the award pass the New York Convention grounds incorporated in s 48, it
must pass the expanded public policy ground created under s 34 of the 1996 Act. In
practice, the statutorily enacted procedure for enforcement of a foreign award would
be rendered superfluous till the application for setting aside the same (under s 34) is
decided. The statutorily envisaged (narrow) public policy grounds for challenge to an
award would also be rendered meaningless as the award would have to meet the
expanded public policy test (and virtually have to meet a challenge to the award on
merits) before it can be enforced. The Venture Global case thus largely renders
superfluous the statutorily envisaged mechanism for enforcement of foreign awards
and replaces it with judge made law. Moreover, in so far as the judgment permits a
challenge to a foreign award on the expanded interpretation of public policy it is per
incuriam, as a larger, three Bench decision, in the case of Renu Sagar holds to the
contrary. Further Saw Pipes(on which Venture Global relies for this proposition) had
clearly confined its expanded interpretation of public policy to domestic awards
alone lest it fall foul of the Renu Sagar case (which had interpreted the expression
narrowly). The Supreme Court in Venture Global did not notice this self-created
limitation in Saw Pipes, nor did it notice the narrow interpretation of public policy in
Renu Sagar.

5. Procedural Requirements
The procedure for enforcement of arbitral awards is pretty much the same in the new
Act as under the Foreign Awards (Recognition and Enforcement) Act, 1961 and the
Arbitration (Protocol and Convention), Act 1937. The reason that there are no
qualitative differences is because the New York Convention and the Geneva
Convention themselves provide for the procedure for enforcement which are merely
given statutory recognition by way of an enabling legislation and the same continues
under the new Act.
a. Enforceable awards
There are several requirements for a foreign arbitral award to be enforceable under
the AC Act.
(i) Commercial transaction: The award must be given in a convention country to
resolve commercial disputes arising out of a legal relationship. In the case of RM
Investment & Trading vs. Boeing, the Supreme Court observed that the term
"commercial" should be liberally construed as having regard to manifold activities
which are an integral part of international trade.
(ii) Written agreement: The Geneva Convention and the New York Convention
provide that a foreign arbitral agreement must be made in writing, although it need
not be worded formally or be in accordance with a particular format.
(iii) Agreement must be valid: The foreign award must be valid and arise from an
enforceable commercial agreement. In the case of Khardah Company vs. Raymon &
Co (India), the Supreme Court held that an arbitration clause cannot be enforceable
when the agreement of which it forms an integral part is declared illegal.
(iv) Award must be unambiguous: In the case of Koch Navigation vs. Hindustan

Petroleum Corp, the Supreme Court held that courts must give effect to an award that
is clear, unambiguous and capable of resolution under Indian law.
A person who intends to enforce a foreign arbitral award should apply to the court
and produce the following documents:
(a) Original award or copy thereof, duly authenticated in the manner required by the
law of the country in which it was made.
(b) Original agreement for arbitration or a duly certified copy thereof,
(c) Such evidence as may be necessary to prove that the award is a foreign award.
(d) Translations, if necessary shall also be furnished.

b. Relevant Court
The Indian Supreme Court has accepted the principle that enforcement proceedings
can be brought wherever the property of the losing party may be situated. This was in
the case of Brace Transport Corp of Monrovia v Orient Middle East Lines Ltd. The
court here quoted a passage from Redfern and Hunter on Law and Practice of
International Commercial Arbitration, inter alia, as follows:
A party seeking to enforce an award in an international commercial arbitration may
have a choice of country in which to do so; as it is sometimes expressed, the party
may be able to go forum shopping. This depends upon the location of the assets of
the losing party. Since the purpose of enforcement proceedings is to try to ensure
compliance with an award by the legal attachment or seizure of the defaulting partys
assets, legal proceedings of some kind are necessary to obtain title to the assets
seized or their proceeds of sale. These legal proceedings must be taken in the state or
states in which the property or other assets of the losing party are located.

c. Time Limit
The 1996 Act does not prescribe any time limit within which a foreign award must be
applied to be enforced. However, various High Courts have held that the period of
limitation would be governed by the residual provision under the Limitation Act 1963
(No 36 of 1963), i.e. the period would be three years from the date when the right to
apply for enforcement accrues. The High Court of Bombay has held that the right to
apply would accrue when the award is received by the applicant.
d. Grounds for Refusal of Enforcement
Section 48 for New York convention and Section 57 for Geneva convention of the
Act of 1996 lays down the grounds where the enforcement may be refused it the
objector can prove one of the following grounds:
i) Incapacity: that a party to the arbitration agreement was, under the law applicable
to him, under some incapacity,
ii) Invalid Arbitration Agreement: that the arbitration agreement was invalid under
the law to which the parties subjected it, or, failing any indication thereon, under the
law of the country where the award was made,
iii) Due process: that a party was not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was otherwise unable to present his
case,
iv) Jurisdictional defect: that the award deals with a difference not contemplated by
the terms of arbitration agreement.

v) That the composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or failing such agreement, with the law
of the country where the arbitration took place.
vi) That the award has not yet becomes binding on the parties, or has been set aside
or suspended by a competent authority of the country, in which, or under the law of
which, it was made.
e. Ex officio Court Jurisdiction
The section further lays down the grounds where the court may also refuse to enforce
a foreign award if it finds:
i) Non-arbitrability - That the award is in respect of a matter which is not capable of
settlement by arbitration under the laws of India.
In the case of Fuerst Day Lawson ltd. V/s Jindal Export ltd, Supreme Court held that
once the court determines that a foreign award is enforceable it can straightaway be
executed as a decree. In other words, no other application is required to convert the
judgment into a decree.
ii) Contrary to Public Policy - That the enforcement of the foreign award would be
contrary to public policy of India. The violation of rules of public policy is a ground
for refusal of enforcement or a ground for setting aside. Indian law does not restrict
(or extend) this ground to violation of International Public Policy even where the
arbitration is an international commercial arbitration. Where enforcement of a foreign
award is sought in any Court in India, the rules of public policy applicable will only
be the Public Policy of India.
In Renu sagars case, whilst construing the provisions of Sect. 7(1)(b)(ii) of the

Foreign Awards Act (which reproduced Art. V (2) (b) of the New York Convention),
the Supreme Court of India held that in order to attract the bar of public policy the
enforcement of the award must involve something more than violation of Indian law;
the enforcement of a foreign award would be refused on the ground that it is contrary
to public policy if such enforcement was contrary to the fundamental policy of
Indian law or justice or morality. It was held that any violation of the Foreign
Exchange Regulation Act, which was enacted for the national economic interest,
would be contrary to the public policy of India. The enforceability of a foreign award
could not be resisted as violating the public policy of India where an award, however,
directed payment of compound interest, or directed payment of compensatory
damages or where the arbitral tribunal had awarded an amount higher than should
have been awarded or where costs awarded by the arbitral tribunal were excessive.
In Supreme Court case of Oil & Natural Gas Corporation Ltd. vs. Saw Pipes Ltd., the
definition of public policy in section 34 of the Act was controversially expanded
such that anything which is against any Indian law is deemed to be opposed to Indian
public policy. This means that any foreign awards that are subject to the application
of section 34 can be challenged under wider grounds than would usually be permitted
under the New York Convention alone.
f. Enforcement of Non Convention Awards
In the case of Badat & Co. Bombay V/s East India Trading Co. the Supreme Court
has ruled that such a Non-conventional award will be enforceable in India under the
common law on grounds of justice, equity and good conscience.
In case of Bhatia International V/s Bulk Trading S.A. & Anr., The Supreme Court
held that The 1996 Act nowhere provides that its provisions are not to apply to
international commercial arbitrations which take place in a non-convention country.

How to Improvement
While it would be unrealistic to expect the judiciary to enforce an award without
vetting the arbitral process by way of nuances of the national legal system such as
due process and evidentiary standards, in order to facilitate the International
Arbitration process, it is important to exercise judicial restraint in scrutinizing the
International arbitral awards. Where absolute arbitral finality is inimical to a rational
system of public policy as recognized by the Indian Supreme Court in several
judgments and on the other hand, it is necessary for an effective international arbitral
system. Balancing the conflicting claims of public policy and arbitral finality is
difficult. A new and narrower definition of the term public policy is required in the
era of globalization to encourage the foreign investors to carry out healthy
commercial relationships in India. A globally compatible definition of public policy
should be adopted or the court should abdicate the public policy to some extent so as
to ensure the edifice of International Commercial Arbitration an arbitral award
might run contrary to the public policy of India but it might not be against the public
policy at the International level and might be beneficial too to that party.
Parties Must Specifically Exclude Application of Part I of the Act
Some authors have opined that until the Venture Global decision is reversed or
overruled by a larger bench of the Supreme Court, parties doing business in India or
elsewhere with Indian parties should include in their arbitration provision a clause
specifically excluding the applicability of Part I of the 1996 Act. This should make
Section 34 inapplicable to the award. Further, it is best to make this exclusion express
and not rely on the Court's statement that the exclusion can be implied because it is
not clear as to what the court would find to be an acceptable implied exclusion. For
example, in INDTEL Technical Services Pvt. Ltd. v. W.S. Atkins PLC, the parties
memorandum of understanding indicated that the construction, validity and

performance of the agreement would be governed by and construed in accordance

with laws of England and Wales. However, it was held that Indian courts had
jurisdiction to appoint the arbitrator under Section 11(9) because the parties had not
chosen the seat of arbitration. The Court did not consider the choice of foreign law as
an implied exclusion of Part I by the parties. This results in uncertainty about the
enforcement of foreign awards. It is essential to remedy this situation.

The Legislature Must Take Steps to Preserve the Sanctity of the ADR movement
Some other suggestions have called for India's Legislature ought to take steps to
curtail unnecessary judicial legislation and derailment of arbitration proceedings in
the garb of filling lacunae in the 1996 Act. The international network of reciprocal
enforcement treaties of universal disposition should be adopted by India to foster the
respect for the International Arbitration.
Judiciary Must Respect and Support Globally Accepted Dispute Resolution
Mechanisms
It has been said that India's judiciary should adopt an internationally acceptable
approach to the enforcement of a foreign award under the New York Convention and
create an arbitration friendly environment. Its courts should not hesitate to appoint
amicus curiae or experts whenever faced with issues relating to interpretation of New
York Convention provisions. In fact, since most judges sitting on the lower courts
have little or no experience dealing with issues arising out of the New York
Convention, the Indian Bar should hold conferences, seminars and training programs
to bring these issues to the bench and discuss issues of concern.
The Indian courts continued attitude to not resist the temptation to intervene in

arbitrations is harmful. Primarily for a legal system which is plagued by endemic

delays, a pro-arbitration stance would reduce the pressure on courts. Arbitration is not
merely an attractive and lucrative option for resolution of disputes, it is absolutely
essential to maintain the integrity of the Indian legal system so that the trust in it is
maintained and India should work to safe the citadel of International Commercial
Arbitration.
]

Conclusion
Viewed in its totality India does not come across as a jurisdiction which carries antiarbitration bias. The immediate purpose of the new Act was to comprehensively
cover international commercial arbitrations and conciliation as well as domestic
arbitration and conciliation; to minimize the supervisory role of courts in the arbitral

process and to provide that every final arbitral award is enforced in the same manner
as if it were a decree of the court and this seems to have been achieved by the express
provisions of the new Act and the interpretative jurisprudence generated by the
Supreme Court.

References:
Bibilography:

Markanda, P. C., Law relating to Arbitration and Conciliation,

LexisNexis Butterworths Wadhwa Nagpur, (2009)Seventh Edition

Websites:
http://www.kaplegal.com/articles/AIAJ_V4_N1_2008_Book_(Sumeet_Ka
chwaha).pdf last accessed on 20 February 2011.
http://jurisonline.in/2010/10/enforcement-of-foreign-arbitral-awards/ last
accessed on 17 February 2011
http://legalsutra.org/867/enforcement-of-foreign-arbitral-awards/ last
accessed on 18 February 2011
www.jstor.org/stable/837713 last accessed on 20 February 2011
lawcommissionofindia.nic.in/51-100/report76.pdf last accessed on 19
January 2011