CAT-IV

Issues In Enforcement Of Foreign Award

Submitted to- Submitted by-

Mrs. Priya Vijay Vinamra Agrawal
Faculty ,NUSRL Semester- IX
Roll No.- 302
Issues in enforcement of foreign award
Introduction

The growth of international commerce has necessitated the creation of efficient methods of
resolution of disputes like arbitration and enforcement of the consequent awards that
determine the rights and obligations of the parties. The procedure for enforcement and
execution of decrees in India is governed by the Code of Civil Procedure, 1908 while that of
arbitral awards in India is primarily governed by the Arbitration & Conciliation Act, 1996 as
well as the CPC. Domestic and foreign awards are enforced in the same manner as a decree
of the Indian court. This is true even for consent awards obtained pursuant to a settlement
between parties. However, there is a distinction in the process for enforcement of an award
based on the seat of arbitration. While the enforcement and execution of an India - seated
arbitral award would be governed by the provisions of Part I of the Act, enforcement of
foreign seated awards would be governed by the provisions of Part II of the Act.1

Enforcement of Foreign Award

The enforcement of a 'foreign award' is a three-phase process. First, the party seeking to
enforce the award has to make an application under s 47 to the court along with the evidence,
as required in it. Secondly, the party against whom the award is invoked, desiring to resist the
enforcement, is required to furnish proof to the court of the existence of one or more of the
defences set forth in s 48. Finally, if on the basis of the evidence before it, the court is
satisfied that the award is enforceable, it may enforce the award as a decree of the court under
s 49.India is a signatory to the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 1958 as well as the Geneva Convention on the Execution of Foreign
Arbitral Awards, 1927 If a party receives a binding award from a country which is a
signatory to the New York Convention or the Geneva Convention and the award is made in a
territory which has been notified as a convention country by India, the award would then be
enforceable in India. Out of the 196 countries in the world only 48 countries have been
notified by the Central Government as reciprocating countries, with the most recent addition
being Mauritius. Therefore various problems arises in enforcing foreign awards

Issues In enforcement

While enforcing a foreign award there are many such issues that arise :

Non Reciprocal country and non Signatory

The basic premise of Foreign awards rest on the principle of reciprocity. If a country does not
reciprocate it becomes difficult to enforce such foreign awards, further since all the countries
are not signatory to the convention therefore same benefit cannot be given .

Problems of Local-Protectionism
The recognition and enforcement of foreign awards in some cases have occasionally been
confronted with the obstacles from local-protectionism. As mentioned above, the tasks of
recognition and enforcement of foreign awards are authorized to the local competent courts.
On some occasions, the local competent courts could be impacted by the pressure from the
officials of the local governments, to partially protect the local parties who are subject to
enforcement of the foreign awards.

Public Policy

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.

Distrust towards Arbitration

What these problems or actually, loopholes will ultimately lead to is mistrust towards
International Commercial Arbitration by International Business Operators and States, and
will thus defeat the very purpose of Arbitration in the arena of international trade and
commerce.

Extent of Judicial Intervention in Arbitration

The New Law makes it clear that notwithstanding anything contained in any other law for the
time being in force, in matters relating to all kinds of arbitration in India, no judicial authority
shall intervene except as provided in the Law itself (S. 5). This principle of limiting the
judicial intervention in the arbitral process is not a mere replication of Article 5 of the Model
Law that deals with the extent of court intervention. Due to this limitation it is now easier
enforce the foreign awards

Section 48of the Arbitration Act

Under sections 48 and 57 of the AC Act, an Indian court can refuse to enforce a foreign
arbitral award if it falls within the scope of the following statutory defenses:
(i) the parties to the agreement are under some incapacity;(ii) the agreement is void;(iii) the
award contains decisions on matters beyond the scope of the arbitration agreement;(iv) the
composition of the arbitral authority or the arbitral procedure was not in accordance with the
arbitrationagreement;(v) the award has been set aside or suspended by a competent authority
of the country in which it was made(vi) the subject matter of dispute cannot be settled by
arbitration under Indian law, or(vii) the enforcement of the award would be contrary to Indian
public policy.
Although this Section is genuine but sometimes what may be wrong under the Indian act
maybe valid according to the foreign country and therefore sometimes hinder such
enforcement

Conclusion

The position of judicial intervention in India with regard to enforcement of foreign awards
has been through a lot of debate and change. The current position that does not allow judicial
intervention unless a specific provision is present in that regard brings back all the arguments
in favour of more judicial intervention. The concept of public policy that was discussed
earlier also comes into focus for it is only Indian courts that can decide upon the public policy
prevalent and whether the foreign award is in compatibility with it. The requirement of an
agreement reduces greatly, the say that Indian courts will have in enforcing foreign arbitral
awards. A decent balance needs to be struck between intervention of domestic courts and
finality of the award made in outside India