TOPIC: ENFORCEMENT OF FOREIGN

AWARDS SUBJECT: ALTERNATIVE

DISPUTE RESOLUTION

Submitted By;

ANKIT SHARMA

Roll No. 272/17

Section ‘K’
 CONTENTS
SL.NO TOPIC
1. INTRODUCTION
2. ENFORCEMENT OF DOMESIC
AWARDS
3. ENFORCEMENT OF FOREIGN
AWARDS
4. APPROPRIATE FORUM AND
LIMITATION
5. LIMITATION PERIOD
6. MODES OF EXECUTION
7. ARBITRATION AND
CONCILIATION
(AMENDMENT) ACT,
2015
8. CONCLUSION
INTRODUCTION

Enforcement of Awards in India

The growth of international commerce has necessitated the creation of
efficient methods of resolution of disputes. In some situations, securing an
award or a final judgment from the courts may only be a battle half won;
this is especially true in the Indian context. We have come across situations
where the opposite parties decide to not participate in the arbitral process or
abandon it mid-way. The enforcement of these awards/judgments where the
party is in absentio is sometimes more complicated than one where the
opposite party has participated in the proceedings. In some situations,
objections have been raised even against costs awarded by the tribunal or
the jurisdiction of the tribunal or court, as the case may be. Therefore, the
stage of enforcement of an award or decree warrants a high degree of
caution. The procedure for enforcement and execution of decrees in India is
governed by the Code of Civil Procedure, 1908 (“CPC”) while that of arbitral
awards in India is primarily governed by the Arbitration & Conciliation Act,
1996 (“Act”) 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 (“domestic award”) would be governed by the
provisions of Part I of the Act, enforcement of foreign - seated awards
(“foreign award”) would be governed by the provisions of Part II of the Act.
A few steps that are crucial for ensuring successful enforcement of arbitral
awards and execution of decrees are: Making effective service on opposite
party/ judgment debtor is crucial to prevent objections at later stage; Taking
necessary steps by way of attachment/notice/arrest/appointment of
receiver or in another manner; And, that principles of natural justice apply
to even execution proceedings.
ENFORCEMENT OF DOMESTIC AWARDS
An award holder would have to wait for a period of three months after the
receipt of the award prior to applying for enforcement and execution. During
the intervening period, the award may be challenged in accordance with
Section 34 of the Act. After expiry of the aforesaid period, if a court finds the
award to be enforceable, at the stage of execution, there can be no further
challenge as to the validity of the arbitral award. Prior to the recent
Arbitration and Conciliation (Amendment) Act, 2015 (“Amendment Act”), an
application for setting aside an award would tantamount to a stay on
proceedings for execution of the award. However, by virtue of the
Amendment Act, a party challenging an award would have to move a
separate application in order to seek a stay on the execution of an award.
 ENFORCEMENT OF FOREIGN AWARDS
India is a signatory to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”)
as well as the Geneva Convention on the Execution of Foreign Arbitral
Awards, 1927 (“Geneva Convention”). 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. The enforcement of a foreign award in India is a two-
stage process which is initiated by filing an execution petition. Initially, a
court would determine whether the award adhered to the requirements of
the Act. Once an award is found to be enforceable it may be enforced like a
decree of that court. However, at this stage parties would have to be mindful
of the various challenges that may arise such as objections taken by the
opposite party, and requirements such as filing original/ authenticated copy
of the award and the underlying agreement before the court.

Requirements for enforcement of foreign awards

Section 47 of the Act provides that the above “shall” be produced before the
court, at the time of the application for enforcement of the foreign award.
However, in a recent judgment, the Supreme Court of India interpreted that
the word “shall” appearing in Section 47 of the Act relating to the production
of the evidence as specified in the provision at the time of application has to
be read as “may”.4 It further observed that such an interpretation would
mean that a party applying for enforcement of the award need not
necessarily produce before the court a document mentioned therein “at the
time of the application”. Nonetheless, it further clarified that such
interpretation of the word “shall” as “may” is restricted “only to the initial
stage of the filing of the application and not thereafter.”

As per section 48 (1) of the Act, a foreign award may not be enforced in
India if it is proved by the party against whom it is sought to be enforced
that:

1. The parties to the agreement were under some incapacity to perform under
the law to which they were subjected to and in the absence of any mention
of such law, the law of the country where the award was made, i.e. the place
of arbitration, or,
2. The agreement was invalid under the law to which the parties have
subjected it and in the absence of any mention of such law, the law of the
country where the award was made, or, a fair trial was not conducted by the
tribunal passing the award by failing to adhere to the principles of fair
hearing, or,
3. The award passed was partly or wholly beyond the scope of the arbitration
agreement, in which case the part of the award exceeding the scope of
submission to arbitration may be separated from rest of the award, or,
4. The composition of the arbitral tribunal or authority and/or the procedure
of its appointment was not in accordance with the arbitration agreement or
in the absence of any mention of the same in the agreement, it was not in
accordance with the law of the country where the arbitration proceedings
were held, i.e. the place of arbitration, or,
5. The award has not yet been made binding on the parties or has been set
aside or suspended by a competent authority of the country which is either
the place or seat of arbitration.
The court may call upon such party making an application under section 48
(1) to provide evidence to prove the existence of any or all of the grounds for
refusal of enforcement of award as mentioned above.

As per section 48 (2) of the Act, a foreign award may not be enforced in
India if it is found by the court in India that:

1. The settlement of the award is not as per Indian arbitration laws, or

2. The enforcement of the award is contrary to the public policy of India.

This defense should be construed narrowly. It has to be something more

than mere contravention of law to attract this defense. An award is said to
be in conflict with the public policy of India if it has been affected by fraud
or corruption; or it was in violation of the of the Act; or it was in
contravention with the fundamental policy of Indian law or basic principles
of morality or justice.
Section 48 only provides grounds for refusal of enforcement of foreign award
as mentioned in A and B and it does not permit the court to make a review
of the foreign award on the merits of the case; does not permit the court to
exercise its appellate jurisdiction over the foreign award; and does not
permit the court to enquire as to whether some error has been committed by
the tribunal while passing the foreign award.
It is further provided that if an application for the setting aside or
suspension of the award has been made to a competent authority, the court
may, if it considers it proper adjourn the decision on the enforcement of the
award and may also, on the application of the party claiming enforcement of
the award, order the other party to give suitable security.
Enforcement of arbitral awards: Appropriate forum &
limitation
The Supreme Court in its recent ruling in, Sundaram Finance Ltd. v.
Abdul Samad and Anr clarified that an award holder can initiate execution
proceedings before any court in India where assets are located. In case the
subject-matter of the arbitration is of a specified value, commercial courts
established under the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act 2015 (“Commercial
Courts Act”) would have jurisdiction, as given below:

I. Award arising out of an India seated arbitration (being an

international commercial arbitration): By virtue of the Commercial Courts
Act and the Amendment Act, the Commercial Division of a High Court where assets
of the opposite party lie shall have jurisdiction for applications relating to
enforcement of such awards if the subject matter is money. In case of any other
subject matter, Commercial Division of a High Court which would have jurisdiction
as if the subject matter of the award was a subject matter of a suit shall have
jurisdiction, i.e., where the opposite party resides or carries on business or
personally works for gain.

II. Award arising out of an India seated arbitration (not being an

international commercial arbitration): As per the Commercial Courts Act and
the Amendment Act, for such cases, the appropriate court would be the
Commercial Court exercising such jurisdiction which would ordinarily lie before
any principal Civil Court of original jurisdiction in a district, as well as the
Commercial Division of a High Court in exercise of its ordinary original civil
jurisdiction.
Limitation period for enforcement of awards
i. Domestic awards

Since arbitral awards are deemed as decrees for the purposes of enforcement (as
observed by the Supreme Court in M/s Umesh Goel v. Himachal Pradesh
Cooperative Group Housing Society, the Limitation Act 1963 applies to
arbitrations. The limitation period for enforcement of such an award is twelve
years.

ii. Foreign awards

The Act provides that certain conditions have to be assessed prior to enforcement of
a foreign award, and where the court is satisfied that the foreign award is
enforceable, the award would be deemed to be a decree of that court. The Supreme
Court in M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd, held that under the
Act a foreign award is already stamped as the decree. It observed that, “In one
proceeding there may be different stages. In the first stage the Court may have to
decide about the enforceability of the award having regard to the requirement of the
said provisions. Once the court decides that foreign award is enforceable, it can
proceed to take further effective steps for execution of the same. There arises no
question of making foreign award as a rule of court/decree again.” Accordingly,
courts have been of the view that the limitation period for enforcement of a foreign
award would be the limitation period for execution of decrees, i.e., twelve years.
Modes of Execution
Since foreign awards, domestic awards and foreign judgments (from
reciprocating countries) are to be executed in India as a decree passed by an
Indian court, the modes of execution for foreign awards and judgments and
domestic awards and judgments are also common. On an application made
by the decree-holder for execution of the decree/ award (whether foreign or
domestic), the court may order the execution of the decree / award by one or
more of the following modes:

1. By delivery of any property specifically decreed;

2. By attachment and sale or by sale without attachment of any property;
3. By arrest and detention in prison;
4. By appointing a receiver; and
5. By any other manner as the nature of the relief granted may require.

In case of decrees involving payment of money, execution by detention in

prison shall be ordered only after the judgment debtor is given an
opportunity of showing cause as to why he should not be imprisoned. In
doing so, the court has to record in writing and be satisfied that the
judgment debtor would obstruct or delay the execution of the decree. An
executing court cannot go behind the decree, that is, it does not have the
power to modify the terms of the decree and must take it as it stands. In
case there are multiple decree-holders, the assets, after deducting the costs
of realization, shall be distributed among all such persons.
ARBITRATION AND CONCILIATION (AMENDMENT)
ACT 2015
Under the Arbitration and Conciliation (Amendment) Act, 2015, There are
two avenues available for the enforcement of foreign awards in India, viz.,
the New York Convention and the Geneva Convention, as the case may be.

Enforcement under the New York Convention

Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015

deals with foreign awards passed under the New York Convention.
The New York Convention defines "foreign award" 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 the 11th day of October, 1960-

(a). In pursuance of an agreement in writing for arbitration to which the

Convention set forth in the First Schedule applies, and

(b). 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.
From the abovementioned conditions, it is clear that there are two pre-
requisites for enforcement of foreign awards under the New York
Convention. These are: The country must be a signatory to the New York
Convention; and the award shall be made in the territory of another
contracting state which is a reciprocating territory and notified as such by
the Central Government.

Section 47 provides that the party applying for the enforcement of a foreign
award shall, at the time of the application, produce before the court (a)
original award or a duly authenticated copy thereof; (b) original arbitration
agreement or a duly certified copy thereof; and (c) any evidence required to
establish that the award is a foreign award. As per the new Act, the
application for enforcement of a foreign award will now only lie to High
Court.

Once an application for enforcement of a foreign award is made, the other

party has the opportunity to file an objection against enforcement on the
grounds recognized under Section 48 of the Act. These grounds include:

1.The parties to the agreement referred to in section 44 were, under the law
applicable to them, under some incapacity, or the said agreement is not
valid under the law to which the parties have subjected it or, failing any
indication thereon, under the law of the country where the award was made;
or
2. The party against whom the award is invoked was not given proper notice
of the appointment of the arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or

3.The award deals with a difference not contemplated by or not falling within
the terms of the submission to arbitration, or it contains decisions on
matters beyond the scope of the submission to arbitration: Provided that, if
the decisions on matters submitted to arbitration can be separated from
those not so submitted, that part of the award which contains decisions on
matters submitted to arbitration may be enforced; or

4.The composition of the arbitral authority or the arbitral procedure was not
in accordance with the agreement of the parties, or, failing such agreement,
was not in accordance with the law of the country where the arbitration took
place; or

5. The award has not yet become 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, that award was made.

5. The subject-matter of the difference is not capable of settlement by

arbitration under the law of India; or

6. The enforcement of the award would be contrary to the public policy of

India.

The Amendment Act has restricted the ambit of violation of public policy for
international commercial arbitration to only include those awards that are:
(i) affected by fraud or corruption, (ii) in contravention with the fundamental
policy of Indian law, or (iii) conflict with the notions of morality or justice.
It is further provided that if an application for the setting aside or
suspension of the award has been made to a competent authority, the Court
may, if it considers it proper, adjourn the decision on the enforcement of the
award and may also, on the application of the party claiming enforcement of
the award, order the other party to give suitable security.
Section 49 provides that where the Court is satisfied that the foreign award
is enforceable under this Chapter, the award shall be deemed to be a decree
of that Court.

Enforcement under the Geneva Convention

Sections 53-60 of the Arbitration and Conciliation (Amendment) Act, 2015

contains provisions relating to foreign awards passed under the Geneva
Convention.

As per the Geneva Convention, "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,-
(a) In pursuance of an agreement for arbitration to which the Protocol set
forth in the Second Schedule applies, and

(b) 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, may, by notification in the Official Gazette,
declare to be 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

(c) In one of such territories as the Central Government, being satisfied that
reciprocal provisions have been made, by like notification, declare to be
territories to which the said Convention applies, and for the purposes of this
Chapter, an award shall not be deemed to be final if any proceedings for the
purpose of contesting the validity of the award are pending in any country in
which it was made.

Section 56 provides that the party applying for the enforcement of a foreign
award shall, at the time of the application, produce before the court (a)
original award or a duly authenticated copy thereof; (b) evidence proving
that the award has become final and (c) evidence to prove that the award
has been made in pursuance of a submission to arbitration which is valid
under the law applicable thereto and that the award has been made by the
arbitral tribunal provided for in the submission to arbitration or constituted
in the manner agreed upon by the parties and in conformity with the law
governing the arbitration procedure. As per the new Act, the application for
enforcement of a foreign award will now only lie to High Court.

The conditions for enforcement of foreign awards under the Geneva

Convention are provided under Section 57 of the Arbitration and
Conciliation Act, 1996. These are as follows:

(a) The award has been made in pursuance of a submission to arbitration

which is valid under the law applicable thereto;
(b) The subject-matter of the award is capable of settlement by arbitration
under the law of India;
(c) The award has been made by the arbitral tribunal provided for in the
submission to arbitration or constituted in the manner agreed upon by the
parties and in conformity with the law governing the arbitration procedure;
(d) The award has become final in the country in which it has been made, in
the sense that it will not be considered as such if it is 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;
(e) The enforcement of the award is not contrary to the public policy or the
law of India.
The Amendment Act has restricted the ambit of violation of public policy for
international commercial arbitration to only include those awards that are:
(i) Affected by fraud or corruption,
(ii) In contravention with the fundamental policy of Indian law, or
(iii) Conflict with the notions of morality or justice.

However, the said section lays down that even if the aforesaid conditions are
fulfilled, enforcement of the award shall be refused if the Court is satisfied
that—
(a)The award has been annulled in the country in which it was made;
(b)The party against whom it is sought to use the award was not given notice
of the arbitration proceedings in sufficient time to enable him to present his
case; or that, being under a legal incapacity, he was not properly
represented;
(c) The award does not deal with the differences contemplated by or falling
within the terms of the submission to arbitration or that it contains
decisions on matters beyond the scope of the submission to arbitration:

Provided that if the award has not covered all the differences submitted to
the arbitral tribunal, the Court may, if it thinks fit, postpone such
enforcement or grant it subject to such guarantee as the Court may decide.

Furthermore, if the party against whom the award has been made proves
that under the law governing the arbitration procedure there is any other
ground, entitling him to contest the validity of the award, the Court may, if
it thinks fit, either refuse enforcement of the award or adjourn the
consideration thereof, giving such party a reasonable time within which to
have the award annulled by the competent tribunal.

Section 58 provides that where the Court is satisfied that the foreign award
is enforceable under this Chapter, the award shall be deemed to be a decree
of the Court.
 CONCLUSION

The effectiveness of the enforcement system for arbitral awards determines the
integrity and credibility of the arbitration system altogether. If award-
creditors are unable to recover smoothly the amount of damages awarded by
arbitral tribunals, arbitration will be rendered irrelevant to business. The
aim of this article is to examine the current system of enforcement of
arbitral awards and evaluate its effectiveness.
First, enforcement proceedings are to some extent perceived by corporations
as relatively inefficient. Consequently, corporations often choose not to rely
on the current enforcement system to recover damages awarded by arbitral
awards as they are particularly concerned with the costs and delays
associated with the enforcement procedure.
Second, the parties tend to rely on alternative means to recover their awards. In
essence, private means of enforcement of arbitral awards have been gradually
developing through business practices. As is argued, these means of private
enforcement are more flexible, more business-oriented and eventually more
effective than the system of enforcement that has been established by domestic law
in accordance with the New York Convention.
The third and final conclusion of the article relates to the current relevance of the
New York Convention to arbitration practice. As is argued, the perceived or actual
inadequacies of the existing enforcement system are mainly associated with the
domestic mechanisms of execution rather than the New York Convention itself. Yet
the New York Convention has now largely exhausted its contribution to the
facilitation of the enforcement of arbitral awards.

The design of the new Act is based on the premise that it will provide an
efficient and swift method of dispute resolution for both the domestic as well
as international investors. It is apposite to quote Sir LJ Earl Warren, "It is
the spirit and not the form of law that keeps the justice alive." Although
there have been judgements which have disturbed the calm waters of the
arbitration, the cumulative endeavour should be to preserve the spirit
underlying the Act which is precisely the objective of the new amendment
Act. With a surge in the business opportunities and entrepreneurship in
India, it is only proper to anticipate proper implementation of the Act in
harmony with the UNCITRAL Arbitration Rules which forms the foundation
of the Act.