foreign awards

In this article, Noopur Kalpeshbhai Dalal who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Enforcement of Foreign Awards in India.

Introduction

The Enforcement of a decree, whether foreign or domestic, is governed by the provisions of Civil Procedure Code, 1908 (CPC) in India. There are two ways to get a foreign judgement executed in India. Firstly by filing an Execution petition under section 44A of the Civil Procedure Code, 1908 or second by filing a suit for the foreign judgement or award.

Section 2 (6) of the Civil Procedure Code deals with the enforcement of the awards or judgements passed by any Foreign Court. According to section 2 (5) of the Civil Procedure code, a ‘foreign court’ means a court which is situated outside India and which is not established or governed by the Central Government of India. A Judgement or decree or award passed or given by such foreign court is called a Foreign Judgement. Thus judgements which are delivered by any court in USA, France, England, Canada, Germany, Japan, China etc. are said to be foreign Judgement.

Rules for enforceability of Foreign Judgments and Awards in India

  • The enforcement and binding of the judgements delivered by the foreign courts can be understood in details as below:
  • The following sections of the Civil Procedure Code, 1908 deals with the provisions related to the enforcement of the Foreign Judgements in India.

Section 13 of the Civil Procedure Code, 1908

According to the provisions of section 13 of CPC, every foreign judgement or decree has to pass the tests as laid down under this section. Section 13 of the Act exemplifies the principle of Private International Law which means that any Court in India shall not enforce a foreign judgement if such judgement is not passed or awarded by a competent court abroad. The provisions of section 13 of the act are substantive and not simply procedural law.

Section 13 lays down that a foreign judgement becomes inconclusive and is unenforceable under the following circumstances:

  1. A foreign judgement which is not delivered by a competent court;
  2. A foreign judgement which is not delivered on the basis of the merits of the case;
  3. A foreign judgement in which it appears on the face of the proceedings to be delivered by taking an incorrect view of the international law or by refuting the applicability of an Indian Law in the case in which such Indian Law is applicable;
  4. A foreign Judgement which was delivered by a foreign court in conflict with the laws of natural justice;
  5. A foreign judgement which was obtained with an intention of fraud;
  6. A foreign decree which is found to be in breach of any law which is prevalent in India.

The above exceptions for enforceability of foreign judgements in India can be better understood with the help of the decisions as given by the Honourable Supreme Court of India, Honourable High Courts, and other Courts. Each of the above stated exceptions to section 13 is discussed comprehensively below:

Foreign judgement which is not delivered by a competent court

In the below mentioned cases the courts have held that the foreign court had no jurisdiction and thus the foreign judgement/ award id not enforceable

R. M. V. Vellachi Achi v. R. M. A. Ramanathan Chettiar, AIR 1973 Mad 141

In this case the plaintiff had filed a petition against one of the three partners of a Money lending firm in Singapore demanding a sum of money due from him, claiming the execution of the ex-parte decree passed by the Singapore government against the respondent. However the Respondent has alleged on the point that since he is a partner in the firm and was also not physically present during the hearing of the case in the Singapore high court, the decree passed by the foreign court cannot be enforced in the Madras High Court. The plaintiff in response to the said argument held that the respondent being a partner of the firm has accepted various suits on behalf of the Firm in Singapore Court and thus has accepted the jurisdiction.

The Court in the said case held that it was the firm which has accepted the jurisdiction of the Singapore Court and not the partner in his individual capacity. Thus, based on the above stand Madras High Court held that the decree against the respondent is not executable under section 13 of the Civil Procedure Code, 1908.

K.N. Guruswami v. Muhammad Khan Sahib, 9 August, 1932

In the above cited case the appellant had filed an appeal for the effect of an ex-parte judgement passed by a foreign court. The appeal was made on the defendants who were carrying on the business in partnership in a foreign state and the firm had issued a promissory note. In the said case the appellant had requested for the acceptance of a decree which was passed by a foreign court ex-parte against the defendants.

The Court in the above case held that mere by entering into a contract into a foreign state does not imply the acceptance of the decisions and jurisdiction passed by the Courts of that Country. Thus, it was held that the decree passed against the defendants was without any jurisdiction.

Inference

Based on the understanding of the above cited cases under Section 13 of the Civil Procedure Code, 1908 the following inferences can be laid down,

In the cases of Actions in personam any foreign court can pass a judgement or award against an Indian Person, who was served summons but had chosen to remain ex-parte to the case. But the said foreign judgement or award may be executable against such Indian person in India only if the below mentioned conditions are accomplished:

  1. When the said Indian person is the subject of the foreign country in which the judgement or award is delivered against him even on prior occasions;
  2. When he is the resident of the foreign country when the action was initiated against him;
  3. When the Indian person chooses a foreign tribunal or Court to take actions in the capacity of a plaintiff, in which Court he is sued upon;
  4. When the party to suit appears voluntarily in the hearing of the case;
  5. When any agreement has bound the Indian person to submit himself to any court or forum in which the decree is delivered.

In the above mentioned cases the Court can accept the jurisdiction of a foreign court for passing of a decree against the defendant (Indian Person).

Foreign judgement which is not delivered on the basis of the merits of the case,

D.T. Keymer vs P. Viswanatham Reddi, AIR 1916 PC 121

The Judgement passed by the Bombay High Court is considered to be a landmark judgement. In the said case, a suit was filed by the plaintiff for claiming money from the defendant as a partner of a particular firm, in the English Courts. The Court has undergone certain interrogations on him in which he did not answer and such omission to answer was struckoff by the Court and a Judgement was passed against him. When the said judgement was brought to an Indian Court for enforcement the defendant claimed that the decree was not passed on the merits of the case and so it is not conclusive as per section 13 of the Civil Procedure Code, 1908. The said case was brought to the Privy Council, where the Honourable High Court held that as the defence of the defendant was struck down by the foreign Court and treated as no defence from the end of the defendant for the said claim, the decision was not conclusive and thus the said decree passed by the foreign court is not enforceable in India as per section 13 of the Civil Procedure Code, 1908.

Y. Narasimha Rao v. Y. Venkata Lakshmi, (1991)3 SCC 451

In the above case, the Supreme Court held that the decision of a case should be a result of the consent of all the parties to the case. The requirement of consent is only fulfilled if the respondent on his will has duly served in the case and has voluntarily submitted his reply or has accepted the claim or jurisdiction of the court or has agreed to the passing of the decree by the Court either by appearing in the hearing or without appearing in the hearing.

The Court in this case further held that mere reply against the claim under the protest and without submitting to the jurisdiction or appearing in the Court either in person or through any representative, the decision cannot be considered to be taken on merits of the case. 

S. Jayam Sunder Rajaratnam v. K. Muthuswami Kangani, AIR 1958 Mad. 203

In the above case the Court held that though the Foreign judgement or decree was passed ex-parte but it was passed taking into consideration the evidences and based on the interrogation in the hearings the said award shall be considered to be conclusive and passed on the merits of the Case.

Wazir Sahu v. Munshi Das, AIR 1941 Pat. 109

In the above case it was held by the Honourable Patna High Court that just because one of the issues under dispute was not dealt with, it does not conclude that the findings of the case and the decision delivered there upon was not on the merits of the case.

Inference

Based on the understanding of the above cited cases under Section 13 of the Civil Procedure Code, 1908 the following inferences can be laid down,

An Award or decree delivered by a Foreign Court against an Indian defendant who has chosen to remain ex-parte in the said case, can be made enforceable against him if the same is passed by taking into consideration the leading evidences and investigation undertaken during the case.

A foreign judgement in which it appears on the face of the proceedings to be delivered by taking an incorrect view of the international law or by refuting the applicability of an Indian Law in the case in which such Indian Law is applicable,

Anoop Beniwal v. Jagbir Singh Beniwal, AIR 1990 Del. 305

The above citied case refers to a matrimonial dispute between two parties. In the said case the plaintiff had filed a divorce petition against the defendant under the English Court on the basis of the relevant provisions of the Matrimonial Causes Act, 1973 (English Act). The grounds of divorce were that the respondent had behaved in an unreasonable manner with the petitioner it was not possible to live further with the respondent. The decree was passed by the English Court and was brought to the Indian Court for enforcement. The respondent claimed that since the decree was passed by the English Court it was not passes taking into consideration the Indian Laws. However the Indian Court under section 13 of the Civil Procedure Code, 1908 held that there is a similar ground for divorce in cases of cruelty in the marriage association as per the provisions of the Indian Hindu Marriage Act. Therefore the English Court had taken the decision based on the similar grounds and therefore there was no refute to recognize the Indian Act. Thus the Judgement passed by the English Court was enforceable in India.

Panchapakesa Iyer v. K.N. Hussain Muhammad Rowther, AIR 1934 Mad. 145.

The above case refers to a family property settlement dispute, wherein the foreign court granted probate of the will in the favour of the executors. The Property was majorly located in the jurisdiction of the foreign court and some of the part of the property was also located in India. The wife of the testator filed a claim against the executors of the will for share in the said property. The suit of the widow wife was heard and a decree was passed by the English Court and a part of it was satisfied.  

For the remaining part the widow assigned the property in favour of the plaintiff. The above case was held in the Indian court for enforcement of the decree passed by the English Court by the Defendants. The Indian Court in this case held that as the property under the Indian Jurisdiction was the subject matter of the suit, it is under the jurisdiction of the Indian Law and the English Court cannot refute the Indian Law and thus the said foreign judgement is not enforceable in India.

Inference

Based on the understanding of the above cited cases under Section 13 of the Civil Procedure Code, 1908 the following inferences can be laid down,

  1. A Foreign Judgement or Award passed by a foreign court for the claim of an immovable property situated in India cannot be enforceable as it refutes the International Law.
  2. A Foreign Judgement or award which is passed in contradiction of an Indian Law and which refutes the recognition of an Indian Law cannot be made enforceable in India. However a proper contract or treaty with such foreign country is made for foreign jurisdiction then in that case the foreign decree can be made enforceable.

A foreign Judgement which was delivered by a foreign court in conflict with the laws of natural justice

Hari Singh v. Muhammad Said, AIR 1927

In the above case the Indian Court held that the foreign court had not appointed a guardian for the minor defendant and further the judgement of the case was delivered ex-parte without the knowledge of the minor. Even on the minor becoming major the defendant had not come to know of the suit being pending against him and a decree passed by the foreign court for the said suit. Thus on the basis of the said facts it was held by the Indian Court that the decree passed by the foreign court was against the laws of Natural Justice and cannot be made enforceable in India as per section 13 of the Civil Procedure Code, 1908. Therefore the said case was held inconclusive.

Lalji Raja & Sons v. Firm Hansraj Nathuram

 In the above cited case the Honourable Supreme court had held that just because a suit is passed by a foreign court ex-parte does not mean the said foreign award or judgement is passed against the laws of Natural Justice.

I&G Investment Trust v. Raja of Khalikote

In the above case the Court held that though the summons were issued against the defendants but the same were never served to the defendant and an ex-parte judgement was passed by the foreign court and the proceedings were against the laws of natural justice.

Inference

Based on the understanding of the above cited cases under Section 13 of the Civil Procedure Code, 1908 the following inferences can be laid down,

A Foreign Court which passes a judgement or decree must be comprising of impartial persons and must be of fair view and not against the laws of natural Justice. Unless all the conditions of reasonable and fair judgement is fulfilled as per the laws of Natural Justice a foreign decree or award is not enforceable in India.

A foreign judgement which was obtained with an intention of fraud

Maganbhai Chhotubhai Patel v. Maniben, AIR 1985 Guj. 187

The Court in the above case held that as the plaintiff had misled the court about the place of his residence (domicile) the foreign decree which is delivered on the basis of this false representation the said foreign judgement is inconclusive and cannot be enforced in India as per section 13 of the Civil Procedure Code, 1908.

Satya v. Teja Singh, AIR 1975 SC 105

The court in the above case held that as the plaintiff has obtained the decree from the foreign court by misleading the foreign court with regard to the jurisdiction of the suit though the said suit cannot be dealt by the foreign court, thus such foreign judgement obtained by fraud is inconclusive and not enforceable as per section 13 of the Civil Procedure Code, 1908.

Sankaran v. Lakshmi, AIR 1974 SC 1764

The Honourable Supreme Court of India in the above case has held that although it is not permissible for the court to show its mistake, it can be shown that it has been misled. There is an important difference between the two terms mistake and trickery. The decision of a case can be set aside if the Court was imposed upon or misled to give a judgement.

Inference

Based on the understanding of the above cited cases under Section 13 of the Civil Procedure Code, 1908 the following inferences can be laid down,

In case the foreign court is misled or the plaintiff has lied to any foreign court based on which the foreign decree has been passed. Then such Judgement may not be enforceable in India as per the section 13 of the Civil Procedure Code, 1908.

A foreign decree which is found to be in breach of any law which is prevalent in India

T. Sundaram Pillai v. Kandaswami Pillai, AIR 1941 Mad. 387.

 The court in the above case had held that the foreign judgement was obtained by the defendant by breaching the provisions of the Indian Contract Act. At the time of entering into the contract the defendants were minor and thus the contract is void ab intio. Thus the Judgement passed by the foreign court based on the said contract is breaching the provsions of the Indian laws relating to the Contract act and thus it is inconclusive and not enforceable in India as per section 13 of the Civil Procedure Code, 1908.

Inference

Based on the understanding of the above cited cases under Section 13 of the Civil Procedure Code, 1908 the following inferences can be laid down,

A foreign judgement or award which is passed by a foreign court and is found to be breaching the provisions of an Indian Law, then such foreign award is not enforceable in India. But if in case a contract is based on provisions of the proper law of the contract then it is enforceable in India.

Conclusion

Thus from the above, it can be inferred that if a judgement is passed by a foreign court against an Indian person, the decree or award may not be enforceable against him due to the operation of section 13 of the Civil Procedure Code, 1908. In the said cases the plaintiff is required to come to the Indian Court either to get the foreign judgement executed or to file a petition under section 44 A of the Civil Procedure Code, 1908 or should file a fresh suit for the enforcement of the judgement. Once the said judgement is recognized by a foreign court, then the procedure for enforcement of the said judgement from a superior court as per section 51 of the Civil Procedure code, 1908 will be initiated.

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