The article has been written by Samiksha Singh. This article discusses the concept of the enforcement of both domestic and foreign awards in India. Before dealing with the process of enforcement, this article firstly gives a brief overview of the law, that is, the Arbitration and Conciliation Act, 1996, in order to discuss important concepts that lead up to the making of the award. It then goes on to discuss in detail the questions surrounding the procedure, limitations, and challenges faced in the enforcement of domestic as well as foreign arbitral awards in India.
This article has been published by Shashwat Kaushik.
Introduction
Arbitration is one of the oldest mechanisms for the settlement of disputes and has long been preferred for its potential to resolve disputes without the need to litigate before traditional courts. Arbitration, like other mechanisms of settlement of disputes such as mediation, conciliation, etc., is a type of alternative dispute resolution method. Arbitration, in some aspects, resembles a trial proceeding before traditional courts. It resembles a trial since both parties present and argue their case like they would in a trial. Further, after hearing both parties, the arbitrator, like a judge, forms an opinion and passes a judgement, which in arbitration is referred to as an award. The enforcement of this arbitral award made by the arbitral tribunal is like a decree of the court. Thus, fundamentally speaking, one can say that since arbitration resembles a trial proceeding in so many ways, it is similar to a judicial process. However, it would also not be an overstatement to say that arbitration betters trial litigation in many respects. While there are many reasons to say so, briefly and primarily, it is because not only do the parties have the autonomy to nominate their own arbitrators, but also the very process is much faster, flexible, more relaxed in procedural aspects, neutral, confidential, and expeditious in terms of disposal of the issues and issuance of awards. It is therefore a top choice for big companies that seek a speedy, and more confidential resolution of their disputes.
Arbitration is governed and regulated by the Arbitration and Conciliation Act, 1996 (hereinafter “1996 Act”). The first part, that is, Part I, titled “Arbitration” deals with domestic arbitration. The second part, on the other hand, that is, Part II, titled “Enforcement of Certain Foreign Awards” deals with foreign awards. Part II is further subdivided into two chapters. The first chapter, Chapter I, provides a mechanism to enforce those awards that are made in pursuance of the New York Convention. The second chapter, Chapter II, on the other hand, provides the process of enforcing those awards that are made in pursuance of the Geneva Convention.
Arbitration agreement
Section 2(1)(b) of the 1996 Act defines an “arbitration agreement,” stating that it is an agreement provided under Section 7 of the 1996 Act. Section 7 of the 1996 Act, in effect, provides exhaustively as to what would constitute a valid arbitration agreement. Thus, it is:
- An agreement by virtue of which parties submit “all” or “certain” disputes to arbitration.
- Such disputes may be ‘existing’ at the time of making the agreement or may arise in the ‘future’.
- These disputes should arise between parties in connection with a “defined legal relationship.” This relationship need not necessarily be contractual in nature.
- The parties can enter into an arbitration agreement either by only incorporating a clause in the contract or by entering into a separate arbitration agreement altogether.
- The agreement must be in written form. For the purpose of this requirement, an arbitration agreement would be construed to be in written format if it is recorded in any form. It may be a signed document or contained in an exchange of letters, telegrams, etc. between the parties, or it may even be in the statement of claim or defence. Simply put, it should be recorded in a “written” format in any way that shows the existence of an arbitration agreement between the parties.
Contents of an arbitration agreement
Generally, the following are provided for in an arbitration agreement:
- Place or seat of arbitration: An arbitration agreement provides the juridical place or seat of arbitration. Seat is important because it is the courts located at the juridical place of arbitration that have the jurisdiction to entertain any application or appeal during the continuance of the arbitration proceedings. As an example, an Indian-seated international commercial arbitration may have its legal seat in New Delhi or any other place within India.
- Process of appointing arbitrators: Parties have the autonomy to choose their own procedure for the appointment of arbitrators. In this, for example, the parties may opt for a tribunal comprising three arbitrators, wherein each party would have the right to nominate one arbitrator. Further, the process of appointing the third arbitrator may require that the third or presiding arbitrator be appointed with the agreement of the two arbitrators.
- Number of arbitrators: Arbitration proceedings are generally carried out by a sole arbitrator or a total of three arbitrators. For domestic arbitrations governed by Part I of the 1996 Act, Section 10 specifies that the parties are at liberty to agree upon the number of arbitrators; however, the total number of such arbitrators constituting the tribunal must be an odd number.
- Language of arbitration: Such types of clauses are more prevalent in instances of foreign-seated arbitrations wherein the parties have different nationalities. Hence, there is a need to agree upon a common language that would govern the proceedings.
- Type of arbitration: An arbitration could be of multiple types, including institutional, ad hoc, or fast-track arbitration.
- Name and Address of the Arbitral Institution: In case the parties agree to opt for institutional arbitration, the agreement may specify the name and address of the institution governing the arbitration. India, too, has its own institutes that conduct and regulate institutional arbitration. For example, the Delhi International Arbitration Centre, the Mumbai Centre for International Arbitration, etc.
- Procedure regulating the arbitration proceedings: Arbitration is generally very flexible in terms of procedure. If the parties opt for institutional arbitration, the institutional rules govern and regulate the arbitration proceedings. In the event that the parties proceed with ad hoc arbitration, they have the autonomy to agree on the procedure that would govern the proceedings.
Principles to identify an arbitration agreement
While Section 7 of the 1996 Act essentially provides what would constitute an arbitration agreement, there has always been ample dispute between the parties on the question of whether they actually agreed to have their disputes resolved by arbitration or not. The reason for this is that once an intention to proceed with arbitration for the resolution of disputes is made out by an interpretation of the contract, the parties mandatorily have to go for arbitration. They cannot later back out. Thus, it becomes important to understand what agreements would be construed as arbitration agreements. In the case of Jagdish Chander v. Ramesh Chander (2007), the Supreme Court listed certain principles to identify an arbitration agreement. These essentials were:
- Upon construction of the terms of the agreement, there should be a clear indication that the parties intend to submit their disputes for resolution by a private tribunal. There should further be a clear indication that they also intended to be bound by the decision of the tribunal. A mere possibility to submit to arbitration would not suffice; there should be a clear, definitive indication to submit to arbitration.
- If the attributes of a valid arbitration agreement are met, that is,
- It is in writing.
- The parties agreed and intended to submit their differences for resolution by a private tribunal.
- That private tribunal has the power to adjudicate the disputes impartially, affording each party equal opportunity to argue and present their case, and
- Parties are in agreement that they would be bound by the decision of that private tribunal.
If these requisites are met, then it is irrelevant whether the terms “arbitration”, “arbitrator” etc. have or have not been used in the contractual clause dealing with the settlement of disputes. The emphasis is on the substance of the agreement and not the form of such an agreement.
- In cases where the word “arbitration” is expressly used, it is not essential that the attributes mentioned above also have to be specified for such an arbitration agreement to be valid. Nonetheless, if the clause in the contract for settlement of disputes uses words or expressions that derogate from the attributes of arbitration, then that too would not be a valid arbitration agreement merely because the word “arbitration” has been used. For example, if the clause states that the authority could decide the substance of the dispute without any hearing or without any submissions by the parties, then that would not be a valid arbitration agreement.
- Merely using the term “arbitration” would also not make a clause in the contract a valid arbitration agreement. The clause should show the clear, express, and definite intention of the parties that they would only opt to resolve their disputes through arbitration whenever a dispute arises between them. If the arbitration clause instead leaves it up to the parties to once again make a choice whether they want to go for arbitration, it would not be a valid arbitration clause. Further, if the clause gives various options to the parties to resolve their dispute and “arbitration” is only a “possibility”, that again would not be a valid arbitration agreement.
Arbitral award
The tribunal hears both parties, and after doing so, it applies the law to the case at hand, forms an opinion, and makes a decision. This decision is referred to as an “award.” The term “arbitral award,” however, is not defined anywhere in the 1996 Act. There is only a mere reference to the term “arbitral award” under Section 2(1)(c) of the 1996 Act, which is to say that an arbitral award would also include an interim award. Further, Section 31(6) of the 1996 Act empowers an arbitral tribunal to pass an interim award at any time during the continuance of the proceedings. This interim award can be based on any matter on which the tribunal may pass a final award.
Categorisation of arbitral awards
Arbitral awards can be categorised as follows:
Domestic award
The term domestic award has not been defined under the 1996 Act. However, Section 2(7) of the 1996 Act provides that any award that is made under Part I of the Act would be considered to be a domestic award. Simply put, any award that is the outcome of an arbitration held in India whose proceedings themselves were carried on in consonance with Part I of the 1996 Act would be construed to mean a domestic award. As already discussed earlier, the scheme of the 1996 Act is such that Part I of the Act only governs and applies to those arbitrations whose juridical seat or place of arbitration is India. It is thus safe to say that Section 2(7) of the 1996 Act is clearly based on the principle of territoriality to classify what constitutes a domestic award. The outcome of Section 2(7) simply is that even in instances of international commercial arbitration, if the arbitration itself takes place in India, that is to say, has its seat in India, then such arbitration would be governed by Part I of the 1996 Act. Further, the outcome of such an arbitration would be termed a “domestic award.” Part I of the 1996 Act, encompassing Sections 2 to 43, lays down the legal framework for governing and regulating domestic arbitrations.
Foreign award
Part II of the 1996 Act provides the manner in which the enforcement of foreign awards would be carried out in India. Part II deals with only those arbitrations whose juridical seat is located outside India. This part consists of two chapters. The first chapter, that is, Chapter I, encapsulating Sections 44-52, provides the legal framework for dealing with the enforcement of the New York Convention awards. The second chapter, that is, Chapter II, comprising Sections 53-60, deals with the enforcement of Geneva Convention Awards.
In Chapter I, which deals with the enforcement of New York Convention Awards, the term “foreign award” is defined in Section 44 of the 1996 Act. As per Section 44:
- A foreign award is one that is made based on differences between the parties.
- This difference must emanate from a legal relationship between the parties. However, it is not necessary that such a relationship be contractual in nature. This only means that even if parties are related by virtue of a tortious relationship, that too would fall under the purview of Section 44.
- Further, such differences between the parties must be recognised as commercial under Indian law.
- Section 44(a) and (b) further provide that the award must result from an agreement that is in writing and the award itself must be made in a territory to which the New York Convention applies, respectively. For the purpose of Section 44(b) of the 1996 Act, “territory” to which such a convention applies would be one that the central government declares by virtue of a notification in the official gazette.
For the purposes of Chapter II, which deals with the enforcement of Geneva Convention Awards, the term “foreign award” is defined under Section 53 of the 1996 Act. Herein, an award would be qualified as a foreign award when:
- It is based on differences between parties on such matters that are considered commercial under Indian law.
- The award must be the result of an arbitration agreement to which the Second Schedule of the 1996 Act is applicable (the Convention provided under the Second Schedule is the Geneva Protocol, 1923).
- Both parties must belong to different jurisdictions. However, those jurisdictions must be declared to be parties to the Geneva Convention of 1927. For the aforesaid Section 53, “jurisdictions” that would be construed to be parties would be ones that the Central Government, by virtue of a notification in the Official Gazette, declares. This Convention has been reproduced under the Third Schedule of the 1996 Act.
- The arbitral award itself should be made in one of those territories where the convention provided under the Third Schedule is applicable. Here too, it would be the Central Government that would make a declaration through a notification as to which territories the Convention is applicable. The Central Government would make such a declaration only upon its satisfaction that reciprocal promises have been made.
Conditions of a valid award
For an award to be valid, it must meet the following requisites:
- Be made pursuant to a valid arbitration agreement.
- The parties were afforded equal opportunity to submit and argue their case. Moreover, they must have had proper notice of the constitution of the tribunal and the appointment of arbitrators.
- The award itself should not travel beyond the scope of the arbitration agreement. It must deal with the dispute as contemplated by the arbitration agreement.
- The composition of the arbitral tribunal must be in conformity with the agreement between the parties.
- The dispute should be arbitrable, and the award should not be against the public policy of the enforcing country.
- Further, the arbitral tribunal must pass an award that is reasoned unless the parties agree otherwise.
Essential elements of a valid award
As per Section 31 of the 1996 Act, the following elements are necessary for an arbitral award to be construed as valid:
- Firstly, the arbitral award must be in written form.
- Secondly, it must be signed by the members of the tribunal. However, it is pertinent to mention that the signatures of all members are not mandatory to make an award valid. In the event that the arbitral tribunal is composed of more than one arbitrator, it is not mandatory that the signatures of all the members be provided. If the majority of the members of the tribunal provide their signature, that shall suffice so long as the arbitrator who has not signed provides the reason behind such an omission.
- Thirdly, the award must be a reasoned one.
- Fourthly, the award should provide the date of passing the award. As per Section 31 of the 1996 Act, the award should also provide the place at which it was made. For the purposes of this requirement, it would be deemed that the award was made at the seat or place of arbitration determined in line with Section 20 of the 1996 Act.
Thus, by virtue of Section 31 of the 1996 Act, any award that fails to meet the requirements specified under Section 31 may be declared invalid.
Enforcement of domestic awards
The process for enforcement of a domestic award is provided in Section 36 of the 1996 Act. Once the award attains finality in terms of Section 35 of the 1996 Act, the parties may approach the appropriate court for enforcement of the award.
Finality of an award
Every arbitration proceeding has one ultimate objective, which is to result in an award that is both valid and enforceable. For this reason, the final award must be such that it fully decides all the issues and differences that had arisen between the parties and were in dispute between the parties, which they had ultimately raised for determination in the arbitration proceeding. Section 35 of the 1996 Act confers the status of finality on an arbitral award. It goes on to state that an arbitral award shall be final and binding not just on those who have been parties to the arbitration proceedings but also on every person claiming under the parties. Therefore, this arbitral award that has attained finality and which has decided all the differences raised and in dispute between the parties would be binding on the parties as well as those other persons who seek to claim through the parties.
In fact, a three judge bench of the Apex Court examined the scope of Section 35 in the case of Cheran Properties Limited v. Kasturi and Sons Limited (2018). The observation made with regard to the scope of this section was that Section 35 of the 1996 Act essentially widens the scope of who may be bound by an arbitral award. It does so by binding not only those who have been parties to the arbitration proceeding but also those who derive their authority through the parties to the proceedings.
Applicability of the principle of res judicata to an award
Section 31 of the 1996 Act provides what would constitute the form and contents of an arbitral award. Any arbitral award, in order to be binding and enforceable against the parties and their privies, must be valid in nature. For any award to be valid, it must:
- One, decide definitively all the claims submitted by the parties for determination by the tribunal.
- Two, it must be in accordance with Section 31 of the 1996 Act.
The scheme of the law is that the rules of the Code of Civil Procedure, 1908 (hereinafter referred to as “CPC, 1908”) and the Indian Evidence Act, 1872 (hereinafter referred to as “IEA, 1872”) would not be applicable to arbitration proceedings in line with Section 19 of the 1996 Act. Yet, the spirit of these laws, in as much as the principles of estoppel and res judicata provided under Section 115 of the IEA, 1872, and Section 11 of the CPC, 1908, respectively, would be applicable.
Enforcement of an arbitral award
After the arbitral tribunal forms an opinion and subsequently passes the award, the award may be challenged in accordance with the grounds provided under Section 34 of the 1996 Act. If a challenge to the award has been made and is unsuccessful, or if the grounds under Section 34 of the 1996 Act have not been made out, the award attains finality in terms of Section 35 of the 1996 Act. Further, as already discussed above, this final award becomes binding on both the parties to the proceedings and their privies who claim through the parties.
Scheme of enforcement in the Indian Arbitration Act, 1899
The process of enforcement in the now-repealed Indian Arbitration Act, 1899, was provided under Section 15. According to the repealed Section 15 of the Indian Arbitration Act, 1899, this award, unless it is set aside or remitted back for reconsideration, would be enforceable like a decree of the Court. There was no requirement to obtain a formal decree after the passing of a final award for it to be enforceable. The final award itself was to be enforced like a decree.
In this regard, a question arose as to whether the principles of CPC, 1908, would be applied in enforcing awards under the Indian Arbitration Act, 1899, or not. The answer to this question was provided by the Calcutta High Court in the case of Gladstone Wyllie v. Joosub Peer Mahomed (1923). The Hon’ble Court observed that although Section 15 of the Indian Arbitration Act, 1899 in itself did not make a mention of the applicability of the CPC, 1908 for the purposes of enforcement of the arbitral award, when the legislature provided that the award on being filed must be enforced in a way where the award was to be deemed as a decree of the Court, then there was an implied intention on the part of the legislature that the CPC, 1908 be applied for the purposes of enforcing the award.
Scheme of enforcement in the Arbitration Act, 1940
The position regarding enforcement in the Arbitration Act, 1940, was different from the earlier Indian Arbitration Act, 1899. Unlike the 1899 Act, where there was no requirement of obtaining a formal decree, under the 1940 Arbitration Act, in order to get an award enforced, the parties had to first, obtain a judgement and then subsequently a decree in line with the award. Section 17 of the repealed 1940 Arbitration Act provided that when the Court did not find any cause to set aside or remit the award, it would then go on to first pronounce a judgement in accordance with the award. After doing so, the court would then proceed to pronounce a decree. Thus, if the parties sought to enforce the award, they could only do so after obtaining a judgement and a subsequent decree from the Court in line with the terms of the award.
Enforcement under the 1996 Act: Position prior to the Arbitration and Conciliation (Amendment) Act, 2015
The position under the unamended Section 36 of the 1996 Act was partially similar to the position under Section 15 of the repealed Indian Arbitration Act, 1899. The similarity between these two statutes was regarding the manner of enforceability of awards under these two statutes. In the 1996 Act as well, the award was once again made enforceable as if it were a decree of the Court. Unlike the requirement under Section 17 of the repealed Arbitration Act, 1940, there was no prerequisite of first obtaining a judgement and subsequently obtaining a decree from the Court in line with the award for seeking enforcement of the award.
Further, prior to the Arbitration and Conciliation (Amendment) Act, 2015, an award could only be enforced when the objections for setting aside the award under Section 34 of the 1996 Act were dismissed. Therefore, previously, in the unamended Section 36, if merely a challenge under Section 34 of the 1996 Act was preferred, there was an automatic stay on the enforcement of such awards.
In fact, the Supreme Court was presented with an opportunity to discuss the discretionary power of the courts in enforcing an award once that award had been challenged by any party under Section 34 of the 1996 Act. Here, in the case of National Aluminium Co. Ltd. v. Pressteel and Fabrications Pvt. Ltd. (2003), the Apex Court observed that once a challenge under Section 34 of the 1996 Act was made, the award could not be executed. In fact, the courts did not possess any discretion to pass any interlocutory order with reference to the award. If at all, the Court may only adjudicate upon the correctness of the claim. The pendency of a challenge under Section 34 of the 1996 Act only meant that the award holder could not even seek a direction from the Court, even if it were only a direction requiring the award debtor to make any deposit to the Court of any part of the award. Going with this logic, it only meant that if a challenge under Section 34 of the 1996 Act lasted several years, then the award would also automatically stand suspended from execution for those many years. This defeated the very objective of arbitration, which was an expeditious resolution of disputes.
Enforcement under the 1996 Act: Position after the Arbitration and Conciliation (Amendment) Act, 2015
The Arbitration and Conciliation (Amendment) Act, 2015, was a significant step taken towards the enforcement of arbitral awards. This Amendment in 2015 substituted the earlier Section 36 of the 1996 Act. Following the implementation of the 2015 amendment, there was no longer an automatic stay or suspension of the award. Unlike the position prior to the 2015 Amendment Act, a mere filing of a challenge under Section 34 of the 1996 Act did not mean that the award would automatically be stayed, thereby making it unenforceable. In order to stay the award, the party was required to file a separate application praying for an order of stay. The Court, after recording the reasons for stay in writing, may grant a stay and impose such conditions as it may deem fit.
Further, if there was an award for payment of money, the proviso to Section 36(3) laid down that in such cases, the Court would have regard to the provisions of the stay of money decree provided under CPC, 1908. Now, a question may arise whether in cases of payment of money in an arbitral award, are the courts required to mandatorily adhere to the provisions of CPC, 1908, since Section 36(3) of the 1996 Act uses the term “have due regard to”? This question was answered by the Apex Court in Pam Developments Private Limited v. State of West Bengal (2019), wherein the Hon’ble Court interpreted the phrase “have due regard to.” The Supreme Court, while doing so, made a clear distinction between the terms “in accordance with” and “have due regard to.” The Apex Court noted that the very fact that the legislature incorporated the phrase “have due regard to” and not “in accordance with” signified that the legislature only intended that the Court had regard to the provisions of CPC, 1908, as a guiding factor and not as a mandatory requirement. Further, the Court pointed out that the provisions of the CPC, 1908, would apply only in as much as they were not incompatible with the provisions of the main, self-contained statute, that is, the 1996 Act.
Enforcement under the 1996 Act: Position after the Arbitration and Conciliation (Amendment) Act, 2021
With the introduction of the 2021 Amendment, titled the Arbitration and Conciliation (Amendment) Act, 2021, to Section 36 of the 1996 Act, a second proviso was added under Section 36(3). By virtue of this amendment, the Court could impose an unconditional stay on an award if there was an element of fraud or corruption in either the arbitration agreement or, alternatively, in the making of the award. However, before doing so, the Court must “prima facie” be satisfied that the arbitration agreement or the award was tainted with fraud or corruption.
Creation of statutory fiction for enforcing the domestic award
In simple terms, in arbitration proceedings, there is no decree. There is only an arbitral award. This award was passed by an arbitral tribunal. Here, an important point to remember is that, unlike courts, the arbitral tribunal is a creation of the arbitration agreement. The arbitral tribunal has no existence apart from the arbitration agreement. It is therefore safe to say that the tribunal is the creation of an agreement between the parties to have their differences resolved by arbitration. So, it can also be said that the tribunal’s jurisdiction itself is derived from the arbitration agreement. Thus, while the tribunal is empowered to make an award, it does not possess the power to ensure the enforcement of that award.
For this reason, in order to enforce this award, the 1996 Act creates a statutory fiction whereby the award is deemed to be a decree. This means that an award, though not a decree, is to be treated in a manner like a decree of the Court. Subsequently, it has to be enforced in consonance with the provisions for enforcement under the CPC, 1908. As already mentioned, unlike the Arbitration Act of 1940, which required firstly a judgement and subsequently a decree to be passed in line with the award for it to be enforceable, the 1996 Act does not require courts to go through this process since, by virtue of the statutory fiction, a final award is already enforceable, similar to a decree of the Court. The rationale behind imposing such a statutory fiction is to ensure a mechanism for the enforcement of arbitral awards. This is because, unlike courts, arbitral tribunals do not possess the power to ensure the enforcement or execution of the awards.
Now, just because Section 36 of the 1996 Act uses the phrase “as if it were a decree of the Court” that does not mean that an arbitral award is similar to a decree in all respects. The Bombay High Court in the case of Dhirendra Bhanu Sanghvi v. ICDS Ltd. (2003) observed that the phrase must be construed only to mean that the arbitral award would also be enforceable, just like a decree. Further, it is as conclusive and binding upon the parties as any ordinary decree.
When does the award become enforceable
According to Section 36(1) of the 1996 Act, an arbitral award can be enforced only when the time limit for challenging the award under Section 34 of the 1996 Act has passed. This time limit for challenging the award under the grounds mentioned in Section 34 of the 1996 Act has been specified under Section 34(3). As per Section 34(3) of the 1996 Act, the arbitral award may be challenged within 3 months from the date on which the arbitral award is received. Apart from a challenge, the parties are further free to seek any correction in the award, any interpretation of the award, or any part of the award. If the parties opt for either a correction of the award or its interpretation, the limitation for such a request would be 3 months from which such a request for correction has been disposed of by the tribunal. This 3-month period provided under Section 34(3) of the 1996 Act is further extendable by a period of 30 days. However, such an extension would be provided only if the applicant satisfied the court that there existed sufficient cause which prevented the applicant from making an application challenging the arbitral award.
Thus, subject to whether the Court has stayed the operation of the award or not, an award would be enforceable only after the time limit specified in Section 34 of the 1996 Act for challenging the award has passed, that is, 3 months, further extendable by 30 days on establishing sufficient cause. It is also pertinent to mention that the proviso to Section 34(3) of the 1996 Act provides that, upon showing sufficient cause, the court may further extend the time period for challenging the award by way of an application under Section 34 by 30 days “but not thereafter”. Does that mean that the courts would not condone a delay beyond 30 days? This clarification was made way back in the case of Union of India v. Popular Construction (2001), wherein the Apex Court observed that by incorporating this phrase, the Statute provides for an express exclusion in line with Section 29(2) of the Limitation Act, 1963. Therefore, as far as the question of condonation of delay is concerned, any application for condonation of delay per Section 5 of the Limitation Act, 1963, would not be applicable.
What is the mechanism for enforcing a settlement award
Not just an arbitral award but also a settlement award would be enforceable in a similar manner as if it were a decree of the court. Merely because the parties are undergoing arbitration, they are not barred from entering into any form of settlement. In fact, Section 30(1) of the 1996 Act rather urges parties to settle their disputes by virtue of mediation, conciliation, or any other alternative method of dispute resolution, even during the pendency of the arbitral proceedings. Section 73 of the 1996 Act lays down the provision for a settlement agreement as a consequence of conciliation between the parties. When Section 73 is read with Section 30 of the 1996 Act, it transpires that a settlement in line with Section 73 would be afforded a similar status to that of an arbitral award per Section 30 of the 1996 Act. This was also the view of the Apex Court in Mysore Cements Ltd. v. Svedala Barmac Ltd. (2003). Thus, as per Section 30(4) of the Act, such settlement agreement would be construed to be an award and shall have the same status as any other arbitral award made consequent to an arbitration proceeding and would be enforceable as if it were a decree of the Court in accordance with Section 36 of the 1996 Act.
Enforceability of ex-parte award
The tribunal is empowered to pass any ex parte award if the parties fail to appear during hearings. Consequently, the tribunal may pass an ex parte award upon consideration of the evidence before it in consonance with Section 25(c) of the 1996 Act. This ex parte award would be a valid award made in line with Section 25(c) of the 1996 Act and would be enforceable under Section 36 of the Act.
Which court can entertain an application for enforcement of an award?
The definition of court for the purposes of Part I of the 1996 Act is provided under Section 2(1)(e) of the 1996 Act. Further, Section 42 of the 1996 Act begins with a non-obstante clause and goes on to provide that, by virtue of an arbitration agreement, if any application is preferred before any court in respect of the arbitration agreement, then it is only that court that would have jurisdiction over the arbitration proceedings in general and all subsequent applications in particular. On reading these two sections together, a question might arise as to which court would have the jurisdiction to enforce the award. Would it be the court that supervised the arbitration proceedings, or could any other court also have jurisdiction to enforce the award?
Further, according to Section 2(1)(e) of the 1996 Act, a court would imply any court that has jurisdiction over the subject matter of the arbitration. It is not necessary that there be only one court that has jurisdiction over the subject matter. More than one court could have subject-matter jurisdiction over the arbitration. In that respect, since more than one court has jurisdiction, a further question also arises whether in respect of Section 42 of the 1996 Act, the court in which any application is first made pursuant to the arbitration agreement, whether that court alone would have exclusive jurisdiction to enforce the award? Further, if the award has to be enforced in some other place, let’s say in some other state where the assets of the parties are located, would the award holder have to obtain a transfer decree from the court having exclusive jurisdiction?
In the case of Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd. (2009), it was the observation of the Delhi High Court that, for the purposes of enforcement, the definition provided under Section 2(1)(e) of the 1996 Act would not be applicable. This is because the term “court” used in Section 36 is not to confer any territorial jurisdiction upon a court to enforce the award but only to create a legal fiction by virtue of which an arbitral award is statutorily given the force of a decree to ease its enforcement. Thus, the term “court” in Section 36 has a different significance from “court” in Section 2(1)(e) of the 1996 Act.
This issue was finally settled in the case of Sundaram Finance Limited v. Abdul Samad and Anr. (2018). Here, the Apex Court observed that an award is to be enforced in conformity with the provisions of the CPC, 1908, in a similar manner “as if it were a decree of the Court”. However, the Supreme Court made a distinction here by stating that even though the enforcement is to be carried out as if it were a decree, the award itself cannot be said to be a decree of any court. This is because no court is passing that award. Therefore, the enforcement of the award could thus be initiated anywhere where such a decree can be enforced. The Apex Court further observed that there was no need to obtain any transfer of decree from the Court, which supervised the proceeding and possessed exclusive jurisdiction. This is for the simple reason that just because the Court had exclusive jurisdiction to entertain certain applications and appeals does not mean that the award in itself is a decree of that Court or any Court for that matter. By virtue of statutory fiction, it is only deemed to be enforceable like a decree of a civil court. The Court thereby affirmed the view taken in Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd. (2009) and observed that the parties need not obtain a transfer decree from the Court having jurisdiction in terms of Section 2(1)(e) of the 1996 Act. Therefore, the enforcement of such an award may be sought before any court within whose jurisdiction the assets of the award holder lie.
Registration of domestic awards
Section 17 of the Registration Act, 1908, lays down what documents would require compulsory registration. According to Section 17, any award affecting any immovable property would have to compulsorily be registered. Further, if such an arbitral award requiring compulsory registration is not registered, then the arbitral award could not be received as evidence in respect of an immovable property.
In Satish Kumar & Ors v. Surinder Kumar & Ors (1968), it was observed by the Supreme Court that if there is any award that affects any right in respect of an immovable property, such an award would compulsorily have to be registered.
Stamp duty on arbitral award
The Indian Stamp Act, 1899, specifically Section 3, lays down what instruments would be chargeable with stamp duty in accordance with Schedule I of the Act. In this Schedule I, Item 12 provides the stamp duty payable for awards. In accordance with Section 35 of the Indian Stamp Act, 1899, any instrument for which stamp has to be paid but has not been paid would not be admissible as evidence. Deriving thereby, if an arbitral award is not duly stamped, then, in accordance with Section 35, the same would not be admissible as evidence. However, the unstamped arbitral award can be validated by the payment of the deficient amount and the penalty.
Enforcement of foreign awards
Part II of the 1996 Act governs and regulates the enforcement procedures for foreign awards in India. This part is further subdivided into two chapters. Chapter I deals with the enforcement of the New York Convention Awards, 1958. It runs from Sections 44-52 of the 1996 Act. Further, Chapter II deals with the enforcement of Geneva Convention Awards. This chapter runs from Sections 53-66 of the 1996 Act.
Enforcement of New York Convention Awards
Part II, Chapter I, of the 1996 Act deals with the mode of enforcement of New York Convention Awards. Under this part, while the courts do have the power to refuse enforcement, they do not possess the power to set aside such an award. This is different from Part I of the 1996 Act, wherein, under Section 34, courts have the power to set aside the award in accordance with Section 34. Thus, in instances of foreign awards, the opposing party has no recourse against that award other than seeking its non enforcement at the time when the award holder seeks to enforce it.
It is also pertinent to mention at this point that Section 48 of the 1996 Act, which lays down the provision for the conditions for enforcement of foreign awards, uses the term “may” refuse enforcement. This only means that the legislature has left it open to the discretion of the courts to enforce or not enforce an award even when the grounds specified under Section 48 are made out.
It is also important to mention that while considering an enforcement petition, the court should not reapply its mind in order to second-guess the findings of the tribunal. In Shri Lal Mahal Ltd. v. Progetto Grano Spa (2013), it was observed by the Apex Court that the enforcing court is neither an appellate court nor can it inquire whether the rendering of the award is erroneous. The grounds enumerated under Section 48 of the 1996 Act, therefore, do not allow a review of the merits of the foreign award.
Conditions for Enforcement of the New York Convention Award
The following are the conditions for the enforcement of the New York Convention Awards:
Incapacity of parties
According to Section 48(1)(a) of the 1996 Act, the enforcing court “may” refuse enforcement if:
- The parties to the arbitration agreement under Section 44 of the 1996 Act did not have the capacity to enter into a contract as per the law applicable to them. For example, if the law applicable here would be India, the capacity to enter into a contract would be governed by Section 11 of the Indian Contract Act, 1872.
- Further, the arbitration agreement referred to in Section 44 of the 1996 Act is invalid according to the legal framework that regulates the arbitration agreement. As already mentioned, this law which governs the arbitration agreement may be the one which the parties have agreed upon, or in the absence of any such agreement between the parties, it would be the law of the place where the award was made.
Procedural due process
According to Section 48(2)(b) of the 1996 Act, an award may be refused enforcement if:
- The party objecting to the enforcement of the award establishes that it was not given adequate notice of the arbitrator’s appointment; or
- The party objecting to such enforcement was given improper notice of the arbitration proceedings themselves; or
- Such a party was otherwise unable to adequately present its case.
For the purpose of the aforementioned section, there is no straightjacket formula to determine what would constitute procedural unfairness. This would depend on the independent circumstances of each case. Due process implies complying with the principles of natural justice, being adjudicated by a fair and impartial tribunal, or equality of treatment. However, it is pertinent to mention that a mere procedural lapse would not mean that the award would not be enforced; the procedural lapse should be such that it has an effect on the overall fairness of the proceedings.
Jurisdictional defects
According to Section 48(1)(c) of the 1996 Act, a foreign award may be refused enforcement if:
- The tribunal exceeded its authority in dealing with the issues, and while doing so, it dealt with such differences or disputes that were not submitted by the parties; or
- The award went beyond the scope of the arbitration agreement.
This subsection also comes with a proviso according to which if the decisions by the arbitral tribunal on terms submitted to arbitration are separable, that is, they, can be separated from those issues which were not submitted to arbitration, then the part which deals with the decisions on matters contemplated by the submission to arbitration may be enforced. Here, the phrase “terms of submission of arbitration” implies the terms of the arbitration agreement itself. The same observation has been made in the case of Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan (1999).
Defects in the composition of the tribunal or arbitral procedure
According to Section 48(1)(d) of the 1996 Act, a foreign award may be refused enforcement if either:
The tribunal’s composition; or the procedure of arbitration was contrary to what was agreed upon by the parties, or in the absence of any such agreement between the parties, it was contrary to the law of the juridical seat of arbitration.
As far as the first condition is concerned, relating to the tribunal’s composition, it is up to the parties to choose the manner of composition of the tribunal or the total number of arbitrators. Suppose the parties agree that there should be three arbitrators in the tribunal; however, if the arbitrator appointed by only one party continues with the arbitration, then, in case of such a defect, the enforcement of the award passed by the tribunal may be refused. However, in such a scenario, it is also important that the other party refuses to take part in the proceedings at that time itself. In the event that the party now opposing the enforcement then participates in the arbitration proceedings, that party cannot be allowed to take this ground and resist the enforcement, stating that there is a defect in the tribunal’s composition. Participating in the proceedings would be considered a waiver of the subsequent right to object to such a defect in the tribunal’s composition.
Award yet to attain finality or set aside at the seat of arbitration
According to Section 48(1)(e) of the 1996 Act, the award may not be enforced if:
- It is yet to become binding, or
- It has been set aside or suspended by an authority competent to do so at the juridical seat of arbitration or as per the law in accordance with which the award was made.
As regards the first part, an award generally becomes binding soon after it has been made subject to any remedies, such as setting aside the award or any appeal before an appellate body.
As regards the second part, if the award is set aside at its seat, it may not be enforced. However, an award may also be suspended by the competent authority. For example, upon a request by a party to set aside the award, the competent authority may remit the award back for the tribunal’s reconsideration in order to give the tribunal an opportunity to eliminate such grounds on which the award is liable to be set aside. During that time, the competent authority may suspend the award. In such a scenario as well, the award may be refused enforcement.
Non-arbitrability of subject matter
In consonance with Section 48(2)(a) of the 1996 Act, enforcement may be refused if the subject matter of the arbitration is non-arbitrable in India.
Non-arbitrable disputes in India generally pertain to those matters in which the action is right in rem. In Booz Allen & Hamilton v. SBI Home Finance Limited (2011), the Apex Court made the observation that a dispute over a mortgage over an immovable property is a non-arbitrable dispute. While there is no statutory definition of what constitutes non-arbitrable matters, actions that involve a right in rem are generally considered to not be arbitrable.
Violation of public policy
Enforcement may also be refused if, in enforcing such an award, there would be a violation of public policy in India. The elements of “public policy” for the purposes of this section, have been enumerated under Explanation 1 of Section 48(2)(b). These are:
- First, in the making of the award, if there existed any element of fraud or corruption, or if the same was violative of Section 75 or Section 81 of the 1996 Act,
- Second, if the award contravenes the fundamental policy of Indian law,
- Third, if the award conflicts with the basic notions of morality and justice.
For the purpose of determining whether an award contravenes the fundamental policy of Indian law, Explanation 2 to Section 48(2)(b) provides that there must not be a review of the merits.
Section 48(3)
As per Section 48(3) of the 1996 Act, the enforcing court may also refuse enforcement of the award if there has been an application for setting aside or suspension of the award in accordance with Section 48(1)(e). The Court may in such a scenario adjourn the question of enforcement of the award. Further, the Court may also order the party against whom the award is sought to be enforced to give adequate security upon an application made by the award holder.
Enforcement under Section 49 of the 1996 Act
Section 49 of the 1996 Act provides that upon the satisfaction of the Court that the foreign award is enforceable, the foreign award would be construed to be a “decree of that Court”. Here, in Section 49, the term used is “that court.” The use of this terminology in Section 49 is quite different from the terminology used in Section 36 of the 1996 Act for enforcement of domestic awards under Part I. In Section 36, the term used is “as if it were a decree of the Court.” Contrastingly, the term used in Section 49 is “decree of that Court.” A pertinent question here would be why such a deviation was made by the legislature in Section 49 of the 1996 Act. When Section 36 uses the term decree of “the court”, why does Section 49 use the phrase “that court”? Now, in order to understand this distinction in terminology, it is important to understand the rationale behind such a measure. A domestic award is a deemed decree, but it cannot be said to be a decree of a particular court. However, under Section 49 of the 1996 Act, the Court, which decides whether the conditions for enforcement of the award specified under Section 48 of the 1996 Act are met or not, deems the foreign award to be the decree of that Court. This distinction is made because in cases of foreign-seated arbitrations wherein the parties have the autonomy to opt for a neutral seat of arbitration, it is rare to come across circumstances wherein the assets of either party are situated in the territory of the neutral country where the award has been made. So, even though the award is made in a particular country, it would subsequently have to be enforced in another country. Further, the enforcement of the award would have to be carried out according to the legal framework of the country in which the assets are situated. Therefore, it becomes extremely important that the foreign award be internationally recognised and subsequently enforced. Such recognition should not be limited just to the juridical seat of arbitration. Thus, when a party seeks enforcement of such an award in India, Section 49 of the 1996 Act firstly provides recognition to the international award by making it a decree of “that Court.” It is then subsequently enforced in India.
Recognition of the award
The validity of an award made in a foreign-seated international commercial arbitration could be challenged in accordance with the legal framework of the juridical place of arbitration. If there has been a challenge to the award at the seat and such challenge has been unsuccessful or there has been no challenge at all and the award stands, then such a foreign award attains the status of finality and is enforceable in India as a foreign award.
Proceeding for enforcement and execution
There is a common procedure for enforcing and executing the foreign award. Thus, the enforcing court can decide the question of both the enforceability and execution of the award in a common proceeding. A separate proceeding for both would only result in a multiplicity of proceedings.
What is the limitation for the execution of foreign awards?
This issue regarding what would be the limitation period for the execution of foreign awards has been expressly clarified in the case of Government of India v. Vedanta Limited (2020). Before this issue was resolved by the Apex Court, various contrasting views were held by different high courts. The contrast in opinion was with regard to what would be the appropriate provision of the limitation Act that would apply to calculate limitations for the execution of foreign awards. The question was whether Article 136 of the Limitation Act or Article 137 would be applicable? In Government of India v. Vedanta Limited (2020), this issue was dealt with in detail and clarified by the Hon’ble Supreme Court. The Hon’ble Court clarified that the enforcement of foreign awards would fall under the residuary provision of Article 137 of the Limitation Act. Thus, the limitation for the execution of foreign awards would be three years from the time when such a right to seek execution accrues.
Process of enforcement of the Geneva Convention Awards
Part II, Chapter II, of the 1996 Act deals with the enforcement of awards made in pursuance of the Geneva Convention. This chapter, titled “Geneva Convention Awards,” runs from Sections 53-60. This chapter, in effect, replaces the now repealed Arbitration (Protocol and Convention) Act, 1937. India is a signatory to both the Geneva Protocol, 1923 and the Geneva Convention, 1927. In order to put these conventions into effect in the Indian scenario, the earlier Arbitration (Protocol and Convention) Act, 1937, was enacted. Chapter II, Part II, of the 1996 Act is thus a replacement for the Arbitration (Protocol and Convention) Act, 1937. While the Geneva Convention is not as prevalent as it used to be when it was enacted, it is relevant since it represents prior attempts to address the concerns and problems faced in the enforcement of foreign awards.
Conditions for Enforcement of Geneva Convention Awards
In order to enforce a foreign award under Part II of Chapter II of the Arbitration and Conciliation Act, 1996, Section 57(1) lays down five conditions. These are:
Arbitration agreement should be valid
Section 57(1)(a) of the 1996 Act provides that the foreign award would be liable to be enforced only if such award is made in accordance with a valid arbitration agreement. The test of the validity of the arbitration agreement would be in accordance with the law applicable to the agreement. In the event that the arbitration agreement is invalid, then the award too would not be enforceable.
Subject matter should be arbitrable
Section 57(1)(b) of the 1996 Act provides that the subject matter of the award must be arbitrable as per Indian law. If the same is not arbitrable in accordance with Indian law, then the foreign award would not be enforceable.
Constitution of the tribunal and due process
Section 57(1)(c) of the 1996 Act provides that the award must be made by such an arbitral tribunal as was provided in the submission to arbitration by the parties. Further, the constitution of the tribunal should be in a manner as agreed by the parties. In doing so, it should also conform to such laws as are applicable to the arbitration procedure.
Award must be final
Section 57(1)(d) of the 1996 Act states that the award sought to be enforced must have attained the status of finality in the country in which it was made. By finality, the provision means that the award should not be open to any form of opposition or appeal. For example, a foreign award would be considered to have attained finality if the time period for challenging the award by virtue of a proceeding had expired long before. Such an award would be considered to have attained finality and would be enforceable.
Enforcement should not be against public policy
According to Section 57(1)(e) of the 1996 Act, if the enforcement of the foreign award is against the public policy of India, then the award would be denied enforcement in India. Further, Explanation 1 to Section 57(1)(e) clarifies what would be construed to mean public policy for the purpose of this provision. Public policy, for the purposes of Explanation 1, constitutes the following:
- In the making of the award, either any element of fraud or corruption was present, or the award violated Section 75 or Section 81 of the 1996 Act; or
- The award contravenes the fundamental policy of Indian law.
- The award conflicts with the basic notions of morality and justice.
For the purpose of determining whether an award contravenes the fundamental policy of Indian law, Explanation 2 to Section 57(1)(e) provides that there must not be a review on the merits.
Conditions for non-enforcement under Section 57(2)
Section 57(2) of the 1996 Act provides three other grounds for refusal of enforcement of the foreign award. These are:
- In accordance with Section 57(2) subclause (a), an award that has been set aside at its juridical seat or place of arbitration may be refused enforcement.
- Section 57(2) subclause (b) lays down two other conditions for enforcement based on improper representation. According to this Section, if the party against whom the award is to be used could not adequately present its case either on account of untimely notice of the proceedings or because of some legal incapacity, then such an award may be refused to be enforced.
- Section 57(2) subclause (c) provides that if the tribunal failed to deal with all the differences between the parties as per the agreement or the tribunal gave its decision on such aspects that go beyond the scope of the arbitration agreement, then the enforcement may be refused. However, in instances where the award does not deal with all the differences between the parties, a proviso to this subsection provides that the Court may either postpone the enforcement or grant the enforcement. If the Court chooses to grant the enforcement, then it may further subject the enforcement to such a guarantee as the Court decides.
Additional grounds under Section 57(3)
Section 57(3) of the 1996 Act provides one additional condition for enforcing the award. As discussed above, under the 1996 Act, Sections 57(1)(a) and (c) and Section 57(2)(b) and (c) lay down certain conditions for enforcing the award. If the party seeks non-enforcement of the award under Section 57(3), then that party has to successfully establish that, in accordance with the law regulating the procedure of arbitration, there is some other ground except the ones already provided under Sections 57(1)(a) and (c) and Section 57(2)(b) and (c) that would entitle the opposing party to challenge the award. If the opposing party successfully proves the presence of further ground, then the court may do either of the two things:
- Refuse enforcement, or
- Adjourn Enforcement
If, however, the Court decides to adjourn enforcement, then it may provide a reasonable time for the opposing party to challenge the award and have it set aside by the tribunal competent to do so.
Section 58: Enforcement of the Geneva Convention Awards
Section 58 of the 1996 Act provides that upon satisfaction of the Court that the award is enforceable under Chapter II of Part II, such award would be deemed to be a decree of the Court.
Conclusion
While a lot has been done to make India a hub for arbitration, there is much to be done to overcome the ambiguity that persists in making the process of enforcement a smoother affair. As a much needed relief, the Arbitration and Conciliation (Amendment) of 2015 revoked the provision of an automatic stay on domestic arbitral awards. However, a lot of barriers still stand in the way of the swift execution of an award. As far as domestic arbitrations are concerned, the enforcement of arbitral awards is still a very time-consuming affair.
First and foremost, if a party seeks to challenge an arbitral award according to Section 34 of the 1996 Act, then the time period for enforcement would be three months, further extendable by 30 days. However, this is not the end of the dilemmas a successful party may have to face. The Court’s decision under Section 34 of the 1996 Act can be further appealed under Section 37 of the 1996 Act. After a decision on the appeal under Section 37, the parties have the option to make a further appeal before the Supreme Court under Article 136 of the Constitution of India. Even if the award holder is able to cross all of these hurdles, the execution itself may take several years. This is because there is no prescribed time limit within which the award must necessarily be enforced. Thus, it runs contrary to the very purpose of arbitration, which is to ensure the expeditious disposal of cases and the resolution of disputes.
A smoother, faster enforcement of arbitral awards is necessary and required in order to make India a pro-arbitration country. Parties generally engage in litigation just to stall the process of enforcement. However, if a better execution mechanism is not set up, it would be a long way for India to become a hub for arbitration. In this regard, however, a commendable approach was taken by the Supreme Court in the case of Vijay Karia v. Prysmian Cavi E Sistemi (2020), wherein a heavy cost of Rs. 50 lakhs was imposed on the appellants in view of the continuous challenges that were made to the award.
Frequently Asked Questions (FAQs)
If there has been a challenge to an award as per Section 34 of the Arbitration and Conciliation Act, 1996, does that mean that the enforcement of such an award would automatically be stayed?
No, after the Arbitration and Conciliation (Amendment) Act, 2015, there is no automatic stay on the execution of the award. This position of automatic stay was applicable only prior to the Arbitration and Conciliation (Amendment) Act, 2015. However, after the 2015 amendment, the fact that the award is facing a challenge under any ground mentioned in Section 34 of the 1996 Act is irrelevant. There is no automatic stay. Further, the Apex Court in the case of Hindustan Construction Company Limited v. Union of India (2019) noted that this provision for no automatic stay applies not just to cases subsequent to the 2015 amendment but also to cases which belong to a period before the 2015 amendment.
Can there be a foreign-seated international commercial arbitration between two Indian entities?
Yes, two Indian entities have the autonomy to proceed with a foreign-seated international commercial arbitration having the juridical seat or place of arbitration outside India. In the case of PASL Wind Solutions Private Limited v. GE Power Conversion India Private Limited (2021), the Apex Court affirmed this view. Furthermore, in such cases, the process of enforcement of such awards in India would be as per Part II of the Arbitration and Conciliation Act, 1996, dealing with the enforcement of foreign awards.
Can there be a challenge to a domestic award under Section 34 of the Arbitration and Conciliation Act, 1996, on the ground that the domestic award is not stamped?
No, a party cannot challenge an award under Section 34 of the 1996 Act on the ground that the award is unstamped. Such clarification was provided in the case of M. Anasuya Devi v. Manik Reddy (2003). The Apex Court in this case made an observation that a domestic award can be challenged only as per the grounds provided under Section 34 of the Arbitration and Conciliation Act, 1996. Further, the Apex Court observed that, though such an issue of non-stamping cannot be dealt with under Section 34, an objection regarding non-registration or non-stamping may be raised during the enforcement stage under Section 36 of the 1996 Act.
Does the Arbitration and Conciliation Act, 1996, provide for any stipulated time limit within which the courts are bound to enforce the domestic award?
No, there is no time limit within which the courts are bound to dispose of the enforcement petition, thereby enforcing the award. While Section 29A of the Arbitration and Conciliation Act, 1996, lays down that an arbitral tribunal must make an award in 12 months. This period of 12 months as provided under Section 29(A)(1), can be further extended by the parties for a period of 6 months. However, there is no such provision that provides for a time frame within which the courts should enforce and execute the arbitral award.
Can the parties to an India-seated international commercial arbitration choose a venue outside India?
Yes, they can. A venue is merely a geographical place of convenience where the parties and tribunal meet for the conduct of the hearing. It has no bearing on the juridical seat or place of arbitration. In this case, when the juridical seat is in India, the hearings may be conducted at any place convenient to the tribunal and the parties, which includes a venue outside India. A mere conduct of a hearing outside India would not amount to the ousting of the jurisdiction of the Indian courts under Part I, Sections 2-43 of the Arbitration and Conciliation Act, 1996. The Supreme Court made a similar observation in the case of Videocon Industries Ltd. v. Union of India (2011).
If a foreign award is passed in a country that is a contracting party not just to the New York Convention but also to the Geneva Convention, then how would such an award be enforced in India?
If a foreign award is made in a country that is a contracting party to both of these conventions, then in that case the award would be enforced in consonance with the procedure for enforcement provided in the New York Convention and not the Geneva Convention. The same is provided under Section 52 of the 1996 Act, according to which those awards to which Chapter I of Part II, that is, the New York Convention applies, and Chapter II, Part II, that is, the Geneva Convention, would not be applicable. This is also in line with Article VII(2) of the New York Convention, which provides for the non-applicability of the Geneva Convention in so far as and to the extent to which the Contracting States are bound by the New York Convention.
Whether a foreign award requires to be registered like a domestic award under the Registration Act, 1908?
No, there is no provision for registration of a foreign award under the 1996 Act. Further, according to Section 48 of the 1996 Act, a non-registered award would not be refused enforcement. Additionally, in the case of Harendra H Mehta v. Mukesh H. Mehta (1999), the Apex Court clarified that a foreign award under the Foreign Awards (Recognition and Enforcement) Act, 1961, is not required to be registered.
Like a domestic award, is there also a requirement for a foreign award to be stamped?
No, there is no such requirement for a foreign award to be stamped under the Indian Stamp Act, 1899. This question has now conclusively been dealt with in the case of M/s. Shriram EPC Ltd. v. Rioglass Solar SA (2018). Herein, the Apex Court observed that the reference to the term award under Schedule I, Item 12 of the Indian Stamp Act, is applicable only to the domestic award dealt with under Part I of the 1996 Act and not to foreign awards. Therefore, the requirement of stamping awards is not applicable to foreign awards and is limited to domestic awards regulated and made under Part I of the 1996 Act.
Can perversity in interpretation be a grounds for objecting to a foreign award?
No, for the simple reason that there was an element of perversity in the interpretation of a clause in the contract, a foreign award cannot be objected to. A similar view was held by the Apex Court in the case of Vijay Karia v. Prysmian Cavi E Sistemi (2020).
References
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