Written by - Rithik Aggarwal
Designation - Intern, MediateGuru
Arbitration is a legal process like court proceedings irrespective of that it takes place outside courts but is effective as a court judgement. It is a quick, less expensive, confidential and final solution to dispute resolution which makes it a flexible method of dispute resolution. Arbitration involves the discernment by the independent third party (called arbitrator) which is appointed by the parties by the virtue of the Arbitration Clause included in the contract itself done by the parties.
The decision given by the Arbitrator is known as the Arbitral Award which is made on the merits of the facts by the Arbitrator and it is cognate to the judgement in the court of law.
3 conditions are necessary to be fulfilled for an award to be treated as a Foreign Arbitral Award:
· The legal relationship between the parties must be commercial.
· Award must be made in pursuance of an agreement in writing.
· Award must have been made in a country that is a signatory to the New York Convention.[1]
Recognition of Foreign Arbitral Award in India
Foreign awards are enforced under the New York Convention of 1927 and the Geneva Convention as contained in Part II of the Arbitration and Conciliation Act 1996 (thereinafter referred to as ‘Act’) as a decree of the court. Foreign Arbitral awards or the international Arbitral awards gets their status by the virtue of the two most leading Conventions i.e., the New York Convention and the Geneva Convention and the country’s signatories to these two facilitates the Enforcement of Foreign Arbitral Award.
Enforcement of Foreign Awards
Indian Arbitration Act of 1996 provides the framework for the enforcement of foreign/International arbitral awards as India is one of the countries signatories to the convention of 1927 i.e., Geneva Convention which deals with the Execution of Foreign Award and the Convention of 1958 i.e., New York Convention which deals with the Recognition and Enforcement of Foreign Arbitral Award. In Bhatia International Case [2] Hon’ble Supreme Court held that if the arbitration award was made in a country that is not a signatory to the convention, then that award will not be considered as the Foreign Arbitral Award.
For enforcing the foreign award there are certain conditions that should be fulfilled which are as follows:
a) There should be a commercial transaction
b) Agreement should be in writing
c) Agreement must be valid
d) Award should not be ambiguous
The party which is seeking the enforcement of the Foreign Award under the provision of the Act must file an application in the competent court with the following: [5]
· Original/Authenticated copy of the award
· Original/Authenticated copy of the agreement
· Evidence that may be necessary to prove that the award is foreign
Section 57 of the Act [6] deals with the conditions which are necessary for the enforcement of the foreign awards which are:
· Award has been made in pursuance of a submission to arbitration valid under the law in India
· Subject matter of the award is capable of settlement by the arbitration under the law of India
· 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.
· Award has become final in the country which it has been made
· Enforcement of award should not be contrary to the public policy or the law of India
Section 58 of the Act deals with the Enforcement of the Foreign Awards which lays that where the court is satisfied that the foreign award is enforceable under this chapter, the award shall be deemed to be a decree.
Conclusion
The above analysis of topics regarding the enforcement of foreign awards - a field of law that has greatly increased in importance due to the recent inundation to the New York Convention of 1958 by the major commercial countries of the world. The Government of India has from the initial stages supported international trade arbitration bypassing domestic enactments to give effect to the relevant conventions on arbitration. On the other hand, the Indian courts, following the example of English courts, have been inclined to take a restrictive approach to international arbitration, especially concerning the issue of stay of court action, during the pendency of foreign arbitration. This issue has a ripple effect because it causes the pre-emption of enforcement of foreign awards. However, a recent 77th amendment to the Act of 1961 provides for a mandatory stay of court action and it is hoped that adherence to it will further the enforcement of foreign awards in India by contributing some certainty to the use of international trade arbitration.
Comments