International Commercial Arbitration is defined under Section 2(f) of the Arbitration and Conciliation Act. The Act governs International Arbitration and Domestic Arbitration but in these two situations it differs from each other under Part I of the Act and which is as follows:

1.   In case of appointment of an arbitrator;

2.   In relation to determining the governing law.

It can be defined as an arbitration where at least one of the parties which can be an individual, a company or an association of individuals who are from outside of India and habitually reside out of the jurisdiction of India in any other country whose Central management is controlled in any other country and not by the Indian government.

Enforcement of Foreign award

The enforcement of the foreign award is given under Part II of the Act which relates to both the New York Convention award and Geneva Convention award.

Definition of Foreign award

Under Section 44 of the Act, it is given that an Arbitration award is made by any county to whom the Central government recognises as a territory by making a notification and to whom the New York Convention applies. Even if a country is a signatory to the New York Convention this does not mean that its award can be made in India, there has to be further notification by the Central government to recognise it as a territory.

(So far only 43 countries have  been recognised by the Central government to be a territory and execute their award in India.)

In 2012, the face of International Commercial Arbitration changed when the Supreme Court of India made a judgement in the case of Bharat Aluminium Co. V. Kaiser Aluminium technical services Ltd, (2012) 9 SCC 552. Mostly commonly known as BALCO case and gave the following guidelines as:

1.   In the case of International Commercial Arbitration where the seat is outside India, no application can be made in Indian courts for interim relief and they don’t have any authority in this regard.

2.   The award granted in International Commercial Arbitration will be subject to Indian jurisdiction only when they are to be enforceable in India.

Requirements for enforcement of Foreign award

The following essentials must be made to enforce any foreign award and they are:  

1.   Original award or authorized copy where the award was made;

2.   Evidence to prove that it is a foreign award;

3.   The award must be given in a Convention country;

4.   The agreement must be in writing;

5.   The agreement must be valid and should arise from a Commercial agreement.

6.   The award made must be unambiguous.

Khardah company v. Raymond and Co, AIR 1962 SC 1810

In this case, the Court held that a foreign award cannot be made to be enforceable in India if it’s integral part is declared to be illegal.

Koch Navigation v. Hindustan Petroleum Corporation, AIR 1989 SC 2198

In this case, the Court held that to give effect to the award it must be clear, unambiguous and capable of enforcement through Indian law.

Unenforceable award

An Indian court can refuse to enforce a foreign award if it falls under any of the following categories:

1.   The agreement is void in nature;

2.   The parties to the agreement are under some sort of incapacity;

3.   The party making the application was not given proper notice for appointment of the arbitrator or arbitral proceedings;

4.   The award made is out of the scope of the arbitrator and does not deal with the dispute;

5.   The award made is contrary to public policy;

6.   The subject matter dealt is not capable of settlement by Arbitration.

Conditions for enforcement of Foreign award

Where the Court is satisfied that the award made is capable of enforcement it should be deemed to be a decree and executed in the same way as given under CPC, 1908. Basically, there are a few noteworthy differences between Section 34 and 48 of the Act as under Section 34 under domestic award the court can set aside an award whereas in section 48 the court can only refuse to execute the foreign award and cannot set aside it. The only way to set aside a foreign award in India is by way of filling a Civil Suit under the Specific Relief Act.

The second difference between the two Sections is under a foreign award, there exists an additional ground where the court can deny to execute the decree as to whether it is binding on the parties or not. If the decree passed does not bind the parties it can be refused to be enforced in India.

An appeal lies from an order of the court where it refused to enforce a foreign award but surprisingly no appeal can be made where the Court has rejected the objections to enforcing a foreign award. However, the Constitutional remedy can be approached by the parties under Article 136 as a special leave petition to the Supreme court.

Limitation Period for enforcement of awards

1.   Domestic award

As the Arbitration award passed under Arbitration proceedings is considered as a decree in the Case of M/s Umesh Girl v. Himachal Pradesh cooperative group housing Society, 2016 (11) SCC 313 the Supreme Court of India held that according to Limitation Act, 1963 the limited time period for enforcement of a decree is twelve years.

2.   Foreign award

Various Courts have given their interpretation in this regard and it varies from each other. The Bombay High Court has held that as the foreign award is not a decree a Competent Court is required to make it enforceable and make it binding on the parties which involves a two-step procedure for which the limitation period would be 3 years for recognizing a foreign award as binding on the parties and thereafter, further 12 years are present to enforce the decree. On the Other hand, the Madras High Court has ruled an opposite judgement and held that the foreign award is similar to the domestic award and it is already stamped therefore, no procedure is required and parties can straight away apply for its execution and 12 years are present to enforce the foreign award as a decree in India.

Conclusion

In the early period, the Concept of Arbitration was introduced but by the efforts of due recognition to Model Law of International Commercial Arbitration and Conciliation rules given by the United Nations Commission on trade and law ( UNCITRAL). The model law and rules have played a significant role in the settlement of commercial disputes and provided rules to various other countries which they can adapt and make according to their municipal laws as earlier there was no unified law related to trade and its need felt when globalization started which further gave rise to disputes related to it. Further the Act was amended in 2015 with better updates.

Share this News