Enforcing Foreign Arbitration
Awards
in India
Article & FAQ's
Can an Arbitration Award Obtained from a Foreign Country be Enforced Against a Party in India?
Under Section 44 of the Indian
Arbitration and Conciliation Act, 1996, a foreign
arbitration a foreign award by definition means an award passed in such
territory as the Central Government by notification may declare to be a
territory to which the New York Convention applies.
Hence, even if a country is a signatory to
the New York Convention, it does not ipso facto mean that an
award passed in such country would be enforceable in India.
There has to be further notification by the Central Government
declaring that country to be a territory to which the New York
Convention applies.
About 40 countries have been notified so far by the Indian
government. The United States of America, United Kingdom,
France, Germany, Japan and Singapore are among the countries
notified by India.
Australia and Hong Kong are among the
countries which have not yet been notified.
Is India a Party to the New York Convention of Enforcement of
Arbitration Awards?
India is a party to the the New York
Convention of 1958 on the Recognition and Enforcement of Foreign
Arbitral Awards. It became a party to the 1958 Convention on 10th June,
1958 and ratified it on 13th July, 1961.
India is also a party to the Geneva
Protocol on Arbitration Clauses of 1923, and the Geneva Convention on
the Execution of Foreign Arbitral Awards, 1927. The Indian law is complex in these kind of matters.
Therefore, please seek a proper legal advice regarding this
matter.
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Whether an Arbitration Award obtained in the USA is enforceable in
India?
The USA and India are both
parties to the the New York Convention of 1958 on the
Recognition and Enforcement of Foreign Arbitral Awards.
The United States of America is among the
countries notified by India under the New York Convention.
Therefore, an Arbitration
Award obtained in the USA is enforceable in India. .
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What law governs the enforcement of Foreign Arbitration Awards in
India?
The Indian Arbitration and Conciliation Act,
1996 the governing arbitration statute in India. It is based on
the Model Law on International Commercial Arbitration adopted by
the United Nations Commission on International Trade Law (UNCITRAL)
in 1985. The Code of Civil Procedure, 1908 (CPC)
governs the execution of decrees, whether foreign or domestic,
in India.
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What are the Conditions for enforcement of Foreign Arbitration Awards in
India?
Section 48 of the
Indian Arbitration and Conciliation Act, 1996
lays down the conditions for enforcing a foreign arbitration
award in India. Grounds for refusal of
enforcement are provided for under Section 48 are similar to the
New York Convention. If the court is satisfied
that the foreign award is enforceable, the same shall be deemed
to be a decree of the court. The Supreme Court has held that no
separate application need be filed for execution of the award. A
single application for enforcement of award would undergo a
two-stage process. In the first stage, the enforceability of the
award, having regard to the requirements of the Act (New York
Convention grounds) would be determined. Once the court decides
that the foreign award is enforceable, it shall proceed to take
further steps for execution of the same.
Whether a Foreign Arbitration Award can be challenged in India
on the ground of public policy?
Previously, under the Indian Arbitration and Conciliation Act, 1996,
challenging a foreign arbitration award on the ground of public
policy was not available.
In a recent judgment, the Supreme Court of India
has ruled that broadly interpreted public policy considerations
that were previously only grounds for challenging domestic
arbitration awards are now appropriate grounds for challenging
foreign arbitration awards. (Venture Global Engineering v.
Satyam Computer Services, Ltd., January 2008).
Specifically, the Supreme Court upheld a challenge in India to a
foreign arbitration award on the grounds that the relief
contained in the award violated certain Indian statutes and was
therefore contrary to Indian public policy pursuant to Part I of
the Indian Arbitration and Conciliation Act, 1996.
The case arose from a challenge in India by a US company,
Venture Global Engineering (VGE), to set aside an award rendered
against it in an arbitration proceeding in London under the
rules of the LCIA. The relief in the award implicated VGE’s
interests in India and called for the transfer of certain shares
that VGE owned in an Indian joint venture. VGE’s challenge
asserted that the relief in the award violated certain Indian
corporate and foreign investment statutes, specifically the
Foreign Exchange Management Act, 1999, and therefore constituted
a "conflict with the public policy of India" pursuant to the
general provisions contained in Section 34 of Part I of the
Arbitration Act.. The decision has important
implications both for companies doing business involving India
and for companies with substantial assets located in India and
for companies required to enforce foreign arbitration awards in
India.
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