Enforcement of foreign awards against Indian companies in an international ICC arbitration

An international commercial arbitration, governed under the arbitration regime of the International Chamber of Commerce, can be seated either in India or in a foreign country. While Part I of the Arbitration & Conciliation Act, 1996 (Indian Act), would govern the enforcement and execution of an Indian seated arbitral award, provisions of Part II of the Indian Act would govern the enforcement of foreign seated awards.

In India, foreign awards are acquiescent under Part II of the Indian Act, which, specifically, is in consonance with the provisions of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) or the Convention on the Execution of Foreign Arbitral Awards 1927 (Geneva Convention).

India is a signatory to both conventions. Section 44 of the Indian Act provides that, for a foreign award to be recognized as such under Part II, Chapter I (New York Convention Awards), certain conditions need to be fulfilled. These conditions are as follows:

1. The territory should be signatory to the New York Convention
2. The Indian Central Government should have notified in the Official Gazette that it has reciprocal provisions with such
   a territory.

Therefore, any foreign award a party/country, which is a signatory to either the New York Convention or the Geneva Convention, receives under the ICC arbitration regime can get the same enforced within the territory of India.

Enforcement

The enforcement of a foreign award under the ICC arbitration regime in India is a binary process. The dualistic approach begins with the filing of an execution petition in an Indian court, wherein the latter at the first instance shall ascertain whether the foreign award had adhered to the requirements of the Indian Act. These requirements are listed as follows:

1. Whether the original award or an authenticated copy, in accordance with Section 47 the Indian Act, was filed.
2. Whether the original agreement or certified copy of the arbitration agreement, in accordance with Section 47 of the Indian Act, was filed.
3. Whether necessary evidence to prove that the award is a foreign award, in accordance with Section 47 of the Indian Act, has been filed.

Section 47 of the Indian Act states the following:

Evidence —

1. The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court: (a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; (b) the original agreement for arbitration or a duly certified copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award.
2. If the award or agreement to be produced under sub-section is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.

Explanation —

In this section and all the following sections of this chapter, “court” means the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal civil court, or any court of small causes.

Once the court is satisfied that the foreign award is enforceable, the same shall be enforced like a decree of that court. In this decree, related to Fuerst Day Lawson Limited v Jindal Exports Limited 2001(6) SCC 356, the court stated that, “In one proceeding, there may be different stages. In the first stage the court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of court/decree again.”

While doing the same, Indian courts are mindful of the following conditions as set out under Section 48 of the Indian Act, which may be met before execution of such awards. These conditions can also be the grounds that the other/aggrieved party adopt for challenging the said award. These conditions/grounds, which shall render the foreign award unenforceable, are as follows:

1. That the subject agreement is not in accordance with the law to which the parties have subjected it or under the law of the country where the foreign award was made.
2. The award is ultra vires to the agreement.
3. The award contains decisions on matters beyond the scope of arbitration.
4. The arbitral procedure was not in accordance with the law of the country where the arbitration took place.
5. The foreign award has not yet become binding on the parties or was set aside by the higher authority of the country in which that award was made.
6. Enforcement of the foreign award will be contrary to public policy of India.
7. Subject matter of the dispute is not capable of settlement under the Indian Act.

Once the award has survived the challenge and the court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court under Sedtion 49 of the Indian Act. After this stage, it can be executed under Order XXI of the Code of Civil Procedure, 1908, in the same manner as a decree of an Indian court. Where the subject matter of the foreign award is money, the commercial division of any High Court in India where assets of the opposite party lie shall have jurisdiction. In case of any other subject matter, the commercial division of a High Court, which would have jurisdiction as if the subject matter of the award was a subject matter of a suit, shall have the jurisdiction.

Ravi Singhania is the managing partner and Madhu Sweta is a partner at Singhania & Partners