Introduction
In today’s globalized world, cross-border commercial transactions are common, leading to a surge in international commercial disputes. Arbitration has emerged as the preferred method for resolving such disputes due to its flexibility, neutrality, and enforceability. When an arbitral award is made in a country other than India, it is termed a foreign award. The enforcement of such awards in India is governed primarily by the Arbitration and Conciliation Act, 1996, which integrates international conventions like the New York Convention (1958) and the Geneva Convention (1927).
What is a Foreign Award?
As per Section 44 of the Arbitration and Conciliation Act, 1996:
- A foreign award is one made in a country that is a signatory to the New York Convention or the Geneva Convention, and
- The award must arise from a commercial dispute under a written arbitration agreement.
Legal Framework for Enforcement
1. Part II of the Arbitration and Conciliation Act, 1996
- Chapter I: Relates to enforcement of New York Convention awards (Sections 44–52).
- Chapter II: Relates to enforcement of Geneva Convention awards (Sections 53–60).
India is a signatory to both conventions, and hence it recognizes foreign awards rendered in specified territories under these conventions.
Procedure for Enforcement of Foreign Awards in India
Step 1: Filing a Petition
The party seeking enforcement must file a petition under Section 47 of the Arbitration and Conciliation Act, 1996 in the appropriate High Court having jurisdiction.
Step 2: Essential Documents
The petition must be accompanied by:
- The original arbitral award or a duly authenticated copy.
- The original arbitration agreement or a certified copy.
- If the award or agreement is not in English, a certified English translation.
Step 3: Court’s Prima Facie Satisfaction
The High Court examines the documents and ensures they satisfy the conditions of Section 47. If satisfied, the court proceeds with the enforcement as if it were a decree of the court under Section 49.
Grounds for Refusal of Enforcement (Section 48)
The court may refuse to enforce the foreign award only under specific grounds laid down in Section 48, such as:
A. Procedural Grounds:
- Invalid Arbitration Agreement under the law governing it.
- No proper notice given to the party or inability to present the case.
- Award deals with matters beyond the scope of arbitration agreement.
- Improper composition of the arbitral tribunal.
B. Public Policy Grounds:
- Award is in conflict with the public policy of India.
- Award was induced or affected by fraud or corruption.
- Award is in violation of fundamental policy of Indian law or basic notions of morality and justice.
Landmark Judgments Interpreting Enforcement
1. Renusagar Power Co. v. General Electric Co. (1994)
- Distinguished between the public policy of India and public interest.
- Enforcement can be refused only if the award contravenes fundamental policy, morality, or justice.
2. Shri Lal Mahal Ltd. v. Progetto Grano Spa (2013)
- Reaffirmed that public policy objection cannot be expanded arbitrarily.
- Set aside the broader interpretation used in domestic awards.
3. Vijay Karia v. Prysmian Cavi (2020)
- Reinforced minimal judicial interference in enforcement of foreign awards.
- Held that Section 48 is exhaustive, and courts cannot impose extra conditions.
Time Limit for Enforcement
There is no specific limitation period mentioned under the Arbitration Act for enforcement of foreign awards. Hence, Article 137 of the Limitation Act, 1963 applies, providing a three-year period from the date when the right to apply accrues.
Execution of Foreign Awards
Once the court is satisfied with all compliance under Sections 47–49 and no valid objections under Section 48 are sustained, the award is declared enforceable. It is then treated as a decree of the Indian court and can be executed under the Code of Civil Procedure, 1908.
Distinction: Foreign vs Domestic Awards
| Criteria | Foreign Award | Domestic Award |
|---|---|---|
| Place of Arbitration | Outside India | Within India |
| Governing Provisions | Part II of Arbitration Act | Part I of Arbitration Act |
| Enforceability | Requires High Court Recognition | Enforced as decree post Section 36 |
| Public Policy Grounds | Narrow interpretation (Section 48) | Broader interpretation (Section 34) |
| Judicial Intervention | Minimal | Slightly higher in domestic awards |
Advantages of Recognizing Foreign Awards
- Promotes ease of doing business.
- Boosts foreign investor confidence.
- Aligns with international commitments.
- Reduces litigation burden on Indian courts.
Challenges and Criticism
- Delay in judicial process due to objections under Section 48.
- Ambiguity in interpretation of public policy.
- Some courts hesitant to enforce awards affecting state interest or high stakes.
Recent Reforms and India’s Pro-Arbitration Approach
India is moving towards becoming an arbitration-friendly jurisdiction. The 2015, 2019, and 2021 amendments to the Arbitration and Conciliation Act have all aimed at:
- Minimizing court interference
- Imposing time limits
- Ensuring procedural clarity for foreign and domestic awards
Memory Code Table: Enforcement of Foreign Award
| Section | Topic | Key Point |
|---|---|---|
| Sec 44 | Definition of Foreign Award | Based on commercial agreements, made outside India |
| Sec 47 | Evidence required | Award, arbitration agreement, certified translation |
| Sec 48 | Grounds for refusal | Procedural issues, public policy, fraud, excess jurisdiction |
| Sec 49 | Effect of enforcement | Award = Decree of civil court |
| Sec 50 | Appeal provision | Appeals permitted on refusal to enforce |