Enforcement of Foreign Award

The Arbitration and Conciliation Act, 1996, deals with the enforcement of foreign awards, and consists of two Chapters. Chapter I relates to the New York Convention Awards, and Chapter II relates to the Geneva Convention Awards. The New York Convention on the Recognition and Enforcement of Foreign awards, 1958 and the Geneva Convention on the Execution of the Foreign Arbitral Awards, 1927, deal with rules of procedure for enforcement of foreign awards in different countries which are parties to these Conventions. As India is party to both these Conventions, the relevant provisions relating to the enforcement of these awards have been incorporated under the Act of 1996.

• 1The arbitration agreement is valid;
• 2Subject matter of dispute is capable of settlement by arbitration;
• 3The award is made by a validly constituted Arbitral Tribunal;
• 4The award has become final in the country in which it has been made;
• 5Recognition and enforcement of award is not contrary to the public policy of the country wherein it has to be enforced.

Even if these conditions are fulfilled, the recognition and enforcement of the award could be refused if the court is satisfied that (a) the award is annulled; (b) sufficient notice of the arbitration proceedings is not given to the party; and (c) the award does not deal with contemplated differences. It was, however, felt that the Geneva Convention suffered from certain defects which hampered the speedy settlement of disputes through arbitration and thus, the New York convention was entered into. The New York Convention seeks to remedy those defects by providing for much more simple and effective methods of obtaining recognitiov amd enforcement of the foreign awards. The party against whom the award is sought to be enforced can object to recognition and enforcement of the foreign award on the grounds, (a) of incapacity of the parties or invalidity of the agreement; (b) lack of proper notice of appointment of arbitrator or arbitral proceedings; (c) that the award deals with differences not contemplated within the submission to arbitration; (d) that the composition of the arbitral authority or procedure does not accord with the agreement; (e) that the award has not as yet become binding; (f) that the subject-matter is not capable of settlement by arbitration: (g) that recognition and enfocement of the award is contrary to the public policy. None of these grounds postulates a challenge to the award on merits. Both the conventions have been incorporated as Schedules to the Act of 1996 and thus have been made a part thereof.

"Foreign Award" is defined in section 44 of the Act of 1996 as an award on differences between persons arising out of legal relationships, whether contractual or not, considered to be commercial under the law in force in India; and made in pursuance of an agreement in writing for arbitration to be governed on the Recognition and Enforcement of Foreign Awards Act, 1958, in the territory of a foreign State notified by the Government of India as having made reciprocal provisions for enforcement of the Convention.

The UNCITRAL model law states that "an arbitral award, irrespective of the country in which it was made, shall be recognised as binding and, upon application in writing to the competent court, shall be enforced. The choice of place of arbitration for international arbitration, is guided by the convenience of the parties with little or no connection with the State where the arbitration takes place".