Introduction
A foreign arbitral award is one that is made outside India, typically as a result of an international commercial arbitration. The recognition and enforcement of such awards in India are governed primarily by the Arbitration and Conciliation Act, 1996 (Part II), and also by international conventions, mainly the New York Convention (1958) and the Geneva Convention (1927).
Legal Framework in India
The legal provisions dealing with the enforcement of foreign arbitral awards are found in Part II of the Arbitration and Conciliation Act, 1996.
- Chapter I (Sections 44–52) governs New York Convention Awards.
- Chapter II (Sections 53–60) governs Geneva Convention Awards, though it is now rarely used.
- Section 44 defines a “foreign award” as one made in a country notified by the Indian government as a reciprocating territory under the New York Convention, arising from a commercial legal relationship.
Conditions for Enforcement
To enforce a foreign arbitral award in India, the following conditions must be satisfied:
- The award must be from a reciprocating territory as notified by the Indian government.
- The award must arise out of a commercial relationship.
- The party must apply before the High Court with:
- The original or certified copy of the award
- The original or certified copy of the arbitration agreement
- Any necessary translations
Under Section 48, enforcement may be refused only if:
- A party was under some incapacity or the arbitration agreement is invalid.
- The party against whom the award is invoked was not given proper notice or was unable to present their case.
- The award deals with issues not contemplated by or not falling within the scope of the arbitration agreement.
- The arbitral tribunal was not constituted in accordance with the agreement or the law of the seat of arbitration.
- The award is not binding or has been set aside or suspended by a competent authority in the country in which it was made.
- Enforcement would be contrary to the public policy of India.
The 2015 Amendment to the Act clarified that public policy shall be interpreted narrowly and will only include:
- Fraud or corruption
- Violation of fundamental policy of Indian law
- Basic notions of morality or justice
Effect of Enforceability
Once the High Court finds that the foreign award is enforceable (under Section 49), the award is deemed to be a decree of the court. It can then be executed as a regular court decree under the Civil Procedure Code.
Doctrines and Principles
Two key principles govern the enforcement of foreign awards:
- Principle of Reciprocity:
India will only enforce awards from countries that also recognize and enforce Indian arbitral awards. - Pro-Enforcement Bias:
Courts are expected to interpret the grounds for refusal under Section 48 narrowly to promote international trade and cross-border dispute resolution. The objective is to enforce awards unless a clear legal violation exists.
Procedure of Enforcement
The process begins when the award-holder files an application in a competent High Court in India. Along with the application, the award, arbitration agreement, and translations (if needed) are submitted. The court examines if the requirements of Sections 44, 47 and 48 are fulfilled. If no valid ground of refusal is found, the court declares the award enforceable under Section 49, after which it can be executed like a decree.
Reciprocating Territories
India has notified more than 50 countries under the New York Convention. These include major jurisdictions such as:
- United States
- United Kingdom
- France
- Singapore
- Germany
- Australia
- Switzerland
The complete list is available on the Ministry of Law and Justice or Department of Legal Affairs website.
Key Case Laws
- Renusagar Power Co. Ltd. v. General Electric Co. (1994)
Distinguished between public policy in enforcement vs. setting aside. It held that enforcement may only be refused for violations of Indian public policy in a limited sense. - Shri Lal Mahal Ltd. v. Progetto Grano Spa (2014)
Supreme Court held that enforcement courts cannot review the merits of a foreign award. Public policy should be applied narrowly. - Vijay Karia v. Prysmian Cavi (2020)
Strong pro-enforcement judgment where the Court emphasized minimal interference with foreign awards and criticized overuse of public policy as a ground for refusal. - Cairn Energy v. Government of India (2021)
The award dealt with investor-state arbitration and enforcement challenges against sovereign states, raising questions of immunity and treaty obligations.
Mind Map
The topic of Recognition and Enforcement of Foreign Arbitral Awards can be broken down into key areas for easy understanding. It begins with understanding the legal framework, specifically Part II of the Arbitration and Conciliation Act, which is divided into two chapters—one for the New York Convention and another for the Geneva Convention. Next, it covers the definition of a foreign award, which must arise out of a commercial legal relationship and come from a country notified as a reciprocating territory.
The required documentation for enforcement includes the original award, the arbitration agreement, and relevant translations. The court checks for any grounds of refusal under Section 48, such as invalid agreements, improper procedure, excess jurisdiction, or public policy concerns. If no such grounds exist, the award is enforceable under Section 49 and becomes a decree.
Doctrinally, the principle of reciprocity and the pro-enforcement bias guide interpretation, with courts expected to minimize interference. The process begins with an application to the High Court, and enforcement leads to the award being treated as a civil decree. Several key case laws, such as Renusagar, Lal Mahal, and Vijay Karia, illustrate the Indian judiciary’s evolving pro-enforcement approach. The topic also includes the list of notified reciprocating countries where foreign awards are enforceable in India.
Situation-Based Questions and Answers
Q1. A party claims it was not informed about the arbitration proceedings. Can enforcement be refused?
Yes, under Section 48(1)(b), if the party was not given proper notice or was unable to present their case, the court may refuse enforcement.
Q2. Can an award be enforced in India if it has been annulled by a court in the country where it was made?
No, under Section 48(1)(e), enforcement may be refused if the award has been set aside or suspended in the country of origin.
Q3. Does violation of Indian tax law by a foreign award amount to violation of public policy?
Not necessarily. The Supreme Court has held that the “public policy” exception is limited and does not include every breach of Indian law, unless it affects fundamental policy.
Frequently Asked Questions (FAQs)
Q1. What is a foreign arbitral award?
It is an arbitral award made in a foreign country in an international commercial arbitration, enforceable under Part II of the Arbitration Act.
Q2. Can Indian courts review the merits of a foreign award during enforcement?
No. The courts cannot go into the merits of the dispute. Only procedural and legal compliance are examined.
Q3. What is the time limit for enforcing a foreign arbitral award?
Though the Act is silent, Indian courts generally apply Article 136 of the Limitation Act, which allows 12 years from when the award becomes enforceable.
Q4. What does ‘public policy of India’ mean in this context?
It refers to fundamental legal principles of India, including prohibition of fraud, corruption, and violation of fundamental laws. It is a narrow exception.
Q5. Is a separate suit required to enforce a foreign arbitral award?
No, once the High Court declares the award enforceable under Section 49, it becomes equivalent to a decree, and a separate suit is not necessary.
