ENFORCEMENT OF FOREIGN

ARBITRAL AWARDS IN INDIA

NITHIN.P
HC16156
B.A.L.L.B “B”

230
 ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN
INDIA

1. Introduction

In international trade, arbitration, rather than litigation, is the preferred

method of dispute resolution, since it is easier to enforce an arbitral award than a
court decision, in a foreign State. From a practical point of view, this is because
there are more multilateral conventions and bilateral treaties facilitating enforcement
of foreign arbitral awards than there are for enforcement of court decisions. From a
theoretical point of view, enforcement of arbitral awards is easier, because of the
contractual nature of arbitration. An arbitral award is the consequence of a private
dispute settlement procedure, while a court ruling represents the sovereignty of the
State where they are issued. It is easier for a national court to enforce the
consequence of a contractual agreement between two private parties, than a decision
representing the sovereignty of a foreign State. Therefore, as seen, in the previous
Chapters, the tendency in international convention and municipal laws is to facilitate
enforcement of arbitral awards.

In this Chapter, it is examined to what extent Indian Law is facilitative of

enforcement of foreign arbitral awards, so far as they are not covered by bilateral or
multilateral treaties. As we have seen in the Chapter IV, the law of arbitration in
India has gone through deep changes in recent decades. Regulations on enforcement
of foreign awards have significantly improved in recent years. Previous Indian Law
did not make any distinction between domestic and foreign awards, and no definition
of a foreign arbitral award was made. Therefore, it was assumed that foreign awards
were subject to retrial and challenge, and that the same legal procedure and scrutiny
were applied to foreign awards as those applied to domestic awards. Present Indian
Law, however, in some aspects, goes beyond the New York Convention, 1958 (the
NYC, 1958) to facilitate enforcement of foreign awards. In this Chapter, after a brief
review of the background to the issue of enforcing foreign arbitral awards in India,
and legal developments in this regard, those parts of the Arbitration Act, 1996 that
address enforcement of foreign arbitral awards are examined. These parts of Indian
Law apply to foreign arbitral awards that can be enforced under international
conventions or bilateral treaties to which India is a party. Following an examination
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of general provisions of Indian Law regarding enforcement of foreign awards,
grounds for non-enforcement of such awards are considered. Then, the competence
of the court regarding foreign awards is discussed.

2. Background of Enforcing Foreign Arbitral Awards in India

The international commercial activities were in existence to the present era as

well. Of course, its volume and participating units were limited. The advent of
industrial revolution technical and mechanical utilization and information
technology explosion have made the world very small in its reach and transactions
have grown enormously between the different nations. Where there are voluminous
and numerous transactions (both at international & domestic level), it is but natural
that there shall be disputes as well. The settle these international commercial
disputes speedy and satisfactorily, as per international norms, in India there were
two separate Acts, namely:
a)The Arbitration (Protocol & Convention) Act, 1937: It was enacted as a result
of Geneva Protocol (1923) & Geneva Convention, 1927 (the GC, 1927)
under the auspices of League of Nations.
b)The Foreign Awards (Recognition & Enforcement) Act, 1961: It was enacted
as a result of the NYC (1958), under the auspices of United Nations
Organization

After the enactment of the Arbitration Act, 1996, the two aforesaid Act stand
repealed, and with certain modifications, their close relevant provisions have been
incorporated in Chapter I with heading ‘Enforcement of Certain Foreign Awards’
and ‘New York Convention Awards’ and Chapter II with heading “Geneva
Convention Awards” respectively of Part II of the present Act, 1996.

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 However, the Supreme Court (SC) in Thyssen Sthlunion GMBH v. Steel
1
Authority of India has held that there is not much difference in the provisions of
the Foreign Awards (Recognition & Enforcement) Act, 1961 and the Arbitration
Act, 1996 regarding enforcement of the foreign award. The definition of ‘foreign
award’ is also same in both the enactments. The only difference appears to be that
while under the Foreign Awards (Recognition & Enforcement) Act, 1961 a decree
follows, whereas under the present Arbitration Act, 1996, a foreign award is already
stamped as the decree.

The Part II of the present Arbitration Act, 1996 contains in Chapter I the
primary provisions of the NYC (1958) which deals and covers both arbitral
agreement and awards, having foreign texture and in Chapter II, likewise, the
provisions of the Geneva Convention, 1927 (the GC, 1927) are contained. Thus part
II of the present Arbitration Act, 1996, regulates the awards made under the NYC
(1958) in Chapter I or the GC (1927) in Chapter II for its enforcement.

Section 52 of the present Arbitration Act, 1996 provides that Chapter I of

Part II excludes the application of Chapter II but Chapter II does not exclude the
application of Chapter I. Excepting Section 52 (in Chapter I) of the Act, 1996, both
the Chapters (Chapter I and Chapter II) consist of 8 Sections each dealing with same
issue and wording of the Sections is also almost the same barring Section 47 of
Chapter I and Section 57 of Chapter II which deal with the enforcement of foreign
awards.

3. Definition of Foreign Award

A foreign award has been defined in Section 44 of the present Arbitration

Act, 1996. It gives an understanding about the term of foreign awards as also the
2
term Commercial in context of foreign award. Under this Section, the term
‘Foreign Award’ means an arbitral award made on or after the 11 th day of October,
1960 on differences between persons arising out of legal relationships, whether
contractual or not, considered as commercial under the law in force in India. The

first Act as to foreign awards was the Foreign Awards (Recognition & Enforcement) Act, 1961
and because the Arbitration Act, 1996 takes over the provisions of the Act, 1961, the Section
provides that is necessary that foreign award was made on or after the 11th day of October, 1960.

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 It is undoubtedly true that the origin of foreign awards comes from foreign
arbitration. In the other word, the term ‘Foreign Award’ means the arbitral award
made as a result of foreign arbitration which is not a domestic arbitration. It
becomes necessary to understand the term ‘foreign arbitration’. The Calcutta High
Court in Case Serajuddin v. Michael Golodetz,3laid down the necessary conditions
relations relating to term ‘foreign arbitration’ or essential elements of a foreign
arbitration, resulting into the foreign arbitral award -these are as following points;-
a. Arbitration should have been held in foreign lands;
b. by foreign arbiter(s);
c. Arbitration by applying foreign laws;&
a. As a party foreign national is involved. In the instant case since the case was
decided on the basis of American Arbitration Law, on foreign land involving
a foreign party under a foreign arbitration, it was held to be a foreign
arbitration.

To interpret the term ‘Foreign Award’, the SC in N.T.P.C. v. Singer Co.,

4observed that where in London an interim award was made which arose out of an
arbitration agreement governed by the laws of India. It was held that such an arbitral
award cannot be treated as a foreign award and it is purely a ‘Domestic Award’
because it was governed by the Indian laws both in respect of agreement and
arbitration.

In 1994, just a year had passed since the SC ruling in aforesaid case, the
Delhi High Court in Gas Authority of India Ltd. v. Spie Capage S.A.,5 examined in
depth the historical developments which led to the NYC (1958) and GC (1927) and
their result implementation under the two enactments i.e., The Arbitration (Protocol

3 AIR 1960 Cal.49, (Indian kanoon).

4 AIR 1993 SC 998, (Indian kanoon).
5 AIR 1994 Del.75, (Indian kanoon).

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and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement)
Act, 1961 which now repealed by the Arbitration Act, 1996.

The definition of ‘Foreign Award’ for the purposes of the GC (1927) as

contained in this Section differs from the foreign award as defined in Section 44
under the NYC (1958). The differences may be stated as follow:

Section 44 of the New York Section 53 of the Geneva

Convention, Convention,
1958 1927

The words ‘arising out of Section 53 failed to utilise these

legal relationships, whether words, instead of this it use
contractual or not’ as “relating to matters
used in Section 44. considered as commercial”.

The definition of ‘Foreign Award’ as But Section 53 is devoid of this beginning.

given in Section 44 under the NYC
(1958) begins with the non–obstanate
clause i.e., ‘under
the context otherwise requires’.

Section 44 insists that the agreement Section 53 simply talks of

must be in writing agreement simpliciter, omitting
the words ‘in writing’.

Table 6.1: Differences between definitions of ‘Foreign Award’ in the New York
Convention, 1958 and the Geneva Convention, 1927

1. Distinction between the Foreign Award and Domestic Award

A Foreign award as distinguished from domestic award is one which has any
of following elements:

N Domestic Foreign
o Award Award

1 The parties should have their One of the disputant parties is a

nexus of birth or business to national of foreign State. But there

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Indian origin. Two Indians can be a situation where same
residing in a foreign State and Indian national sharing property
carrying on their business in that and business in India and some
State if agree to decide their foreign State have resorted to
disputes through decide their Dispute
arbitration through arbitration applying the
foreign
regulated by Indian laws, the
arbitral

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 award out of such arbitration law regarding their commercial
agreement shall be treated as transactions it was held to be a
domestic even though it was foreign award. The case of
given in foreign territory. Harendra H. Mehta
v. Mukesh H. Mehta, 1 may be cited
to
illustrate the point further.

2 The range of issue remains The subject matter of arbitration

confined to Indian characteristics agreement is international in
covering business and its character. That is, it deals with
cognate expressions within the international commerce, trade or
limit of Indian territory. investment and the
like.

3 The award is made in the The award is made in a foreign

territory of India, though an State. But in situation may be
arbitral award given in a foreign where in two foreign parties
State for the dispute of the two carrying on business in India agree
parties of Indian origin and to resolve their disputes through
nationality governed by the arbitration applying some
Indian law shall also be a nominated foreign law, it will be a
domestic award. foreign award out of such
arbitration agreement, though given
in the Indian
territory.

4 The domestic award confines itself The party should belong to that
within the territory of India. Sate with which the element of
reciprocity exists as per
Notification in the Official Gazette
published by the Indian
Government. A State with which
the element of reciprocity is non-
existent, the award if any shall not
be deal with

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 under the Arbitration Act, 1996.

Table 6.2: Distinction between the Foreign Award and Domestic Award

To illustrate the above distinction the decision of the Delhi High Court in
Dorstener Maschine (Germany) v. Sand Plast India, 6 is cited wherein against the

6 AIR 1995 Arb.LR 282(Del), (Indian kanoon).

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the enforcement of foreign arbitral award in Germany, an injunction was sought in
India, the Delhi High Court refused to grant an injunction. The disputes between the
disputants were referred for arbitration to Indo-German Chamber of Commerce. The
arbitral tribunal consisted of two arbiters were appointed by each of the party. In
arbitration process the counter claim of the Dorstener was rejected whereas the
claim of Sand Plast was permitted. Since, Dorstener had no assets in territory of
India; Sand Plast on receiving of the copy of the award initiated the proceedings
regarding enforcement of the award in Germany. The respondent i.e., Dorstener
opposed the enforcement of arbitral award and prayed for an ad interim injunction.
The court while refusing to grant injunction held that in the view of the NYC (1958)
the case being a foreign award and agreement had a foreign element involving
international commerce and trade the German Company should not be permitted to
restrain the Indian Company from enforcing the award in Germany by way of
injunction as such. Hence, the NYC (1958) was applicable to the matter. It may be
pointed out that the NYC (1958) deals with both, the arbitration awards and
arbitration agreements.

After 4 years, in Harendra H. Mehta v. Mukesh H. Mehta,7 the SC has

clarified the issue. In this particular case, two brothers having their joint business in
India as well as USA. They also had properties in both States. When differences
arose between them, they entered into an arbitration agreement at USA for the
distribution of their all properties and business between them. The arbitral
proceedings were held and award made in USA. The parties entered in to settlement
during the pendency of arbitral proceedings and the arbitral award was made in
terms of the said settlement. The issues on which the SC was deciding primarily
were:-

I. The legal relation between the disputant.

I. The award came out of the settlement between the disputant hence it
was not an arbitral award.

I. The award was not made a decree by the USA Federal Court.

I. The arbitral award was not registered.

7 AIR 1999 SC 2054, (Indian

kanoon).
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 The SC after considering all the issues decided that the award was a Foreign
award, and inter alia, held that:- 8

I. The legal relationship of commercial nature under the Indian Law,

though disputants were brothers and this fact did not take the award
out of the purview of the present Act of 1996.

I. Though the award was made in terms of settlement between the

parties, but still it was an award under the Act of 1996.

I. The Indian Courts cannot refuse the enforcement of this award on the
ground that USA Federal Court had not issued a decree for the same
because under the Arbitration Act,1996 the award becomes directly
enforceable without going to court for its decree.

I. The registration of award is not compulsory and necessary for its

enforcement under the present Act of 1996.

4. General Provisions

Indian Law recognizes applying foreign laws in arbitration, whether in

procedural or substantive issues. As we have already seen, under the Arbitration
Act, 1996, the disputant parties to an arbitration agreement are allowed to choose the
law applicable to the issue of their disputes. They can subject their legal
relationships to any monetary rule of law, including foreign laws, international
convention, bilateral treaties or model-format contracts.9

The most important provisions of Indian Law regarding enforcement of

foreign arbitral awards are Articles 44 and 49 of the Arbitration Act, 1996 taken in
conjunction with each other. Under Article 49, foreign arbitral awards are enforced
in the same way that foreign sentences and orders are enforced in India. This points
to the adherence of the Indian legislator to the fundamental attitude that does not
consider international arbitral awards as distinct from international judgments, and
is, thus, not very much favourable to international arbitration, in terms of
enforcement. In this regard, too, Indian Law follows the English legal pattern.

8 Harendra H. Mehta v. Mukesh H. Mehta, AIR 1999 SC 2054, (Indian kanoon).

9 Article 7 of the Arbitration Act,

1996.
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 Articles 44 of the Act of 1996 provides that orders and awards made in a
foreign State may be granted leave to enforce in India on the same conditions that
the concerned State enforces the orders and awards issued in the India. The above
provisions show that there has to be a mutual policy of the enforceability of foreign
awards between India and the relevant foreign State.

The arbitral award should have been given in that territory where on the
basis of reciprocity the NYC (1958) is applicable. For territories to which the NYC
(1958) is applicable, the government of India, in its official Gazette shall be
declaring the names of States and territories where reciprocally the NYC (1958) will
apply. The Foreign Awards (Recognition and Enforcement) Act, 1961 was passed
which nearly 44 State territories were declared which had reciprocal acceptability of
NYC (1958). The list so declared in 1961, 10 still remains valid due to Section 85(2)
(b) of the Arbitration Act, 1996.11 If an award is made in a country which is not a
signatory of NYC (1958), then the provisions of the Section shall not be applicable
to that award and that award shall not be treated as a foreign award under the present
Act, 1996. The SC in Bhatia International v. Bulk Trading S.A., 12 observed that
awards in arbitration proceedings which take place in a non-convention country are
not considered to be ‘foreign award’ under the arbitration Act, 1996.they would thus
not be covered by Part II. It is an acceptable approach for all members of the
NYC(1958). For instance, under English Arbitration Act, 1996, if an arbitral award
is singed in a State which is a party to the NYC (1958), English Court can hear an

Thus, when seized of a foreign award, in order to enforce it, it must be

established that the rendering country allows enforcement of awards made in India,
and apply the same conditions that are applied to the enforcement of Indian awards
in that State. In other words, it has to be proved that no more restrictive condition
than those of Indian Law applies to the enforcement of an Indian award in the said
State. A refusal of enforcement of Indian awards in that State leads to the denial of
enforcement of awards rendered there in India. Also, stricter conditions for
enforcement of Indian awards in a State than those applied in India triggers similar
restrictions for enforcement of awards made in that State, if they are to be enforced
in India. There are two serious difficulties, however, with this requirement. First, the
Indian provision does not specify what the conditions referred to are. Second, there
is no mention of on that the burden of proof for the existence of the reciprocity
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condition is: the requesting party or the Court. Such vagueness in the language of
the Article can give rise to disputes over its interpretation. It has been argued that if
Article 49 means that the Indian judge has to take into consideration exactly the
same conditions for enforcing a foreign award in India that are applied by the courts
at the seat of arbitration when they enforce awards made in India, this imposes a

difficult task on the judge. This is because it is difficult for a judge to know the
conditions for enforcing a foreign award in another State. Furthermore, unless there
is a precedent or specific provision of law in the other State, it is so difficult to prove
that there is such a mutual policy. Imposing such a condition may result in non-
enforcement of an arbitral award.

In principle, a local judge should refer to the law of the seat of arbitration to
acquaint himself with provisions relating to the enforcement of foreign awards in
that State. This is famous as legislative exchange. He should also refer to
international conventions or treaties concluded between the country where the award
is made and his own country. This is called diplomatic exchange. More importantly,
some formal procedures followed by a State in enforcing another State’s awards are
of little importance that neither are considered as an obstacle to the enforcement of
these judgments and award in the first State, nor are necessary to be followed in the
second country exactly accordingly, in order to meet the condition of reciprocity. It
should be noted, moreover, that international conventions and treaties usually
function for the purpose of relieving the courts of deciding on the conditions of
reciprocity, as the conventions are reciprocal by their nature. 14 It would have been
better, if Indian Law had contained two different provisions regarding the
enforcement of court rulings and arbitral awards. In that way, it would have been
possible to address issues more relevant to enforcement of arbitral awards. For
example, Article 44 can be interpreted as saying a foreign award may be enforced as
if it was a domestic Court decision in India, if the issuing State treats awards made in
India as if they were court decisions in that State. However, Indian Law could have
been more explicit in this regard, in order to avoid any misinterpretation.
Nevertheless, the principle of reciprocity expressed in Article 44 (b) of the
Arbitration Act, 1996 significantly paves the way for the facilitation of enforcing
foreign arbitral awards in India.

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 In general, under Indian law, if enforcement of a foreign award is sought in
India, it is Indian Law that determines the enforcement procedure. This is in line
with the general rule in has to international conventions on enforcement of awards,
according to which the law of the enforcing country is applicable to enforcement procedure. 15 If no
multilateral or bilateral treaty governs enforcement of a foreign award, its enforcement in India
requires a court decision.

5. Grounds for Non-Enforcement of Foreign Arbitral Awards

The Arbitration Act, 1996 provides for certain grounds for refusing
enforcement of foreign arbitral awards. In this respect, Indian Law generally follows
the NYC (1958). Nevertheless, there are some significant differences that are
discussed in the following Sections. The main difference is that while, under the
Convention these grounds may, but not must, result in non-enforcement of a foreign
award, under Indian law, they shall have such a legal impact. In other words, if there
exists such a ground, the Convention provides judges with the discretion to or not to
enforce the award, but Indian Law clearly prohibits them from enforcing such an
arbitral award.

The Section 34 of Arbitration Act, 199616 covered some of the grounds for
said aside which are same with Section 48. This Section has been enacted on the

15 For instance, Article III, the New York Convention, 1958.

16Section 34 of the Arbitration Act, 1996 reads as; “Application for setting aside arbitral award.- (1)
Recourse to a Court against an arbitral award may be made only by an application for setting
aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award
may be set aside by the Court only if--- (a) the party making the application furnishes proof that-
---- (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the
law to which the parties have subjected it or, failing any indication thereon, under the law for the
time being in force; or (iii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his
case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matter beyond the scope of the
submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can
be separated from those not so submitted, only that part of the arbitral award which contains
decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the
arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties,
unless such agreement was in conflict with a provision of this Part from which the parties cannot
derogate, or, failing such agreement, was not in accordance with this Past; or (b) the Court finds
that (i) the subject-matter of the dispute is not capable of settlement by arbitration under the
law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of
India.
Explanation Without prejudice to the generality of sub-clause (ii), it is hereby declared, for
the avoidance of any doubt, that an award is in conflict with the public policy of India if the
making of the award was induced of affected by fraud or corruption or was in violation of
section 75 or section 81.
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(1) An application for setting aside may not be made after three months have elapsed from the date
on which the party making that application had received the arbitral award, or, if a request had
been made under section 33, from the date on which that request had been disposed of by the
basis of Article V of the NYC (1958) and also Section 7 of the Foreign Awards
(Recognition & Enforcement) Act, 1961.

The Section 48 of the Arbitration Act, 1996 had an occasion to elaborate and
lay down proof grounds for setting aside of award which are available in foreign
awards. Briefly stated, these grounds are; -
a) If the arbitral agreement is not valid.
b) Due process of law has been violated.
c) Arbiter has exceeded his authority.
d) Irregularity in the composition of Arbitral Tribunal or arbitral proceedings.
a) Award being set aside or suspended in the country in which, or under the law
which, that award was made.
a) Non-arbitrability of dispute.
e) Award being contrary to public policy.

Rest of the grounds which are same with Section 34 of the Arbitration Act,
1996 (which explained previous Chapter), new grounds of Section 48 of the
Arbitration Act, 1996 have covered by researcher as fallow:

1. Not Being Issued by a Competent Body

Article 48(1) of the Arbitration Act, 1996 provides that a foreign award
cannot be enforced, if it has not been issued by a competent judicial authority,
according to the international jurisdiction rules of the country where it has been
made. As we already know, under Article 49 of the Arbitration Act, 1996, the rules
applying to foreign Court decisions also apply to foreign awards. It can be argued
that the extension of the above rule to foreign arbitral awards means that such an
award cannot be enforced in India, if it is not issued by a competent arbitration
tribunal according to the law of the country where it is made. If this interpretation is

arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by
sufficient cause from making the application within the said period of three months if may
entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of
an application under sub-section (1), the Court may, where it is appropriate and it is so requested
by a party, adjourn the proceedings for a period of time determined by it in order to give the
arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as
238
 in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.”
plausible, Indian Law is more restrictive of the NYC (1958) and most other
internationally established rules, which do not explicitly refer to such a condition.

Some States (like Egypt17 or Bahrain18, etc.) go beyond the requirement that a
foreign judgment or award may be enforced, if the issuing authority is competent
according to the international jurisdiction rules set out at the seat of judgment. They
also require that, if a foreign judgment is to be enforced in their territory, their
domestic court must not have jurisdiction to hear the case, according to their own
rules of private international law, which is considered as part of their public policy.
In other words, joint jurisdiction between the issuing and enforcing countries results
in non-enforcement of a foreign judgment. This is so, for instance, in the United
Arab Emirates, the Dubai Court of Cassation ruled that if the Dubai Court has
jurisdiction over a dispute; a judgment rendered by a foreign court on the dispute
would not be regarded as res judicata, and would not be enforced.19

20
Although, like the NYC (1958), Indian Law explicitly consider the
invalidity of arbitration agreement, the incapacity of the parties to conclude the
arbitration agreement, the wrong composition of the tribunal or the excess of the
jurisdiction of the tribunal, as grounds for refusing enforcement of a foreign arbitral
award. As we have seen in Chapter V of this thesis.

Since the above provision of Indian Law does not directly address the issue
of the jurisdiction of the rendering body, it does not deal with the possibility of an
award being issued on a dispute which is partially within the jurisdiction of the
tribunal. Under most legal systems, recognition and enforcement may be granted to
those parts of the award in which the tribunal has acted within its jurisdiction, if such
parts can be separated from the other parts. There is no reason not attribute the same
view to the Indian law. The difficulties and ambiguities raised by the above
provision of Indian Law once again indicate that it would have been better, if Indian

17 Article 298(1) of the Egyptian Code of Civil and Commercial Procedure 13/1968.
18 Article 252 of the Bahrain Law No.12.
19 Danny Kabbani. “Enforcement of Foreign Judgments Relative to Project Finance in Islamic
Countries”, GCC Commercial Arbitration Centre Bulletin, issue 19 (June 2001) , 17
20 Articles V (1) (a) to V (1) (c), the New York Convention (1958).
238
Law had addressed foreign awards differently from foreign court judgments and
orders.

1. Non-Compliance with Indian Law or a Court Decision

Article 48(1) (d) of Arbitration Act, 1996 provides that a foreign orders and
award that entails a breach of a rule of the laws practiced in India shall not be
enforced. The problem with this provision is that it does not specify which types of
rules cannot be breached by the award. It can be interpreted that they must not be
against the ordinary law of India. This, however, goes beyond the internationally
established rules and particularly the NYC (1958), which requires a foreign award
not to be against the mandatory rules of law in the enforcing State. Indian Law even
goes further, and requires that a foreign orders and award the enforcement of which
is sought in India must not contradict orders and award already issued in India. This
implies the priority of an Indian court decision over a foreign judgment or award, in
term of their execution in India. Such a situation arises in the case of joint
jurisdiction, when both the Indian and foreign courts have jurisdiction to hear a
dispute. As seen before, the exclusive jurisdiction of a domestic court leads to non-
enforcement of a foreign award, even if no domestic decision has yet been made. On
the other hand, it can be said that, if the judgment is made by the Indian court
lacking jurisdiction to hear the case, and the defendant did not made any objection to
the competence of the court, the judgment is considered as if it were made by the
court having jurisdiction. Such a judgment consequently has priority of enforcement
over foreign sentences and awards regarding the same dispute. Nevertheless, in
other cases of lack of jurisdiction or joint jurisdiction, there is no reason for the
priority of a decision made by the Indian court over a foreign arbitration award.

Under the above situation of Indian Law, filing a lawsuit with the Indian
court does not bar the enforcement of a foreign award, because enforcement of such
an award may be barred only if a contradicting Indian court sentence has already
been made. The provision does not also require denying enforcement of an award, if
court proceedings on the same or a related subject pending in India have begun
before the foreign arbitral proceedings. Under many legal systems, such as the
English law, the losing party may request a stay of the order for enforcement,
pending determination of any application to set aside the award before the

238
competent foreign authority.21 It may also be asked whether the Indian court would
enforce the foreign award, if a court judgment has already been rendered, or court
proceedings are pending in a third country. India may or may not have a contract
with the latter country for enforcing Court judgments. India is under obligation to
enforce court judgments rendered in countries with which it has a bilateral or
multilateral treaty. India is a party to several international conventions for
enforcement of foreign award.

1. Improper Summons and Legal Representation

The Orissa High Court in Orient Paper Mills v. Civil Judge,22 did not allow
the summoning the chairman of arbitral tribunal as a witness. The application was
made under Articles 226 & 227 of the (Indian) Constitution for a direction to the
Civil Judge for issuing summons. The award was submitted by the tribunal. It
rejected the claim with a full statement of reasons. The ground on which the
Chairman was sought to be summoned was that the tribunal considered certain
document behind the back of the party. The Court said that this ground, if
established, would have enabled the party to get the remedy of setting aside. In the
presence of such a crystal remedy, there was hardly any need for summoning the
arbiter as a witness. 23

The Orissa High Court held that a foreign award can be enforced, only if
both disputant parties have been summoned to appear and legally represented. This
decision is a reflection of Article V (1) (b) of the NYC (1958).

Although Article 48(1) (b) of the Act, 1996 does not explicitly express equal
treatment, fair hearing, full and proper opportunity for the parties to present their
case and having access to the other party’s documents as conditions for the
enforcement of a foreign award, it can be interpreted as to prohibiting most types of
failure to comply with fairness in arbitration proceedings. For instance, the Arbitral

Tribunal’s refusal to hold a hearing requested by one of the disputant parties may be
regarded as a violation of due process, and thus a ground for denying enforcement of
the award. 24

1. Non-Arbitrability of the Dispute

Enforcement of an arbitral award may be refused if the court finds that the
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issue of the difference is not capable of settlement by arbitration under the law of
India. Article 48(2) (a) of Arbitration Act, 1996 provides that the dispute about
which a foreign award is made must be arbitrable under Indian Law. This is
equivalent of Article V (2) (a) of the NYC (1958). As we have seen in chapter IV
(Four) of this thesis, Article 2 of the present Act, 1996 implies that almost any
dispute arising from legal relationships between private and public entities can be
settled by arbitration. However, disputes that cannot be subject to reconciliation or
compromise cannot be settled through arbitration.

Generally speaking, almost all subject-matters in dispute, not being of a

criminal nature, may be referred to arbitration. Where the law has given jurisdiction
to determine a particular matter to specified tribunals only, determination of that
matter by other tribunals is excluded.

The SC in Union of India v. Popular Builders,25 held that the existence of

arbitrable dispute is a condition precedent for exercise of power by an arbiter. The
SC in U.P.Rajkiya Nirman Nigam Ltd. v. Indure(P) Ltd., 26 has also emphasized that
the arbitrability of a claim depends on the construction of the clause in the contract
and on this point the finding of the arbiter is not conclusive and that ultimately it is

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