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MODULE 5
ARBITRAL AWARDS

ENFORCEMENT OF FOREIGN AWARDS
India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, 1958 (“New York Convention”) as well as the Geneva Convention on the Execution of
Foreign Arbitral Awards, 1927 (“Geneva Convention”). If a party receives a binding award from a
country which is a signatory to the New York Convention or the Geneva Convention and the award is
made in a territory which has been notified as a convention country by India, the award would then be
enforceable in India. Out of the 196 countries in the world only 50 countries have been notified by the
Central Government as reciprocating countries, with the most recent addition being Mauritius.3The
enforcement of a foreign award in India is a two-stage process which is initiated by filing an
execution petition. Initially, a court would determine whether the award adhered to the requirements
of the Act. Once an award is found to be enforceable it may be enforced like a decree of that court.
However at this stage parties would have to be mindful of the various challenges that may arise such
as frivolous objections taken by the opposite party, and requirements such as filing original/
authenticated copy of the award and the underlying agreement before the court.

Requirements for enforcement of foreign awards
• Original award or a duly authenticated copy in the manner required by the country where it is
made.
• Original agreement or duly certified copy.
• Evidence necessary to prove the award is a foreign award, wherever applicable.

Section 47 of the Act provides that the above “shall” be produced before the court, at the time of the
application for enforcement of the foreign award. However, in a recent judgment, the Supreme Court
of India interpreted that the word “shall” appearing in Section 47 of the Act relating to the production
of the evidence as specified in the provision at the time of application has to be read as “may”.4 It
further observed that such an interpretation would mean that a party applying for enforcement of the
award need not necessarily produce before the court a document mentioned therein “at the time of the

application”. Nonetheless, it further clarified that such interpretation of the word “shall” as “may” is
restricted “only to the initial stage of the filing of the application and not thereafter.”

Conditions for enforcement of arbitral awards
A party may resort to the following grounds for challenging an award. Such an award would be
rendered unenforceable when:

• The parties to the agreement were under some incapacity.
• The agreement in question is not in accordance with the law to which the parties have

subjected it, or under the law of the country where the award was made (especially in case of
foreign awards).
• There is a failure to give proper notice of appointment of arbitrator or arbitral proceedings.
• Award is ultra vires the agreement or submission to arbitration.
• Award contains decisions on matters beyond the scope of submission to arbitration.
• Composition of the arbitral authority or the arbitral procedure is ultra vires agreement.
• Composition of the arbitral authority or the arbitral procedure is not in accordance with the
law of the country where the arbitration took place (in case of foreign awards).
• The award (specifically a foreign award) has not yet become binding on the parties, or has
been set aside or suspended by a competent authority of the country in which, or under the law
of which that award was made.
• Subject matter of the dispute is not capable of settlement by arbitration under Indian law.
• Enforcement of the award would be contrary to the public policy of India.

Limitation period for enforcement of awards
Various High Courts have given varying interpretations on the limitation period within which a party
may enforce an award. The Bombay High Court has observed that since a foreign award is not a
decree per se and would not be binding on parties unless a competent court records it as enforceable,
it would undergo a two-step process. Thus, the application for enforcement of a foreign award would
fall within the residuary provision of the Schedule to the Limitation Act, that is, the limitation period
would be three years. Thereafter, on recognizing the award as a decree, the limitation period for
execution of such a decree would be twelve years therefrom. However, the Madras High Court held a

contrary view by referring to foreign awards as deemed decrees, and the corresponding limitation
period would be twelve years. It held that, “the foreign award is already stamped as a decree and the
party having a foreign award can straight away apply for enforcement of it and in such circumstances,
the party having a foreign award has got 12 years’ time like that of a decree holder.”The Act provides
that certain conditions (as listed above) have to be assessed prior to enforcement of a foreign award,
and where the court is satisfied that the foreign award is enforceable, the award would be deemed to
be a decree of that court. The Supreme Court in M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd.,
held that under the Act a foreign award is already stamped as the decree. It observed 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.”

Procedure for enforcement of foreign judgments
The first major step towards enforcement of foreign judgments in India is, to file execution
proceedings, which is done by following the procedure, as envisaged under Section 44A and Order
XXI of the CPC (illustrated above).Regarding the “court” before which an execution petition is to be
filed:

• The Bombay High Court has an established view that Section 44A clearly gives jurisdiction to
the Bombay High Court which, for the purposes of execution of the decree, would be
considered as the District Court.

• However, the Delhi High Court has an unsettled view. On reference to Section 5(2) of the
Delhi High Courts Act 1966, notwithstanding anything contained in any law for the time
being in force, the High Court of Delhi shall also have in respect of the said territories
ordinary original civil jurisdiction in every suit the value of which exceeds rupees two crores.
Thus, a Single Judge of the Delhi High Court had observed that for avoiding “unnecessary
confusion...There is no legal impediment ... to approach the High Court in the first instance for
execution of the decree of a value of more than Rs. 20 lakhs, as in the instant case.” However,
it was set aside by the Division Bench of the Delhi High Court which observed that “the
legislature has vested such ‘District Court’ the power to execute the ‘foreign decree’ as if it

had been passed by itself” and not the Delhi High Court. This judgment was further appealed
before the Supreme Court of India, which has granted a stay on the judgment of the Division
Bench. This is now pending before the Supreme Court for final disposal. Requirements for
enforcement of foreign judgment under Section 44A of the CPC, where certified copy of
decree of any of the superior courts of any reciprocating territory has been filed in a district
court, the decree may be executed in India as if it had been passed by the district court. For
proceeding with the execution, the certified copy of the decree shall be filed along with a
certificate from such superior court stating the extent, if any, to which the decree has been
satisfied or adjusted. Such certificate shall be deemed as the conclusive proof of the extent of
such satisfaction or adjustment.

Grounds of challenge to enforcement of foreign judgments
Section 13 of the CPC provides that a foreign judgment may operate as res judicata by being
conclusive with respect to any matter adjudicated upon thereby (which does not include the reasons
laid down in the foreign judgment). However, this shall not be applicable where:

• It has not been pronounced by a Court of competent jurisdiction. While ascertaining
competence of a foreign court, it has to be established that the concerned court is vested with
jurisdiction in terms of its pecuniary and territorial limits, as well as rules of private
international law.

• It has not been given on the merits of the case;
• It appears on the face of the proceedings to be founded on an incorrect view of international

law or a refusal to recognize the law of India in cases in which such law is applicable;
• The proceedings in which the judgment was obtained are opposed to natural justice;
• It has been obtained by fraud;
• It sustains a claim founded on a breach of any law in force in India

UNCITRAL MODEL LAW
UNCITRAL Model Law is a product of the United Nations Commission on International Trade Law
(UNCITRAL). The main purpose of the establishment of the UNCITRAL in 1966 was to unify and
harmonise the law concerning international trade law. The support and promotion of the NYC was

also among the objectives of the NUCITRAL. In line with those objectives, the UNCITRAL adopted
the UNCITRAL Arbitration Rules in 1976 and UNCITAL Model Law on International Commercial
Arbitration in 1985. The Model Law seeks to provide for unified and harmonious sets of international
commercial arbitration rules. As an acknowledgement of its efficiency, the Model Law has been,
verbatim or with some subtle modifications, incorporated in most national arbitration laws of the
leading trading countries.

The Recognition and Enforcement of Foreign Arbitral Awards:
What is meant by recognition and enforcement is to give effect to the arbitral award. The indisputable
advantages of arbitration in comparison with litigation, would not be benefited of unless the arbitral
award is simply enforced. Although available statistics reveal that considerable portions of arbitral
awards are voluntarily enforced, vis, without recourse to court proceedings, there are still significant
number of cases where the wining party invokes legal procedures to enforce the arbitral award in
hand. That occurs occasionally despite the finality and binding nature of the arbitral awards.
Given the international element of International commercial arbitration, generally, it takes place in a
neutral country. That is to say, in a country which is none of the parties is affiliated to; the seat of
arbitration. However, that does not mean, necessarily, recognition and enforcement of arbitral award
would take place in that country. Thus, it is common practice that the wining party is compelled to
seek enforcement in other foreign jurisdictions. That is the case, where the successful party seeks
enforcement against the defaulting parity’s assets which are located in a country other than the seat of
arbitration. An award which is rendered in one country and its recognition and enforcement is sough
in different one, is categorised as a foreign arbitral award. That foreign arbitral award, not the
domestic award/one, as the title of this study suggests, is the subject matter of this study. While the
NYC deals with the foreign arbitral awards, its provisions are also applicable to the arbitral awards
those do not considered domestic by the law of the country where recognition and enforcement is
sought.
The following briefly describes the two basic actions contemplated by the New York Convention.
The first action is the recognition and enforcement of foreign arbitral awards, i.e., arbitral awards
made in the territory of another State. This field of application is defined in Article I. The general
obligation for the Contracting States to recognize such awards as binding and to enforce them in

accordance with their rules of procedure is laid down in Article III. A party seeking enforcement of a
foreign award needs to supply to the court (a) the arbitral award and (b) the arbitration agreement
(Article IV). The party against whom enforcement is sought can object to the enforcement by
submitting proof of one of the grounds for refusal of enforcement which are limitatively listed in
Article V(1). The court may on its own motion refuse enforcement for reasons of public policy as
provided in Article V(2). If the award is subject to an action for setting aside in the country in which,
or under the law of which, it is made (“the country of origin”), the foreign court before which
enforcement of the award is sought may adjourn its decision on enforcement (Article VI). Finally, if a
party seeking enforcement prefers to base its request for enforcement on the court’s domestic law on
enforcement of foreign awards or bilateral or other multilateral treaties in force in the country where
it seeks enforcement, it is allowed to do so by virtue of the so-called more-favourable-right-provision
of Article VII(1). The second action contemplated by the New York Convention is the referral by a
court to arbitration. Article II(3) provides that a court of a Contracting State, when seized of a matter
in respect of which the parties have made an arbitration agreement, must, at the request of one of the
parties, refer them to arbitration. In both actions the arbitration agreement must satisfy the
requirements of Article II(1) and (2) which include in particular that the agreement be in writing.

Generally, the grounds for challenging an award are limited and many countries do not permit appeals
from the decision of an arbitral tribunal. In countries that have adopted the UNCITRAL Model Law
on International Commercial Arbitration, awards can only be challenged by seeking their 'annulment'
at the seat of the arbitration. Awards may also be challenged by resisting their enforcement in a place
where the successful party seeks to enforce them. Even if an award is annulled, or if enforcement is
refused, this may not necessarily prevent it from being enforced in another country.
The grounds to challenge of awards given in Part I (section 34) of the Indian Arbitration Act are
applicable only to Domestic Awards and not to Foreign Awards. On September 6, 2012, Supreme
Court in Bharat Aluminum Co. v. Kaiser Aluminium Technical Service Inc. reconsidering its previous
decisions concluded that the Indian Arbitration Act should be interpreted in a manner to give effect to
the intent of Indian Parliament. In this case the Court reversed its earlier rulings in cases of Bhatia
International v. Bulk Trading S.A. & Anr. and Venture Global Engg v Satyam Computer Services Ltd
& Anr. stating that findings in these judgments were incorrect. Part I of the Indian Arbitration Act has

no application to arbitrations seated outside India irrespective of whether parties chose to apply the
Indian Arbitration Act or not. Most importantly, these findings of the Supreme Court are applicable
only to arbitration agreements executed after 6 September 2012. Thus all disputes pursuant to
arbitration agreement entered into upto 6 September 2012 shall be decided by old precedents
irrespective of fact that according to the Supreme Court such rulings were incorrect and have been
reversed.
Most challenges will be made before the courts. Although each country which has a law governing
arbitration will have its own concept for challenging arbitral awards, there are three general grounds
for such challenges.

• An award may be challenged on jurisdictional grounds, i.e. the non-existence of a valid and
binding arbitration clause.

• An award may be challenged on what may be broadly described as procedural grounds, such
as failure to give proper notice of the appointment of an arbitrator.

• An award may be challenged on substantive grounds, on the basis that the arbitral tribunal
made a mistake of law or on the grounds of a mistake of fact.

Some arbitration rules provide for "internal" challenges. The most extensive provision for the
challenge of arbitral awards by means of an internal review procedure is to be found in the ICSID
arbitration rules. In the case of an application for the annulment of the award, an ad hoc committee of
three members is constituted by ICSID to determine the application. If the award is annulled, in
whole or in part, either party may ask for the dispute to be submitted to a new tribunal, which
Tribunal will consider the dispute again and then deliver a new (and final) award.

THE CHALLENGE OF AWARDS (THE PRINCIPLE OF FINALITY)

The principle of finality implies that no higher instance will review the award on the merits of the
case. By choosing arbitration, the parties have waived their right to appeal, and consequently,
arbitration is an efficient dispute resolution. The finality of awards is emphasized in law, legislative
history and case law, and it is on the international level reflected in the Model Law as well as in the
New York Convention. The European Court of Justice has also emphasized the importance of finality

of awards in the famous case Eco Swiss v Benetton “it is in the interest of efficient arbitration
proceedings that review of arbitration awards should be limited in scope and that annulment of or
refusal to recognise an award should be possible only in exceptional circumstances.” Although the
principle of finality implies that awards cannot be challenged on substantive grounds, there are
procedural grounds upon which awards could be challenged within the framework of the lex arbitri.
The rationale behind permitting challenge on procedural grounds is to ensure minimum standards of
objectivity, fairness and justice in arbitration, and thusly to create a fair balance between finality and
review of awards. Another rationale of permitting challenge exclusively on procedural grounds is that
many disputes are typically suitable for arbitrators and not a national court. Perhaps the dispute is
technically complex, or the dispute should be resolved in accordance with law other than one the
court is familiar with. Nonetheless, without the ability to have awards set aside through a challenge,
there is a risk that arbitration could become discredited if irregularities occurred. The grounds upon
which awards can be challenged in Sweden are found in section 34 of the Swedish Arbitration Act
(SAA). Although national courts under the SAA shall set aside the award if the prerequisites are
fulfilled, the courts must recognize the arbitrators’ discretion in procedural issues as long as it does
not violate the party instructions, the law or other procedural rules. The finality of awards is
supported by the principle of in dubio pro validitate. The principle implies that national courts in
uncertain cases should uphold awards in-stead of setting themaside. The Supreme Court confirmed
that only serious procedural errors or mistakes may serve as a basis for a request to challenge an
award on procedural grounds.

PROBLEMS OF EXECUTING FOREIGN ARBITRAL AWARDS IN INDIA

Getting an award issued in your favour, from an international tribunal, does not always means good
news as you still have to get your award enforced in India. Most Arbitral awards are voluntarily
complied with. The problem occurs when one of the parties disputes the award and need for its
enforcement arises. There have been various cases, where, despite receiving a favourable award, the
party failed to get it enforced by a competent court in India. The reasons for these failed enforcements
ranges from one party deciding not to participate in the Arbitral proceedings to other situations where

the party has challenged the award on the grounds of cost awarded or the jurisdiction of the
Arbitration Tribunal. These grounds are:

Either party is under some Incapacity
If one or both of the parties, involved in the arbitral proceedings were under some incapacity as per
the applicable law, then such an award cannot be enforced. This incapacity can be due to reasons such
as involuntariness, fraud, duress, undue influence or misrepresentation.
The Supreme Court, in Bhaurao Dagdu Paralkar v. State of Maharashtra and Ors, observed that “By
fraud is meant an intention to deceive; ….. The expression “fraud” involves two elements, deceit and
injury to the person deceived“. The Court further observed that “A fraudulent misrepresentation is
called deceit and consists in leading a man into damage by wilfully or recklessly causing him to
believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to
be false, and injury in ensues therefrom …..“

Either party was not given Notice
If either party has not received a notice regarding the appointment of the arbitrator or regarding the
arbitral proceedings, it would amount to a violation of the principles of natural Justice. Such awards
are liable to be set aside. But if a party has voluntarily decided to sit out of the arbitral proceedings,
such awards will be enforced because such sitting was with his free will. Only those awards can be
challenged where one of the party was left out for reasons that were beyond its control.

The Arbitral Award is beyond the scope of Arbitration
The Jurisdiction of an Arbitration Tribunal is limited by the terms of reference. No tribunal is
supposed to flout these limitations. They are only supposed to adjudicate on the questions that have
been submitted and not go beyond that. An award, which is issued in excess of the scope of
Arbitration, is liable to be set aside by the Courts.
It is important to note here that if it is possible to separate the awards which are awarded within limits
of the terms of the arbitration from those that are awarded by exceeding those limit, it is possible to
enforce the former.

Legality of the Composition or Procedure of the Arbitration Tribunal
An award is liable to be quashed if:

1. the tribunal that has been composed is not in accordance with the agreement signed between
the parties

2. the procedure followed during the arbitration proceedings was not as per the agreement
between the parties

3. if the composition or the procedure of the arbitration is not in accordance with the law of the
country where the seat of the arbitration was situated

Award set aside before its enforcement
If an award, before it becomes binding on the parties, is set aside or suspended by the authorities of
that country, in whose jurisdiction it was awarded, it will not be enforceable in the Indian Courts as
the Courts of the country which issued the award has the exclusive jurisdiction to set aside the award.

Dispute not capable of being resolved under Arbitration
If the nature of a dispute is such that it cannot settled be under arbitration, either because the subject
matter is not capable of being settled under different laws which are currently in force in different
countries for the time being, or, the subject matter is such that, it is not capable of being enforced
under the law currently in force in India. In such a case, the court will refuse the enforcement of the
award.

Public Policy
An award, issued in violation of the Public Policy of India, will not be enforceable in India. Awards
issued against public policy is a defense against the enforcement of such awards. The courts in India
are bound to refuse the enforcement of an award, which is in contravention of the public policy in
India.
Settling the dispute as to what will amount to the violation of Public Policy of India, the Supreme
Court, in Renusagar Power Co. Ltd vs General Electric Co, held that the bar of public policy will be
attracted only when there is a violation of something more than the Indian Laws. The enforcement
would be refused if the award is contrary to the fundamental policy of Indian law or justice or public
morality.

The Delhi High Court, in Daiichi Sankyo Company Limited vs. Malvinder Mohan Singh and Ors.,
held that the defense of the ground of public policy can be taken only when the award is against the
fundamental policy of India, the interest of India or justice/ morality. It does provide the Indian
Courts with an opportunity to take a second look at the award. It further held that claims barred by
limitations, awards of consequential damages and awards against minors are liable to set aside by the
Indian Courts.

Pressure by the Local Governments
A local party to an Arbitration will exercise more political power than a foreign party. They will try to
exert this power to annul the award or at least decrease the quantum of the award. This may result in
frustrating the award issued by an International Arbitration Seat. This is due to lack of an authority to
supervise the substantive as well as the procedural examination of the enforcement of these awards.

Inconsistent Application of Law
A Foreign Arbitral Award can be enforced in all those jurisdictions where the assets of the opposite
party are situated. The possibility, that the courts belonging to different jurisdictions will interpret the
same award differently, cannot be ruled out. Even if an award issued by an Arbitration seated in
India, it may not be enforceable in the Jurisdiction of some other country.