INTRODUCTION
The expansion of global trade and commerce in the contemporary era has necessitated the conception of efficient and effective methods of resolution of disputes securing party autonomy at the same time. In some situations, securing an arbitral award or a final judgment from the courts may only be an encounter half won; this is especially true in the Indian context the latest example of the same being the Vodafone arbitration case decided by the permanent court of arbitration, Netherlands recently, as the solicitor general of India Mr. Tushar Mehta advised the government to challenge the arbitral award in a court of law and the government did the same, also a similar scene is created in the dispute between Cairn energy and indian government against the arbital award in favour of Cairn energy by the Permanent Court of arbitration.
We have seen situations where the opposite parties decide to not participate in the arbitral process or abandon it mid-way. The enforcement of these awards where the party is absent is sometimes more complicated than one where the opposite party has participated in the proceedings. In some situations, objections have been made even against costs awarded by the arbitral tribunal or the authority of the tribunal or court, as the case may be. Consequently, the stage of enforcement of an award or decree warrants a high degree of caution.
The modus operandi for enforcement and execution of decrees especially in India is governed by the Code of Civil Procedure, 1908 (“CPC”) on the other hand, that of arbitral awards in India is mainly governed by the Arbitration & Conciliation Act, 1996 (“Act”) as well as the CPC.
The successful party in international commercial arbitration to be honest expects the award to be performed without delay as much time taken in the resolution of dispute is a major reason to opt for arbitration instead of litigation. This is a legit expectation. The idea of arbitration, unlike mediation and most other methods of alternative dispute resolution (ADR), is to arrive at a binding decision on the dispute. Once this decision cross-border in the form of an arbitral award, it is an inherent part of every arbitration agreement that the parties will carry out. To put the spot away from confusion, this is expressly set out in cross-border and institutional rules of arbitration. For instance, the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) said that the arbitral award ‘shall be ultimate and obligatory on the parties, and that ‘the parties take on to bring out the arbitral award without any further delay’.
Such figures as are accessible propose that most arbitral awards are carried out willingly—that is, without the need for enforcement measures in national courts of any country. Nonetheless, broad and reliable statistics about international and domestic arbitration are not readily available for two main reasons: first because arbitration is a private dispute resolution process; and secondly, in any event, there is no particular reason why an arbitral tribunal (or indeed an arbitral institution) should know whether or not an award has been carried out. Unlike a national court of law, an arbitral tribunal majorly has no role to play in the enforcement of its award/decision. Once the award has been rendered to the tribunal, the arbitral tribunal usually has nothing more to do with the dispute, except it, is necessary to make an additional award or to correct or interpret its award for a particular reasonable reason. After making a final arbitral award the work of the arbitral tribunal is formally finished, also is known as functus officio.
When it comes to the Indian context Domestic and foreign awards are enforced in the same manner as a decree of the Indian court. This is true even for consent awards obtained according to a settlement between parties negotiation and mediation you may say. Nonetheless, there is a disparity in the course for enforcement of an arbitral award based on the seat of arbitration. While the enforcement and execution of an award of which the seat is India called (“domestic award”) would be regulated by the provisions of Part I of the act, in international commercial arbitration arbitral awards called (“foreign award”) would be governed by the provisions of Part II of the arbitration and conciliation Act, 1996.
DIFFERENCE BETWEEN RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARDS
Though there are some minute conceptual differences between recognition of an award and enforcement of an award though not feasible/significant to deal with in length although it’s pertinent to note that recognition of an award is a prerequisite of the enforcement of awards or vice versa used jointly as mentioned in the New York convention on arbitration any potential problem faced in recognition of award similarly comes as a hurdle at the time of enforcement of the arbitral award. The precise distinction, an award may be recognized without being enforced. Though, if it is enforced, then it is essentially acknowledged by the court of law that ultimately orders its enforcement like the Delhi high court granted interim relief to Amazon in the case of reliance v Amazon after acknowledging or recognition of emergency arbitral award delivered by the Singapore international arbitration centre (SIAC). In other words, is between ‘recognition’ and ‘recognition and enforcement’ Enforcement goes a step further than recognition to be more precise.
ENFORCEMENT OF FOREIGN ARBITRAL AWARD UNDER THE NEW YORK CONVENTION
(a) Introduction
The New York Convention replaces the 1927 Geneva Convention as stuck between states that are Parties to both Conventions, and is a considerable development, as it provides for a Simpler and more efficient method of having recognition and enforcement of foreign awards. The conference also replaces the previous 1923 Geneva Protocol as between states that are bound by both, and again constitutes a substantial improvement, because it gives a much wider scope to the validity of arbitration agreements than that given under the earlier convention. Hence, the New York Convention has been rightly eulogized as ‘the single most important pillar on which the edifice of international arbitration rests’ , and as a convention that ‘possibly could lay claim to being the most effectual instance of international Legislation in the entire gamete of commercial law history’. It is for this reason that, for now, many remain unwilling to put up with the possible disturbance that would go with the upgrading of the Convention’s existing text shows the importance of convention globally.
(b) Enforcing foreign awards
Even though the title of the New York Convention provides only for the recognition and Enforcement of ‘foreign arbitral awards, the Convention also deals with the recognition and enforcement of arbitration agreements. In its opening text, the Convention adopts a stunningly global approach: This Convention shall have an effect on the recognition and enforcement of arbitral awards made in the country slightly than the condition where the acknowledgment and enforcement of arbitral awards are requisite, and any kind of differences arising out of dispute whether physically or importantly legally is a thing to watch out for. It shall also apply to arbitral awards not considered domestic awards in the State Where their acknowledgment and enforcement of award are sought.
If this opening Article were to stand without qualification, it would mean that an award Made in any state (even non-signatory to New York Convention) would be Recognized and enforced by any other state that was a party, as long as the award fulfilled the basic circumstances set down in the Convention especially the public policy of a concerning jurisdiction or the due process of law is not followed while writing an award in matters of international as well as domestic arbitration.
(c)Recognition and enforcement under the New York Convention
The new York convention paves way for both recognition and enforcement of awards in the country where convention applies, same scenario with recognition, a state bound by the Convention undertakes to respect the obligatory effect of awards to whom the Convention Applies; so, as has been seen, such awards may be relied upon by way of a solid defense in legal proceedings. Also concerning enforcement, a state that is a party to the Convention undertakes to enforce awards to which the Convention applies following its local procedural rules and regulations. It also undertakes not to impose substantially more difficult conditions, or higher amount or charges, for such enforcement than are obligatory in the enforcement of its domestic awards for fair and equitable treatment of the parties as provided in the Havana convention especially when it comes to/ for investment/interstate arbitration, all collectively work efficiently.
Also when it comes to India there is a big problem underlying when it comes to the enforcement of a foreign award in India though it is a two-stage procedure that is started by filing an execution petition. To begin with, a court would fix whether the award adhered to the requirements of the Act. An arbitral award may be enforced like a decree of a civil court if it is enforceable although the parties and their counsels at this stage needs to be careful concerning various tactics such as objections taken by the opposite party like no attempt is made for pre-arbitration negotiation between the parties, notices before commencement not served, etc, along with requirements like filing original/ authenticated copy of the award and the underlying Arbitration agreement before the court for successfully enforcing the arbitral award in INDIA.
(d) Formalities
The rules and regulations required for having recognition and enforcement of arbitral awards to which The New York Convention applies are easy. The party looking for such recognition and Enforcement is only required to bring the following documents to the relevant court:
(a) The duly signed authentic original award or a duly qualified copy thereof; [and]
(b) The original agreement where arbitration clause was mentioned in article II, or a duly certified copy thereof.
Despite these necessities of Article IV of the New York Convention, courts of law in several Jurisdictions have enforced awards in the absence of an original doc of the arbitration Agreement, or certainly with not any written arbitration clause at all. For example, the Supreme Court of Spain enforced an award of the China International Economic and Trade Arbitration Centre (CIETAC) even though surprisingly it did not identify the parties thereto, Reasoning that the respondent fully participated in the arbitration, therefore proving its Intention to present its dispute with the claimant to arbitration. If the arbitral award and the arbitration agreement are not in the official language of the country in which recognition and enforcement are required, certified translations are required. Once the essential documents have been supplied, the court will grant recognition and enforcement unless one or more of the grounds for denial, listed in the Convention, is Present.
LANDMARK JUDICIAL PRONOUNCEMENTS PERTAINING TO ENFORCEMENT OF ARBITRAL AWARDS & INTRICACIES INVOLVED
In the latest case, the supreme court of India in national agriculture cooperative marketing federation of India v. aliment S.A held that a foreign arbitral award is not enforceable, on the basis that the deal contemplated would have dishonored OR violated the Indian laws and was opposing to the public policy of India which itself an in-depth ground for refusal of an award.
In oil and natural gas corporation v. saw pipes ltd, the supreme court of India while looking at a domestic arbitration award the Hon’ble court held that the domestic arbitral award could be rejected on the ground that the arbitral tribunal violated the Indian law and SC also said that it added patent illegality shape to Renu Sagar case formula.
The SC of India in the landmark case of SBP CO. V. Patel engineering held that the power of appointment is strictly to be a judicial power and the same could not be exercised by the nonjudicial authority or any interested party univocally to prevent biases of arbitral tribunals that’s why court restricted to delegate this authority only to a supreme court or a high court judge, not at the district court level, the court remarked.
In the recent landmark case, Perkins Eastman architects DPC & ANR. V. HSCC {India} the supreme court resolved many queries especially related to impartiality and independence of the arbitrator appointment also said that the court has the power to intervene under S.11 unless the appointment is prima facie valid and the court agreed by the same doesn’t want an overhaul on its power conferred, this will surely affect the government contracts where the arbitration clause are mostly one sided.
Also it was held by the supreme court in the past few recent years that a foreign arbitral award is not liable to be stamped it won’t affect the enforceability of an award .
In the past the Hon’ble Delhi high court in Naval Gent Maritime Ltd v Shivnath Rai Harnarain ltd had held that foreign award would not require registration and can be enforced as a decree of a court of law in India and it won’t be considered as a prerequisite for its enforceability anyhow. Similarly, the Hon’ble Bombay high court observed the same approach at this viewpoint only in the case of Vitol S.A v. Bhatia International Limited.
Also, it’s noteworthy how the seat & venue debate faced a deepening crisis irrespective of the judgment of the supreme court where it settles down some important question of law revolving around the same issue as an international London seated arbitration governed by the English law challenged in Chhattisgarh high court under sec.34 of the arbitration and conciliation act, 1996 further comes into the arena of the supreme court where the supreme court upheld the judgment of the high court and reject the challenge to award in favor of the respondent and it’s indeed a very important and significant judgment after the Bhatia case.
Adding ambiguities or resolve the complexities of this saga is bring it up on a table by the hon’ble supreme court of India in 2019, BGS SGS Soma JV V. NHPC LTD. That the venue of arbitration mentioned in the t arbitration agreement or clause in the contract between the parties is the seat of arbitral proceedings and sort of willfully overrule the case of union of India v. hardy exploration and production [India] inc. where the crisis of seat/ venue debate decided upon the conduct and determination of parties thereof.
In the much-debated case of Amazon.com NV investment holdings LLC V. future coupons (p) Ltd there is a huge dilemma regarding the status of emergency arbitration in India and the interim injunction as prayed by the future group against the emergency arbitration award from Singapore international arbitration center in favor of Amazon against the deal of reliance and future retail group in December 2020 although, on March 18, 2021, the single-judge bench of justice J.R.Midha J. of Delhi high court acknowledged the status of emergency arbitration to some extent by upholding application of the doctrine of a group of companies directs attachment of the future retail group and agreed by the SIAC emergency arbitrator relief which observed that protective rights didn’t amount to control of the petitioner over future retail ltd and consequently didn’t violate the law bench aligns with the same after hectic debate and arguments.
CONCLUSION
On a concluding note, I just wanted to say that the above discussions focus on the problem faced by the parties (mostly foreign) seeking enforcement of international arbitration awards in India and other multiple jurisdictions but one still needs to remain optimistic when it comes to arbitration practice as it’s a fact that a large number of awards are enforced too by the assistance of the national courts in Asia and interestingly India and other Asian countries trying hard to make arbitration more robust and friendly for MNC’S and foreign investors as dispute resolution is a thing to watch out when it comes to economic and investment aspects’ for the companies and others especially investment treaty arbitration.
Also very pleased to see the growth of arbitration in India and the approach of the supreme court of India and other high courts to interfere as little as required to ultimately reduce the burden of pendency of disputes on the judiciary. for instance, the 2019 amendment of the arbitration and conciliation act (section 29A) to reduce the time limit of arbitration proceedings to 12 months and the arbitration tribunal needs to pass an award within 12 months only except in the case of international commercial arbitration for which it was stated that finish proceedings as early as possible also creation of a council of arbitration, centralized body for looking at arbitrators and promotion of arbitration as a way to resolve the dispute and also Indian council of arbitration opens up a dispensation center for arbitration activities in tier 2 cities such as Kanpur last year inaugurated by the chief justice of Allahabad high court and also formal institutionalized New Delhi international arbitration center at par with Mumbai center for international arbitration, Mumbai doing some appreciable work into this domain, thus future for enforcement of arbitral awards as well as arbitration as a practice is bright.
At last, in the contemporary era, it is quite evident within this domain of arbitration that the losing party in arbitration setup usually has more room for tricky negotiation as; such a party may simply carry out the award freely, following its care-full activity to do so. Then, the losing party may use the arbitral award as a source for negotiating a settlement. It is possibly unanticipated that the winning party to the arbitration may settle for less than the amount awarded in comparison to the claim made, but it may be considered better to accept a lesser sum without delay than to face a further challenge or enforcement proceedings to recover the full amount, therefore hopefully Shortly this practice of challenging arbitral award will be reduced to a greater extent by the reforms and propagation made to the practice of arbitration for making it more fruitful, far-reaching and robust to a larger extent.
