Convention on the Recognition and Enforcement of Foreign Arbitral Awards

INTRODUCTION:

World has started to recognize the importance of international arbitration. As it is growing,  it as a means to settle disputes among the international organisations or international parties the “convention on the recognition and enforcement of foreign arbitral awards”  aims to  give a conventional standards from the legislative point-of-view, show that arbitration agreement and court regulation are recognized as an enforcement of foreign and non-domestic arbitral awards. Here the term used ”non-domestic” seems to grasp the award which was made in the state of enforcement,  in spite of the fact it is treated as foreign, under its law because, in hearings some proportion of foreign component is present.

Having the principal is aim to, not to discriminate the arbitral awards be it foreign and non- domestic and it ensures that these awards are acknowledged by the parties and are capable of being enforced in their dominion as a domestic awards would.

 

KEY PROVISIONS:

This convention helps the awards to be applicable in any state other than the state where the acknowledgement and implementation is sought. It also applies to non-domestic awards. When it is allowed to be enclosed by an accord, party may announce that they will apply the convention:-

  1. When the awards are prepared in the Dominion of another party
  2. Only to a legal association that can be termed as “commercial” underneath their domestic law.

This accord contains means on arbitration agreements. This is the point that is covered in the acknowledgement of the fact that and award could be declined when enforcement on the basis that accord upon which it was built might not be recognized.

According to Article 2(1) of the convention it provides that parties must recognize written arbitration agreement. Keeping that in mind UNCITRAL adopted, this recommendation to provide a guided interpretation to the parties of the requirements in Article 2(2) that and arbitration agreement must be in writing and to put forward the the use of Article7 (1), where any interested party can be allowed to avail itself the rights under the regime of the country where the arbitral agreement is relied upon.

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There are five grounds define by this convention upon which acknowledgement and implementation may be rejected at the appeal of the party against whom it is invoked.

“The grounds include incapacity of the parties, invalidity of the arbitration agreement, due process, scope of the arbitration agreement, jurisdiction of the arbitral tribunal, setting aside or suspension of an award in the country in which, or under the law of which, that award was made. The Convention defines two additional grounds upon which the court may, on its own motion, refuse recognition and enforcement of an award. Those grounds relate to arbitration ability and public policy”[1].

ENFORCEMENTS:

According to the 3rd article of the convention it is required by the contracting states to implement foreign awards that are within the Ambit of article 1” in accordance with (their) … rules of procedure.”  It is made pretty evident that if you have to obtain implementation,  the real burden of showing the copies of the arbitral proceedings is on the winner of the arbitration and the agreement of the arbitration  which was prepared, it might be translated or not.  It is his duty (victor) to get approval about the grant, that it is final or should be enforceable where it was made, for any other way of showing that implementation will be   refused only, if the opposite parties can you show that the award which was awarded in the proceedings have defects in it or it has defects in the process that lead up to it.

Article 3 and 4, signatories to have a fairly simple procedure for implementation. It is not required that each country to have an identical procedure domestic grants. Discrimination against foreign arbitral award shouldn’t be done it is merely not enough. It is clear that the references to the enforcing forum’s own “rules of procedure” and its “public policy” do not give it any basis to nullify the basic obligation to have straight forward procedures for enforcement of foreign awards.

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Position in India

The Indian law has acknowledged for the laws in arbitration it can be procedural or it can be substantial issues. The  most important laws regarding the  implementation of the foreign arbitral awards are “Article 44 and Article 49 of The Arbitration Act, 1996” taken in conjunction with each other. Under article 49 the awards are implemented in the same way that a foreign grants and orders are implemented here.

According to the Article 44 of the act provides that the orders made in a foreign land may be granted leave to implement in India on the same terms that the, respective country implemented the order and grants issued in India. This article styles to show that there has to be a policy for the implementation of these grants between India and the respective foreign country.

These arbitral grants must be granted in the areas where on the basis of cooperation this convention is applicable. For the jurisdictions where this convention is applicable, the government should be announcing in their newspapers that they are clearing the name of the areas where the convention will apply. If any award is passed in a country where this convention is not applicable then the law of the land, says that Section 44 will not be applicable to that grant and that grant will also not be treated as a foreign award under the present act of 1996.

“The supreme court in ‘Bhatia I. v. Bulk T.S.A.[2], observed that arbitration 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 not be covered by second part of the convention. This approach was acceptable to all the members of the New York convention of 1958.

 

ADVANTAGES:

Now if we assume that the party is here in the international contract that comes within the ambit of this convention and the wish to agree on the arbitration clause to be certainly effective. What all this convention could offer them?

  1. That is there is agreement to which we have to see that operation is a agreeable contract and it should cover the matters that are abatable under the laws of their countries involved in the transaction, whether it will be honoured, in the court of those countries where they may decline it in lieu of the litigation
  2. The parties to the contract go all the way out and towards Setting-up of the governing rules upon which the arbitration would be governed itself.
  3. The contracting parties could be sure that, the arbitral award of these arbitration would be enforceable in their jurisdiction if it meets the general requirements of the laws of the land without any discrimination.
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CONCLUSION:

It is in no doubt that this convention of the United Nation is a very substantial leap forward but it hasn’t reached the end of the road as many of the people look at it. Global market are more than ever desirable to go in the future towards a global regime of arbitration, where it is governed more independently by the will of the parties and less restricted by their local laws of the country. Summarizing this we can say that the legal system of India has convincingly moved in the right direction towards creating an environment that is facilitating for the implementation of these awards, but there is room for some improvements that would bring India with the advanced legal regimes of the world to provide an advance legal solutions in the needs of the international arbitration.

 

[1] AIR 2002 SC 1432

[1] The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958

Author: Kashish Goel,
Delhi Metropolitan Education, GGSIPU 4th Year

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