CRITICAL ANALYSIS ON THE ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA
Savio Alex Sanjay
3rd Year BA LLB
Christ (Deemed to be University), Bengaluru
The purpose of Arbitration is to get speedy justice with cost effectiveness and a favorable award. We see that nowadays there have been extensive international efforts made to overcome the hurdles in recognition and enforcement of foreign arbitral awards. Hurdles such as the award being in one party’s favor and thereafter being set aside for being invalid or a disconnect between jurisdiction of domestic and foreign courts in case of annulment of an award and so on.
This paper in its introductory part briefly explores the domestic arbitration regime and it further delves into its primary focus areas as follows: –
(a) The relevance of state ‘public policy’ with respect to International Arbitral awards?
(b) Why is there a disconnect between International and Domestic courts of arbitration with respect to Jurisdiction and powers of annulment in developed and developing countries?
(c) Whether Article 5 of the New York convention is absolute or exhaustive in nature?
The research methodology used by the authors in this paper is doctrinal and adopts a qualitative approach. The justification behind the adoption of the qualitative method is that the study is, mainly, a library-based research. The study depends on the secondary data, the existing literature and relevant researches those have been previously carried out. Reliance will be placed on primary sources such as Books, debates and proceedings of PCA, SIAC and other such arbitration institutions. Secondary sources such as journals, scholarly articles, reports and draft bills shall be referred to in order to analyze the lacuna in the existing mandatory international rules and conventions, and to determine the hierarchy in jurisdiction of an arbitral award’s enforcement.
The word arbitration has the dictionary meaning of hearing and determining of a dispute between the parties by a person or persons chosen or agreed to be chosen voluntarily by the parties. It’s been observed that the concept of arbitration is not unknown in India. In classical India, disputes between private individuals were placed before Panchas and Panchayats. In a similar vein, commercial matters were decided by Mahajans and Chambers. However, formal arbitration proceedings came into existence after Britishers started commercial activities in India. Arbitration, in the legal sense, that is, reference of a dispute by consent of the parties to one or more persons with or without an umpire and an award enforceable by the sovereign power were a working concept in ancient India.
About two and a half centuries back the techniques of resolution of disputes by arbitration have received legal recognition in India. In 1772, arbitration was introduced in India for the first time. The East India Company framed several regulations which were applicable only to three metropolises, namely Bengal, Bombay and Madras.
Section 22 of the Arbitration Act, 1940 further provides that the arbitrator to whom the matters in dispute in the suit may be referred, shall be appointed in such manner as may be agreed upon mutually by the parties. The court however has no power to refer the decision of any issue raised in the suit to arbitrators nominated by the courts against the protest of the parties.
The Code of Civil Procedure (Act VIII of 1859) codified for the first time the civil procedure in civil courts and the law relating to it. Sections 312 to 327 of this code dealt with the concept of arbitration in suits. Sections 312 to 325 provided for arbitration by parties to pending suits. Section 326 dealt with the filing in court of an agreement to refer to arbitration and section 327 dealt with filing of an award without the intervention of the court. The code recognized three kinds of arbitration and the same distinction is still recognized.
The provisions of the code of civil procedure (Act VIII of 1859) were replaced by the code of civil procedure (Act XIV of 1882) and later by the Code of Civil Procedure (Act V of 1908). All the three codes recognized only references to arbitration of disputes which had actually arisen to arbitration. Section 2 (a) of the Arbitration Act 1899 for the first time gave recognition to the reference of the disputes likely to arise in the future to an arbitrator. The definition in section 2(a) of the Arbitration Act, 1940 is merely a repetition of the earlier definition. A uniform law of arbitration applicable throughout India was provided for the first time by the landmark enactment of the Arbitration Act, 1940.
The Indian laws recognized arbitration agreement by which the parties could bring themselves to not litigate in courts but seek their remedy outside the courts. Even though section 28 of the Contract Act 1872 makes void any such agreement by which anybody is restricted from approaching courts for relief, arbitration agreements proved to be an exception to this law. This has gone on to become a part of the fundamental law of India.
At present the new Arbitration and Conciliation Act, 1996, which repealed the old Arbitration Act, 1940, is in force. This is in adopting the UNCITRAL model laws.
It appears that the intention of the 1996 Act is to steer clear of the earlier position, namely, that the provisions of the Code of Civil Procedure, 1908 would apply to all proceedings under the Arbitration Act subject to the provisions of the Act as well as the rules made there under. On the flipside, there is internal evidence in the 1996 Act which leans towards suggesting that the intention is to make a self-contained code. Section 9 of the 1996 Act deals with the powers of the court to make certain interim measures indicating an intention on the part of the legislature to make the 1996 Act a self-contained self-operative Code with regard to the subject matter of arbitration and conciliation and that the provisions of the Civil Procedure Code are not applicable, unless specifically made so.
The arbitration by the judicial specialist is barred under Section 5 of the Act. This fundamental arrangement is contained in the laws of every other nation that has embraced the UNCITRAL Model. The key goals set out in the Statement of Objects and Reasons of the 1996 Act are “to limit the supervisory part of courts in the arbitral procedure” and “to ensure each arbitral award is authorized in a similar way leveling with announcement of a common court”. Section 5 under the Act sets an exhaustive bar on the obstruction of the courts in issues where there exists an arbitration proviso. Under the new Arbitration Act, the impedance of the Court in all issues associated with the direct of Arbitration, choice of the Arbitrator and the award has been especially limited when contrasted with that under the 1940 Act.
Balco and White Industries
In BALCO, the Court was of the conclusion that it couldn’t help contradicting the decisive particles in Bhatia and Venture Global, and that the ability to concede between time measures in regard of outside situated arbitrations or to manage difficulties to remote awards did not spill out of the arrangements of the 1996 Act. In doing as such, the Court took the broader view in’ understanding of Bhatia that all of Part I connected to arbitrations situated outside India did not discover applicable premise in the arrangements of the 1996 Act.
A huge removal – from the conclusion is that the Court solidly supported the seat of arbitration as the ‘focal point of gravity’ of an arbitration specially to choose purview of courts in connection to that arbitration. Another is that is clears up the until now dim refinement in India between the substantive administering law of an agreement and the law representing the arbitration ascension. Maybe, most critical, is its explanation of the elucidation of the expression ‘of the nation in which, or under the rules of the New York Convention. While the expression has been the subject of talk around the world, the Court saw that there can’t be simultaneous award of two separate courts in the seat and the locale, the law of which oversees the arbitrations – it must be the court at the seat of arbitration who can exercise such purview to manage a test.
In BALCO case, altogether however, the Supreme Court characterizes the relevance of its elucidations by proposing that its perspective of the law just applies to arbitration assentions executed after its choice i.e. post 6 September 2012. In doing as such, the Court seems to have been guided by down to earth contemplations and unavoidable issues that may have come about because of applying its perspectives reflectively. This advance energizing issues on the position that Indian courts may to go up against pending arbitrations and related suits and future cases on assentions as of now in constrain, however dated before the Court’s choice. It is likewise of some enthusiasm to check whether parties re-execute arbitration assentions alone in regard of their business contracts so as to fall inside the BALCO net.
The decision is a huge positive development for India as it brings in the contour the Indian position with international arbitration jurisprudence and undertaking. This decision is bound to create greater confidence in the Indian legal system and courts. Also, it will undoubtedly make more prominent speculator trust in India, consistency and consistency in the legal approach will just work well for to make a more proficient question d
etermination process for Indian and Non – Indian parties similarly.
etermination process for Indian and Non – Indian parties similarly.
LEGISLATIVE AND JUDICIAL RESPONSE IN INDIA
A second category covers the failure to inform a party about the arbitration. Informing parties of the identity of arbitrators is fundamental to the process of arbitration. Requirement that the party should be informed about the arbitral proceedings means that the party can be located. A German Court in Bavaria, did not allow the enforcement of an award which was made in made in Moscow. Main reason for the refusal was that the German buyer was not duly informed of the arbitration. The Court found that although Russian arbitration law provides that in case the information about the arbitral proceedings is sent to the defendant’s last known address, it sufficient to fulfill the requirement of sufficient notice to the party.
Siroj Export Company Ltd. V. I.O.C. Ltd., AIR 1997 Raj 120:1997 (2) CivLj 552: 1996 (1) Raj LR 306:1997 (1) Raj LW 187.
 Bhatia International v. Mass Trading S. A. & Anr Appeal (Civil) 6527 of 2001
 ONGC v. SAW Pipes Appeal (Civil) 7419 (2001) of 518
 Parsons & Whittemore Overseas Co. Inc. v. Societe Generale de lIndustrie du Papier (RAKTA), Y.B. Comm. Arb I 205 (1976) (US No. 7).
 Bharat Aluminium Co vs Kaiser Aluminium Technical (Civil) Appeal No.7019 of 2005
 Bauer & Grobmann OHG v. Fratelli Cerrone Alfredo e Raffaele, X Y.B. Comm. Arb. 461-462 (1985) (Italy No. 70). Corte di Appello [Court of Appeal], Naples (Salerno Section), May 18, 1982.
 Libyan American Oil Company (Liamco) v. Socialist People’s Libyan Arab Yamahirya, formerly Libyan Arab Republic (1982) VII Ybk Comm Arb 382.
 Venture Global Engineering v. Satyam Computer Services, 233 Fed Appx 517 (CA 6 (Mich)).
 Centro-trade Minerals & Metals Inc. v. Hindustan Copper Ltd., 2006 (2) Arb I.R. 547 (SC).
 National Thermal Power Corp. Ltd. v. Singer Co., Anr., AIR 1993 SC 998: (1992) 2 SCC 551.
 Renusagar Power Co. Ltd. v. General Electric Co., AIR 1994 SC 860, 888: 1994 Supp(l) SCC 644.
 Law Commission of India, Supplementary to report No.246 on Amendments to the Arbitration and Conciliation Act,1996