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Article

Enforcement of Foreign Judgement and Foreign Arbitral Awards in India


Vijay Kumar Dungarwal
Ph.D. Research Scholar, MLSU,Udaipur

Abstract
India today is very much important part of the global economy. The ever-increasing level of globalization has led to raise, international business disputes too. In this contest, the enforcement of foreign judgement and foreign Arbitral Awards becomes significant. The law relating to enforcement of foreign judgement and awards has been discussed in the present paper. A foreign judgement may be enforced in India by (i) proceedings in execution and (ii) by a suit upon it, CPC, 1908. The enforcement of foreign arbitration awards is governed by the Arbitration and Conciliation Act, 1996 through New York Convention and Geneva Convention and an Non-conventional award will be enforceable in India under the common law grounds of justice, equity and good conscience. Foreign Judgement Section 2(b) of the Civil Procedure Code 1908, defines foreign judement to mean any judgement of a foreign Court Section 2(5) of the code defines a foreign court to mean a Court outside India and not established or continued by the authority of the Central Government. Thus, a foreign judgement would mean adjudication by a foreign court upon the matter before it and not merely a statement of the reasons for the order. [Brijlal V/s Govind AIR 1947 PC 192]. A judgement given by a foreign court would not cease to be so if, as a consequence of political change, the territory where the court was situated at the time of the judgement later becomes part of India. However, an act of state is not a foreign judgment [Sriman V/s Goswami, ILR 17 Bom 620] Foreign Awards The decision of the Arbitration follows in the form of an award. Section 44 (New York Convention Awards) of the Arbitration and Conciliation Act, 1996 defines foreign award means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960 a) in pursuance of an agreement in writing for arbitration to which the convention set forth in the First Schedule applies and, b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the official Gazette, declare to be territories to which the said convention applies. Section 53 (Geneva Convention Awards) of Arbitration and Conciliation Act, 1996, defines foreign awards means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924 a) in pursuance of an agreement for arbitration to which the protocol set forth in the second schedule applies, and b) between persons of whom one is subject to the jurisdiction of some one of such powers as the Central Government,. Being more of the six exceptions laid down in Section 13 of the CPC 1908. [Vishwanath V/s Abdual Wajid, Air 1963 SC I]

Competent Jurisdiction of the Foreign Court


The foreign court passing the judgement must be competent to trial the suit. It is well established that the following circumstances would give jurisdiction to the foreign courts. [Moloji V/s Shankar AIR 1962 SC 1737] :- Where the person is a subject of the foreign

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country, in which the judgement has been obtained against him on prior occasions ; Where he is a resident in the foreign country when the process was served on him , He is temporarily present in the foreign, country when the process was served on him, Where he in his character as plaintiff in the foreign actions selects the foreign court as the forum for taking action in the capacity of plaintiff, in which forum he is sued later, Where by an agreement a person has contracted to submit himself to the forum in which the judgement is obtained. whether it emanates from a reciprocating country or non-reciprocating country. Reciprocating Territory/ country means any country or territory outside India and so notified. The Central Government issued notifications from time to time to recognized countries as reciprocating countries. When a suit emanates from any of the reciprocating countries, the concerned Indian Court will proceed forthwith to enforce the foreign judgement, provided it is not affected by any of the exceptions enumerated in Section 13 of CPC, 1908. If it emanates from any other country i.e. a nonreciprocating Country, the enforcement would have to be sought by filing a suit in India on the foreign judgement. Again, the Indian Court would pass a judgement in terms of the foreign judgement provided it is not affected by the said exceptions. Section 14 of the CPC,1908 provides that the court shall presume, upon production of any document purporting to be a certified copy of foreign judgement that such judgement was pronounced by a Court of competent jurisdiction, unless the contrary appears on the record, that such presumption may be displaced by providing want of jurisdiction. The presumption under Section 14 of the CPC, 1908 is obligatory on production of a certified copy. It may be displaced by evidence on the point. [Vithalbhai V/s Lalbhai, AIR 1942 B 199] and [Mithalal V/s Kapoor, AIR 1959, Raj 47] A decree(judgement) obtained on foreign judgement does not merge in the decree passed by an Indian Court. [Darbad V/s Narain, AIR 1944 L 302] Procedure for Execution of Foreign Judgement A suit on the foreign judgement must be brought within 3 years from the date of the judgement. Section 101 of the Limitation Act, 1963. The pendency of an appeal in the foreign country will not bar a suit on a foreign judgement. A judgement of an Indian Court can only be enforced

As laid down by the Supreme Court of India in Vellachi Achi V/s Ramanathan, AIR 1973 M 141, that, generally the courts of a country, impose a three fold restriction on the exercise of their jurisdiction : - jurisdiction in rem (binding not only the parties but the world at large) by a court over res outside the jurisdiction will not be exercised, because it will not be recognised by other courts. - The court will not deal directly or indirectly with tide to immovable property outside the jurisdiction of the state from which it derives its authority and - The court will not assist in the enforcement within its jurisdiction of foreign penal or revenue laws.

Mode of Enforcement of a Foreign Judgement


If the conditions set out in section 13 of the CPC, 1908 are fulfilled, a foreign judgement may be brought before a court in India for enforcement. However, it is not to be supposed that Indian Courts are bound in all cases to take cognizance of the suit and they may refuse to entertain it on grounds of expediency. A foreign judgement may be enforced in India by (i) : proceedings in execution and Section 44 and (ii) : by a suit upon it. The enforcement of a foreign judgement would be based on the territory from where it emanates,

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by proceedings in execution, against that a foreign judgement may be enforced by proceedings in execution in certain cases only. These are mentioned in Section 44 and 44 A of the CPC, 1908. In all other cases, a foreign judgement can only be enforced by a suit on the judgment. If such a suit is dismissed, no subsequent application to execute that judgement will lie-for it has become merged in the decree dismissing the suit. This stand is brought out through the CPC, 1908 distinguishing between foreign, judgements of countries which are reciprocating territories and those which are not. Section 44A of the CPC, 1908 reads that : - Where a certified copy of a decree of any of the Superior Court of any reciprocating territory has been field in a District Court (of India), the decree may be executed in India as if it had been passed by the District Court. - Together with the certified copy of the decree shall be filed a certificate from such Superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this Section be conclusive proof of the extent of such satisfaction or adjustment. Decree for this purpose means a decree or judgement under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of like nature or in respect of a fine or other penalty, but shall in no case include an arbitration award, even if such an award is enforceable as a decree or judgement. Enforcement of Foreign Arbital Awards in India The Act of 1996 was aimed to achieve two goals. First, to unify the legal regime surrounding arbitration for both domestic and international arbitration conduct in India. Second, to improve arbitral efficiency by reducing the need for judicial intervention, enforcing awards as judicial decrees, and granting greater autonomy to arbitral tribunal decisions. Statutory Framework for Convention Award Part-II of the Act of 1996 which lays down statutory framework for the enforcement of foreign arbitral awards given in the countries which are signatories to either the 1927 Convention on the Execution of Foreign Arbitral Awards [Geneva Convention] or the 1958 convention on the Recognition and Enforcement of Foreign Arbitral Awards [New York Convention] Pre-Enforcement Conditions India has, however, made two reservations while rectifying the convention, namely A) that it would apply the convention to the recognition and enforcement of an award only if it was made in the territory of another reciprocating contracting state, and B) that is would apply the convention only to differences arising out of legal relationships which are considered as commercial under Indian Law [Section 2(1) f] In the case of Brace Transport Corporation of Monrovia Orient Middle East Line Ltd. [(1995 supp 2 SC C 280] Supreme Court has accepted that enforcement proceedings can be brought wherever the property of the losing party may be situated. Application for Enforcement A party applying for enforcement of a foreign award is required to produce before the court :- [Section 47 for New York convention and Section 56 for Geneva convention] - Original award or copy thereof, duly authenticated in the manner required by the Law of the country in which it was made - Original agreement for arbitration or a duly certified copy thereof, - Such evidence as may be necessary to prove that the award is a foreign award.. - Translations, into English certified as correct in such other manner as may be sufficient according to the law in force in India, where the award is in a foreign language.

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In the case of Fuerst Day Lawson ltd. V/s Jindal Export ltd. (2001) 6 SCC 356] Supreme Court held that once the court determines that a foreign award is enforceable it can straight away be executed as a decree. In other words, no other application is required to convert the judgment into a decree. Grounds for Refusal of Enforcement Section 48 for New York convention and Section 57 for Geneva convention of the Act of 1996 lays down the grounds where the enforcement may be refused it the objector can prove one of the following grounds: i) Incapacity: that a party to the arbitration agreement was, under the law applicable to him, under some incapacity, ii) Invalid Arbitration Agreement: that the arbitration agreement was invalid under the law to which the parties subjected it, or , failing any indication thereon, under the law of the country where the award was made, iii) Due process: that a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case, iv) Jurisdictional defect v) that the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, with the law of the country where the arbitration took place. vi) that the award has not yet becomes 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, it was made. Ex officio Court Jurisdiction: The section further lays down the grounds where the court may also refuse to enforce a foreign award if it finds: i) Non-arbitrability - that the award is in respect of a matter which is not capable of settlement by arbitration under the laws of India. ii) Contrary to Public Policy : that the enforcement of the foreign award would be contrary to public policy of India. Enforcement of Non-Convention Awards: In the case of Badat & Co. Bombay V/s East India Trading Co. [AIR 1964 SC 538] the Supreme Court has rules that such an Non-conventional award will be enforceable in India under the common law on grounds of justice, equity and good conscience. In case of Bhatia International V/s Bulk Trading S.A. [2002, 4 SCC 105] Supreme Court held that The 1996 Act nowhere provides that its provisions are not to apply to international commercial arbitrations which take place in a non-convention country. Conclusion : Thus, foreign judgement and foreign arbitration awards can be lawfully enforced and executed in India References :
The Arbitration and Conciliation Act, 1996 The Code of Civil Procedure 1908 Law of Arbitration and Conciliation- Avtar Singh 2007 (Eastern Book Company) Civil Procedure C.K. Takwani- 2005 (Eastern Book Company)

Case Study References :


Brijlal V/s Govind [AIR1947 PC 192] Vishwanath V/s Abdual Wajid [AIR 1963 SC 1] Moloji V/s Shankar [AIR 1962 SC 1737] Vellachi Achi V/s Ramanathan [AIR 1973 M,141] Vithalbhai V/s Lal Bhai [AIR1942 B 199] Mithalal V/s Kapoor [AIR 1959, Raj 47] Darbad V/s Narain [AIR 1944 L 302] Brace Transport Corporation of Monrovia Orient Middle East Line Ltd. [1995 Sup. 2 SCC 280] Fuerst Day Lawson Ltd V/s Jindal export Ltd. [2001,6 SCC 356] Badat & Co. Bombay V/s East India Trading Co. [AIR 1964 SC 538] Bhatia International V/s Bulk Trading S.A. [2002, 4 SCC 105]