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NY Convention

The document discusses the New York Convention and its relevance to the enforcement of foreign arbitral awards in India, as outlined in the Arbitration and Conciliation Act, 1996. It details the definition of a foreign award, the conditions for enforcement, the powers of judicial authorities, and the evidence required for enforcement. Additionally, it specifies grounds for refusal of enforcement and the appeal process related to foreign awards.

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13 views3 pages

NY Convention

The document discusses the New York Convention and its relevance to the enforcement of foreign arbitral awards in India, as outlined in the Arbitration and Conciliation Act, 1996. It details the definition of a foreign award, the conditions for enforcement, the powers of judicial authorities, and the evidence required for enforcement. Additionally, it specifies grounds for refusal of enforcement and the appeal process related to foreign awards.

Uploaded by

shankargupta1212
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FOREIGN AWARDS WITH REFERENCE TO NEW YORK CONVENTION

 INTRODUCTION
The New York convention also known as the Convention on the Recognition and Enforcement of
Foreign Arbitral Award. Sections 44 to 52 of Part II of the Arbitration and Conciliation Act, 1996
(the Act) amended by the Arbitration and Conciliation (Amendment) Act, 2015 deals with
enforcement of certain foreign awards in reference to New York Convention in India.

 DEFINITION OF FOREIGN AWARD


According to Section 44 of the Act a foreign award means an arbitral award on disputes arising
between parties to arbitration, whether in contractual or non-contractual relationship,
considered as commercial under Indian laws enacted on or after the 11th day of October, 1960.
But the country must be a signatory to the New York Convention and recognised by the Central
Government of India as a Convention country and the award shall be passed in the territory of
another contracting country which is a reciprocating territory, i.e. the Central Government of
India has notified it as Convention country in its Official Gazette.
Ø According to the section 44 of the new Act, for a foreign award following element are
necessary:
· The award should have been given in pursuance of that agreement on which the New York
Convention is applicable. And the agreement should be in writing.
· The award should have been given in that territory where on the basis of reciprocity the New
York Convention is applicable.
· There must be some legal relationship between the parties whether contractual or non-
contractual.
· The transaction should be of commercial nature.

In R.M. INVESTMENT AND TRADING CO. (P) LTD VS. BOEING CO, AIR 1994, the SC has observed
that the interpretation of word ‘commercial’ should be very broad and wide so that the all
activities may be included in it which have become an innate integral part of the present
international commercial trade and business.

 POWER OF JUDICIAL AUTHORITY TO REFER PARTIES TO ARBITRATION


Section 45 of the Act empowers a judicial authority to refer the parties to arbitration at the
request of one of the parties or any person claiming through or under him except in the situation
when the agreement is found to be void, inoperative or incapable of being performed or except
anything contained in the part 1 of the new Act or in CPC,1908.
In SHAKTI BHOG FOODS LTD. VS. KOLA SHIPPING LTD. (2009), the SC held that in view of the
mandatary provisions of section 45 the court was duty bound to stay all proceedings in the suit
and refer the matter to arbitration as per the relevant clauses of the charter party agreement.

 FOREIGN AWARD WHEN BINDING


Section 46 of the Act provides that any foreign award which would be enforceable under this
Chapter shall be treated as binding for all purposes on the persons as between whom it was
made. It may be relied upon by the parties in any legal proceedings in India.
A foreign award becomes binding on the parties as per New York Convention when-
· it has been formulated by a regular proceeding,
· it has complied with the formalities required for arbitral award.

The foreign award, once it gains the status of final, cannot be challenged on merits because once
it is final it becomes conclusive and binding in all respect and purposes, except under the
circumstances provided in section 48 of the new Act, whereby the enforcement of the award will
be refused.

The foreign award cannot be set aside or annulled by a domestic court except where public policy
is in violation. But a domestic court has jurisdiction to decide whether the award is enforceable
or not. (LUDWING WUNSCHA AND CO. VS. RAUNAQ INTERNATIONAL, AIR 1983)

 EVIDENCE REQUIRED TO APPLY FOR ENFORCEMENT OF A FOREIGN AWARD


According to section 47 of the Act a person seeking to enforce a foreign arbitral award shall make
an application to a court, i.e. high court having jurisdiction in the matter as per the provisions of
the Amendment Act, 2015 and provide the original award or its certified copy; original arbitration
agreement or its duly certified copy; and if the award or agreement is in a foreign language, the
party seeking to enforce must produce a certified copy of a foreign award translated into English
and/or any other evidence to establish that the award is a foreign award. The burden of proof is
on the party seeking to enforce the foreign arbitral award to prove that it is a genuine foreign
award and the aforesaid documents form a prima facie evidence to establish the same.

 CONDITION FOR ENFORCEMENT OF FOREIGN AWARDS


SECTION 48 of the New Act, 1966, prescribe the grounds on the basis of which the court can
refuse to enforce a foreign award. The grounds are as follows: -
a) Incapacity: If a party to an arbitration agreement is (under the law applicable to him) under
some incapacity, then the Indian courts can refuse to enforce such awards.

b) Invalid Arbitration Agreement: If an arbitration agreement is not valid 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, it is not liable for enforcement.

c) Lack of natural justice: If a party to an arbitration agreement has not been given proper
notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise
unable to present his case this would be in violation of the principles of natural justice and
consequently, a ground for refusing enforcement.

d) Jurisdictional defect: the award must not deal with questions or matters which are beyond
the scope of the agreement. The award is not enforceable if it decides disputes as to the
arbitrator’s jurisdiction which by the foreign law, they have no power to decide.
The proviso to this clause carves out an exception. If the matters to the dispute cannot be
separated from the arbitration for taking decision than the matter will be submitted to arbitration
for enforcement.

e) Legality of composition of arbitral tribunal and procedure: If 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, then such
an award is not liable to be enforced.

f) Award is suspended: If the 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,
it was made.

g) Public Policy: Recognition or enforcement of a Convention award may also be refused if the
award is in respect of matter which is not capable of settlement by arbitration, or if it would be
contrary to public policy to recognise or enforce the award.
Section 48 only provides grounds for refusal of enforcement of foreign award as mentioned
above which does not permit the court to make a review of the foreign award on the merits of
the case; does not permit the court to exercise its appellate jurisdiction over the foreign award;
and does not permit the court to enquire as to whether some error has been committed by the
tribunal while passing the foreign award.
It is further provided that if an application for the setting aside or suspension of the award has
been made to a competent authority, the court may, if it considers it proper adjourn the decision
on the enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.

 ENFORCEMENT OF FOREIGN AWARDS


As per section 49 of the Act empowers the foreign award to be executed as decree of the court if
the court is satisfied that the foreign award in question is recognisable and enforceable under
this Act.

 APPEALABLE ORDERS
Under Section 50 of the Act, no appeal shall lie against the award so upheld except for a
discretionary appeal to Supreme Court of India under Article 136 of the Constitution of India
when it is a question of fundamental importance or public interest. But in the case of an award
held to be non-enforceable by the court, an appeal may be allowed under section 50 (1) (b) of
the Act.
The decree shall be executed, on application by the decree-holder, in accordance with the
provisions of CPC by the court which passed it.

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