PART II ENFORCEMENT OF CERTAIN FOREIGN AWARDS Scanned with CamScanner1 International and Commercial Arbitration “The essence of the theory of ‘transnational arbitration’ is that the institution of international commercial arbitration is an autonomous juristic entity which is independent of all national courts and all national systems of law."! “One of the primary purposes of transnationalist movement is to break the links between the arbitral process and the courts of the country in which the arbitration takes bitration and Conciliation Act, 1996 provides for certain aspects of nal commercial arbitration. The term “international commercial arbitration” has been defined in Section (2)(1)(f) of the Arbitration and Conciliation Act, 1996 as follows: 2. (1)()_ “International commercial arbitration” means an arbitra- tion relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is— @) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) a company or an association or a body of individuals whose central management and control is exercised in an other than India; or (iv) the Government of a foreign country, or an arbitration to be considered as international arbitration within the meaning of this definition it is necessary that; (a) the dispute must arise out of a legal relationship: which is commercial, irrespective of the fact whether such relationship is contractual or not; and (b) at least one of the parties to the dispute is a foreign national or a company registered in a foreign country or'a company, management and control of which is exercised from ‘a foreign country or the Government of a foreign country, y country Commercial ‘The term ‘commercial” has'not been defined in the Act. This term is explained in a footnote of UNCITRAL Model Law on Intemational Commercial. Arbitration, 1. Sir Michael John: Transnational Arbitration in English Law, 133, CURRENT LecAL PRODLES, 1984, 2 id at p 135. [333] Scanned with CamScannersi n vanat an Commercial Arbitato [Chap Internationa 33 a ee! 334 For guidance since Move! L&W” has been refered ta iy can be used for guid ql Palen explanation says Preamble of the Act. an “The term ‘commercial’ shot! : all relationships of iven a wide interpretation as t9 gg, 4 be ature, whether cony a commercial actual matters arising 0m a mmercia! nature include, But are not Fmited io, ge or nt, Retatonships oF ar ansaction for the supply oF exchange of ga following transactions: any representation or agency; far tions cement; commerci istribution agreements ites epi adiilth’ leah” 1 i atimion of works: consulting: engineering; licensing: inygy, toring, leasing: coms pee naurance; exploitation agreement OF Concession; jy, stg kin sg tes OPEN cage fg or passengers by air, 1 oF road. Choice of place and proper law of arbitration Section 28 of the Arbitration and Conciliation Act, 1996 provides that'in ap for services international commercial arbitration: (i) the ute has to be decided in accordance with the rules’ of law designated by the parties as applicable to the substance of the dispute; (ii) the designation by the parties of the law or legal system of a given country would have to be construed as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii) where the parties fail to designate any such applicable law, the Arbitral Tribunal would have to apply the rules of law it considers to be appro- priate keeping in mind all the circumstances surrounding the dispute. ‘As to the choice of law, the Supreme Court in its decision’in NTPC. v Singer Company® cited the following passage from Dicey, and. Mortis, THE CONFLICT oF Laws: “Rule 180.—The term ‘proper law of contract’ means the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and! most teal connection.” The Supreme Court also cited a passage from the speech of Lord HERSCHEL? “our In this case, as in all such cases,'the whole of the contract must be looked at, and the contract must be regulated by’ the intention of the partes as appearing from the contract. It is perfectly competent to those who under such circumstances as 1 have indicated, are entering into a contract, to. indicate by the terms which they employ, which system of law. they intend to be applied to the construction of the contract, and to the determination of the rights arising out of the contract.” idisomim0d Where the intention of the parties is not clear either through, their clauses of inferences, the courts endeavour to impute an intention by. identifying. the lege! 3. (1992) 3 SCC 560: AIR 1993 SC 998, a 4. Vol Il, 11th Eda, pp 1161-1162. ‘ 5. Hamlyn & Co v Talisker Distlery, (1894) AC 202; [1891.94] All ER Rep 852. Scanned with CamScanneryr 8.01 Choice of place and proper law of arbitration 335 gystem with which the transaction has its closest and most real connection. I . In reference 10 the parties intention the only limitation is that their intention must show 1 bona fide choice and should not be opposed to public policy. In th rn y. In the words of Lord Where there is an express statement by the parties of their intent to select the law of the contract, itis difficult to see what qualifications are possible, provided the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on the ground of public policy..." In making its choice the aw has to apply the sound ideas of ‘business convenience and sense to the language of the contract itself7 Where the place of arbitration is by legal choice, it will not, in the absence of any other connecting factor with that place, be sufficient to draw an inference as to the intention of the parties 10 be governed by the law of that place. The clause showing the place of Faference must necessarily give rise to a strong indication in regard to the intention Of the parties ® The test of discovering the partes® intention would be objective, that is, what might have been the choice if any reasonable person had applied his mind to the question. The judge has to determine the intention of the parties by asking himself “how a just and reasonable person would have regarded the problem.”? For this purpose, the place where the contract was made, the form and object of the contract, the place of performance or business of the parties, reference to the courts having jurisdiction and similar other links are examined by the courts to determine the system of law with which the transaction has its closest and most real connection. The position in this respect was summarised by the Privy Council in Mount Albert Borough Council.v ‘Australasian Temperance and General Mutual Life Assurance Society Ltd:'® “The proper law of the contract means that law which the English or other court is to apply in determining the obligations under the contract.... It may, be that the parties have in terms in their agreement expressed what law they intend to govern, and in that case prima facie their intention will be effectuated by the court. But in most cases they do not do so. The parties may not have thought of the matter at all. Then the court has to impute an intention, or to determine for the parties what is the proper law which, as, just and reasonable persons, they ought to or would have intended if they had thought about the question when they made the contract.” ©. Vita Food Production Ine v Unus Shipping Co Ltd, 1939/AC 277 at p'290: {1939} 1 All ER 513 x 7. Citing Dicey’s sub-rule (2) of Rule 180 which reads: Te "'Seb-rule (2)--When the intention of the partis to a contract with regard to the law sovett Lea or expressed in words, their intention is to be inferred from uhe terms and nett Of the contract and from the general circumstances of the case, and such inferred intention determines the proper law of the contract.” Jac: bs Marc Co 'v Credit Lyonnais, (1884) 12 QBD 589 at p 601: [1881-85] All ER Rep 151 (CA). ‘ ¢ 8. Citing Fehmarn, The, (1958) 1 All ER 333 CA. ¢ 8 ey i Mount Albert Borough Counc’ 9. Assunzione, The,(1954) P 150, 176; (1954) 1 All ER 278 CA; Mount St p 240: ‘Astrataaian Temperance and General Mutual Life Assurance ‘Society Ltd, 19a8;AG 4 a 1937] 4 All ER 206. E mga 10. ton 3 SCC 560 at p 562: 1938 AC 224 at p 240: 1937] 4 AILER: 206. a) Scanned with CamScannerCommercial Arbitration (Chap. 1 i ing that the las Juded on this point by observing t proper law is ‘i papas have expressly or impliedly chosen or which is Josest and most intimate connection with the 336 International and The Supreme Cou thus the law which the imputed to them by reason of its cl ontract.!! ° In the case before the Supreme Court, namely, National Thermal Power Corpn v Singer Company'? the court felt that there was no need to draw any inference about the intention of the parties or to impute any intention to them, for they had clearly and categorically stipulated that their contract made in India and to be performed in India was to be governed by the laws in force in India and the courts in Delhi were to “have exclusive jurisdiction in all matters, arising under this contract”. Governing law of arbitration ; As regards the governing law of arbitration, the Supreme Court cited Dicey as saying:!3 “Rule 58—(1) The validity, effect and interpretation of arbitration agree- ment are governed by its proper law. (2) The law governing arbitration proceedings is the law chosen by the parties, or, in the absence of agreement, the law of the country.in which the arbitration is held.” This is, however, a rebuttable presumption." The proper law of arbitration will also decide whether the arbitration clause would equally apply to a different contract between the same parties or between one of those parties and a third party. The parties have the freedom to choose the law which apply to their international commercial arbitration agreement.'S They may choose the procedural law and also the substantive law. In the NTPC case there was no doubt'over this'matter because the parties indicated the applicable law and where the proper law is chosen by the parties, such Jaw must, in the absence of an unmistakable intention to the contrary, govern the arbitration agreement which, though collateral or ancilfary'to thé main contract, is nevertheless a part of such contract. The parties in this’ case’ stipulated that the arbitration between them will be conducted in accordance with the ICC Rules and those rules, being in many respects self-contained or self-regulating and constituting a contractual code of procedure, will gover the conduct-of the arbitration, except insofar as they conflict with the mandatory requirements of the proper law 11, (1992) 3 SCC $60: 1938 AC 224 at p 240: [1937] 4.All ER, 206. 12. (1992) 3 SCC 560 at p 563. 13. Pp 534-535, Vol 1. 14. Sues Dies. Nel 1H Pp 539 and i observation in ‘Whitworth Street Estates (Manchester) Lid ¥ apes Miler & Parmers Lad 1970 AC S85 app 60,612 and 616: [1970] 1 ANTER "796; Heyman 15. The fies are free almost wi i procedure’ ywever omsles that procedure might spear by ‘compo’ wit te orthodox ny ‘ot jul cision: The doctrine of “‘party autonomy’’ is subject to overall controls brought about by SOasideations such as those of public policy. See Sir Michael John Mustill, 7 é ration in English Law im CURRENT LEGAL PROBLEMS, 1984/at p 134, a Scanned with CamScanner5 2001 Governing law of arbitration 337 or arbitration, or of the procedural law of the seat of arbitration. On thi conclusion of the court in the NTPC case was: aoe ‘The proper law of contract in the present case being expressly st to be the laws in force in India and the exclusive jurisdiction of re een Deli in all matters arising under the contract having been specifically aeecnet and the parties nol having chosen expressly or by implication a law diffe, from the Indian law in regard to the agreement, the proper law indeed was the tae In force i India and the competent cours of this courdry ria iebeedry have jurisdiction over all matters concerning the arbitration, met The terms of the agreement also showed that where any dispute was between the NTPC and a foreign contractor, the arbitration would be in accordance with ICC Rules and that same was binding on the parties. This is so because an international commercial arbitration necessarily involves a foreign element giving rise to questions ‘isto the choice of law and jurisdiction of courts. The court said:!7 1n international commercial arbitration necessarily involves a foreign element giving rise to questions as to the choice of law and the jurisdiction of courts. Unlike in the case of persons belonging to the same legal system, contractual relationships between persons belonging to different legal systems may give rise to various private international law questions such as the identity of the applicable law and the competent forum. An award rendered in the territory of a foreign State may be regarded as a domestic award in India where it is sought to be enforced by reason of Indian law being the proper law governing the arbitration agreement in terms of which the award was made. The Foreign Awards Act, 1961 incorporating the New York Convention, leaves no room for doubt on the point.” ‘The court continued to say: “The ICC Rules provide for settlement by arbitration of business disputes of an international character. They furnish an institutionalised procedure of arbitration. These rules being a self-contained or a self-regulating code, they operate more or less independently of judicial interference in the conduct of arbitration, except insofar as they conflict with the mandatory requirements of the governing system of the proper law or the procedural law of the place of arbitration. Party autonomy in international business is thus the guiding principle of the self-regulating mechanism envisaged by the ICC Rules, and interference by any court with the actual conduct of arbitration is to a large extent avoided. ‘The difference between an ad hoc arbitration and an institutional arbitration is not a difference between one system of law and another; for whichever is the Propet law which governs either proceeding, it is merely a difference in the method of appointment and conduct of arbitration. Either method is applicable to an interna- tional arbitration, but neither is determinative of the character of the resultant ee snk Mellat v Helliniki Techniki SA, (1983) 3, AIL ER 42 Cor cor Sed Paton, tera Camo cos 0 Ana Ei en er tN NOE "mst (gis BO ‘Cheshire and North's PRIVATE INTERNATIONA ov clits “ArarTRaTion (20th Edn); iL Fara rymger Company, (1992) 3 SOC 560 at p S66. Scanned with CamScannerInternational and Commercial Arbitration {Chap. 1 338 ign Awards namely, whether or not it is a foreign award as defined under the Foreign Aw: “a le need to invoke the procedural Where the ICC Rules apply, there is generally little need to Y machinery of any legal system in the actual conduct of aration, These nae vie for the submission of request for arbitration, the appointment of arbiallns, AH ANOS against the appointment, pleadings, procedure, election of the place of Meter Ot, Arie of reference, time-limit for award, cost, finality as enforceability and sinilay mate cedure (Article 11 of the ICC Rules). The partis \ “R ie ii law which the arbitrator shall apply to the merits of the sino. In the absence of any stipulation by the parties as to the applicable tn. he arian may apply the law designated as the proper law by the rules of ee ; wi I f bey deem to be appropriate (Article 13 of the ICC Rules). These and other pi contained in the ICC Rules make them a self-contained and self-regulating system, i i 18 but subject to the overriding powers of the appropriate national courts. Foreign award As to this, the court said: “A. foreign award’, as defined under the Foreign Awards Act, 1961'9 (repealed) (now Section 44 of the Arbitration and Conciliation Act, 1996) means an award made on or after October 11, 1960 on differences arising between persons out of legal relationships, whether contractual or not, which are con- sidered to be commercial under the law in force in India. To qualify as a foreign award under the Act, the award should have been made in pursuance of an agreement in writing for arbitration to be governed by the New York Convention on the recognition and enforcement of Foreign Arbitral Awards, 1958, and not to be governed by the law of India. Furthermore, such an award should have been made outside India in the territory of a foreign State notified by the Government of India as having made reciprocal provisions for enforcement of the Convention. These are the conditions which must be satisfied to qualify an award as a ‘foreign award’. (Section 2 read with Section 9 of the 1961 Act, now Section 44 of the Arbitration and Conciliation Act, 1996.) An award is ‘foreign’ not merely because it is made in the territory. of a foreign State, but because it is made in such a territory on an. arbitration agreement not governed by the law of India. An award made on an arbitration agreement governed by the law of India, though rendered outside India, is attracted by the saving clause in Section 9 of the Foreign Awards Act [ibid 1996 Act} and is, therefore, not treated in India as a ‘foreign award’. _A “foreign award is (subject to Section 7) recognised and enforceable in India ‘as if it were an award made on a matter referred to arbitration in India’ (Seaton 4). Such an award will be ordered to be filed by a competent court in India which will pronounce judgment according to th ‘Section '6).” (Sections 46 and 47 of the 1996 Act.) Se trial * 18. See ICC Rules of Arbitration, 1983; see also Cr Paulsson, INTERN) Cuan OF COMMERCE ARBITRATION, 2nd Ean (1980), PAK and Ege 19. The Act of 1961 has been repealed by the Arbitration and Act contains all the provisions for the enforcement of cota Tolga —~ Scanned with CamScanneryr -n0) Foreign award 52M : 339 section 7 [now Section 48 of the 1996 Act] of the Foreign Awards A consonance with Artie V of the New York Convention which is scheduled a he sw apecifies the conditions under which recognition and enforceme bil will be refused the request of a party against whom it is invoked es “A foreign award will not be enforced in India if iti ‘ under the law applicable to them, under s city, or, the agreement was not valid under the law to Which the parties have subjected it, or, in the absence of any indication thereupon under the law of the place of arbitration; or there was no due compliance with the rules of fair hearing; or the award exceeded the scope of the submission to arbitration; or the composition of the arbitral authority or its procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the place of arbitration; or “the award has not yet become binding on the partes, Or has been set aside or suspended by a competent authority of the country in Which, or under the law of which, that award was made. The award will not be enforced by a court in India if it is satisfied that the subject-matter of the award is not capable of settlement by arbitration under Indian law or the enforcement of the award is contrary to public policy. The Foreign Awards Act [now Part II of the Arbitration and Conciliation ‘Act, 1996] contains a specific provision to exclude its operation to what may be regarded as a ‘domestic award’ in the sense of the award having been made on an arbitration agreement governed by the law of India, although the dispute was with a foreigner and the arbitration was held and the award was made in award a foreign State.” Section 9 of the 1961 Act says: “Nothing in this Act shall— (a)ee le (b) apply to any award made on an arbitration agreement governed by the law of India.” Such an award necessarily falls under the Arbitration Act, 1940, [now the Arbitration and Conciliation Act, 1996] and is amenable to the jurisdiction of the Indian courts and controlled by the Indian system of law just as in the case of any other domestic award, except that the proceedings held abroad and leading to the award were in certain respects amenable to be controlled by the public policy and the mandatory Teaurements of the law of the place of arbitration and the competent courts of that place, “It is important to recall that in the instant case the parties expressly stated that the laws applicable to the contract would be the laws in force in India and that the courts of Delhi would have exclusive jurisdiction ‘in all matters arising Under this contract’, They have further stated that the ‘contract shall in all Tespects be construed and governed according to Indian laws’. These words were Wide enough to engulf every question arising under the contract including the disputes between the parties and the mode of settlement. It was in Delhi that © agreement was executed. The form of the agreement was closely related to Scanned with CamScannerd Commercial Arbitration {Chap. 1 n enactments were specifically men- 1 many respects. The contract was ian workmen whose conditions of he parties to the contract isa 1¢ closest and most 340 International an the system of | tioned in the agreement to be performed in India with the ai service were regulated by Indian lav ‘The contract aw in India. Various India pplicable to it in id of Indi ys, One of th { has in every respect th public : spe i peal connection with the Indian system”of. levi and it is by that Jaw that the parties have expressly evinced their intention ( be bound in all respects. The ‘ained in one of the clauses of the contract, and arbitration agreement was cont not in a separate agreement, In the the governing law of the contract (i of the contract) being Indian law, it is U govern matters concerning, arbitration, the place of arbitration has its relevance in regat s true that an arbitration agreement may be regarded as a collateral or ancillary contract in the sense that it survives to determine the claims of the parties and the mode of settlement of their disputes even after the breach or repudiation of the main contract. But it is not an independent contract, and it hee no meaningful existence except in relation to the rights and liabilities of the parties under the main contract. It is a procedural machinery which is activated when disputes arise between parties regarding their rights and liabilities. The law governing such rights and liabilities is the proper law of the contract, and unless otherwise provided, such law governs the whole contract including the arbitration agreement, and particularly so when ‘the latter is contained not in a separate agreement, but, as in the present case, in one of the clauses of the main sence of any indication to the contrary, in the words of Dicey, the proper law hat system of law which must necessarily although in certain respects the law of rd to procedural matters. It i contract.” Significantly, London was chosen as the place of arbitrati 12 of the ICC Rules which reads: “The place of arbitration shall be fixed by the International Court of Arbitration, unless agreed upon by the parties.” The parties had never expressed their intention to choose London as. the arbitral forum, but, in the absence of any agreement on the question, London was chosen by the ICC Court as the place of arbitration. London had no significant connection with the contract or the parties except that it is a neutral place and the Chairman of the Arbitral Tribunal is a resident there, the other two members, being nationals of the United States and India respectively. “The decisions relied on by counsel for the Singer do not support his contention that the mere fact of London being the place of arbitration excluded the operation of the Arbitration Act, 1940 [now the Arbitration and Conciliation ‘Act, 1996] and the jurisdiction of the courts in India. In Whitworth Street Estates (Manchester) Ltd v James Miller & Partners Ltd” the parties had not expressly stated which Jaw was to govern their contract. On an analysis of the various: factors, the House of Lords held that in the absence of any choice of the law governing arbitration proceedings, those proceedings were to be considered to be governed by the law of the place in which the arbitration was held, namely, a oe 20. 1970 AC 583 at pp 607, 612 and 616: (1970) 1 All ER 796. . jon by reason of Article Scanned with CamScanner5 0) Foreign award scotland ae it was hat system of law which was m with the proe ie Various Tinks with Scotland, which: esl connected | performance G ue contract, unmistakably showed that the « ti the place of were to be governed by the law of Scotland, although the mayan eee eeaings Law Lords (Lords REID AND WILBERFORCE dissenting on jen eaee the learned ! taking into account certain other factors, the contact Wa aera law. That case is no authority for the Proposition that ee oe ane law of contract is expressly stated by the partie \ contrary indication, a diffe i 341 e thal, even where the proper nt la governed abitaion Te ae se contained in that judgment do not support the contention uged a es Singer that merely because London was designated to be the plice of cians the law which governed arbitration was different from the law ex resly chosen by the parties as the proper law of the contract. : arti It is true that the procedural law of the place of arbitration and the courts of that place cannot be altogether excluded, particularly in respect of matters affecting public policy and other mandatory requirements of the legal system of that place. But in a proceeding such as the present which is intended to be controlled by a set of contractual rules which are self-sufficient and designed to cover every step of the proceeding, the need to have recourse to the municipal system of law and the courts of the place of arbitration is reduced to the minimum and the courts of that place are unlikely to interfere with the arbitral proceedings except in cases which shock the judicial conscience.”* Courts would give effect to the choice of a procedural law other than the proper law of the contract only where the parties had agreed that matters of procedure should be governed by a different system of law. If the parties had agreed that the proper law of the contract should be the law in force in India, but had also provided for arbitration in a foreign country, the laws of India would undoubtedly govern the validity, interpretation and effect of all clauses including the arbitration clause in the contract as well as the scope of the arbitrators’ jurisdiction. It is Indian law which governs the contract, including the arbitration clause, although in certain respects regarding the conduct of the arbitration proceedings the foreign procedural law and the competent courts of that country may have a certain measure of control.?? The arbitration clause must be considered together with the rest of the contract and the relevant surrounding circumstances. In the present case, as seen above, the choice of the place of arbitration was, as far as the parties are concerned, merely accidental insofar as they had not expressed any intention in regard to it and the choice was made by the ICC Court for reasons totally tinconneeted with either party to contract. On the other hand, apart from the expressly stated intention of the parties, the contract itself, including the arbi- tration agreement contained in one of its clauses, is redolent of India and matters Indian. The disputes between the parties under the contract have no Oe Li in Bank Mellat v Helliniki Techniki SA,-(1983) 3 “AWER ronal Tank and Pipe SAK v Kiva, 21. See the observations of KERR, 2 ic ed by Lord Dent ‘MR in Internati 22. See yrinciple stated by is in Internat Scanned with CamScanner342 International and Commercial Arbitration [Chap. 1 with anything English, and they have the closest connection with Indian laws, rules and regulations. In the circumstances, the mere fact that the venue chosen by the ICC Court for the conduct of arbitration is London does not Support the ase of the Singer on the point, Any attempt to exclude the jurisdiction of the 7 tent with the competent courts and the laws in force in India is totally inconsis agreement between the parties. In sum, it may be stated that the law expressly chosen by the parties in respect of all matters arising under their contract, which must necessarily include the agreement contained in the arbitration clause, being Indian law and the exclusive jurisdiction of the courts in Delhi having been expressly recognised by the parties to the contract in all matters arising under it, and the contract being most intimately associated with India, the proper law of arbitration and the competent courts are both exclusively Indian, while matters of procedure connected with the conduct of arbitration are left to be regulated by the contractually chosen rules of the ICC to the extent that such rules are not in conflict with the public policy and the mandatory requirements of the proper law and of the law of the place of arbitration. The Foreign Awards Act, 1961 has no application to the award in question which has been made on an arbitration agreement governed by the law of India." In another case before the Supreme Court, the parties had business in India and the USA in joint venture. They also held properties in both countries. Differences arose between them. They appointed an arbitrator to distribute between them their joint property and business. The arbitration agreement was made in the USA, Proceedings were held and award was passed there. The court said that this was a foreign award. The difference between the parties pertained to their legal relationship which was also of commercial nature under Indian laws. The fact that the parties were brothers could not take the award outside the ambit of the Act.25 During the pendency of the proceedings the parties entered into a settlement and had the award Passed in terms of the settlement. The court said that the award was still an arbitral award.?* Its enforcement in India could not be refused on the ground that it was not converted into a rule of the court in the country of origin. The court also held that registration of the award was not necessary. It was also not hit by Chapter XXC of the Income Tax Act, 1961 relating to pre-emptive purchase by the Central Govern- ment?” The award was a complex document. It required parties to execute transfers and closing documents after the partes got their respective shares of properties and business. The award thus created only a right to obtain transfer and closing of documents. The award itself was not a transfer. It did not require registration 28 23. NIPC y Singer Co, (1992) 3 SCC 560 at pp 567-572: AIR 1993 SC 998 at pp 1010-1013. 24, Harendra H. Mehta v Mukesh H. Mehta, (1999) 5 SCC. 108: i 158: Heri Meher 9 AIR 1999 SC 2054: 238 ITR 25, Foreign Awards (Recognition and Enforcement) Act, 1961 ig ; ets absorbed into the 1996 Act. 7 + the provisions of which have 26, NIPC w Singer Co, (1992) 3 SCC 560 at pp 567-572: AIR 1993 SC 998 at pp 1010-1013. 21. Ibid at p 2068. 28. Ibid. Scanned with CamScannerInternational arbitration 343 5.20001 International arbitration In a case before the Supreme Court, the parties belonged to two different countries. The agreement provided for application of Indian Law to the substance of the matter, but provided for a foreign seat of arbitration. The court held that the procedural sto be that of the country where the seat of arbitration was after deciding the ier in accordance with Indian laws, the enforcement would have to be in India and also according to Indian kaws. At the time when this case was decided, the 1940 Act was applicable. ‘The award had to be filed in the court for making it a rule of the court. The jurisdiction for this purpose was held to be that » WW of the relevant courts in In In Bank Mellat v Helliniki Techniki SA the court of appeal laid down the fundamental principle to the effect that in the absence of any contractual provision to the contrary, the procedural law (or cureal) law governing arbitrations was that of the forum of the arbitration, since this was the system of law with which the agreement to arbitrate in the particular forum would have its closest connection.3! The question of proper substantive law and procedural law arose before an English court in Union of India v McDonnell Douglas Corpn:3 A party agreed to supply services under a contract which was to be governed by the laws of India. The contract contained an arbitration clause which provided that the arbitration was to be conducted in accordance with the procedure provided by the Indian Arbitration Act, 1940 and that the seat of arbitration would be in London. A dispute arose which created the question as to whether the proceedings would be conducted according to Indian Procedural Laws It was held that the proper law applicable to the commercial aspect of the litigation and to the arbitration was the law of India. The court felt that it was inherently unsatisfactory, even so it is open to the parties to agree that the procedure of arbi- tration would be governed by a law other than the law of the place of arbitration, but that the jurisdiction of the English law could not be excluded by any such agreement. The court was of the view that by choosing the London seat of arbitration, the parties had opted for English procedural aw and that the statement in the contract that the proceedings would be conducted in accordance with the Indian Act had the effect of importing from the Indian Act those provisions which were concerned with 29. Sumitomo Heavy Industries Lid v ONGC Lid, (1998) 1 SCC 305. The Bombay High Court had the jurisdiction to direct the filing of the award in that court. This was necessary under S. 47 of _ the Arbitration Act, 1940, the Foreign Awards (Recognition and Enforcement) Act, 1961 being not applicable. Neko Resources Ltd v Gujarat State Petroleum Corpn, (2002) 10 SCC 71, the applicant was a body corporate outside India, held, the arbitration between the parties fell in the category Of intemational commercial arbitration. 30. (1984) 1 QB 291: [1983] 3 All ER 428: (1983) 3 WLR 783 CA. 31. Naviera Amazonica Perwana S.A. v Compania International De seguros Del Per, (1988) Lloyd's Rep 110 CA, another decision to the same effect. The court also cited passages from Mustill and ‘Boyd, THe LAW AND PRACTICE OF COMMERCIAL ARBITRATION IN ENGLAND given under the heading ‘Laws governing the Arbitration” and Dicey and Morris on Tie Conruicr oF Laws, (12th Edn). ‘The court distinguished James Miller & Partners v Whitworth Street Estates, 1970 AC 583: (1970) 1 All ER 796: (1970) 2 WLR 728 HL, because in that case there was no provision in the contract, about the choice of law. [1993] 2 Lloyd's Rep 48. Scanned with CamScanner344 International and Commercial Arbitration [Chap, the internal conduct of the parties arbitration and which were not inconsistent with the choice of the English arbitral procedural law. i In the absence of express choice, laws of the country where arbitration is to be held would be the proper law. The presumption is rebuttable. There was nothing in the contract or correspondence between the parties to rebut the presumption. The arbitration clause specified New York to be the place of arbitration. It was held that in the circumstances of the case, the intention of the parties to be governed by the law of India could not be spelled out.?? NEW YORK CONVENTION AWARDS Definition of foreign award [S. 44] Foreign award means an arbitral award on differences between persons arising out of legal relationship, whether contractual or not. It is necessary that the relationship should fall within the meaning of the word “‘commercial” under the law in force in India. The first Act as to foreign awards was that of 1961 and because the present Arbitration and Conciliation Act, 1996 takes over the provisions of the ign Awards (Recognition and Enforcement) Act, 1961, the section provides that it is necessary that the award was made on or after the 11th day of October, 1960. ‘The award should be in pursuance of an agreement in writing for arbitration to which the convention set forth in the First Schedule applies. It is further necessary that the award was made in one of such territories as the Central Government may declare by notification in the Official Gazette to be territories to which the convention applies. Such declaration is made on the Government being satisfied that reciprocal provisions have been made. ‘An arbitral award becomes complete on signature. It is perfected by signature at the place where it is signed irrespective of the place where it was made. If an award is signed in a country which is a party to the New York Convention, 1958 an English court can hear an appeal from the award if it was made under English law. In this case: The parties referred a dispute arbitration in England on the basis of an agreement made under English law. The arbitration concluded in an award which was signed by the arbitrator in Paris, The claimant appealed against the award for remission and for statement of further reasons. ‘The House of Lords recognised it as a Convention Award. The High Court had the power of enforcing the curial jurisdiction and of adjourning any decision on the enforceability of the award until the disposal of pending review proceedings. Power of judicial authority to refer parties to arbitration [S. 45] ‘The section operates notwithstanding anything contained in Part I of the Arbi- tration and Conciliation Act, 1996 or in the Code of Civil Procedure, 1908. The section says that when any matter covered by Section 44 (above) comes before the 3. Shreejee Traco (I) (P) Lid v Paperline International Inc., (2003) 9 SCC 79.,pasties are at liberty to choose the applicable law. In the absence of express choice, a presumption arises that the laws of the country where proceedings are to be held would be the proper law. 34, Hiscox v Outhwaite, (1991) 3 WLR 297 HL. Rassee! N.V. v Oriental Commercial and Shipp CeUUR), {1991} 2 Lloyd’ Rep 625, convention award allowed to be enforced, defendanis failed to prove any agreement against enforcement. Scanned with CamScanner5.2001 New York Convention Awards court in respect of which the parties hav © made an arbitration agree I help it, and if a party to the agreement makes a request, the court the parties pree i shall require the pa ine mater 1 arbitation within the tems of the agresmet, such fest ca be one ‘a i _ made by one of ie Parties OF any person claiming through or under a party. The court may ler such reference if it finds the agreement to be null and void inoperative or incapable of being enforced.35 , 345 The oe Court explained the scope of this section in the following words:** Pa ae Should te Mas to give meaning and effect to the incorporation se, Parties to refer disputes to arbitration is clear. The implementation of the arbitration clause in this case would not have led to an absurd or unworkable situation. Incorporation clause ought not to be invalidated or frustrated by use of a literal, pedantic and technical interpretation. There should be no manifest inconsistency between the arbitration clause and the incorporation clause. Where incorporation clause in conditions of carriage of bills of lading clearly set out that all terms and conditions of the charterparty ‘including the law and arbitration clause are herewith incorporated’, the arbitra- tion clause in charterparty was applicable to dispute between the endorse of bills of lading and owners and charterers of the ship concerned. That the expression ‘charterparty” in the arbitration clause in the charterparty agreement was not changed to ‘bill of lading’ while incorporating the same in the latter, was immaterial. The High Court erred in not allowing application of the owners of the ship under Section 45 seeking stay of suit filed by the endorsee of the bills of lading and for reference to arbitration.” Simultaneously with ordering the reference, the court will order stay of the suit. Appeal The question whether an appeal lies under Section 50 to a Division Bench of the High Court against an order under Section 45 passed by a Single Judge refusing to refer the parties to arbitration, being the subject of conflicting views, the SLP was directed to be placed before a ‘Three-Judge Bench of the Supreme Court? Stay of international commercial arbitration ‘A suit was filed by a party to an arbitration agreement against the other par A muihetine aareement was entered into with Orissa Mining Corporation (OMC) for selling the. product ‘charge chrome’. The agreement contained an arbitration clause for referring disputes to the International Chamber of Commerce London Another agreement was entered into between by (OMC) with ils wholly-owned subsidiary OMC (Alloys) for production of charge chrome for marketing. oe agreement was acted upon by production and delivery of charge chrome, fr marketing, Subsequently, the subsidiary merged with the holding gamnnn eT charge chrome division was taken over by the Orissa Government by an ae “3S. Societe Commercial De Co jers v ‘rading Corporation, AIR 1998 Guj 94. 3. Race Commer De Cee a pr re sna =H it d. ‘agreement was null and void, hence suit liable to be stayedso-se CC 473; AIR 36. Owners ‘and Parties Interested in Vessel MV “Baltic Confidence” v STC, (2001) 7 S 2001 SC 2381 (2nd Supp). 37. Onma Impex (P) Lid v Nissal Asb Pte Ld, (1999) 2 SCC S41. Scanned with CamScanner346 International and Commercial Arbitration [Chap. 1 and then sold to TISCO. The marketing agent invoked the arbitration clause for fulfilment of the terms of the marketing agreement. The Orissa Government filed a suit for a declaration that it was not bound by the marketing arrangement made by OMC. The marketing agent sought a stay of the suit. The court surveyed the relevant Provisions of the Act and agreement and found that the Orissa State became successor to the charge chrome division of OMC and, therefore, it was bound by the legal commitments of that division. Legal proceedings were connected with those com- mitments. The agreement was valid, operative and capable of being performed. The requirements of stay of the suit were satisfied.* The language of Section 3 of the erstwhile Foreign Awards (Recognition & Enforcement) Act, 1961 was mandatory for stay whilst that of Section 34 of the Arbitration Act, 1940 was discretionary. The same mandatory touch is there in Section 45 of the Arbitration and Conciliation Act, 1996. This opinion has been expressed by the Gujarat High Court in a case®? in which neither pleadings, nor any material on record showed that the arbitration agreement was null and void or that it was inoperative or incapable of being enforced. The seller of goods shipped them through the owner of a certain vessel. The shipment was pursuant to a contract between the seller and buyer. The buyer alleged short delivery at destination and filed a suit for damages. There was an arbitration clause in their contract. The seller pleaded in the suit for getting it stayed saying that looking at the controversy, the evidence of surveyors was decisive and the same being available in the country of shipment, the dispute should be resolved by arbitration in London. It was held that the applicant was not disentitled from getting the suit stayed because his application contained no statement on the merits of the suit. The owner of the vessel was held to be a party to the agreement so as to enable him to apply for stay of the suit. The Supreme Court has suggested that where questions of amenability of a dispute to international arbitration arise, interim injunctions against such reference should not be allowed to continue for a long period and domestic courts should be circumspect in granting such interlocutory injunctions. Binding force of foreign award [S. 46] 46. When foreign award binding.—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, and may accordingly be relied on by any of those persons by way of defence, set-off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award. 38. International Arbitration, State of Orissa v Klockner & Co, (1996) 8 SCC 377: AIR 1996 SC 2140: (1996) 27 Comp Cas 644. The court applied the ruling in General Electric Co v Renusagar Power Co, (1987) 4 SCC 137. E 39. Societe Commercial De Coreales & Financers v State Trading Corpn of India, AIR 1998 Guj 94 * The new 1996 Act became applicable because no proof was offered to show that the agreement was null and void, hence suit liable to be stayed. 40, R. Dressor Rand S.A. v R.G. Khosla Compressors Lid, 1995 Supp (3) SCC 181. Scanned with CamScanner546) Binding force of foreign award 37 In order to make the above provisions really effective, Section 46 declares that any foreign award which would be enforceable under the Act shall be treated as binding for all purposes on the parties to the agreement. It can be relied on by any of those parties by way of defence, set-off or otherwise in any legal proceedings in India. A reference to enforcing a foreign award would include a reference to relying on an award. Explaining the scope of the set of provisions from Sections 46 to 49, the Supreme Court observed as follows:4! “Under the old Act, after making an award and prior to its execution, there was a procedure for filing and making the award a rule of court, i.e. a decree. Since the object of the new Act is to provide speedy and alternative solution to the dispute, the same procedure cannot be insisted upon under the new Act when it is advisedly eliminated. If separate proceedings are to be taken, one for deciding the enforceability of a foreign award and the other thereafter for execution, it would only contribute to protracting the litigation and adding to the suffering of a litigant in terms of money, time and energy. Avoiding such difficulties is one of the objects of the Act as can be gathered from the scheme of the Act and particularly looking to the provisions contained in Sections 46 to 49 in relation to enforcement of a foreign award. A party holding a foreign award can apply for enforcement of it but the court before taking further effective steps for the execution of the award has to proceed in accordance with Sections 47 to 49. In one proceeding there may be different stages. In the first stage the court may have to decide about the enforceability of the award having regard to the requirement of the provisions. Once the court decides that the foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award a rule of court/decree again. If the object and purpose can be served in the same proceedings, there is no need to take two separate proceedings resulting in multiplicity of litigation. It is also clear from the objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and the scheme of the Act that every final arbitral award is to be enforced as if it were a decree of the court. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical, For enforcement of a foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to make it a rule of the court or decree and the other to take up execution thereafter. In one proceeding the court enforcing a foreign award can deal with the entire matter. Even otherwise, this procedure does not prejudice a party in the light of what is stated in Thyssen judgment. If the argument advanced on behalf of the respondent is accepted, the very purpose of the Act in regard to speedy and effective execution of foreign award will be defeated.”? ndal Exports Ltd, (2001) 6 SCC 356: AIR 2001 SC 2293: 2001 Lab Thyssen Stablunion Gmbh v Steel Authority of India Lad, (1999) 9 41. Fuerst Day Lawson Lad v Jin IC 2073. The Court relied on i lowed 42, The Bombay High Coun (Jom 447 and eld tata foreign award which i certified and atesed as final can be put into enforcement wil enforceability. | oe this approach in Euro-Asia Chartering Corpn (P) Lid v Fortune | | | ithout taking out any proceedings for determination of its Scanned with CamScanner348 International and Commercial Arbitration (Chap. 1 Jurisdiction Ina contract for supply of goods between an Indian and a foreign company the terms were negotiated and finalised at Bombay. The Indian party signed the contract document in Punjab and sent it to Bombay. The representatives of the foreign company signed it at Bombay. The court held that the contract was entered into at Bombay. The Court at Bombay had jurisdiction to entertain the petition under S. 49 to enforce the award.*3 Matters of evidence [S. 47] The party seeking enforcement of a foreign award has to produce at the time of the application the following documents: 1. the original award or its copy which is duly authenticated in the manner required by the law of the country in which the award was made; 2. the original agreement of arbitration or duly certified copy; 3. such evidence as is necessary to prove that the award is a foreign award. Where the award is in any other language than English, an English version would have to be produced. The version should be certified as correct by a diplomatic or consular agent, of the country to which the party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. For the purposes of these provisions, court means the Principal Civil Court of Original Jurisdiction in a District. It also includes the High Court in exercise of its ordinary original civil jurisdiction. The court should have jurisdiction over, the subject-matter of the award if the same had been the subject-matter of a suit. The word would not include any civil court of a grade inferior to the Principal Civil Court or any court of small causes. An award made in Ukraine after the break-up of the USSR was held to be a foreign award. Ukraine was a part of the territories of the USSR which was recognised by India as reciprocating territory and continued to be so even after its political separation, though there was no separate notification recognising it as a reciprocating country. The notification applicable to the USSR would remain applic- able to all break-away territories. The arbitration had to be in accordance. with the laws of Ukraine. There was the allegation that those laws were not followed: As to this the court said that the burden of proof was on the party making such allegations and that burden was not discharged. The fact that the arbitrator was the high-ranking officer of the foreign country would not render the enforcement of his award in India to be against the public policy of India. Where the contract between the parties and their obligations under it were to be governed by Indian laws, it was held that the Bombay Court had the jurisdiction to compel the filing of the award for further proceedings though the seat of arbitration was in a foreign country and the procedural law of that foreign country was applied.‘ “GB. Toepfer International Asia (P) Lid v Thapar Ispat Lid, AIR 1999 Bom 417. 44. Transocean Shipping Agency (P) Ltd v Black Sea Shipping, (1998) 2 SCC 281: AIR-1998 SC 707. ‘The decision was under the Foreign Awards (Recognition and Enforcement) Act, 1961. The origioal agreement was substituted by a new agreement and, therefore, it was held that the dispute would have to be resolved in accordance with the requirements’ of the new agreement. 45. Sumitomo Heavy Industries Lid v ONGC Ltd, (1998) 1 SCC 305: AIR 1998 SC 825. Scanned with CamScanner5.40) Refusal of enforcement of foreign award 349 An award may be recognised, without being enforced; but if it is enforced, then it is necessarily recognised. Recognition alone may be asked for as a shield against renagitation of issues with which the award deals. Where a court is asked to enforce jn award, it must recognise not only the legal effect of the award but must use legal sanctions to ensure that it is carried out-® Limitation An award was pi Arbitration Rules. The Rules prohibited the plea of limitation where it was no! before the Tribunal, The proceedings resulted in an ex parte award. The objecting party had not raised the plea of limitation before the Tribunal. They were not allowed to oppose the enforcement of the award on that ground.*7 ed by the Grain and Seed Trade Association (GAFTA) t raised Refusal of enforcement of foreign award [Section 48] Section 48(1) and (2) lay down that enforcement of a foreign award may be refused. at the request of the party against whom it is invoked, only if— (a) proof is furnished by the party in respect of any of the grounds specified in clauses (a) to (¢) of sub-section (1), (as detailed below) or (b) the court finds either that the subject-matter of difference is not arbitrable or that enforcement of award would be against the public policy of India. (a) On furnishing of proof by party [Section 48(1)] 1. Incapacity of parties (clause (a)] If the parties to the agreement referred to in Section 44 were under some incapacity under the law applicable to them, the enforcement of the foreign award may be refused. 2. Invalidity of Agreement (clause (a)] If the agreement referred to in Section 44 is not valid under the law to which the parties have subjected it or, failing any indication about it, under the law of the country where the award was made, the enforcement of the foreign award may be refused.** 3. Lack of Proper Notice (clause (b)] Enforcement of a foreign award may be refused under this clause on any of the following grounds: (a) that the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator, (6) that the party against whom the award is invoked was not given proper notice of the arbitral proceedings, (c) that the party against whom the award is invoked was otherwise unable to present his case. Yo. Tare Transport Corpn of Monrovia v Orient Middle East Lines Ltd, 1995 Supp (2) SCC 280: AIR 1994 SC 1715. 47. Toepfer International Asia (P) Lad v Thapar Ispat Lid, AIR 1999 Bom 417. 48. For extensive notes see under S. 34. Scanned with CamScanner350 International and Commercial Arbitration (Chap. 1 4. Award beyond the Scope of Reference [clause (c)] The arbitrator should conform to the terms of reference under which he is supposed to function. He has no authority to arbitrate that which is not submitted to him. Hence, an award which is outside the submission cannot be enforced, Section 48(1)(c) specifies that the enforcement of a foreign award may be refused if it deals with a difference (a) not contemplated by the reference, or (b) not falling within the terms of the reference, or (c) it contains a decision on matters beyond the scope of reference. But if the decision on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decision on matters submitted to arbitration may be enforced. This can happen only when such separation is possible. If such separation is not possible, the enforcement of the decision may be refused in its entirety.4? 5. legality in Composition of Arbitral Tribunal or in Arbitral Procedure [clause (d)] Enforcement of a foreign award may be refused if the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or in the absence of such agreement, was not in accordance with the law of the country where the arbitration took place. 6. Award not yet Binding [clause (e)] Enforcement of a foreign award may be refused 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 that award was made. (b) On findings of Court [Section 48(2)] 1. Difference not Arbitrable (clause (a)] Enforcement of an award may be refused if the court finds that the subject of the difference is not capable of settlement by arbitration under the law of India.S! 2. Enforcement of Award against Public Policy [clause (b)] Section 48(2)(b) provides that enforcement of the foreign award may be refused if the court finds that the enforcement of the award would be contrary to the public policy of India. The Explanation to this provision clarifies that an award would be in conflict with public policy of India if the making of the award was induced or affected by fraud or corruption. Thus, enforcement of an award may be refused if it was obtained by suppressing facts, by misleading or deceiving the arbitrator, by bribing the arbitrator, by exerting pressure on the arbitrator, etc.52 ‘The expression “‘public policy” must necessarily be construed in the sense that this concept is applied in the field of private international law. The award in this case contained reasons. But they were not considered by, the court for the purpose 49. For extensive notes see under S. 34 50. Ibid. 51. Umer v Dadli, AIR 1926 Sind 128. See also cases under Section 34(2\by(), above: 52. Ibid. Scanned with CamScanner546) Enforcement of foreign awards 351 of determining its enforceability. The court said that this would not by itself make the enforcement of the award to be in conflict with the public policy of India. Adjournment of enforcement of foreign awards [Section 48(3)] If an application for a competent authority th the enforcement of the ing aside or suspension of the award has been made to © court may, if it considers proper, adjourn the decision on ward, The court may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. Enforcement proceeding The Supreme Court has laid down that there is no need to take separate proceedings, one for deciding enforceability of the award to make it a rule or decree bf the court and the other to take up execution thereafter. Enforcement of foreign awards [Section 49] If the court is satisfied that the foreign award is enforceable, the award shall be deemed to be a decree of that court. In connection with the enforcement of a foreign award, the Supreme Court held that the Act has to be taken to come into force from the moment when the first of the Ordinances replacing the old Act came into force. Noting the sequence of events, the court said: “The Arbitration and Conciliation Ordinance, 1996 was originally promul- gated by the President on 16-1-1996 and was made effective from 25-1-1996. The second Ordinance came in its place on 26-3-1996 which was again replaced by the third Ordinance on 26-6-1996. These Ordinances were issued, necessitated by the circumstances for continuing the operation of the new law. The new Act (26 of 1996) received the President's assent on 16-8-1996 and was published in the Gazette of India (Extra) Part II, Section I, dated 19-8-1996. Section 1(3) of the Act provides: ‘It shall come into force on such date as the Central Government may by notification in the Official Gazette, appoint.’ 4 Where the provisions of the Ordinance and the Act replacing it are the same, the Ordinance had the same force and effect as the Act by which it has been replaced. Here, in the light of the successive Ordinances and the provisions of the Ordinances and the Act being the same the new law continued with the same effect and force from 25-1-1996 when the first Ordinance was promulgated. There is no alteration or change in the legal position and effect in relation to enforcement of the foreign award including the one made between the period 25-1-1996 and 22-8-1996, the date on which the Act came into force in terms of Section 1(3) read with the Gazette Notification inasmuch as the first Ordinance was operative with the same force and effect from 25-1-1996. From the plain and literal reading of Section 1(3) of the Act 53. Force Shipping Ltd v Ashapura Minechem Ltd, (2003) 3 RAJ 418 (Bom): (2003) 3 Bom LR 948. 54, Fuerst Day Lawson Lid v Jindal Exports Lid, (2001) 6 SCC 356: AIR 2001 SC 2293. 35. Ibid. 56. Gazette Notification No. GSR 375(E), dated 22-8-1996 reads: . i “In exercise of the powers conferred by sub-section (3) of Section 1 of the Arbitration and Conciliation Act, 1996, the Central Government hereby appoints the 22nd day of August. 1996, as the date on which the said Act shall come into force.” Scanned with CamScanner352 International and Commercial Arbitrati ion and the Gazette notification, it is clear that the Act But the purposive reading would show that the Act came into force on 22.4 of the first Ordinance which in 7 came into fc ii +; . was brought into force on 25-1. 1996 +n coMinuation either its coming into force on 25-1-1996 or its continuation an toa ee : A petition for enforcement of a for i country where an answerable party to the clin may Rae oe ay Bat of the for recovery can be filed. A single judge, in this ease, seo oor Pete & suit enforceable and passed orders for its execution. The aware denon’ pines cancellation of the order on the ground that the enforcement applieadon we ar at Bombay only because filing it in Delhi would have meant more court fee shee being no ceiling on court fee in Delhi. The court said that such a motive could tak be taken as affecting the validity of the order of enforcement. The notice of petition was properly served. The notice was served on a company which was associated with the debtor company and received by affixing the rubber stamp of the latter; Section 49 empowers the court only to declare that the award is enforceable. It would then be enforced as a decree under the Civil Procedure Code.58 Claim of interest The Bombay High Court has held that the court enforcing a foreign award could not grant interest beyond the date of the award. The court suggested that this gap could be filled in either by the Legislature or by the High Court? Appealable orders [Section 50] Section 50 deals with orders which are appealable. 1. Section 50(1) provides that an appeal shall lie— (a) from a judicial authority's order refusing to refer the parties to arbitration under Section 45, and ( (6) from the court's order refusing to enforce a foreign award under Section 48. Appeals lie to the court authorised by law to hear appeals from such orders. 2. Section 50(2) bars a second appeal against the appellate order passed under appeal to the Supreme Court is not affected. this section. However, the right to =e aaa ICH i : 57. Euro-Asia Chartering Corpn (P) Lid y Fortune International Ltd, poo 4 a o om ” Centrotrade Minerals Metals Inc v Hindustan Copper Lid, AIR 2008 Cal LA, Way fe approach the appropriate forum with their respective payers the plea th it fo he ee against whom the award has gone can approach the court isnot tenable, Though Sot Geamine each award for its enforceability but it can pass interim orders interest the person seeking enforcement. ape 58. Focpfer Inertial Asia (P) Lid v Thapar Ispt (P) Lid AIR 1999 F Bom 41. Fores Shon * Tad Ashapura MineChem Lid, (2003) 3 RAJ 418 (Bom): (2003) 3 Bom HP oor for execution can be appended to the aplication for enforcement £0 that Ws Sr etn, Mrard to be enforceable can proceed to execute the decree without furbe Stherwise a separa application would have to be moved for exeOWOR | a 44 59. Toepfer International Asia (P) Lid v Thapar Ispat(P) La, AUR. oO Scanned with CamScanner2 Geneva Convention Awards Foreign award for purposes of this convention: Definition [Section 53] ie Section 31 Gefines foreign award” for the purposes of Chapter 2 of Part I forcement of Geneva Convention Awards. te ction a oe Ace Awards. In terms of Secti “Foreign award” 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 someone of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and (©) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made. Second Schedule ‘The Second Schedule of the Act is related to Part (a) of the above definition of “foreign award.” The Second Schedule reproduces the text of the Protocol on Arbitration Clauses concluded in 1934. For Second Schedule see p 385. Third Schedule The Third Schedule of the Act is related to Part (b) of the above definition of “foreign award”. The Third Schedule contains the provisions of the Convention on the Execution of Foreign Arbitral Awards, 1937. For Third Schedule see p 386. Power of Judicial Authority to refer parties to arbitration [Section 54] Section S4 makes it mandatory for any judicial authority when seized of a dispute regarding a contract made between parties to whom ‘Section 53 [Geneva Convention) applies, to refer the parties to arbitration. This can be done on the application of either party. The Section reads: 54. Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, on being 1353] Scanned with CamScanner354 Geneva Convention Awards (Chap, 2 seized of a dispute regarding a contract made between persons to whom Section 53 applies and including an arbitration agreement, whether referring to present or future differences, which is valid under that section and capable of g cartied into effect, shall refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators and such reference shall not prejudice the competence of the judicial authority in case the agreement or the arbitration cannot proceed or becomes inoperative. Foreign award when binding [Section 55] Section 55 provides that a foreign award which is enforceable under the Act (Part II, Chap 2} shall be binding for all purposes. A foreign award which would be enforceable shall be treated as binding on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set-off or otherwise in any legal proceedings in India and any references to enforcing a foreign award shall be construed as including references to relying on an award. Documentary evidence for enforcement of foreign award [Section 56] Section 56 provides for documentary evidence to be produced before the court! by a party seeking to enforce a foreign award. A party who wishes to enforce a foreign award must make an application to the court and produce the following documentary evidence— (a) the original award or its copy duly authenticated in the manner required by the law of the country in which it was made, (b) evidence proving that the award has become final, and (c) such evidence as may be necessary to prove that the conditions mentioned in Section 57(1)(a) and (c) are satisfied. If any document required to be produced is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Conditions for enforcment of foreign award [Section 57(1)] Section 57(1) lays down the conditions that are required to be satisfied for enforcement of a foreign award. These conditions are five in number:— (1) The award has been made in pursuance of a submission to arbitration which is valid under the law applicable to it [S. 57(1)(a)]. According to the Explanation to Section 56 of the Act, ““Court™ means the Principal Civil Court of ordinary original jurisdiction in a district, and includes the High Court in exercise of its ordinary orginal civil jurisdiction, having jurisdiction over the subject-matter of the award if the same had been the subject-matter of a suit, but does not i ma if - Primal Chl Court or any Coun of oe neta any civil court of x grade infrir Scanned with CamScanner554) Adjournment of enforcement of foreign award 355 (2) The subject-matter of the award is capable of settlement by arbi the law in India [S. 570))]- : ? {G) The award has been made by the Arbitral Tribunal provided for in. the submission to arbitration or constituted in the manner agreed upon by the parties seth in conformity with the law governing the arbitration procedure [S. S7C)(0)]- (4) The award has become final in the country in which it’has been made, in the sense that it will not be considered as such if it is open to opposition or appeal grif itis proved that any proceedings for the purpose ‘of contesting the validity of the award are pending (S. 57(1)()]- (6) The enforcement of the award is not contrary to the public policy or the Jaw of India. The Explanation to this provision clarifies that an award would be in ontict with public policy of India if the making of the award was induced or iffected by fraud or corruption. Thus, enforcement of an award may be refused if it was obtained by suppressing facts, by misleading or deceiving the arbitrator, by bribing the arbitrator, by exerting pressure on the arbitrator, ete. [S. ST1V(e))- tration under Refusal of enforcement of foreign award [Section 57(2), (3)] Sub-sections (2) and (3) of Section 57 enumerate the grounds on which the court may refuse to enforce the foreign award. These grounds are as under: (1) The award has been annulled in the country in which it was made [s. 572) (2) The party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case [S. 572)0)]- (3) Being under a legal incapacity, the party was not properly represented {S. 57(2)(6)] (4) The award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration [S. 57(2)(c)]. (5) Enforcement of the award may also be refused if the party against whom the award has been made successfully contests the validity of the award on the grounds mentioned in clauses (b), (d) and (e) of Section $7(1) [S. 57(3)]. Adjournment of enforcement of foreign award [Section 57(2), proviso, Section 57(3)] __ Section 57(2)(proviso) and sub-section (3) of the same section lay down the situations in which enforcement of foreign award may be adjourned. These situations are: __ (1) If the award has not covered all the differences submitted to the Arbitral Tribunal, the court may, if it thinks fit, postpone the enforcement of the award. But the court will also have the alternative to grant the enforcement of the award subject to such guarantee as the court may decide [S. 57(2), proviso]. (2) If the party against whom the award has been made If successfully contests fe validity of the award on the ground mentioned in Section 57(1)(6), @. and (e) court may, if it thinks fit, adjourn the enforcement of the award giving such Scanned with CamScanner356 Geneva Convention Awards party a reasonable time within which to have the award annulled by the competent Tribunal (S. 57(3)]. Enforcement of foreign awards [Section 58] If the court is satisfied that the foreign award is enforceable, the award will be deemed to be a decree of the court and will be enforced as such. Appealable orders [Section 59] Section 59 deals with orders which are appealable. 1, Section 59(1) provides that an appeal shall lie— (@ from a judicial authority's order refusing to refer the parties to arbitration under Section 54, and (b) from the court's order refusing to enforce a foreign award under Section 57. Appeals lie to the court authorised by law to hear appeals from such orders, 2. Section 59(2) bars a second appeal against the appellate order passed under this Section. However, the right to appeal to the Supreme Court isnot affected: * Saving [S. 60] This saving section says that nothing in this chapter shall prejudice any rights which any person would have had of enforcing in India of any award if this chapter {Chapter II of Part II of 1996 Act] had not been enacted. 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