ARBITRAL AWARDS AND ITS ENFORCEMENT

AUTHORS:

Princee Dhawan, Amity Chattisgarh

Priya Gupta, NLU Nagpur

Kanika Jaiswal, KLE Bengaluru EDITOR: Akansha Singh, RMLNLU Lucknow



Arbitral Award

The arbitral award could be defined as a concluding decision given by a solitary arbitrator or an arbitral tribunal, which settles out, wholly or in part, the dispute given in jurisdiction. Arbitration is defined as legitimate proceeding, which happens exterior to the court of justice, but leads in a conclusive binding decision similar to judgment of the court. The dispute is bent on sole or additional third parties rather than referring to court. Third parties are referred to as arbitrators, who are assigned by parties in disputation. This legal process is administered as per the terms of the agreement between parties, which is usually found in the commercial contract between the parties. It is believed that this process could give a speedy, efficient, off the record, unbiased, and concluding remedy to a problem, which is the cause for its worldwide acknowledgement in the closing decades of the 20th century. National laws on arbitration have been codified in most of the continents. About 120 countries have agreed with the 1958 United Nations Conventions Also known as “New York Convention” which clears the way for the imposition of awards in every contracting state. India has made arbitration more responsive to contemporary requirements by the enactment of the Arbitration and Conciliation Act,1996. This Act comprises four parts and 7 schedules[1]. The remedies accessible through the process of arbitration includes – “Injunction “, which is defined as an order by the court to prevent a person from doing a wrongful act; specific performance and providing the aggrieved party with compensation; assignation of a receiver who acts fairly; decree for preservation, responsibility, turnover, and safe-keeping of commodities; preserving the sum in dispute in the arbitration or any alternative interim measures. In execution, there are several awards provided in the course of arbitration which can break down into – “provisional award”, “ partial award “, “agreed award,” “reasoned award “and “additional award”. A ‘provisional award’ is on the ground of provision reliant to the conclusive ascertainment of the merits,. For example an order of doing an interim payment owing to the expenses of arbitration. ‘Partial award ‘is given when some elements of the party’s claim have been resolved while some are still left to be resolved before the final award is to be declared. ‘Agreed award is given when one party has agreed to take enforcement proceedings and the other party has failed to follow the expressions of the settlement.

should be put down in writing and signed by arbitrators. It ought to disclose the grounds and place where the arbitration arose.” Additional award” is provided on solicitation of the parties on the indecisive concern which is still pending. The legitimate pre-requisites of awards would accompany as such – the award ought to be in written form and requires the signature of all the associates of the tribunal or signed by the major ones stating the point behind any omitted signature. It should state the ground as for what it was constructed unless it is exchanged in the middle of parties that no grounds ought to be disclosed. The place of arbitration and on which date is it was conducted ought to be mentioned. Every party is to be issued a signed copy.

Within the bounds of twelve months from the date it comes into the reference, the award must be made available to the parties. Stretch of six months can be done if all the parties accord with it[2].In pursuant to the act, the award is concluding and binding on the parties. However, authorized rights are provided to the parties so as to question the decision. The given rights, in no way, can be relinquished or taken away from them. The basis on which awards can be questioned is as follows – when parties are not capable to conclude the arbitration agreement; when the legal validity of the agreement comes into question; arbitrators are under pressure and cannot discharge their duties independently, no proper notice is drafted for the appointment of arbitrator or the proceedings are not conducted as per the agreement between the parties.


Enforcement Of Domestic Awards

Awards in India are legislated and regulated by arbitration and conciliation act 1996 and also civil procedure1908 plays a huge role in awards. It can be further categorized between domestic and foreign awards which are operated differently. Domestic awards have been addressed in part 1 of the arbitration and conciliation act 1996 and are being awarded on the basis of the principle of natural justice. These awards are given under the territory of India and should be residing in India. Before applying for the agreement and execution of the award granted by the tribunal, the award holder shall wait for a period of 3 months. and during the transitional period, the award can be questioned under article 34 which gives a mechanism to set aside the arbitral award. Further, if the court learns about the award to be enforceable at the execution stage then it cannot be further challenged for its validity. After the 2015 amendment, a separate application needs to be filled for the stay on the execution of an award[3]

Conditions for the enforcement of domestic award include incompetency, Act against the agreement, award beyond the scope of subject matter, constitution of tribunal not followed (judge should be in an odd number) and the subject matter which cannot be resolved by arbitration, would be against the public policy and many more.

The limitation period for the enforcement of the award. Since arbitral awards are viewed as decrees for the purposes of enforcement under section 36 as per the provisions of CPC 1908 after the duration of setting aside an award is over, irrespective of separate application is filed or not under section 34. as observed by the Supreme Court in M/s Umesh Goel v. Himachal Pradesh Cooperative Group Housing Society, [4] the Limitation Act of 1963 applies to arbitrations. Under section Twelve years is the time for the enforcement of the limitation period.

Another important requirement is the stamping of an arbitral award with stamp duty governed by The Indian Stamp Act 1899. Section 35 provides that an award that is not stamped or is inappropriate is not admissible in any case. Stamping and registration related issues of an award can be raised at the stage of enforcement. (M. Anasuya Devi and Anr v. M. Manik Reddy and Ors).[5] The Supreme Court has observed that the requirement of stamping an award and registration is within the ambit of Section 47 of the CPC and not covered by Section 34 of the Act. Under Section 17 of the Registration Act, 1908 an award has to be compulsorily registered if it affects immovable property[6] failing which, it shall be rendered invalid

How do courts examine awards execution of decrees in India?

Firstly the court has to inspect the enforceability of the award, secondly enforce it when the court finds it enforceable, like a decree of that court in accordance with the appropriate provisions under CPC. For the enforcement of decree execution proceedings can be initiated after the decree has been passed under section 36 to 74 of CPC and the jurisdiction of a domestic award in the commercial courts exercising the jurisdiction, which is the principal civil court in an authoritative district and also High court with orderly original civil jurisdiction.


Enforcement of Foreign Awards in India

Part II of the Act of 1996 relates to enforcement of ‘certain’ foreign awards. A foreign award is enforced in India under “Convention on the recognition and Enforcement of Foreign Arbitral Awards, 1958” and “Geneva Convention on the Execution of Foreign Arbitral Awards, 1927”. Apart from being a signatory, the country who made the award must be the signatory to the aforementioned conventions.[7] An award is considered as a Foreign award when these conditions are satisfied.[8]

The application for enforcement of a foreign award is filed under section 47.[9] In India, for enforcing the award first the execution petition is filed. The court then performs the exercise of checking the requirements of the act being fulfilled by the act and then enforces s under section 49.[10]

Section 47 clearly states the essential documents required while filling them for enforcement. These documents are necessary to be presented before the court:

● Original copy of the award,

● Original arbitration agreement entered between the parties,&

● The evidence proves that the award is a foreign award.

The enforcement of the award can be challenged only on the grounds mentioned under section 48.[11] Those grounds include within itself against public policy, the arbitration agreement was per se invalid, parties were under any incapacity, etc. Public Policy is one of the most contested ground but in the case of Renusagar Power Co. Ltd. v. General Electric Co[12] the apex court has observed that public policy should be construed narrowly. The court held that the concept of the fundamental policy of Indian Law to mean (1) compliance of the statutes and judicial precedent, (2) need for judicial approach, (3) natural justice compliance, and (4) standards of reasonableness. In the case of Associate Builders v. DDA[13] wherein it was observed that an award would be against justice and morality when it shocks the conscience of the court; morality, however, would be determined on the basis of “prevailing mores of the day”. Only when something is grossly against the fundamental policy of Indian law or its interests, justice, or morality, can it be said to be against public policy. In the case of Ssangyong v. NHAI[14], the court said that the interpretation of public policy as done in domestic terms under the § 34[15] cannot be done while enforcing the foreign award under § 48.[16] The courts in India can rule against the enforcement of the award and cannot at any point of time rule on the merits of the case.[17]

Any court where the assets in India can be approached by the petitioner for filing the execution petitions.[18] Once the aforementioned conditions are satisfied the award is enforced in India.


CONCLUSION

Enforcing the award is accepting the competence of the tribunal and giving an award the force of a decree. The difficulty often arises in enforcing the foreign award. Previously there were no rules and regulations on enforcement of foreign awards in India. Gradually the rule is being made and it displays that India is taking steps to embrace a foreign seated jurisdiction and part autonomy. There are some improvements such as bringing in clarity on convention countries carrying reciprocal provisions that are yet to be listed on the official gazette is required and legislation which directly deals with the foreign arbitral award will make it possible to provide more structure to the arbitral process and keep India in line with advanced legal regimes across the world.

[1]Kumar Sumit , Arbitral Awards its Challenge and Enforcement , Legal Service India ( July 7 , 2020 , 10:04 AM) , http://www.legalservicesindia.com/article/433/Arbitral-Award-Its-Challenge-&-Enforcement.html.

[2]Bello Temitayo, Arbitral Awards: The Legal Requirements and Interlocutory Applications , SSRN ( July 6 , 2020 , 5 : 00 PM ) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2972591. [3] Section 34,Arbitration and conciliation (amendment)Act, 2015, No. 3, Acts of Parliament,2016 (India). [4] M/s Umesh Goel v. Himachal Pradesh Cooperative Group Housing Society, (2016) 11 S.C.C 313 (India). [5] M. Anasuya Devi and Anr v. M. Manik Reddy and Ors, (2003) 8 S.C.C 565 (India). [6] The Registration Act, 1908, section 17(1) (e). [7] Nishith Desai and Associates, ENFORCEMENT OF AWARDS AND DECREES IN INDIA(Domestic and Foreign),(July05.2020,9:06PM)http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Enforcement_of_Arbitral_Awards.pdf. [8] Section 44, Arbitration and Conciliation Act , 1996, No. 26 , Acts of Parliament,1996(India). [9] Section 47,Arbitration and Conciliation Act , 1996, No. 26 , Acts of Parliament,1996(India). [10] Section 49, Arbitration and Conciliation Act , 1996, No. 26 , Acts of Parliament,1996(India). [11] Section 4, Arbitration and Conciliation Act , 1996, No. 26 , Acts of Parliament,1996(India). [12] Renusagar Power Co. Ltd. v. General Electric Co., AIR 1994 SC 860(India). [13] Associate Builders v. DDA, (2015) 3 SCC 49(India). [14] Ssangyong Engineering and Construction Co. Ltd. v. National Highways Authority of India (NHAI),2019 SCC Online. 677(India). [15] Application for setting aside an arbitral award., Section 34 ,Arbitration Act and Conciliation ACT No. 26 OF 1996. [16] Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, Section 48, Arbitration and Conciliation Act , 1996, No. 26 , Acts of Parliament,1996(India). [17] Lashm Jamboree, International Commercial Arbitration, Recent development n Indian Laws, Kluwer Arbitration 19 J. Int'l Arb. 601 (2002), [18] Sundaram Finance Ltd. v. Abdul Samad and Anr, 2018) 3 SCC 622(India).

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