SUPREME COURT’S PRO-ENFORCEMENT OUTLOOK WITH RESPECT TO FOREIGN ARBITRAL AWARDS IN INDIA

Author: Palak

INTRODUCTION

Arbitration is a process where disputes are admitted to an arbitrator gives binding decisions as a neutral party. On the basis of the judgment given by the arbitration tribunal an award may be provided, which is termed as an Arbitral Awards. The Arbitration and Conciliation Act, 1996 is the foremost legislation which deals with arbitration. The Act is very clearly based upon the UNCITRAL Model Law on International Commercial Arbitration. 

 Arbitral jurisprudence is quite prevalent in India. It has evolved to such heights so that it can be helpful in many commercial disputes and India can become more amiable place for arbitration. The foundation of foreign arbitral awards in India is completely based upon pro-foreign investment climate. In order to move to the highest peak of this ambit the laws relating to foreign arbitral awards are required to be amended so that their scope of could  extend to the parties who were unsuccessful in getting the defences. There are a significant number of foreign arbitral awards which have been successfully implemented in India. The basic system of enforcement is evolved from the fact that the arbitral award is crucial for enforceability. The courts are majorly found in the favour of a pro-enforcement. As a result, a foreign party can also succeed at arbitration proceedings and can seek numerous benefits from them.

MEANING OF ARBITRATION

Arbitration is a form of alternative dispute resolution (ADR). It is one of the ways to resolve disputes outside the judiciary courts. The dispute is resolved by the third party who decides the cases neutrally and is known as an arbitrator. The decision given by an arbitrator is always binding and enforceable in the courts. It is often used to resolve many commercial disputes which are mainly in the context of international commercial transactions. In many countries such as United States arbitration is always been practiced in the terms of employment and commercial contracts. 

ARBITRAL AWARD

The definition of arbitral award is very clearly mentioned under Section 2(1)(c) which clearly defines that “arbitral award” includes interim award. It also ponders over the point that an Arbitral Award includes both a final as well as an interim award. It is an award which is provided to tribunals on the basis of judgement provided by the process of arbitration .

AN INSTALLATION OF PRO ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

International Commercial Arbitration is considered as the finest method for resolving disputes between parties who get involved in various international transactions. The most crucial feature of the international arbitration is the ‘enforceability of award’. An assurance to it is always necessary and if it is not found so then this method will not be considered as an efficient method of dispute resolution. 

If we focus profoundly upon the judgements the in an assertive way we can affirm that Indian courts have tried a shifting towards the pro-enforcement but it is very necessary that arbitral awards should not face any interference. The steps by Indian Courts and Indian Legislature have also been taken that the enforcement of arbitral awards should always be so speedy. It has also well augmented upon that India’s credentials are so amiable that includes very lesser amount of interference by national courts. The Commercial Courts, Commercial Divisions which are led by legislature help in lessening the judicial delays. There are an ample number of elevating efforts which are made by the legislature and judiciary to enhance the confidence of foreign investors and to make India a well international arbitration hub. The principles of New York Convention are a very nice instance. Initially, the courts of our country had a very sceptical outlook towards foreign rewards which also resulted in many judgements of Ventura Global and Phulchand Exports .

ADOPTION OF PRO ENFORCEMENT IN FAVOUR OF ARBITRAL AWARDS BY INDIAN COURTS

Over the last decade the Indian courts have corrected their course significantly in order to  conform with that to international norms which has helped in enforcement of arbitral awards. The establishment of global credibility is the foremost step towards the establishment of arbitral awards. India dealt with the elephant in the room post Bhatia’s ruling where in court interpreted Section 2 of the Act to mean that rules of arbitration must also be applied to arbitrators outside India. Regarding the rules of pro-enforcement the Supreme Court of India gave a judgement in BALCO. In that case, it was made very lucid that the Part I of the Act apply only to only the arbitrators who are residing in India and foreign arbitral awards are only subject to the courts of India only when are to be enforced which is provided in the Part II of the Act. This judgement led to the changed mindsets towards arbitral awards. Furthermore, the Indian legislature also amended many judgements regarding this Act in 2015.

In NTT Docomo Vs Tata Sons, it was held that India is very friendly towards foreign investment. The Reserve Bank of India (RBI) , which was not a party to the arbitration raised an objection regarding the enforcement of an international arbitration award. The Delhi High Court rejected the stand taken by the RBI and held that the same is impermissible as the provisions do not allow so. 

In Cruz City / Mauritius Holdings Vs Unitech Limited , it was held that foreign rewards will only be held enforceable if they do not contravene the basic rationale and further it was added by the court that contravention of a provision of any law of India  is not synonymous to contravention of any fundamental rights of India. The court had also referred to a case of Renusagar Power Co Ltd Vs General Electric Co.

AN ALTERING STAND

The Indian Judiciary has exercised several steps in the restraint of foreign arbitral awards, however a decision was passed in the case of National Agricultural Cooperative Marketing Federation of India Vs Alimenta SAthe court refused the enforcement of foreign award as it was contravening the public policy of India. 

CONCLUSION

Though there have been numerous efforts made by the Judiciary and Legislature, India has earned a poor reputation regarding enforcement of foreign arbitral awards. The courts also stepped in these matters to maintain the reputation of India a lot. The judgement in the case of Vijay Karia vs Vedanta is very significant. The Supreme Court has strengthened the reputation of India with relation to foreign arbitral awards by holding that the courts must have some discretion to enforce the arbitral awards. Indeed, arbitration is one of the easiest ways through which the disputes can be resolved. It is the most amiable to everyone as well. But, if we look upon the things profoundly India still needs to travel a long journey in emerging as one of the most amiable nations when it comes to arbitration.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close