The prevailing cross-border system for dispute resolution —international arbitration— is often more predictable and less expensive than litigation. Enforcing a foreign award can, however, be arduous, especially in jurisdictions like India.
The first issue to be aware of is that there is no advantage in having a US Federal Court confirm the arbitration award and issue a judgment before seeking to enforce the award in India. An arbitral award and subsequent judgment have equal footing in the Indian judicial system insofar as recognition and execution are concerned. Once a party has the final award, it therefore may, and should, begin the enforcement process. Early engagement with Indian counsel will help effectively navigate Indian civil procedure issues.
Under the New York Convention, a US award is required to go through an enforcement procedure under which the party seeking enforcement must apply for recognition and enforcement of the award. In India these proceedings should be instituted in the relevant state or union territory High Court. The High Courts maintain jurisdiction over the enforcement of foreign awards, irrespective of the quantum of the award and they are generally adept at handling the intricacies of commercial matters. Parties seeking to enforce awards in India should consider partnering with local counsel that possesses the right experience for the particular court and the issue at hand.
Depending on the relief being sought, award holders should consider filing the enforcement application in the High Court of the jurisdiction where the Indian company owns significant assets, rather than where the company's registered offices are located. Proper selection of the court where the enforcement proceedings will be instituted is essential to avoid needless debate on jurisdiction. Orders allowing or refusing enforcement are appealable orders under India's Arbitration Act, so the award may go from the High Court to the Appeal Court to the Supreme Court.
Public policy also plays a prominent role in the Indian judicial system, as the law mandates that only a judgment determined on the merits of the case is enforceable. Arbitral awards can be refused on grounds of public policy when the enforcement of the award would be contrary to the fundamental policy of Indian law, the interests of India, Indian justice or morality, or if the award is patently illegal under Indian law. Public policy issues are the overriding impediment to the enforcement of arbitral awards in India.
It is important that adequate notice be promptly given to the respondent Indian company of all hearings and pleadings, especially ex parte awards, to ensure the respondent does not have an opportunity to contend that it was not given notice nor adequate opportunity to appear and present its case before the tribunal. Without proper notice, Indian courts will likely set aside the award.
Enforcing A Commercial US Arbitration Award In India
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