This article discusses the legal issues arising in the course of enforcement of foreign awards in India. The concluding thesis being that current judicial trends indicate the beginnings of a much needed pro-enforcement approach and a better judicial understanding of the concept of party autonomy.
The Indian Arbitration and Conciliation Act, 1996 (Act) governs the law of arbitration in India.
The Act applies to both domestic and international arbitration. Part I of the Act is solely applicable to domestic awards, i.e. arbitration whose seat is in India. Part II of the Act governs the enforcement of New York Convention Awards and Geneva Convention Awards i.e. foreign awards, viz, arbitrations seated outside India.
Post Balco, no interim measures for arbitration held outside India.
The Supreme Court of India in Balco's case (decision rendered on September 6, 2012) ruled that the Act is seat centric and restricted the authority of the Indian Court's to interfere with arbitrations seated outside India. The upshot of this ruling is that Indian courts have no power to grant interim protective relief in cases where the seat of the arbitration is outside India. Though this judgment applies only prospectively, i.e. to arbitration agreements entered into after 6th September 2012, it is nonetheless a welcome step as the Indian courts cannot entertain any application to set aside a foreign award.
Distinction between "seat" and "venue" clarified in Enercon.
The emphasis on identifying the seat of arbitration has become critical in a post Balco era. In particular, care needs to be taken not to confuse the seat of the arbitration from its venue, as the two are often not the same, as emphasized by the Supreme Court in Enercon's case. The Court held that in the absence of parties specifying the law governing the arbitration proceedings, thearbitration agreement will be governed by the law of the country in which the arbitration is seated. The Court further held that only the court of the seat of arbitration would have exclusive jurisdiction to exercise supervisory powers over the arbitration. This judgment minimizes the scope for Indian judicial intervention over foreign awards and limits the scope for interference to only the stage of enforcement of a foreign award.
Posted on 07 June 2018 by Zarir Bharucha
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