ARBITRATION COURSE-2017

Discussion on Enforcement of Arbitral Awards

INTRODUCTION

The growth of international commerce has necessitated the creation of efficient

methods of dispute resolution like arbitration and enforcement of the consequent
awards that determine the rights and obligations of the parties. In some situations,
securing an award or a final judgment from the courts may only be a battle half won;
this is especially true in the Indian context.

We have come across situations where the opposition decide not to participate in the
arbitral process or abandon it mid-way. The enforcement of these awards/judgments
where the party is in absentio is sometimes more complicated than where the opposite
party has participated in the proceedings. In some situations, objections have been
raised even against costs awarded by the tribunal or the jurisdiction of the tribunal or
court, as the case may be. Therefore, the stage of execution of an award or decree
warrants a high degree of caution.

The procedure for execution and enforcement of decrees in India is governed by the
Code of Civil Procedure, 1908 (“CPC”) while that of arbitral awards in India is
primarily governed by the Arbitration & Conciliation Act, 1996 (“Act”).

Prior to the recent Arbitration and Conciliation (Amendment) Act, 2015

(“Amendment Act”), mere filing of a challenge petition to the arbitral award would
tantamount to an automatic stay on proceedings for execution of the award. The court
would take several years to decide the petition, making the process of arbitration time
consuming and ineffective. In a welcome move, by virtue of the Amendment Act,
there would be no automatic stay of the arbitral award and a separate application
would have to be filed for seeking stay of the arbitral award. The court is now
required to record reasons for grant of stay and the provisions of the CPC(Civil
Procedure Code) for grant of stay of a money decree, meaning that the losing party
will necessarily be required to either deposit some part or the entire sum awarded in
the arbitral award, or furnish security, as the court deems fit.

AN ANALYSIS OF THE INDIAN ARBITRATION AND CONCILIATION

ACT (AMENDMENT) 2015

“The Arbitration and Conciliation (Amendment) Act, 2015” is an effort by the

Government of India to improve the ease of doing business in India. The Government
of India promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2015
thereby amending certain provisions of the Arbitration and Conciliation Act, 1996, in
an effort to provide dispute resolution mechanism in India.
The Amendment had been accepted and passed by both the houses along with the
assent of the President, after which the ordinance was promulgated. It was to help and
re-filter the dispute resolution mechanism in India, and create confidence across
domestic as well as foreign businesses in India. Following are the key amendments of
the Act:

1. ACCEPTANCE OF ELECTRONIC MEANS AGREEMENT

An arbitration agreement contained in the form of communication through electronic
means is now to be treated as a valid arbitration agreement. Thus electronic mode is
now permitted and legally accepted. This brings the Act in compatibility with the
UNCITRAL Model Law.

2. APPOINTMENT OF ARBITRATOR
In case of International Commercial Arbitration, the power to appoint an arbitrator is
now with the Hon’ble Supreme Court of India. In this amending Act, It is an endeavor
to dispose of the matter within a period of sixty days from the date of service of notice
to the opposite party and an application for appointment of arbitrator is to be disposed
of as fast as can. It may help to resolve a long pending concern with respect to
appointment of arbitrator, which currently takes very much time.
The Act provides that any person whose relationship with the parties or counsel or the
subject matter of the dispute, falls under any of the categories as specified in the Fifth
Schedule of the Act, shall be ineligible to be appointed as an arbitrator. The said
disclosures are internationally accepted and honoured in ensuring the independence of
the arbitrator.

3. INTERIM MEASURES BY THE COURT

Whenever, any order for interim measures has been passed by the court under the Act
prior to the commencement of the arbitration proceeding, the arbitration proceedings
are to be started within a period of ninety days from the date of such order or such
further time as court may deem fit. Once the arbitral tribunal is constituted within law,
the court may not entertain an application for interim measure unless the remedy
provided may not be effective and surely it will reduce the judicial interference

4. SCOPE OF INTERVENTION BY JUDICIAL AUTHORITY

Authority may require referring the parties to arbitration unless it finds that no valid
arbitration agreement exits. If the original or certified copy is not available with party
for applying for arbitration, either party may call upon the other party to produce the
same by filling an application, moreover, an order refusing to the refer the parties to
arbitration is now appealable under Act.

5.ENFORCEABILITY OF INTERIM MEASURES BY THE ARBITRAL

TRIBUNAL
Now, the Arbitral tribunal has power under the Act to grant interim measures, such an
order may be granted by the tribunal doing the arbitral proceeding or at any time
before enforcing arbitral award under this Act. The Interim order passed by arbitral
tribunal would be enforceable under the CPC,1908.
Pursuant to this act, now scope of arbitral tribunal has widened and may take
following interim measures:
◦ Appointment of a guardian for a minor or person of unsound mind;
◦ Measures protecting goods or amount of money, or property which is subject matter
of the dispute;
◦ Interim injunction or appointment of receiver.
◦ Resolve issues and confusion on the arbitrator’s powers to grant interim reliefs.
6. APPLICABILITY OF THE ACT TO ARBITRAL PROCEEDINGS
This Act is to govern and regulate to all arbitral proceeding commenced on or after
the effectiveness of Act, thus, applicability of the Act shall be limited to arbitral
proceeding and shall limit if the award is passed before the commencement of this,
meaning that the Act is not applicable to post arbitral proceeding and separate
application needs to be filed so as to enforcement of awards could be challenged.

7. CLAIM BY RESPONDENT UNDER THE ACT

A new provision has been inserted in the Act, by virtue of this new provision, the
respondent is permitted to submit a counterclaim. This is a very new feature, which is
widely appreciated by the international and domestic association.

8. TIME BOUND ARBITRATIONS AND FAST TRACK PROCEDURE

The arbitral tribunal is to make the award within twelve months from the date the
arbitral tribunal received notice in writing of its appointment. The parties may, by
consent, extend the aforesaid period by six months. Arbitral tribunal has power to
hold the hearing and arguments and although cannot grant adjournment without
sufficient cause. It may work as very speedy manner. If the award is not made within
the said period of eighteen months, then the arbitrator will get terminate and the new
arbitrator may be appointed. Besides, in the case of termination of the arbitrator by
court, the arbitral tribunal shall reconstituted and proceeding may be conducted from
the stage it has already reached by the earlier arbitrator, there being no requirement to
start new proceeding.

9. ENFORCEMENT OF ARBITRAL AWARD

Prior to the recent Arbitration and Conciliation (Amendment) Act, 2015
(“Amendment Act”), mere filing of a challenge petition to the arbitral award would
tantamount to an automatic stay on proceedings for execution of the award. The court
would take several years to decide the petition, making the process of arbitration time
consuming and ineffective. In a welcome move, by virtue of the Amendment Act,
there would be no automatic stay of the arbitral award and a separate application will
have to be filed seeking stay of the arbitral award. The court is now required to record
reasons for grant of stay and the provisions of the Civil Procedure Code for grant of
stay of a money decree, meaning thereby that the losing party will necessarily be
required to either deposit some part or the entire sum awarded in the arbitral award, or
furnish security, as the court deems fit. However, the question of whether the new
Section 36 would be applicable to a Petition under Section 34 would depend upon the
applicability of the Amendment Act to these proceedings.

10.THE COMMERCIAL COURTS, COMMERCIAL DIVISION V/S

ARBITRATION
The disputes in regard to commercial transaction shall cover commercial contracts,
joint venture agreements, intellectual property rights, contracts relating to movable
and immovable property etc. may widely resolve by below hierarchy.
Commercial Court/Commercial Division: Commercial Act provides that all
application and appeal arising out of an international commercial arbitration and out
of domestic arbitration of such value have been filed in High Court having original
jurisdiction shall be heard by the commercial Division, appeals from such commercial
division will be heard and disposed off by the Commercial Appellate Division and
any other application and appeal arising out of a domestic arbitrator other than
international Commercial arbitration shall lie any principal civil court which shall be
heard and disposed by the commercial court.
Flowchart to understand the above:-

Where there are petition/appeals, the following hierarchy shall be applicable

THE POSITION BEFORE THE AMENDMENT ACT
The pre-amendment scenario was that as soon as a Petition under Section 34 of the
Act was filed, an automatic stay would operate on the award. This was the case owing
to Section 36 of the Act, which read as under:-
"36. Enforcement.-Where the time for making an application to set aside the
arbitration award under section 34 has expired, or such application having been
made, it has been refused, the award shall be enforced under the code of Civil
Procedure, 1908 in the same manner as if it were a decree of the Court."

A plain reading of this section made it evident that until the application under Section
34 had been disposed off as being refused, the award would not have become
enforceable. This implied that there would be an automatic stay on the award on the
mere filing of the Petition under Section 34.
Also the meaning of the word”court” was not clearly mentioned in this act.
Under the preceding Act of 1940, an award had to be filed in the court for making it a
rule of the court to which any of the parties could make objections. Where no
objections was filed or sustainable, the court would pass a judgement regarding the
award and then it was converted into a decree for enforcement.
Constitutional Validity of Section 36

The scope of Section 36 was considered, although not challenged, before the Supreme
court in National Aluminum Covs Pressteel & Fabrications Pvt Ltd [(2004) 1 Arb LR
67 : AIR 2005 SC 1514 : (2004) 1 RAJ 1 : (2004) 1 SCC 540] . It was pointed out that
an automatic suspension on the execution of the award, the moment an application
challenging the award is filed under Section 34, leaves no discretion to put the parties
on terms and defeats the very objective of the Act. The Court however reserved its
opinion on the matter, and only recommended that Parliament look at the provision.

Section 36 was directly challenged in a later case before the Gujarat High Court on
the ground that it is ‘beyond the scope and the objectives’ of the Act. The argument
was rejected since no unconstitutionally could be demonstrated by way of Section 36
being either beyond the scope and objectives of the Act, or, outside the legislative
competence of Parliament or in contravention of any other provision of the
Constitution. The court was in agreement with the legislative wisdom of allowing for
enforcement of the arbitral award only after the time period in Section 34 is over so as
to give the aggrieved party a reasonable opportunity to set aside the
award[Madhavpura Mercantile Coop Bank Ltd vs Shah Bimani Chemicals Pvt Ltd,
(2009) 2 Arb LR 287, 291 (Guj)]

Period of Limitation

The period of limitation for making an application to set aside or remit an award
under Section 17 of the 1940 Act was prescribed by Section 119(b) of the Limitation
Act 1963. If the period of limitation expired without any such application, the court
on receiving the application to that effect, had to proceed to pronounce judgment
according to the award and thereupon a decree followed. The Court had no discretion
in the matter except possibly in a case where the award was on the face of it patently
illegal or in violation of a legal provision. Under the 1996 act, leave of the court is
necessary for enforcement.
Where the period for filing objections had expired, a second notice erroneously issued
to the party was held to be not having he effect of extending time. The award was
made a holding of the court with 14% interest from the date of the award till
realization [Pratap Singh & Sons vs Union of India, (1992) 2 Arb LR 140 (Del)].

Where some delay was caused because of the factual error made by the counsel, the
court said that a bona fide mistake on the part of the counsel should not be allowed to
jeopardize the interest of the litigant [Continental Construction Ltd v Continental
Float Glass Ltd. , (1977) 1 Arb LR 452 (Del); Prem Chand Garg v Haryana State
Industrial Development Corporation Ltd., 2006 (Suppl) Arb LR 152, 157-158 : (2007)
5 RAJ 308 (P&H), party not conversant with legal technicalities pursued his
application in several wrong forums on account of wrong advice given by his
lawyers].

The period of limitation prescribed under Section 34 for filing an application for
challenging an award has been held to be absolute and not extendable. This is further
reinforced by the provisions of Section 36 which mandates the enforcement of the
award in the manner of a decree under the Civil Procedure Code after the expiry of
the time prescribed by Section 34 for setting aside [Union od India v Popular
Construction Co AIR 2001 SC 4010 : (2001) 3 RAJ 163 : (2002) 8 SCC 470 : (2001)
8 JT 271 : (2001) 3 Arb LR 345, ONGC Ltd. v Saw Pipes Ltd. (2003) 1 RAJ 587
(Bom) Ghai Rice mills v Punjab State Civil Supplies Corporation Ltd AIR 2009
(NOC) 1436 (P&H), award can be enforced under Section 36 only after the time
period under Section 34 has expired].In another case, a delay of 406 days was not
allowed to be excluded because Section 5 of the Limitation Act, 1963 was held to be
not at all applicable [S.L Builders v Union of India (2003) 1RAJ 9 (Del)].

An application for setting aside an arbitral award may not be made after a three
months period from date of receipt of copy of arbitral award. The further period of
thirty days has been provided where applicant prevented by sufficient cause from
making application within period of three months. Award becomes immediately
enforceable on expiry of this period. There can be no recourse against an arbitral
award in the court beyond the period of four months (3 months + further period of
thirty days) form the date of receipt of a copy of order [Sukumar Chand Jain v DDA,
(2002) 3 RAJ 157 : (2002) 99 DLT 3 2002) AD (Del) 667, to the same effect is
Vinay Bubna v Yogesh Mehta, (1999) 2 RAJ 200 : (1998) 3 Bom LR 739; (2002) 1
Arb LR 63 (AP); P.C Sharma & Co v Union of India, (2001) 3 RAJ 516 (Del);
inordinate delay , slow motion Govt. procedures, no excuse for seeking extension].

Time Limit for Enforcement

In a case before the court of Appeal [International Bulk Shipping & Services Ltd. v
MMTC of India, (1996) 1 All ER 1017 : (1996) Lloyd’s rep 474; International Bulk
Shipping & Services Ltd. v President of India, (1996) 1 All ER 1017 ; Himoff
Maritime Enterprises Ltd. v President of India, (1996) 1 All ER 1017] an action was
brought six years after the breach of the contractual undertaking the honor award. The
question was whether the action was time-barred and whether the cause of action
arose upon the defendants failure to pay the award within reasonable time or only
when the defendant unequivocally refused to pay. The court said:

The six-year limitation period for the enforcement of an arbitral award began
whenever a claimant became entitled to enforce the award. In legal terms, when his
cause of action arose. Conceptually, such a claim arose under a contractual
undertaking to honor the award, which might render the party against whom the
award was made under an immediate obligation to pay the amount of the award.
Alternatively, if the claim was for damages for breach of the implied promise to pay,
a reasonable period for payment should be allowed, three months at most, but that
period could not be extended by reference to attitudes of the parties and their
representatives during the process of seeking to enforce payment, nor could the
claimant’s cause of action and right to enforce the award be deferred until the
respondent had unequivocally refused to pay. It followed on the facts that the
plaintiff’s cause of action had to have arisen before the end of 1984 and accordingly
the applications made in 1993 were out of time. The order setting aside the leave to
issue and serve the 1993 proceedings was therefore upheld.
The award expressly granted post award interest on pre- award interest amount also.
The judgment debtor in the proceedings who challenged the award, failed to challenge
the award, failed to challenge the award on the ground of interest. The award became
final. It was held that it was not open to the judgment debtor at the stage of execution
proceedings to challenge the award on that ground. Such challenge, if entertained,
would amount to going behind the decree, which was impermissible [Also: Housing
and Urban Development Corporation Ltd v Leela Hotels Ltd., AIR 2013 NOC
220(Del)].

Winding Up Petition on Award

A winding up petition was not allowed to be filed on the basis of an award against a
company which was not made a rule of the court.

When a party invokes the arbitration clause, he must exhaust all the provisions of the
Arbitration Act, for realization of dues under the award. He cannot partly proceed
under the Arbitration Act and also resort to the remedy of winding up under the
Companies Act. The Arbitration Act is a complete code in itself. It provides for all the
machinery right from initiation of proceedings for obtaining an award till the
execution. The petitioner should follow the procedure of enforcement under the
Arbitration Act, rather than the discretionary remedy under the Companies Act [ICDS
Ltd v Kumar Trading Co. Pvt. Ltd., (2004) 1 RAJ 467 (MP)].

Interim Orders for Effective Enforcement

Section 9 of the Arbitration and Conciliation Act 1996 empowers the court to take
any interim measures for protection of the property in question for facilitating the
court to take any interim measures for protection of the property in question for
facilitating an effective enforcement of an award. Under the 1940 Act, one aspect of
the power was in Section 18, which provided for protection of the property for
assuring successful enforcement of the decree, which was to be passed in terms of an
award.
At any time after the filing of the award, whether notice of the filing had been given
to the parties or not, the court was empowered by Section 18 to pass an interim order
if a party was about to take steps to defeat, delay or obstruct the execution of any
decree that may be passed on the award or if the speedy execution of the award was
just and necessary [Rashtriya Chemicals Fertilizer Ltd. v Petrichem S.A. (1995) 1 Arb
LR 411 (Bom), order to deposit award amount or furnish security during the
pendency of objections against award].

Interim Relief not available for dismissing Execution Proceedings

When an award is left unchallenged under Section 34 or 37 of the Act, it attains

finality and may be executed through an application under Section 36. An application
under Section 9 is not the appropriate route for seeking dismissal of execution of
proceedings as premature or seeking a stay on the enforcement of an ex parte award
based upon allegations that the party has not received a signed copy of the award
[Inderjit Goel v Punjab Reliable Investment (P)Ltd., (2005) 3 Arb LR 190, 193-94 :
AIR 2005 P&H 265 : (2005) 3 RAJ 587 : (2005) 2 Pun LR 598].

The Position after the Amendment Act

After the coming into effect of the Amendment Act, Section 36 of the Act was
amended to read as follows:-
"36. 1. Where the time for making an application to set aside the arbitral award
under section 34 has expired, then, subject to the provisions of sub-section (2), such
award shall be enforced in accordance with the provisions of the Code of Civil
Procedure, 1908, in the same manner as if it were a decree of the Court.
◦ Where an application to set aside the arbitral award has been filed in the Court
under section 34, the filing of such an application shall not by itself render that award
unenforceable, unless the Court grants an order of stay of the operation of the said
arbitral award in accordance with the provisions of sub-section (3), on a separate
application made for that purpose.
◦ Upon filing of an application under sub-section (2) for stay of the operation of the
arbitral award, the Court may, subject to such conditions as it may deem fit, grant
stay of the operation of such award for reasons to be recorded in writing: Provided
that the Court shall, while considering the application for grant of stay in the case of
an arbitral award for payment of money, have due regard to the provisions for grant
of stay of a money decree under the provisions of the Code of Civil Procedure,
1908.".
The change in the language of Section 36 makes the following things evident:-
i Section 36(2) clearly specifies that filing of Section 34 application shall not by
itself render the award unenforceable unless the Court grants a stay on a separate
application made.
ii Upon filing of the application, the stay is not to be granted as a matter of right, but
the Court "may" in its discretion grant such a stay, subject to such conditions, and on
recording of specific reasons.
iii While granting such a stay provisions of the Civil Procedure Code, 1908, regarding
stay of money decree need to be followed.
Section 36 under the Amended Act, therefore clearly does not make the stay on the
impugned award automatic upon filing of Petition under Section 34.

The applicability of the Amendment Act, to a Petition under Section 34 filed after
23.10.2015, but where the award had been passed before 23.10.2015, was discussed
in the judgment of Ardee Infrastructure (Supra)

Ardee Infrastructure Pvt Ltd v Ms Anuradha Bhatia [2014 SCC OnLine Del 7226]
The Delhi High Court in the case of Ardee Infrastructure (Supra) was of the view
that once arbitration has been conducted under the un-amended Act, it is a substantive
right of a party to get it enforced under the un-amended Act. This reading was in view
of specific applicability of Section 6 of the General Clauses Act, which reads as
under:-
"6. Effect of repeal. - Where this Act, or any [Central Act] or Regulation made after
the commencement of this Act, repeals any enactment hitherto made or hereafter to be
made, then, unless a different intention appears, the repeal shall not-
◦ revive anything not in force or existing at the time at which the repeal takes effect;
or
◦ affect the previous operation of any enactment so repealed or anything duly done
or suffered thereunder; or
◦ affect any right, privilege, obligation or liability acquired, accrued or incurred
under any enactment so repealed; or
◦ affect any penalty, forfeiture or punishment incurred in respect of any offence
committed against any enactment so repealed; or
◦ affect any investigation, legal proceeding or remedy in respect of any such right,
privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any
such investigation, legal proceeding or remedy may be instituted, continued or
enforced, and any such penalty, forfeiture or punishment may be imposed as if the
repealing Act or Regulation had not been passed."

Another reasoning which the Delhi High Court had used was that if it is assumed that
the converse is true, and the Amendment Act is applicable to Court proceedings
arising out of the old arbitrations but not to the old arbitration proceedings
themselves, it would give rise to absurdity.

If it was to be accepted that the Amendment Act would apply to Court proceedings
arising out of old arbitrations but not to proceedings before arbitral tribunals arising
out of pending arbitration, then, in respect of arbitral proceedings commenced prior to
23.10.2015, the amended provisions would apply to proceedings under Section 9 of
the said Act, but not to Section 17 thereof. This would result in a serious anomaly.
This case is in stark contrast to the judgement given by the Calcutta High Court in the
case of Tufan Chatterjee v Rangandhar where in the Amendment came into force
when the proceedings were still pending and the Calcutta HC ruled that the
Amendment Act would apply and dismissed the case.

Prior to the amendment to Section 36, the filing of a petition under Section 34 for
setting aside an arbitral award rendered the award unenforceable till the disposal of
the petition. This position of law was explained thus in National Aluminum Co Ltd v
Pressteel & Fabrications (P) Ltd (“NALCO”) [(2004) 1 SCC 540]:

“We noticed from the mandatory language of Section 34 of the 1996 Act that an
award when challenged under Section 34 within the time stipulated therein cannot be
executed. There is no discretion left with the court to pass any interlocutory order in
regard to the said award except to adjudicate on the correctness of the claim made by
the applicant therein. Therefore, that being the legislative intent, any direction from us
contrary to that, also becomes impermissible.”

The language in NALCO was held to be wide enough to preclude a Court from
directing the losing party to deposit the award sum in an application under Section 9
as ever, as set out above, the Supreme Court in NALCO itself recommended that
Section 36 be amended. The Supreme Court in NALCO recommends that such an
amendment is the need of the hour. It is pursuant to this recommendation that the
present amendments have been brought into force.

Under the new dispensation in the Arbitration and Conciliation Act,1996, the above
procedure has been substituted by a simple procedure of enforcing the award as a
decree. When the period of filing objections has expired or objections have been
rejected, the award can be enforced under the Civil Procedure Code in the same
manner as if it were a decree passed by a court of law.

Stay by the Appellate Court

An order by the Appellate Court for the stay of execution of the decree shall be
effective from the date of the communication of such order to the court to first
instance, but an affidavit sworn by the appellant, based on his personal knowledge,
stating that an order for the stay of execution of the decree has been made by the
Appellate Court shall, pending the receipt from the Appellate court of the order for
the stay of execution or any order to the country, be acted upon by the court of first
instance.

Steps for Enforcement

The Scheme of the Act is that it is up to the losing party to object to the award and
petition the court for setting it aside. The winning party has to make no procedural
move. If the objections to the award are not sustained (or if there are no objections
within the time allowed) the award itself becomes enforceable as if it were a decree of
the Court.

One of the declared objectives of Section 36 of the Act is that “every final award is
enforced in the same manner as if it were a decree of the Court”. The Supreme Court
in the case of Paramjeet Singh Patheja vs ICDS Ltd reported in 2006 13 SCC 322,
considered the effect and the import of the words “as if” used in Section 36. The
Supreme Court was considering whether an award passed by an Arbitral Tribunal
could be the basis for issuing an Insolvency Notice. The Court came to the conclusion
that it was only a decree of the court that could be the basis of insolvency notice. The
Court came to the conclusion that it was only a decree of a court that could form the
basis of an Insolvency Notice and held that an award was in fact not a decree of a
Court. Therefore the phrase “as if it were a Decree of the court: implies that an award
is not a decree of the court but is only treated in that manner.

Execution is an enforcement of award passed by an arbitrator, which is a deemed

decree under Section 36 of the 1996 Act. It is a judicial process, which enables the
decree-holder to realize the fruits of the decree based on award. Order 21 of Civil
Procedure Court (CPC) makes detailed provisions for making an application for
execution and how they are to be entertained and decided..

Execution against the person or judgment debtor is made by arresting and detaining
him in jail. Execution against the property of judgment debtor is made by attaching
and selling his property and paying the decree holder the amount of the judgment debt
out of the sale proceeds. There are certain statutory limitations as execution against
the person and against the property, such as:

(i) Competent court to enforce award:

Execution petition for the decree is to be filed in the same court, which is the
competent court under Section 34. Some doubts exist about the competent court in
which the application for execution is to be filed. It was held that “court” for the
purpose of this section would refer to a principal civil court of original jurisdiction in
a district including the high court having original jurisdiction [Section 2(1)(e) of the
Act]. The Karnataka High Court had held that the courts that can exercise the power
under Section 34 can alone take steps to enforce the award.

(ii) Stamping requirements:

If the award is to be registered compulsorily, in the absence of registration the award

cannot be enforced. The question whether an award requires stamping and registration
is within the ambit of Section 47 of the Code of Civil Procedure. It would therefore be
relevant when the parties file the award for its enforcement under Section 36 of the
Act. It is at the this stage that the parties can raise objections regarding its
admissibility on account of non-registration and non-stamping under section 17 of the
Registration Act.
(iii) Application for Execution of Award

Order 21, Rule 10 of CPC provides for an application for execution of decree. Where
the holder of an arbitration award (deemed decree) desires to execute it, he has to
apply to the competent court or to the officer (if any) appointed in this behalf, or if the
decree has been sent under the provisions hereinabove contained to another court,
then to such court or to the proper officer thereof.

All proceedings for execution of award are commenced by an application for

execution under Rule 10, Order 21 of CPC. The application for execution should be in
writing and should contain the particulars set forth in Rule 11(2) to 14 of Order 21 of
CPC.

The application for execution to the transferee court must be made within three years
of the order of transfer. Where a decree directs the ascertainment of the identity of a
property and the mesne profits, an application for such ascertainment is one for a final
decree and not one for execution of a decree.

(iv) Time Limit:

Any application for setting aside the award must be made within three months from
receipt of the same. This period can be extended by the court by a further period of 30
days on sufficient cause being shown — ‘but not thereafter’.

CONDITIONS FOR ENFORCEMENT OF ARBITRAL AWARDS-

DOMESTIC & FOREIGN

A party may resort to the following grounds for challenging an award. Such an award
would be rendered unenforceable when:

 The parties to the agreement were under some incapacity.

 The agreement in question is not in accordance with the law to which the
parties have subjected it, or under the law of the country where the award was made
(especially in case of foreign awards).
 There is a failure to give proper notice of appointment of arbitrator or arbitral
proceedings.
 Award is ultra vires the agreement or submission to arbitration
 Award contains decisions on matters beyond the scope of submission to
arbitration.
 Composition of the arbitral authority or the arbitral procedure is ultra vires
agreement.
 Award is not in accordance with the law of the country where the arbitration
took place
 The award (specifically a foreign 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, or under the law of which that award was made.
 Subject matter of the dispute is not capable of settlement by arbitration under
Indian law.
 Enforcement of the award would be contrary to the public policy of India.

CRITICISMS OF THE ARBITRATION(AMENDMENT) ACT

The Arbitration Amendment has created confusion as to whether the amendments will
have a retrospective or prospective effect for court actions concerning arbitration and
the arbitration proceedings. Section 26 of the Amended Act provides that "Nothing
contained in this Act shall apply to the arbitral proceedings commenced in
accordance with the provisions of Section 21 of the principal Act, before the
commencement of this Act unless the parties otherwise agree but this Act shall apply
in relation to arbitral proceedings commenced on or after the date of commencement
of this Act". The Madras High Court in New Tripur Area Development Corporation
Limited v. M/s Hindustan Construction Company Limited & Ors has ruled that
Section 26 of the Amended Act is not applicable to post arbitral proceedings
including court proceedings, since the words "in relation to" has been deleted.
Therefore, the court held that a separate application under the amended law had to be
filed for seeking a stay on the arbitral award even in respect of arbitral awards passed
prior to October 23, 2015. However, the Calcutta High Court in Electrosteel Casting
Limited v. Reacon Engineers (India) Private Limited, has taken a contrary view and
held that the enforcement of arbitral award, borne out of arbitration proceedings
commenced before October 23, 2015, would be stayed automatically upon the filing
of application for setting aside the same. This is a critical issue and needs to be
decided by the Supreme Court at the earliest since the courts are unsure about which
law to follow. This has resulted in inconsistencies in practice and uncertainty about
the law.

FOREIGN AWARDS

1. New York Convention Awards

1.1 Definition
Under the New York Conventions “foreign award” means an arbitral award on
differences between persons arising out of legal relationships, whether contractual or
not, considered as commercial under the law in force in India, made on or after 11th
day of October 1960-

(a) in pursuance of an agreement in writing for arbitration to which the

Convention set forth in the First Schedule applies, and
 (b) in one of such territories as the Central Government, being satisfied that
reciprocal provisions have been made may, by notification in the Official
Gazette, declare to be territories to which the said Convention applies.

1.2 Analysis
To qualify as a foreign award, the award should have been made in pursuance of an
agreement in writing for an arbitration to be governed by the New York Convention
on the Recognition and Enforcement of Foreign Arbitral Wards, 1958, and not to be
governed by the law of India. 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 Conventions.
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 place on an arbitration agreement not governed by the
law of India.

In National Thermal Power Corporation1 , while considering whether an award made

in the territory of a foreign State is a “foreign award” under the provisions of the
Foreign Awards Act, the Supreme Court held that the Foreign Awards Act had no
application where the proper law of contract as chosen by the parties was the law in
force in India with jurisdiction of courts at Delhi. Such an award will be an Indian
award and not a “foreign award” despite the contract being of International nature and
procedural matters being governed by the rules of International Chambers of
Commerce.

1.3 Notification to have nexus of “territory” rather than “country”

An award to be a “foreign award” has to be made in the “territory” of a foreign State
notified by the Government of India as having made a reciprocal provision for
enforcement of the Convention. In the case of Black Sea Shipping Co. vs Transocean
Shipping Agency {P} Ltd 2 where at the time of issuance of the notification dated 7th
September 1992 by the Government of India, Ukraine was an integral part of the
territory of USSR. However, on the dissolution of USSR it became a separate
sovereign state. But the territories to which the said notification applied to had stayed
the same. The Bombay High Court held that since the expression used in the clause
(b) of Section 2 of the Foreign Awards Act was “territory” and not “country”, the
requirements of Section 2 to make the award as a “foreign award” were complied
with. The above decision of the Bombay High Court was upheld by the Supreme
Court.

1.4 Effect of foreign awards

Any foreign award which would be enforceable under the Act 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 defense, set off or
otherwise in any legal proceedings in India. An award may be recognized without
being enforced but if it is enforced then it is necessarily recognized. Recognition
alone may be asked for as a shield against re-agitation of issues with which the award
deals. When a court is asked to enforce an award, it must recognize not only the legal
effect of the award but must use legal sanctions to ensure that it is carried out.

1.5 Liability of third parties cannot be decided in proceedings for enforcement of

foreign award
In the proceedings for enforcement of a foreign award under sections 46 to 49 of the
Act, the enforcement has necessarily to be between the parties to the award. In such
proceedings, serious disputes regarding the liability of third persons could not be
decided.
Once a dispute arises as to whether or not the documents were discrepant, the Court
shall have to direct the applicant to have that dispute decided by a competent court in
an appropriate proceeding. Provisions contained in Part II of the Arbitration and
Conciliation Act,1996 do not permit courts to decide such disputes with third parties
in such proceedings. The court cannot remit the matter bank for following the
procedure order under Order 21 Rule 46 CPC. Order 21 Rule 46 CPC deals with
garnishee proceedings. It applies when monies of the judgment-debtor are in the
hands of third parties. In cases of letter of credit the liability of the issuing bank is an
entirely independent liability. It cannot be said that the monies payable by the issuing
bank are monies belonging to the judgment-debtor. Such claim, if any, can only be
decided in independent proceedings

1.6 Evidence of foreign awards

Where the court is satisfied that the foreign award is enforceable, the award shall be
deemed to be a decree of that court and the party applying for enforcement shall, at
the time of the application, produce before the court-

(i) the original award or a copy thereof, duly authenticated on the manner
required by the law of the country in which it was made
(ii) the original agreement for arbitration or a duly certified copy thereof
(iii) such evidence as may be necessary to prove that the award is a foreign
award
(iv) where the award or agreement is in a foreign language other than
English, English translation of the award or the agreement, as the case
may be, certified as correct by a diplomatic or consular agent of the
country to which the party belongs or in any other manner considered
sufficient according to the law in force in India

1.7 Court having jurisdiction

The explanation to section 47 defines “court” which will be competent to enforce a
foreign award. For the purposes of section 47, “court” means the principal civil court
of original jurisdiction in a district, and includes the High Court in exercise of its
ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the
award if the same had been subject-matter of a suit but does not include any civil
court of a grade inferior to such principal civil court, or any Court of Small Causes.

1.8 Conditions for enforcement of foreign awards

Enforcement of a foreign award may be refused, at the request of the party against
whom it is invoked, only if that party furnishes to the court proof that-
 (a) the parties to the agreement referred to in section 44 were, under the law
applicable to them, under some incapacity, or the said agreement is not
valid under the law to which the parties have subjected it or, failing any
indication there on under the law of the country where the award was
made; or
(b) the party against whom the award is invoked was not given proper notice
of the appointment of the arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within
the terms of the submission to arbitration or it contains decisions on
matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be
separated from those not so submitted, that part of the award which contains
decisions on matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not
in accordance with the agreement of the parties, or failing such agreement,
was not in accordance with the law of the country where the arbitration
took place; or
(e) the award has not yet become binding on the parties, or has not been set
aside or suspended by a competent authority of the country in which, or
under the law of which, the award was made
(f) the subject matter of the difference is not capable of settlement by
arbitration under the law of India; or
(g) the enforcement of the award would be contrary to the public policy of
India. (An award is said to be in conflict with the public policy of India if
the making of the award was induced or affected by fraud or corruption)

1.9 Appealable orders

(1) An appeal shall lie from the order refusing to –

(a) refer the parties to arbitration under Section 45
(b) enforce a foreign award under section 48
to the court authorized by law to hear appeals from such order.

(2) No second appeal shall lie from an order passed in appeal under this section, but
nothing in this section shall affect or take away any right to appeal to the Supreme
Court.

2. Geneva Convention Awards

2.1 Interpretation
Under the Geneva Convention, “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 some one 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 in
the Third Schedule, and of whom the other is subject to the jurisdiction of some other
of the Powers aforesaid, and

(c) 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, 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.

2.2 Power of judicial authority to refer parties to arbitration

Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908

(5 of 1908), a judicial authority 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.

2.3 Foreign awards when binding

Any foreign award which would be enforceable 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 to enforcing a foreign award shall be
construed as including references to relying on an award.

2.4 Evidence

(1) The party applying for the enforcement of a foreign award shall, at the time of
application produce before the Court—

(a) the original award or a copy thereof 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 clauses (a) and (c) of sub-section (1) of section 57 are satisfied.

(2) Where any document requiring to be produced under sub-section(1) 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. [In this section , “Court” means the High Court
having original jurisdiction to decide the questions forming the subject-matter of the
arbitral award if the same had been the subject-matter of a suit on its original civil
jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals
from decrees of courts subordinate to such High Court.]
2.5 Conditions for enforcement of foreign awards

(1) In order for a foreign award to be enforceable, it shall be necessary that—

(a) the award has been made in pursuance of a submission to arbitration

which is valid under the law applicable thereto;

(b) the subject-matter of the award is capable of settlement by arbitration

under the law of India;

(c) 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 and in conformity with the law governing the arbitration procedure;

(d) 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 or if it is proved that any proceedings for the purpose of contesting the
validity of the award are pending;

(e)the enforcement of the award is not contrary to the public policy or the
law of India

{For the avoidance of any doubt, it is clarified that an award is in conflict with
the public policy of India, only if-

1. (i) the making of the award was induced or affected by fraud or corruption or
was in violation of section 75 or section 81; or
2. (ii) it is in contravention with the fundamental policy of Indian law; or
3. (iii) it is in conflict with the most basic notions of morality or justice.

For the avoidance of doubt, the test as to whether there is a contravention with
the fundamental policy of Indian law shall not entail a review on the merits of
the dispute}
(2) Even if the conditions laid down in sub-section (1) are fulfilled, enforcement of
the award shall be refused if the Court is satisfied that—

(a) the award has been annulled in the country in which it was made;

(b) 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; or that, being under a legal incapacity, he was not properly represented:

(c) 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 for the submission to arbitration:

Provided that if the award has not covered all the differences submitted to the arbitral
tribunal, the Court may, if it thinks fit, postpone such enforcement or grant it subject
to such guarantee as the Court may decide.

(3) If the party against whom the award has been made proves that under the law
governing the arbitration procedure there is a ground, other than the grounds referred
to in clauses (a) and (c) of sub-section (1) and clauses (b) and (c) of sub-section (2)
entitling him to contest the validity of the award, the Court may, if it thinks fit, either
refuse enforcement of the award or adjourn the consideration thereof, giving such
party a reasonable time within which to have the award annulled by the competent
tribunal.

2.6 Enforcement of foreign awards

Where the Court is satisfied that the foreign award is enforceable, the award shall be
deemed to be a decree of the Court.

2.7 Appealable orders

(1) An appeal shall lie from the order refusing--

(a) to refer the parties to arbitration under section 54: and

 (b) to enforce a foreign award under section 57, to the Court authorised by
law to hear appeals from such order.

(2) No second appeal shall lie from an order passed in appeal under this section, but
nothing in this section shall affect or take away any right to appeal to the Supreme
Court.

COMPARISON OF FOREIGN AND DOMESTIC ENFORCEMENT REGIME

The difference between Foreign Award and Domestic Award are two fold in nature.
Firstly, in terms of procedure of execution of award- In case of domestic award there
is no requirement for separate execution of award. Once an award is made and
objections are rejected, the award automatically gets executed and there is no
requirement for application of enforcement of an award. A foreign award is required
to be enforced. Once the court is satisfied that a foreign award is enforceable the
award becomes decree of the court and executable as such.

Another significant difference between the domestic and foreign award is that (unlike
domestic awards) foreign awards cannot be set aside. A party seeking to enforce a
foreign award has to make an application for the same and the court can either accept
it or reject it but the court can never set aside the award. But on close observation, we
find that there is an apparent lacuna in this mechanism because under circumstances
where the foreign award was made based on an arbitration agreement which was not
valid or where proper notice was not duly served to the parties etc, the parties would
be, more often than not left with no viable recourse. This problem was however
settled in the case of Venture Global wherein the court held that even Indian Courts
can set aside foreign arbitral awards using the machinery laid down under section 34
of the Arbitration and Conciliation Act 1996.

["Comparison Of Foreign And Domestic Enforcement Regime Commercial Law

Essay." LawTeacher.net. 11 2013. All Answers Ltd. 12 2017 ]
CONCLUSION
The Arbitration (Amendment) Act is a significant step forward in overcoming the
systemic malaise of delays, high costs and ineffective resolution of disputes, which
had plagued the arbitration regime in India. Most of these amendments are welcome,
since many would agree that the earlier arbitration regime did not result in cultivating
the culture of arbitration in India. These amendments will also have to withstand the
scrutiny of Indian courts that have often been criticized for their interventionist
approach. The recent judgments of Indian courts which have had an occasion to
interpret the provisions of the Amendment Act, is an early indication that these
amendments will be subject to further judicial scrutiny. It will be interesting to see
how the courts interpret the new amendments in future. Further amendments are
needed to iron out the flaws in the Amendment Act to make it more effective. The
new arbitration regime promises to herald a new era for resolution of disputes in
India. But, only time will tell whether or not India becomes the next arbitration hub,
as aspired.

i Reference Books Used:

-Law of Arbitration and Conciliation in India (Sixth Edition) by Dr. B P Saraf, S
M Jhunjhunwala

- Law of Arbitration and Conciliation (6th Edition) by Justice R S Bachawat

(Revised by Anirudh Wadhwa & Anirudh Krishnan)