As per arbitration and conciliation, foreign awards has an important place in the act are mainly related to Geneva convention 1927 and New York convention 1959 provisions for the foreign awards have been made under Section 44 of the arbitration and conciliation act 1996.
Definition: In this chapter, unless the context otherwise needs, “foreign awards” suggests that Associate in Nursing arbitrational award on variations between persons arising out of legal relationships, whether or not written agreement or not, thought-about as business beneath the law operative in India, created on or when the eleventh day of Gregorian calendar month, 1960— (a) in pursuance of Associate in Nursing agreement in writing for arbitration to that the Convention set forth within the initial Schedule applies, and (b) in one among such territories because the Central Government, being glad that reciprocal provisions are created could, by notification within the Official Gazette, declare to be territories to that the aforesaid Convention applies.
This definition of a foreign award is based on the New York convention and foreign awards Act 1961.
Generally, foreign awards are said to be Such are what which has been made in foreign and is governed by foreign law. But for the purpose of this act foreign awards is that which is made in that country which is signed member of New York convention. Such award is not an award done in India according to Indian law. It cannot also be called a domestic award. In the case of DalmiaCemote Ltd. Vs National Bank of Pakistan, 1974, 3 All England Reporter 189, the award made in America was not considered as foreign award according to the definition of these activities because America has never been a signed member of this convention.
In the case of National Thermal Power Corporation Ltd., vs Singer Co. , A.I.R 1993 S.C.998, it has been held by the supreme court that an award shall not be considered as for an award only because it has been made at foreign constitutional religion. But an award is foreigner what because it has been done in Such area which is not ruled by Indian law and done in foreign state area shall not be considered for an award in India through the contract may be of international nature.
Illustrations- Award made under an agreement done by Indian law shall not be considered foreign awards even if it is made in a foreign state area. Oil and Natural Gas Corporation Limited vs Wright Honourable Sir Michael Cart, 1996 Supplementary Arbitration law Report 617 Mumbai.
In the case of Coal India Limited vs Canadian Commercial Corporation, A.I.R 2012 Kolkatta 1992, it has been held by the high court of Calcutta that an award passed under and agreement done by the Indian law can be a domestic award whether it may be passed in the foreign country.
In the case of Centrotrade Minerals and Metals Industries vs Hindustan Copper Limited, 2006 ,11 S.C.C 245, provisions of two-stage arbitration agreement was made for the applicant arbitration the first stage arbitration agreement will be applicable in India under part 1 of this act and the second stage arbitration agreement will be applicable in the country following New York Convention award under Part 2 of this act 1 question has arise before the supreme court that whether the foreign award include the applicant award it has been held that this log will be applicable on the element of dispute and at every stage of second arbitration the reactionary law will also be applicable.
The above definition of foreign awards shows the following feature or elements:
- Two parties person are required to have dispute or conflict between their overall subject because dispute leads to the arbitration agreement.
- Such conflict of disputes are required to have originated from the legal relationship of persons every person such legal relationship maybe contractual or not.
- Disputes originated from such legal relationship should be such that there are considered commercial under a law in force in India.
- Award has been made on or after 11th October 1960.
- Arbitration award has been made under Sachin agreement over which New York convention applies.
- Arbitration award had been made willing following such an agreement with Central government has declared by notification in official Gazette as state area over which New York convention
Enforcement of an award is necessarily amongst its parties and not against other parties. Fargo Front Limited vs Commodities exchange corporation, A.I.R. 2004 S.C. 4109.
Enforcement under Geneva Convention
The conditions which are required to be fulfilled for the enforcement of foreign awards are mentioned under section 57 of the arbitration and conciliation act 1996 .this condition are in accordance to the Geneva Convention, these conditions are following;
- The validity of Reference: The first requirement for the enforcement of the foreign awards is that the award shall be under a valid reference .the party which appeals before the court for the enforcement of the foreign awards shall have to prove that reference was valid under respective law. In the case of Society Ammonia vs S. Gorakhram Gokul Chandra, A.I.R. 1964 Chennai 532 it has been held by the Chennai High Court that if arbitration Clause is kept under an invalid contract the award given as per the arbitration clause shall also be invalid.
- Subject matter be in accordance with law: The second requirement for the enforcement of the foreign awards is that the subject matter referred shall be capable of arbitration as per Indian law, in other words, it can be said that for the enforcement of foreign awards the subject matter should be such over which an award is possible under Indian law.
- The validity of the Constitution of Arbitral Tribunal: The third requirement of enforcement of the foreign award is that the constitution of Arbitral Tribunal shall be valid, also arbitration proceeding is required to be conducted as per the decision procedure. S. Mohammed Nayeem vs Sherafic and Far Eastern ltd. A.I.R. 196p Kolkata 146,
- Not against public policy: The fourth requirement of enforcement of the foreign awards is that the award shall not be against the public policy or Indian law. The foreign awards are always favour of public policy Indian law. In the case of Muri Exportation vs D. Khetan and Sons. A.I.R. 1956 Kollkata644, Sachin award has considered enforceable which was related to forward contract with a bhaiya for vegetable oil such a contract was invalid under the provision of a specific law.
- Award to be final: The enforcement of foreign awards also required that the award shall be final. The person who wants the info enforcement of the foreign awards shall have to prove that the award is final under the law of that country.
Enforcement under New York Convention:
Section 48 of the arbitration and conciliation act 1996 mention dose condition which are required to be fulfilled for the enforcement of foreign awards this condition are in according to the New York convention 1958.
Hair it is also important that section 57 provides the positive condition in accordance with Geneva Convention whereas section 48 provides for the negative conditions. Section 48 according to New York convention says that the foreign awards shall not be enforced if certain points are provided with that means if the following points are not provided then foreign awards could be enforced.
Before proceeding further it will be appropriate to state hair that the New York convention was supported by 108 countries whether the Geneva Convention was supported by a few countries. Centrotrade Minerals and Metals Industries vs Hindustan Copper Limited, 2006, 11 S.C.C. 245.
- Incompetency of parties: A foreign awards shall not be enforced if the party to the arbitration were incompetent to contract or such contract was against law such incompetence is required to be under law minority, Unsoundness, etc .of parties are a good example of incompetence.
- Lack of Notice.
Any foreign awards shall not be enforced if the applicant part has:
- not given notice of appointment of the arbitrator
- not informed of arbitral proceedings or has failed to present his case for some other reason.
In the case of Rice trading Guyana vs Nidera Handles Co. 1998, 23 yearbook Commercials Arbitration 731, it has been stated that not giving an opportunity to the defendant for cross-examination for expressing his reaction on the evidence processed by the plaintiff is a good ground to refuse the enforcement of the foreign awards.
- The award is beyond the Reference
Enforcement of foreign awards can be refused if:
- The arbitration award is in respect of such dispute which is not under the reference or arbitration or disputes on which arbitration is based has not been imagined in the reference of arbitration and
- The award consists of such subject matter which is beyond the scope of reference or arbitration.
- The invalidity of the creation of Arbitration authority
Foreign awards cannot be enforced, if:
- the composition of the arbitral authority was not in accordance with the agreement of the parties for filing such agreement was not in accordance with the law of the country where the arbitration took place, or
- the arbitral procedure was not in accordance with the agreement of the parties for filing such agreement was not in accordance with the law of the country where the arbitration took place. In the case of Transosseium Shipping agency vs Black sea shipping, A.I.R. 1999 S.C. 707, it has been held by the supreme court that if the party falls to prove that the award was not according to the arbitration agreement or law of Ukraine then such award shall be enforceable.
- The award not to be binding
- the foreign awards have not become binding
- the foreign awards have been set aside by the competent authority of the foreign awards has been suspended by the competent authority.
- Subject matter not according to law. Foreign awards cannot be enforced if the subject matter of the difference is not capable of settlement by arbitration under the law of India.
- Award to be against public policy
Of foreign awards shall be enforceable if it is against the public policy of India. L public policy has not been well defined it as per the fact and circumstances of the case, but what is troublesome for the public interest is generally considered to be against public policy.
Mukesh.H. Mehta vs Hariendra H. Mehta 1995 company law journal 517 Mumbai.