13/11/2015

1

Focus on Asia Construction Law Conference 2015, Singapore

Society of Construction Law: Session 1 Laws relating to enforcing Foreign Judgments & Arbitral

Awards

Presented By:- Mr. Ratan K. Singh

Advocate and Arbitrator Chairman, Society of Construction Law, India

Director, CIarb., India

Introduction Enforcement of foreign Judgments and Awards is

governed by: ◦ Domestic Law of the Country ◦ Principle of Comity of Courts

Domestic Law of the State ◦ Judgments of Foreign Court are governed under Civil Procedure

Code, 1908 ◦ Foreign Awards are enforced under Part-II of the Arbitration and

Conciliation Act, 1996 Comity of Courts

◦ Not an obligation, but respect to the foreign Judgment ◦ In view of common belief that law across the countries run on

same set of universal principles. (Ruchi Majoo v. Sanjeev Majoo)

13/11/2015

2

Foreign Judgments : Position under Indian Law

Under the Indian law there are two scenarios for getting a foreign judgement

enforced: • Whether the Judgment/Decree is pronounced by: (1) Reciprocating State or (2) Non-Reciprocating State

• Reciprocating States

a. Get the decree transferred under Section 39 of Civil Procedure Code, 1908 (hereinafter as ‘CPC’)or,

b. Filing an Execution Petition under Section 44A of CPC.

Cont... Section 44A provides that a decree of any of the Superior

Courts of any reciprocating territory are executable as a decree passed by the domestic Court.

The Decree under this section is executed at the District Court. In case of Delhi, Bombay, Calcutta and Madras, District Court includes High Court, subject to p ecuniary jurisdiction.

Procedure: As applicable to Domestic Decree dealt under Order XXI of CPC.

In both these situations, a foreign decree/judgment is subjected to Section 13 & 14 of CPC.

13/11/2015

3

Objections Against Decree Detailed under Section 13 of CPC

It provides that a Foreign judgment/ Decree shall be conclusive

except:

◦ If not pronounced by Court of Competent jurisdiction

◦ Not on the merits of the case

◦ Incorrect view of International Law or refusal to recognize Indian Law, where such law is applicable

◦ Against Natural Justice

◦ Claim founded on a breach of any law in force in India

Competent Jurisdiction Dealt in case of Moloji Nar Singh Rao v. Shankar Saran (1962) When the Judgments are said to have extra-territorial validity ◦ Where the person is a subject of the foreign country in which

the judgment has been obtained against him on prior occasions.

◦ Where he is a resident in foreign country when the action is commenced

◦ Person selects the foreign Court as the forum for taking action in the capacity of a plaintiff, in which forum he is sued later

◦ Where the party on summons voluntarily appears ◦ Where by an agreement a person has contracted to submit

himself to the forum in which the judgment is obtained

13/11/2015

4

Merits of the Case A judgment or decree passed by a Foreign Court against an

Indian defendant, who has chosen to remain ex-parte, may not be enforceable against him, provided; ◦ It can be shown that the said judgment was passed after

investigation into, and leading of evidence on the plaintiff ’s claim.

Gajanan Sheshadri Pandharpurkar v. Shantabai

It was held that the real test is to determine whether the judgment has been give as a penalty for any conduct of the defendant or whether it is based on a consideration of the truth or otherwise of the plaintiff ’s case.

Disregard of Indian or International Law

A judgment/decree passed by a foreign Court upon a claim for immovable property (Indian Territory) may not be enforceable since it offends International Law.

A judgment or decree passed by the foreign Court, where a contrary Indian law had been shown, and the Court refused to recognize the law. ◦ Exception: If the proper law of contract is the foreign law

then this may not be applicable.

13/11/2015

5

Opposed to Natural Justice Applicable where allegation regarding the alleged

irregularities in procedure adopted by the adjudicating court and has nothing to do with the merits of the case. (Sankaran Govindan v. Lakshmi Bharathi)

The Foreign Court must be composed of:

◦ impartial persons, ◦ must act fairly, without bias in good faith, and ◦ It must give reasonable notice to the parties to the dispute ◦ Afford each party adequate opportunity of presenting his case

Fraud Must be proved that the court was misled and not

merely mistaken (Sankaran v. Lakshmi)

A judgment or a decree, passed by a foreign court, on a claim founded on a breach of any law in force in India may not be enforceable. However, in case it is based upon a contract having a different “proper law of the contract” then it may be enforced.

Claim sustained on breach of Indian law

13/11/2015

6

Presumptions

Section 14 of CPC

It shall be presumed that judgment was pronounced by a court of competent jurisdiction, unless the contrary appears/ proved

Narsimha Rao v. Venkata Lakshmi (1991)

List of Reciprocating States in Asia

United Kingdom Singapore Bangladesh UAE Malaysia Trinidad & Tobago New Zealand The Cook Islands

(including Niue)and The Trust Territories of

Western Samoa Hong Kong Papua and New Guinea Fiji Aden.

13/11/2015

7

Other Asian Countries: Treaties with India

India-Singapore ◦ Registration under The Reciprocal Enforcement of

Commonwealth Judgments Act, 1985

◦ The Indian judgment may be executed in Singapore as if it were a local judgment.

◦ Conditions: Must be conclusive For a fixed ascertainable amount

Cont...

India- Malaysia

◦ Registration under Reciprocal Enforcement of Judgments Act 1958

◦ Enforcement to be carried out within 6 years from the date of judgment

◦ Should not be relating to following matters: matrimonial matters administration of the estates of deceased persons Bankruptcy winding-up of Companies lunacy or guardianship of infants Taxes fines or penalties

13/11/2015

8

Contd...

India- Hong Kong ◦ Registration under Foreign Judgments (Reciprocal Enforcement)

Ordinance

◦ Subject Matter not registrable Matrimonial matters Administration of the estates of deceased persons Bankruptcy Winding up of companies Lunacy Guardianship of infants

Cont...

India-UAE

◦ UAE and India Juridical and judicial Co-operation in Civil and Commercial matters

◦ Article 238 of the Civil Procedure Law(Dubai), the courts of Dubai must enforce qualifying judgments without reconsidering their merits even where they had concurrent jurisdiction over the original claims

◦ Position is same with regard to enforcing it in DIFC Courts

13/11/2015

9

Foreign Arbitral Awards : Position under Indian Law

Foreign Awards and its enforcement forms Part-II of the Arbitration & Conciliation Act, 1996.

Foreign Arbitral Awards may be classified into 3 categories: ◦ New York Convention Awards

◦ Geneva Convention Awards

◦ Non-Convention Awards

New York Convention under Indian Law

Chapter 1 of Part-II of the Arbitration and Conciliation Act, 1996 (Sections 44-50)

Meaning of ‘Foreign Award’ ◦ Arbitral Award on differences arising out of legal

relationship, whether contractual or not, considered as commercial under the law force in India

◦ Reservation made under the Convention Reciprocity: Convention country which has been notified

by the Central Government of India in the Official Gazette.

Commercial: Liberal Construction of the Phrase as declared by the Supreme Court of India (R.M. Investment & Trading Co. Pvt. Ltd. v. Boeing Company)

13/11/2015

10

Enforcing Foreign Arbitral Awards under the New York Convention

Section 47-49 of the Arbitration and Conciliation Act, 1996

Relevant Court ◦ Court within whose jurisdiction the asset/person is located,

against which/whom the enforcement of the international arbitral award is sought (Bharat Aluminium Co. v. Kaiser Aluminium)

◦ File the application in any court in India as long as the money asset is located within the jurisdiction of the court in which he intends to file the application.

Cont... Evidence required for enforcement ◦ The original award or a copy thereof, duly authenticated in the

manner required by the law of the country in which it was made (Translation in English is to be provided in case award has been made in any other language)

◦ The original agreement for arbitration or a duly certified thereof;

◦ Any other evidence to prove that the award is a foreign award

Appeal against Enforcement ◦ No appeal shall lie against enforcement ◦ Section 49 provides that if the court is satisfied that it is

enforceable, it shall be deemed to be a decree of the Court

13/11/2015

11

Grounds for Refusal Section 48 of the Arbitration and Conciliation Act,

1996 (replicates Article V of the New York Convention)

These grounds are: ◦ Existence or validity of Arbitration agreement ◦ Lack of Due process of law ◦ Jurisdictional defects ◦ Composition of Arbitral Tribunal and procedure ◦ Status of Award

Existence/Validity of Arbitration agreement

Incapacity of the Parties ◦ Section 11 of the Indian Contracts Act, 1872 ◦ Three types of incapacity: Incapacity by infancy Incapacity by insanity Incapacity by personal law

◦ Incapacity annuls the arbitration agreement

Invalidity under the Law governing it ◦ Unsigned Charter Agreement ◦ Austbulk Shipping SDN BHD v. PEC Limited

13/11/2015

12

Due Process Adopts the language of Article 36(1)(a)(ii) of the Model

Law Lack of Proper Notice

◦ No definition of ‘Proper Notice’ ◦ Indicates that proper notice of appointment of arbitrator should be

given ◦ Arbitrator to give proper notice to all parties indicating venue and

time for proceeding Lack of fair hearing

◦ Opportunity to present their case ◦ Fair hearing includes not only to present his case, but also to rebut

Otherwise unable to present his case ◦ Residuary nature ◦ Centrotrade Minerals and Metals Inc. v. Hindustan Copper Ltd.

(2006)

Jurisdictional Issues Includes two aspects where the awards deals:

◦ Differences not contemplated by or not falling within the

terms of the submission to arbitration (ultra petita)

◦ Contains decisions on matters beyond the scope of submission to arbitration

Rule of separability is applicable in such situation Part of the award can be enforced which was within the

scope of jurisdiction

13/11/2015

13

Arbitral Authority and Procedure Two parts for resisting enforcement: ◦ Composition of Arbitral Authority or procedure was not in

accordance with the Arbitration Agreement. ◦ In absence of any agreement, it was not in accordance with

‘law of the country where arbitration took place’.

Award not yet binding ◦ ‘Binding’ to be determined in accordance with the laws of the

Country where award was made ◦ Binding award is where it is no longer open to an appeal

Suspended Award ◦ In case where application for setting aside the award has been

made

Status of Award

Other grounds for Refusal Non-Arbitrability of a Dispute

◦ Implies that subject-matter of the dispute is not capable of settlement by arbitration

◦ This is ascertained according to the law of that Country

Public Policy: Virtuous Circle ◦ Renusagar Case: Laid down a narrow interpretation to ‘public

policy’ which included: Fundamental policy of Indian law

Interests of India

Justice or Morality

13/11/2015

14

Cont... Venture Global Engineering v Satyam Computer

Services Ltd ◦ Application of Part-I to Foreign Awards ◦ Widened the meaning of Public Policy in Foreign Awards ◦ This was followed in Phulchand Exports Ltd. v. OOO Patriot.

BALCO Judgment: Aligning with International arbitral framework ◦ Non-applicability of Part-I to foreign Arbitrations ◦ Limited the scope for the Indian courts to interfere in foreign

seated arbitrations ◦ Forms settled principle of law now

Lal Mahal Case: Resurrection of Renusagar Test

Enforcing Foreign Arbitral Awards under the Geneva Convention

Section 53-60 of the Arbitration and Conciliation Act, 1996 deals with these awards

Evidence required for enforcement (Section 56): ◦ Original/Authenticated copy of the award ◦ Evidence proving Finality of Award ◦ Such evidence as may be necessary to prove Award is made pursuant to valid arbitration Award is made by Tribunal duly constituted under the agreement

and its terms thereof

13/11/2015

15

Conditions for Enforcement Burden of Proof: Party seeking Enforcement must satisfy to the

following: ◦ Validity of Arbitration Agreement ◦ Arbitrability of the Subject-Matter ◦ Tribunal and Procedure ◦ Finality of the Award ◦ Public Policy

Other Grounds of Refusal: Subject to satisfaction of the Court

◦ Annulment of the Award ◦ Due Process ◦ Jurisdictional Defects

Appealable orders: New York and Geneva Convention

Dealt under Section 50 and 59 of the Act

An appeal shall lie against order refusing to enforce a foreign award

No appeal against enforcement

However, appeal to the Supreme Court is maintainable in all cases

13/11/2015

16

Reciprocating Member States New York

Convention ◦ Austria ◦ Belgium ◦ Botswana ◦ Bulgaria ◦ Central African

Republic ◦ Chile ◦ Cuba ◦ Czechslovak

Socialist Republic ◦ Denmark ◦ Ecuador ◦ Arab Republic of

Egypt ◦ Finland ◦ France ◦ German

Democratic Republic

◦ Federal Republic of Germany

◦ Ghana ◦ Greece ◦ Hungary ◦ Italy ◦ Japan ◦ Kuwait ◦ Republic of Korea ◦ Malagasy Republic ◦ Mexico ◦ Morocco ◦ Nigeria ◦ The Netherlands ◦ Norway ◦ Philippines ◦ Poland

◦ Romania ◦ San Marino ◦ Singapore ◦ Spain ◦ Sweden ◦ Switzerland ◦ Syrian Arab

Republic ◦ Thailand ◦ Trinidad and

Tobago ◦ Tunisia ◦ USSR ◦ UK ◦ United Republic of

Tanzania ◦ USA ◦ China ◦ Hong Kong

Cont... Geneva

Convention (Britannic Majesty) ◦ British India ◦ The United Kingdom of Great Britain and Northern Ireland, New Foundland The Dominion of New Zealand

◦ Jamaica ◦ Kenya ◦ Leeward Islands

◦ Territories of Malta ◦ Mauritius ◦ Northern Rhodesia ◦ Palestine ◦ Tanganyika Territory ◦ Uganda Protectorate ◦ Windward Islands ◦ Grenada ◦ St. Lucia ◦ St. Vincent ◦ Zanzibar

13/11/2015

17

Enforcement of Non-Convention Awards

The law on this issue is Fluid. Judicial Decisions have been nothing but all the more confusing Bhatia International v. Bulk Trading S.A.

◦ Regarded these awards as ‘Domestic Awards’ and enforced under Part-I of the Act

◦ Reasoning: Since party cannot be left remediless BALCO Judgment

◦ Overruled Bhatia Judgment and regarded the same issue as lacuna in the Act

◦ However, did not provide any possible solution to this aspect Possible Solution

◦ Treat these awards as judgments from non-reciprocating territories

◦ File a suit upon the Award and subject the same to the provisions of the CPC