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Limitation Period for Enforcement of Foreign Award
Limitation Period for Enforcement of Foreign Award
Due to numerous contradictory and diametrically opposed decisions rendered by different High Courts in India, the question of the limitation period applicable to the implementation of a foreign award in India has long been a vexed matter. The issue was eventually resolved recently in the case of Government of India v. Vedanta Ltd. ('Vedanta Judgment') by the Supreme Court of India on 16 September 2020.
Under Part II of the Arbitration and Conciliation Act, 1996 ('Arbitration Act'), the New York Convention awards are implemented in India. Section 47 of Section 49 of the Arbitration Act is relevant: Section 47 sets out the process for filing a request for the enforcement of a foreign award; Section 48 replicates Article V of the New York Convention and sets out the restricted conditions under which it is possible to deny the enforcement of a foreign award; Section 49 sets out that a foreign award, enforceable under Section48, must be considered to have been rejected. The Limitation Act, 1963 (Limitation Act,1963) regulates the limitation period for the establishment of legal acts in India.
Neither the Limitation Act nor Part II of the Arbitration Act includes any particular clause setting down a limitation period for filing a global award compliance application. For this reason, Articles 136 and 137 of the Schedule to Limitation Act are applicable. This compares with the legal situation in China and Hong Kong, where domestic law expressly allows for the implementation of a foreign award in Mainland China for a limited duration of two years and six years, respectively.
|
Application |
Period of limitation |
Time from which it runs |
|
136. For the execution of any decree or order of any civil court |
Twelve years |
When the decree or order becomes enforceable |
|
137. Any other application for which no period of limitation is provided in this division |
Three years |
When the right to apply accrues |
Whether the limitation period for implementation of a foreign award is 3 years (Article 137 of the Limitation Act) or 12 years (Article 137 of the Limitation Act) is a recurrent issue before the courts.
Judicial Trend
In Noy Vallesina Engineering SPA v. Jindal Drugs Ltd ('Noy Vallesina'), the Bombay High Court held that there are two phases in the implementation of a foreign award. Under Section 48 of the Arbitration Act, the first step of assessing the enforceability of a foreign award will be regulated by Article 137 of the Restriction Act, which provides for a period of three years from the date on which the right to sue accrues. The international award shall, upon determination of enforceability, be considered to be a decree and its compliance will then be regulated by Article 136 of the Restriction Act, which provides for a duration of twelve years.
In M/s Bharat Salt Refineries Ltd. v. M/s Compania Naviera'SODNAC '& Anr(' Bharat Salt'), the Madras High Court took the opposite view in holding that the limitation period of 12 years provided for in Article 136 of the Limitation Act is applicable to both the compliance and enforcement of international awards. For this, in Fuerst Day Lawson v. Jindal Exports ('Fuerest Day'), the Madras High Court relied on the judgment of the Supreme Court of India in which it was held that a foreign award is already stamped as a decree and can be enforced and executed in one composite proceeding. Bombay High Court in Imax Corporation v. E-City Entertainment subsequently followed the judgment in Bharat Salt where it ruled, starting from its previous ruling in Noy Vallesina, that the term 'foreign award is already stamped as a decree' as used in the case of Fuerst Day should be construed as 'foreign award is to be treated as a decree' and in that case Article 136 of the Limitation Act.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
- Limitation Period for Enforcement of Foreign Award
- Judicial Trend
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