Application for enforcement - appropriate forum
An award can only be enforced in the court that has jurisdiction to entertain such an application. Only the District Judge has jurisdiction to entertain an enforcement application for domestic awards. In case of the High Courts having original jurisdiction, the Commercial bench of the High Court can also be approached. The 1996 Act clearly states that only the Principal Civil Court of original jurisdiction in a district is vested with the power of enforcement.
In a landmark ruling by the Supreme Court - Sundaram Finance v. Abdul Samad & Another Civil Appeal No. 1650 of 2018, decided on 15 February 2018 ,the Court stated that an award holder can initiate execution proceedings in the appropriate court of any district where the assets are located. This makes the process of execution for award holders extremely easy and accessible. This also fastens the process of execution thereby helping the arbitration procedure to come to an end much faster than they used to earlier.
For an award from an international commercial arbitration seated in India, one has to approach the Commercial bench of a High Court of the city where assets are located. For a foreign award, one has to approach the Commercial Bench of the High Court of the city where assets are located.
The limitation period to enforce domestic awards, as per the Limitation Act is 12 years. If the award is a foreign award, then the same cannot be considered a decree and hence will have a limitation period of 3 years.
The stamping requirements of domestic and foreign awards differ. The stamping requirements stem from the Stamps Act 1899 which is a colonial law that was initiated by the Britishers.
It is compulsory to stamp a domestic award before presenting it in court for enforcement or execution. Section 35 of the Stamps Act provides that any award that is insufficiently stamped or not stamped shall be inadmissible for enforcement.
The amount for which the award would be stamped depends on the Stamp Act of the particular state where the award was pronounced.
For example: if the award was pronounced and signed in Pune, then the Maharashtra Stamp Act provides for Rupees 500 as stamp duty. Other states have different values as stamp duties for awards, according to their amended Stamp Acts.
The jurisprudence on the foreign award requirements is still evolving with a recent landmark ruling by the Supreme Court on the same topic.
The Supreme Court very recently, in the case of M/S Shriram EPC Ltd v. Rio Glass Solar SA Civil Appeal No. 9515 of 2018, decided on 15th September 2018, have stated that foreign awards do not need stamping and can be executed without any stamping requirements. The Supreme Court bench of Justice RF Nariman and Justice Indu Malhotra held that payment of stamp duty under the Indian Stamp Act is not necessary for the enforcement of foreign arbitration awards in India. Thus, the apex court has settled once and for all a contentious issue on which high courts had taken contrary views. The main reasoning of the court was that a foreign award is not covered by the term “award” mentioned in Item 12 of Schedule I of the Indian Stamp Act, 1889.
The executing court cannot sit as a court in appeal and cannot decide on the merits of the case. The court has to look into the following aspects before executing the award:
- The validity of the award
- Any application for stay of execution
- Jurisdiction of the court to execute the award
- Enforceability of the award.
Thus, the courts cannot re-examine the award. They only have to consider the award on a superficial basis. The grounds provided under Section 34 are the only ones that are required to be considered before ordering a stay for execution of the award. The Court cannot introduce a new ground and cannot expand the grounds for setting aside the award and stay the execution. The court has to adopt a limiting approach considering the exhaustive grounds provided under Section 34 of the Arbitration & Conciliation 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.