The Arbitration Act of 1999 establishes a procedure for prompt dispute resolution based on arbitrators' decisions chosen by the disputing parties. If any protocols are prescribed in the arrangement, the arbitrator shall resolve conflicts relating to the matters under the agreement, and if there are none, under this Act [Sec. 3(1)].
Only after the parties have allowed the arbitrators to resolve the conflict on the grounds of the principles of fairness and religion or natural justice [Section 18(2)], since arbitration hearings are conducted in secret, the parties to a disagreement have the opportunity for a comparative and private trial (Sec.19).
Ordinarily, the arbitrators would make their verdict within 120 days of the date of receipt of the papers (Sec.24). The interested parties are required to put the arbitral award into effect within 45 days of receiving a copy of the prize (Sec.31). In Nepal, foreign arbitral awards are still enforced. This clause guarantees foreign investors that arbitral awards issued in their home country would be implemented as well. The party requesting implementation must file an appeal with the Appellate Court, accompanied by an initial or approved copy of the arbitral award and a copy of the agreement (Sec.34).
The legal regime of the applicant's home country or the country where the arbitral Award is made does not preclude any arbitral Award issued in Nepal from being recognized and enforced. Similarly, if an international arbitral award is compatible with public policy, it is not upheld in Nepal, according to Section 34(4) of the Act.
SUPREME COURT OF NEPAL
Hanil Engineering & Construction Co. Ltd. v. KONECO Pvt. Ltd. et al., the first case of foreign arbitral award enforcement in Nepal, was recently decided by the Supreme Court of Nepal.
According to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 ("New York Convention") and the Arbitration Act 2055, Hanil Engineering Co. Ltd. of South Korea submitted a Writ Petition for enforcement of an arbitral award made in its favor by the Korean Commercial Arbitration Board against KONECO Pvt. Ltd, a corporation established in Nepal (1999). In its decision, the Supreme Court interpreted different provisions of the New York Convention. The Supreme Court of the United States found that the international arbitral award, in this case, was unenforceable, citing the following principles:
Appointment of Arbitrator(s): The parties must consent to select an arbitrator (s). An arbitral award must have been made by arbitrator(s) chosen in compliance with the agreement's laws and procedures.
Under the case that the parties have not decided on appointing a person(s) or an institution as an appointing body, the agreement's substantive rule for arbitral hearings would apply when appointing arbitrator (s). In the case that the parties cannot settle on the protocols for appointing arbitrator(s) or refuse to appoint the arbitrator(s) by mutual consent, the courts have the power to select the arbitrator(s) under the statute.
A notice must be issued formally for parties to have a fair hearing. For an award to be legitimate and enforceable, a separate notification must be given at each stage of the arbitration process in compliance with the statute.
Nepal is a signatory to the New York Convention and is the most effective diplomatic tool for enforcing overseas arbitral awards. An international arbitral award is enforceable in Nepal if it complies with the conditions set out in Article 34 of the Arbitration Act, founded on the New York Convention. For the first time in this situation, the Supreme Court has ruled on the enforceability of an international arbitral award after twenty years of implementation of the Arbitration Act. The judgment confirms that an international arbitral award designed for recognition and enforcement in Nepal must guarantee that the arbitration proceedings meet the conditions set out in Section 34 of the Arbitration Act and the New York Convention.
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. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise.