According to Wharton’s Law Lexicon ‘Foreign Award’ is an award in pursuance of an arbitration agreement governed by Indian Law, if the conditions under Section 44 are satisfied, will not cease to be a foreign award, merely because the arbitration award is governed by the law of India. An awards made outside India, even if governed by Indian law, may be a foreign award but it must satisfy two conditions:
- In pursuance of an agreement in writing for arbitration to which the New York Convention, applies and
- In one of such territories which the central government has notified in the official gazette to be a territory to which the New York convention applies.
Thyseen Sthluuion GMBH V Steel Authority of India; AIR 1999 SC 3923
The Supreme Court held that there is not much difference in the provision of the Foreign Award (Recognition and Enforcement) Act, 1961 and the Arbitration and Conciliation Act, 1996 regarding the enforcement of a foreign award. Both the acts have similar definition of a ‘Foreign Award’. The only difference is that in Foreign Award (Recognition and Enforcement) Act, 1961, the award is followed by a decree, whereas in the Arbitration and Conciliation Act, 1996, the foreign award is stamped as a decree.
In Part 2 of the Arbitration and Conciliation Act, 1996 talks about the enforcement of certain foreign awards. Chapter 1 talks about the enforcement of foreign awards under the New York Convention. Chapter 2 talks about the enforcement of awards under the Geneva Convention.
In the case of Serajuddin V Michael Golodetz the Calcutta High Court laid down the essentials of a foreign award;
- The arbitration should be held in foreign lands
- The arbitration should be held by foreign arbitrators
- The arbitration should be done by applying foreign laws
- When a party of foreign national is involved
DIFFERENCE BETWEEN A FOREIGN AWARD AND A DOMESTIC AWARD
Domestic award- the parties should have birth or business to Indian origin. If two Indian residing and carrying out their business in a foreign land, decide to carry out the process in accordance with the Indian law, then it will be treated as a domestic award, even though it was given in a foreign territory.
Foreign award- when one of the parties is a foreign national, then the award out of the arbitration proceedings will be considered as a foreign award. Also, if two Indians sharing property and business in India and they agree upon a foreign state to resort the dispute implementing foreign laws, it may be considered as a foreign award.