Enforcement of Foreign Awards
The main purpose of New York convention was to facilitate the enforcement of foreign awards, passed in an international arbitration. Despite having several provisions in New York Convention and UNCITRAL Model Law for enforcement of award, parties to the dispute have to face various problems for enforcing the foreign award.
Article V of New York Convention talks about the ground on which enforcement of award can be refused.
- When the arbitration agreement in relation to which the award is made is invalid in itself.
- In case the parties to the dispute are not given the notice of such proceedings instituted against them and due to failure of providing them with the notice they were not able to present their case in the rightful manner.
- Arbitral award can be refused if the arbitrator is not appointed according to law of the country in which the arbitration proceedings are taking place or he is not appointed as per the rules given under the arbitration agreement.
- If the award is not binding on the parties for which the award is made or the agreement is not binding on the parties with respect to which the award is made
- If the award is made in relation to the matter which is not the subject matter of the arbitration agreement or the matter which is not related to the arbitration agreement.
Section 44 of the Act defines the term ‘foreign award’ in relation to New York Convention. According to the definition given in the act foreign award is the arbitral award given by the arbitrator when the parties submit their disputes to the arbitration process.
As far as domestic legislations are concerned, section 48 of The Arbitration and Conciliation Act, 1996 and it enunciates similar grounds for the refusal of enforcement of foreign award as given in the New York Convention. Arbitral award can be refused if the parties to the dispute have gained any incapacity under the law of the country or the arbitration agreement is invalid in itself. Also the refusal or omission of providing notice to the parties can become ground for refusal of arbitral award. The process of appointment of arbitrator can also lead to refusal of arbitral award in the case where the process followed is not according to arbitration agreement or invalid as per the laws of the country.
In relation to Geneva Convention foreign award is defined under section 53 of the arbitration and conciliation act, 1996. The award made in the commercial deputes only comes in the ambit of the definition of foreign award given this section.
Under section 57of The Arbitration and Conciliation Act, 1996, several conditions are given which need to be fulfilled while enforcing award under Geneva Convention. First rule in this section says that the arbitration agreement, under which or in relation to which the award is made, shall be valid. Not only the agreement also the subject matter of the agreement shall be such which is capable of settlement as per the law of the country. Further this section provides that arbitrator shall be appointed according to the process given in the arbitration agreement. The most important point in this section is that the arbitral award shall not be against the public policy. As far as international arbitration is concerned, international arbitral award can be enforced in only those countries where it is made.