What is Foreign Arbitration Award

What is foreign Award?

A foreign arbitration is an arbitration conducted in a place outside India, and the resulting award is sought to be enforced as a foreign award. Ad hoc Arbitration. Ad hoc arbitration is arbitration agreed to and arranged by the parties themselves without recourse to any institution.

 Section 44 Arbitration and Conciliation Act,1996 defines "foreign award" as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India.

The Section further provides that the above mentioned provisions should be in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.

Foreign Award passed in International Arbitration

The New York Convention defines "Foreign Award" as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960-

1. In pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and
2. In one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.^[1]

From the abovementioned conditions, it is clear that there are two pre-requisites for enforcement of foreign awards under the New York Convention. These are:

1. The country must be a signatory to the New York Convention.
2. The award shall be made in the territory of another contracting state which is a reciprocating territory and notified as such by the Central Government.

What is the purpose of international arbitration?

The use of international arbitration has evolved to allow parties from different legal, linguistic and cultural backgrounds to resolve their disputes in a final and binding manner, typically without the formalities of the procedural rules of their own legal systems.

Recognition of foreign award in India

Under the Arbitration and Conciliation (Amendment) Act, 2015. There are two avenues available for the enforcement of foreign awards in India, viz., the New York Convention and the Geneva Convention, as the case may be.

Section 46 of the Arbitration and Conciliation Act,1996 provides the criterion as to when such foreign award would be binding on the parties. According to the said Section, any foreign award which would be enforceable shall be treated as binding for all the purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or any other purpose in any legal proceedings in India. Such right in a third country can be enforced after the execution of the Arbitral Award in that particular country.

Therefore, an Award may be recognized without being enforced, but if it is enforced, then it is necessarily recognized.

Section 47 of the Arbitration and Conciliation Act,1996provides the requirement as to the evidence, which are required for enforcement of the Arbitral Award. Section 47 of the Act reads as under:

1) The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court -

a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;

b) the original agreement for arbitration or a duly certified thereof; and

c) Such evidence as may he necessary to prove that the award is a foreign award.

2) If the award or agreement to be produced under subsection (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.

Explanation- In this Section and all the following Sections of this Chapter," Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject- matter of the award if the same had been the subject- matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.