In a globalised economy, international trade and commerce are a necessity to ensure economic prosperity. With well-equipped regulatory and legal means of carrying out cross-border transactions and trade, the need for a system for resolving disputes and conflicts between the transacting parties has also been highlighted before. In any case, the route of litigation is burdensome, long drawn and less efficient in ensuring satisfactory results.

The matter of jurisdiction and enforcement of foreign judgements also ventures out, which is characterised by a complicated mixture of international principles applied in varying ways by different states. In light of this, arbitration has arisen as a cost and time efficient means of dealing with such conflicts in the international arena. The recognition and enforcement of the awards granted through such means are of a nature that can be upheld across jurisdictions of different states, with much more conviction than the judgements of foreign courts.

Primarily the Geneva Convention on the Execution of Foreign Arbitral Awards (1927) an offshoot of the Geneva Protocol of 1923, as well as the New York Convention of 1958 form the framework for the international law on arbitration. India became a signatory to the Geneva Protocol (during the colonial period) as well as a signatory to the New York Convention. On the basis of these two international conventions, India had enacted two main statutes; first being the Arbitration (Protocol and Convention) Act, 1937[1] to give effect to the Geneva Protocol and; second the Foreign Awards (Recognition and Enforcement) Act, 1961[2].

These were eventually replaced by the Arbitration and Conciliation Act, 1996 ('Act') which is now the backbone of Indian Arbitration Law. It has given statutory basis for enforcing the awards under the New York convention within Part I and those of Geneva Convention within Part II of the Act.

In the past years India has also worked towards shaping itself as an arbitration friendly jurisdiction. Indian judiciary has shown a 'pro-enforcement' stance in upholding foreign arbitral awards and limiting judicial intervention in arbitration proceedings. Through important and landmark decisions, the courts have also clarified key elements in relation to foreign award recognition and enforcement in India. This paper focuses on understanding the process of such recognition and enforcement of arbitral awards within India and studies the implication of the same.

International Arbitration Law

The international framework on arbitration was developed after the first world war, when the need for a robust mechanism to resolve cross border disputes was felt. The International Chamber of Commerce (ICC) brought about the Geneva Protocol as a means of implementing arbitration clause in definitive agreements which was then ratified by 30 countries.[3] However, the nature of the convention subsequently led to the rise of certain challenges in its implementation leading to delays in the enforcement of the awards, like the need to get the arbitral award ratified in the country of origin before it could be enforced abroad.

After a few decades, the 'United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)'[4] came into the picture. This was ratified by India in 1960. In 1985 then, the 'ICA Model Laws on International Commercial Arbitration' was adopted and then amended in 2006. Following the developments in the later half of the twentieth centuries, the arbitration clause became a part of almost all definitive agreements entered into.

New York Convention

The New York Convention marked a significant breakthrough in the field of international arbitration. It simplified the process of recognition and enforcement of foreign arbitral awards by eliminating the requirement of double exequatur (ratification in the country of origin and enforcement). The recognition and enforcement process was simplified in order to meet the objective of the convention and provide speedy and efficient means of resolving disputes and coming to a resolution. There are sixteen Articles in the convention that deal with the matter of enforcement of recognition and enforcement.

Article I[5] provides the field of application of the convention, to include the recognition and enforcement of foreign arbitral awards made in the territory of a state other than the state where recognition is sought. It also applies to awards not considered domestic in the state where enforcement is sought. Article II[6] Mandates contracting states to recognize written arbitration agreements and uphold their validity, subject to limited exceptions.

It also requires courts to refer parties to arbitration when there is an arbitration agreement between them. Further, Article III[7], provides that each contracting state shall recognize arbitral awards as binding and enforce them in accordance with its procedural laws, without imposing significantly more onerous conditions than those for domestic awards. The limited grounds for refusal of recognition and enforcement can be done is provided under Article V[8] of the convention. By way of Article VII[9], the parties can still rely on more favourable national laws or international treaties for the recognition and enforcement of arbitral awards.

In the case of Vijay Construction (Proprietary) Limited v. Eastern European Engineering Limited[10] a dispute arose between Vijay Construction (Proprietary) (Vijay) Limited a company based in Seychelles, and Eastern European Engineering Limited (EEEL), a foreign company, over a construction project and the subsequent cancellation of six contracts that had been made between the two parties. These contracts had included arbitration clauses, and the validity of cancellation was determined through arbitration proceeding that were initiated in Paris under the International Chamber of Commerce (ICC) rules. EEEL had applied to the Seychelles Supreme Court to have the foreign award recognised which was then opposed by Vijay on various grounds, but primarily public policy.

The Court upheld the principle of finality of arbitral awards under the New York Convention, stressing the importance of limiting judicial intervention in arbitration matters. It noted that Seychelles, being a signatory to the Convention, had an obligation to recognize and enforce valid foreign arbitral awards, subject only to the limited grounds for refusal provided in the Convention.

Similarly, in the case of Milantic Trans S.A. v. Ministerio de la Producción (Astilleros Río Santiago)[11] a dispute relating to the contract entered into between Astilleros Rio Santiago (Astilleros) that was an Argentine state-owned shipping company and the Milantic Trans SA (Milantic) which was a foreign shipping company. The dispute was thereafter referred to arbitration in London in accordance with the arbitration agreement between the parties.

The award passed by the tribunal in London was rendered in favour of Milantic Trans SA ordering Astilleros to pay damages. The Argentine company, however, did not comply with the award, and therefore, Milantic therefore, sought to have the award recognised and enforced in Argentina under the New York Conventions of which Argentina was a signatory. One of the main grounds on which Astilleros contended the enforcement proceeding was sovereign immunity and public policy.

The Argentine Courts however, ruled in the favour of Milantic, allowing the recognition and enforcement of the award. They rejected the grounds of sovereign immunity had laid down that despite Astilleros despite being a state-owned entity had entered into a commercial contract and agreed to the arbitration clause contained therein. By participating in commercial activities, it had waived off its sovereign immunity. Further, and more importantly the court highlighted Argentina's obligation under the New York Convention emphasising that foreign awards should generally be recognised and enforced unless clear and compelling grounds for refusal exist. The court thus reinforced the duty of signatories to enforce the foreign arbitral awards.

In another case, Parrish & Heimbecker Ltd. v. TSM Winny AG Ltd.[12] a dispute arose between Parrish & Heimbeker Ltd, (Parrish) which was a Canadian grain company that had entered into a contract with TSM Winny AG Ltd. (TSM), a Ukrainian agricultural company. The arbitration clause provided that the GAFTA rules had to be followed.

The arbitration proceedings were rendered in favour of Parrish and TSM was to pay damages. However, TSM resisted the enforcement of the arbitral award on several grounds including absence of fair trial and procedural irregularities since Parrish had not obtained a certified copy of the award before it was sought to be enforced. The Canadian court in line with the New York Convention, likely ruled in favour of enforcing the foreign arbitral award. Courts in jurisdictions that are signatories to the Convention, including Canada, typically take a pro-enforcement approach, meaning that they recognize and enforce foreign arbitral awards unless there are clear and compelling grounds to refuse enforcement.

These cases have contributed towards building a global environment conducive to arbitration With over 170 countries as signatories to the Convention, it acts as a unified legal framework for cross border enforcement of arbitral awards. The pro arbitration environment also reduces the risk of forum shopping and judicial delays that might affect cross border commerce. The Convention also places very limited grounds for refusal of enforcement of the award that ensures minimal judicial interference by the judiciary of the nation. India being a signatory to the Convention is also under the obligation to uphold it's objectives. These are currently reflected in the Arbitration and Conciliation Act that was enacted to consolidate the international framework in domestic laws including the model laws of UNICITRAL.

Recognition Of Award Under Arbitration And Conciliation Act

The concept of recognition, distinct from enforcement, refers to the legal acknowledgement of domestic and foreign arbitral awards as valid and binding. Recognition is essential as it enables the award to be enforced against the losing party. It is also a more defensive mode to secure an arbitral award since recognition only secures protection to the award where the parties of the same Convention initiate arbitral proceedings, and in case new issues that were not part of the earlier proceedings arise, then getting the award comes to a standstill. 'Enforcement' however, is considered to be a relatively offensive front wherein the party seeking such enforcement intends to get it recognised as well as to enforce the same through legal sanction.

In the case of Brace Transport Corporation v. Orient Middle East Lines[13] a dispute had formed between Brace Transport which was based in the USA and Orient Middle East Lines, which was a Lebanese company. Brace Transport had an arbitral granted in its favour after the proceeding concluded in London, and sough to get this award enforced in India since, Orient had certain assets in India. The main question that arose before the Indian courts was whether an arbitral award that was rendered in London could be enforced in India.

In this the court stated, 'an award may be recognised, without being enforced; but if it is enforced than it is necessarily recognised. Recognition alone may be asked for as a shield against re-agitation of issues with which the award deals. Where a court is asked to enforce an award, it must recognise not only the legal effect of the award bit mist use legal sanctions to ensure that it carried out.'

Overview Of The Law

Part II of the Arbitration and Conciliation Act, deals with the recognition of foreign arbitral awards, which incorporates the provisions of the New York Convention well as the Geneva Convention. Chapter I of Part II of the act gives effect to the provisions of New York Conventions and Chapter II to the provisions of Geneva Convention. Section 44 defines 'foreign award' to mean 'an arbitral award on differences between persons arising out of legal relationships'.

These are in reference to commercial subject matter under the law in force in India. Further, the foreign awards shall be treated as binding for all purposes on the persons on whom it was made[14]. The mechanism for enforcing a foreign awards as contained in Section 47 lays down that the party so applying for enforcement of the award shall be required to produce before the court the original award or a certified copy of the awards, the original agreement for arbitration or a duly certified copy of that, and any other necessary evidence. Recognition of a foreign award under the New York Convention can be refused under Section 48 of the Act on limited grounds, such as:

• Incapacity of parties or invalid arbitration agreement.
• Lack of proper notice or inability to present a case.
• The award goes beyond the scope of the arbitration agreement.
• Procedural irregularities in the composition of the tribunal.
• The award is contrary to Indian public policy (which includes issues of fraud, corruption, or breach of fundamental laws).

Mechanism Of Recognition And Enforcement
The Arbitration and Conciliation act governs the arbitral awards in India, but the execution of these awards, once finally recognised, is as though it were a decree of a court under the Code of Civil Procedure, 1908. The first step for enforcing a contract is to make an application under Section 47 of the Act, to any court having proper jurisdiction. The other party can challenge such enforcement only on the limited grounds of Section 48. In any case, where the court finds that the foreign award is enforceable in India, it will be deemed to be a decree of that court in accordance with Section 49 and will be executed as per the provisions of the CPC[15].


It is generally essential that a foreign award fulfils all the conditions imposed under the Act in order to be recognised and enforced in India; these essentials are primarily as under Section 47. However, in the case of PEC Ltd. v. Austbulk Shipping Sdn. Bhd[16] the Supreme Court had held that mandate as to original copies or certified copies can be relaxed in the initial stage of filing the application, and that non-filing of the documents does not particularly mean that the application is to be ejected.

Through this judgement, minor procedural irregularities during the entire process of arbitration could not be used to reason a refusal for enforcement of the award, unless these directly affected the interest of justice and fairness. This also established a pr-arbitration stance of the Indian arbitration law. The case of Shriram EPC Ltd .v. Rioglass Solar SA[17] had held that stamping of the awards cannot be considered a mandatory condition, and that there is no requirement of registration of the award in order to be enforced as a decree.

In the case of Vijay Karia v. Prysmian Cavi E Sistemi[18] the question pertained to the enforcement of award granted by the London Court of International Arbitration, which had asked an Indian resident entity to transfer to the other party, securities at a discounted rate that was in violation of the Foreign Exchange Management Act (FEMA). Vijay Karia had challenged the enforcement on grounds of 'opposition to public policy'. Thereafter however, the court upheld the enforcement of the award and rejected the ground of public policy under Section 48. The ground of public policy was interpreted in a narrow sense and thereafter, the other grounds including minor defects in procedure did not form sufficient basis for refusal of enforcement.

Grounds For Refusal For Enforcement Of Foreign Award
The grounds for refusal of the enforcement of a foreign arbitral award in India as under the Arbitration and Conciliation Act incorporates the provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (also referred to as the New York Convention) and the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927. Under Indian law, the refusal of enforcement of foreign awards is primarily dealt with under Section 48 of the Arbitration and Conciliation Act, 1996, which outlines specific conditions under which courts may refuse to enforce foreign arbitral awards.

1. Party/Procedure-based Grounds (Section 48(1)) These grounds protect the rights of the parties and the integrity of the arbitration process.
   • Incapacity of the Parties (Section 48(1)(a)): If one of the parties to the arbitration agreement was under some legal incapacity at the time of the agreement (e.g., minors, persons of unsound mind, or entities without legal authority to enter into contracts), the award can be refused.
      
   • Invalidity of the Arbitration Agreement (Section 48(1)(a)): The arbitration agreement must be valid under the law governing it, or, if no governing law is specified, under the law of the country where the award was made. If the agreement is not valid (e.g., it violates the laws of the country or is formed under duress or fraud), enforcement can be refused.
      
   • Lack of Proper Notice or Inability to Present Case (Section 48(1)(b)): If the party against whom the award is invoked was not given proper notice of the arbitration proceedings or was otherwise unable to present their case (e.g., not given a fair opportunity to submit evidence or respond to claims), enforcement can be refused.
      
   • Award Beyond the Scope of Submission to Arbitration (Section 48(1)(c)): If the arbitral award deals with matters beyond the scope of what was submitted to arbitration (i.e., the tribunal decides on issues not covered by the arbitration agreement), those parts of the award that are beyond the scope may be refused enforcement; however, the enforceable part may still be recognized.
      
   • Irregular Composition of the Arbitral Tribunal (Section 48(1)(d)): If the composition of the arbitral tribunal or the procedure followed was not in accordance with the agreement of the parties (or, failing such agreement, the law of the country where the arbitration took place), enforcement may be refused.
      
   • The Award is Not Yet Binding or Has Been Set Aside (Section 48(1)(e)): If the award has not become binding on the parties or has been set aside or suspended by a court in the country where the award was made, the Indian courts can refuse to enforce it. This ensures that an award subject to further judicial review in the rendering jurisdiction is not enforced prematurely in India.
      
2. Substantive/Outcome-based Grounds (Section 48(2)) These grounds focus on protecting the fundamental legal and moral principles of India.
   • Public Policy of India (Section 48(2)(b)): The most commonly invoked ground for refusal of enforcement is the violation of the public policy of India. The term 'public policy' was initially broad but has been narrowed down by Indian courts over time. As per judicial interpretation, an arbitral award would be against public policy if:
     • It is induced or affected by fraud or corruption.
     • It violates fundamental principles of Indian law, i.e., basic notions of justice or morality.
     • It is patently illegal (for example, if it goes against a statute).
     • Enforcement would affect India's sovereignty and integrity or its relations with foreign states.
        
   • The 2015 Amendment: The Arbitration and Conciliation Act clarified that awards cannot be refused enforcement merely because of an erroneous application of law or reappreciation of evidence.
      
   • Subject Matter Not Capable of Settlement by Arbitration (Section 48(2)(a)): If the subject matter of the dispute is not arbitrable under Indian law (i.e., it cannot be settled through arbitration), enforcement may be refused. Certain matters, such as criminal offenses, matrimonial disputes, insolvency, and testamentary issues, are not arbitrable under Indian law.
      
3. Discretionary Power of the Court (Proviso to Section 48): Even if a ground for refusal is established, the court has discretionary power to enforce the award if the part of the award can be separated from the invalid or unenforceable part. The court may also choose not to refuse enforcement if it finds that enforcing the award would still serve justice.

Broadly therefore, these can be summed up as follows:

• Incapacity of parties or invalid arbitration agreement.
• Lack of proper notice or inability to present a case.
• The award goes beyond the scope of the arbitration agreement.
• Procedural irregularities in the composition of the tribunal.
• The award is contrary to Indian public policy.

While the scope of application of the first four grounds is for the most part, limited and unambiguous, the interpretation of public policy has been a matter for consideration of all. The In the landmark case of Renusagar Power Company Limited v. General Electric Company[20] the Supreme Court held that 'public policy' under Section 48 must be interpreted narrowly, limiting it to fundamental principles of Indian law, morality, or justice, rather than allowing for a broad scope of judicial review.

Further in the case of Shri Lal Mahal Ltd. v. Progetto Grano Spa[21] the Supreme Court further clarified that courts should refrain from reviewing the merits of the award or re-examining the evidence and reinforced the scope of public policy to Fundamental policy of Indian Law, interests of India, justice and morality.

These views have been since then, supported by numerous landmark judgements, including, the case of Vijay Karia & Ors. v Prysmian Cavi E Sistemi SRL & Ors[22] where the question as to enforcement of an arbitral award rendered by the London Court of International Arbitration was under consideration, the enforcement was challenged on the grounds of public policy. The court however, emphasised on the need for a narrow interpretation of 'public policy' and enforced the foreign award.

Similarly, in the case of Union of India v. Vedanta Ltd.[23] an arbitral award had been rendered in favour of Vedanta Ltd. The same was challenged by Government of India on grounds of public policy. The Supreme Court rejected the public policy objection and enforced the award. The court held that public policy must be construed narrowly, as per India's obligations under the New York Convention. It further observed that Indian courts should not interfere with arbitral awards unless there is a clear violation of fundamental principles of justice or public morality.

In a diverse range of case that have cropped up in front of the courts in the past few years, the judiciary for most part has taken a pro-arbitration stance. This this most importantly reflected in the above cases from the willingness of the judiciary to relax procedural requirements in the interest of giving effect to the award. Along with this, the courts have constantly stood on the need for narrow interpretation of the grounds for refusal that are listed under the Act.

Challenges In Recognition Of Awards
The recognition and enforcement of foreign arbitral awards in India are governed by the Arbitration and Conciliation Act, 1996 (amended several times, most recently in 2021). While India is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention) and the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (Geneva Convention), several challenges continue to arise when foreign arbitral awards are brought for enforcement in Indian courts.

1. Public Policy Objections
   The public policy defence is one of the most frequently invoked grounds for challenging the enforcement of foreign arbitral awards in India.: Initially, Indian courts took a broad interpretation of public policy, which provided an expansive ground for challenging foreign awards. For instance, in the landmark case of ONGC v. Saw Pipes Ltd.[24] the Supreme Court ruled that an arbitral award could be set aside if it was contrary to Indian law or the terms of the contract, thus expanding the definition of public policy.
   
   However, this was challenged in the judgements like that of Renusagar Power Co. Ltd. v. General Electric Co. and Shri Lal Mahal Ltd. v. Progetto Grano Spa[25] narrowed the definition of public policy, limiting it to situations involving fraud, corruption, or violations of the fundamental notions of morality and justice. Despite these judgments, some lower courts continue to interpret public policy expansively, causing delays in enforcement.
    
2. Judicial Delays
   While India's legislative framework favours minimal judicial intervention in arbitral proceedings, in practice, Indian courts often engage in excessive scrutiny of foreign awards. Even though the Supreme Court has laid down a pro-enforcement approach, certain High Courts have overstepped by reviewing the merits of the case or re-evaluating evidence, which is contrary to international norm. Further, the possibility of multiple levels of appeal through Indian courts contributes to long delays in enforcing foreign arbitral awards. Parties often exploit procedural mechanisms to challenge an award at various levels, making enforcement a time-consuming process.
    
3. 3. Interpreting the Scope of 'Fundamental Principles of Indian Law'
   Under Section 48 of the Arbitration and Conciliation Act, a foreign arbitral award may be refused enforcement if it contravenes the fundamental principles of Indian law. However what constitutes 'fundamental principles of Indian law' is not clearly defined, leaving room for varied judicial interpretations. Although the term refers to fundamental legal doctrines and principles that protect basic rights, courts have sometimes applied this standard to refuse enforcement on grounds that should not fall within the scope of fundamental principles.
   
   Essentially, the procedure although aimed at a time-efficient and cost-friendly approach to ensuring recognition and enforcement, in reality, ends up creating a heavier burden on the parties at times.

Conclusion
In conclusion, the enforcement of foreign arbitral awards in India stands at the intersection of international obligations, domestic legal frameworks, and judicial interpretation. With India's participation in international conventions such as the New York Convention and the Geneva Convention, the legal infrastructure is well-equipped to facilitate the recognition and enforcement of foreign awards. However, challenges persist in the form of public policy objections, judicial delays, and procedural complexities.

Indian courts, especially through recent amendments to the Arbitration and Conciliation Act, 1996, and progressive judicial decisions, have moved towards a pro-enforcement stance, limiting the scope of intervention and encouraging consistency with global standards. The narrowing of the public policy exception and a growing trend of minimal judicial interference reflect a positive shift towards creating an arbitration-friendly environment.

Despite these advancements, hurdles such as inconsistent judicial interpretations, excessive scrutiny, and practical issues in enforcement remain areas of concern. Addressing these challenges requires continued judicial restraint, efficient legal procedures, and streamlined processes, particularly concerning reciprocity and cross-border disputes. Moving forward, India's commitment to arbitration reforms and adherence to international norms will be key to establishing its position as a global arbitration hub while ensuring foreign arbitral awards are enforced promptly and justly.

There can be consideration placed on limiting the scope for judicial interference, and a strict application of the law. The grounds of public policy, and fundamental principles of law need to be statutorily defined and not left entirely to the wisdom of the court. A means of simplifying the procedural requirements can also be looked into to ensure that the parties are not burdened or denied off their awards only on procedural irregularities.

End Notes:

1. Arbitration (Protocol and Convention) Act, 1937
2. Foreign Awards (Recognition and Enforcement) Act, 1961
3. Enforcement of Arbitral Awards in India
4. Convention on the Recognition and Enforcement of Foreign Arbitral Awards: https://legal.un.org/avl/ha/crefaa/crefaa.html
5. Ibid 4
6. Ibid 5
7. Supra 7
8. Supra 8
9. Vijay Construction (Proprietary) Limited v. Eastern European Engineering Limited SCA 28/2020 [2022] SCCA 58 (Arising in CS 23/2019) (21 October 2022)
10. Milantic Trans S.A. v. Ministerio de la Producción (Astilleros Río Santiago)
11. Parrish & Heimbecker Ltd. v. TSM Winny AG Ltd 2020 SKQB 348
12. Brace Transport Corporation v. Orient Middle East Lines 1995 Supp (2) SCC 280, 287
13. Section 46 Arbitration and Conciliation Act 1996
14. Section 44-A CPC, 1908
15. PEC Ltd. v. Austbulk Shipping Sdn. Bhd (2019) 11 SCC 620
16. Shriram EPC Ltd. v. Rioglass Solar SA (2018) 18 SCC 313
17. Vijay Karia v. Prysmian Cavi E Sistemi 2020 SCC OnLine SC 177
18. Arbitration & Conciliation (Amendment) Act, 2015
19. Renusagar Power Company Limited v. General Electric Company 1994 Supp (1) SCC 644
20. Shri Lal Mahal Ltd. v. Progetto Grano Spa (2014) 2 SCC 433
21. Ibid 18
22. Union Of India & Anr v. Vedanta Ltd & Ors IRONLINE 2021 DEL 603
23. ONGC v. Saw Pipes Ltd (2003) 5 SCC 705
24. Ibid 20