This blog post describes ways to enforce arbitral awards in India and the reasons why enforcement of foreign awards remains a problem in that country.
The constant growth of international trade has led to the fact that participants in different markets began to look for other methods of resolving international disputes in order not to use litigation since its execution in foreign affairs is often complicated. As a result, effective methods for the settlement of international commercial disputes, such as mediation and arbitration have been created. They are effective and efficient, but using such methods raises the question of recognition and enforcement of decisions, especially when the process takes place abroad. When the parties submit the resolution of the arisen disagreements for consideration to the arbitration bodies, they are faced with a number of procedural formalities and procedures, as well as the need for further enforcement of the final decision if the counterparty evades its voluntary execution.
Establishing a predictable and efficient cross-border enforcement regime for commercial judgments is still an unresolved task in many jurisdictions.
Domestic and foreign arbitral awards
If you are planning to initiate domestic arbitration in India, the award made during this process is limited to the territory of that jurisdiction. A decision made in a commercial dispute settlement process in a foreign country when both parties are Indian in origin shall be subject to the competence of domestic arbitration.
For an arbitration to be considered a “foreign arbitration”, it must be conducted:
- in a foreign country;
- a foreign arbitrator;
- with the application of foreign laws.
Also, one of the participants must be a foreign citizen or legal entity.
Execution of internal decisions
If you want to initiate an internal arbitration process in India, please note that before filing an application for enforcement of the award, an interim period is required when the award can be challenged. A party challenging the decision must submit a separate application to request a suspension of the execution of the decision.
Execution of foreign decisions
The main reasons for the attractiveness of international arbitration are invariably the comparative ease of recognition and enforcement of awards, as well as confidentiality. Accordingly, efficiency in the enforcement of the New York Convention awards is a fundamental advantage of arbitration. One of the advantages of this method of dispute resolution is also a higher competence of arbitrators, their knowledge of foreign languages , and special experience in certain industries and branches of law.
The recognition of foreign arbitral awards requires a substantial level of trust between states and in each other's judicial systems.
India recognizes foreign decisions under NY and Geneva Conventions. If a binding decision is received from a signatory country, the decision is binding in India.
Cancellation of execution of decisions
For those planning to settle a commercial dispute in India through arbitration, it will be interesting to know that the award will be void if the other party proves that:
- The parties to the agreement were incapacitated;
- The party could not present its case in the arbitration court for valid reasons;
- The party has not been duly notified;
- The award contains matters outside the scope of arbitration;
- The arbitrators or procedure did not comply with the agreement;
- The decision is against ethical standards or does not comply with public policy in India.
Recent decisions confirm the fact that Indian courts have adopted a position in favor of respect for the principle of non-interference in arbitral awards. The authorities are working together to ensure the confidence of foreign investors and to make India a center for international arbitration.
As a result, India's credibility as an arbitration-friendly regime has been strengthening in recent years.You can sign up for a consultation on the settlement of commercial claims through arbitration in India from our specialists. Please reach out to us by using contacts on the website.