16 July 2013

Enforceability of foreign arbitration awards in India

The Supreme Court of India has held that enforcement of foreign award would be refused under Section 48(2)(b) of the Arbitration and Conciliation Act, 1996 only if such enforcement would be contrary to (i) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality; and the enforcing court does not exercise appellate jurisdiction at the time of enforcing the award.
It was held that that for the purposes of said section, the expression “public policy of India” must be given narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to public policy of India if it is covered by one of the three categories (enumerated above) as stated in the case of Renusagar Power Co. Limited v. General Electric Company [1994 Supp (1) SCC 644].

The Court further noted that application of ‘public policy of India ‘doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award. The decision in Phulchand Exports was hence overruled by the present three Judges Bench. The question for consideration in this appeal was whether awards passed by the Board of Appeal of the Grain and Feed Trade Association, London (Board of Appeal) in favour of the respondent were enforceable under Section 48 of the Arbitration and Conciliation Act, 1996.

The Court while holding as above also observed that Section 48 of the 1996 Act does not give an opportunity to have a ‘second look’ at the foreign award in the award-enforcement stage. It was held that even if the contention of the appellant relating to the non-reliance on the report of the inspection agency is considered, it does not fall under any of the 3 grounds mentioned above, based on which a foreign award can be set aside as unenforceable. [Shri Lal Mahal Limited v. Progetto Grano Spa – Supreme Court Judgment dated 3-7-2013 in Civil Appeal No. 5085 of 2013].


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