Arbitration and Conciliation Act Section 48 — Conditions for enforcement of foreign awards
CHAPTER I — New York Convention Awards
Civil
Summary
Sub-section (1) sets out the only grounds on which enforcement of a foreign award can be refused, and only at the request of the party against whom the award is invoked. That party must prove one of the listed grounds to the court.
Under clause (a) of sub-section (1), enforcement may be refused if the parties to the agreement were under some legal incapacity under the law applicable to them, or if the agreement itself is not valid under the law the parties chose to govern it, or, if no such choice was indicated, under the law of the country where the award was made.
Under clause (b) of sub-section (1), enforcement may be refused if the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings, or was otherwise unable to present their case.
Under clause (c) of sub-section (1), enforcement may be refused if the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or if it contains decisions on matters beyond the scope of that submission. However, if the decisions on matters that were submitted to arbitration can be separated from those that were not, the part of the award dealing with submitted matters may still be enforced.
Under clause (d) of sub-section (1), enforcement may be refused if the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, if there was no such agreement, was not in accordance with the law of the country where the arbitration took place.
Under clause (e) of sub-section (1), enforcement may be refused if the award has not yet become binding on the parties, or if it has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.
Sub-section (2) provides two additional grounds on which enforcement of an arbitral award may be refused, and these can be raised by the court on its own finding. Under clause (a), enforcement may be refused if the subject-matter of the dispute is not capable of settlement by arbitration under the law of India. Under clause (b), enforcement may be refused if it would be contrary to the public policy of India.
Explanation 1 under sub-section (2) clarifies that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption, or was in violation of section 75 or section 81, or if it contravenes the fundamental policy of Indian law, or if it conflicts with the most basic notions of morality or justice.
Explanation 2 under sub-section (2) clarifies that the test for whether there is a contravention with the fundamental policy of Indian law shall not involve a review of the merits of the dispute.
Sub-section (3) provides that if an application for setting aside or suspending the award has been made to a competent authority referred to in clause (e) of sub-section (1), the court may, if it considers it proper, adjourn its decision on enforcement of the award. The court may also, on the application of the party seeking enforcement, order the other party to provide suitable security.
Official Text
(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that—
(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that—
(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public policy of India. 2[Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,—
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.]
(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.