Cross-border commercial disputes are increasingly resolved through international arbitration. To give certainty to foreign investors and global corporations, India has adopted the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958. This convention is incorporated into Indian law under Part II, Chapter I of the Arbitration and Conciliation Act, 1996.
At the foundation of this framework lies Section 44 of Arbitration and Conciliation Act, which defines what constitutes a foreign award in arbitration act and sets the basis for its recognition and enforcement in India. This provision ensures that valid arbitral awards made in New York Convention countries can be enforced in India as if they were decrees of an Indian court.
What is Section 44 of Arbitration and Conciliation Act?
Section 44 of Arbitration and Conciliation Act provides the statutory definition of a foreign award under the New York Convention. It specifies the conditions an arbitral award must meet to be enforceable in India under Part II of the Arbitration and Conciliation Act.
In simple terms, section 44 arbitration and conciliation act 1996 ensures that international arbitration awards are not subjected to fresh litigation in India but can be enforced directly, provided they satisfy certain requirements.
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Section 44: Definition of a Foreign Award
A foreign award in arbitration act refers to an arbitral award made in an international arbitration proceeding where:
1. The dispute arises out of a legal relationship, whether:
Contractual (e.g., trade agreements, joint ventures, investment contracts), or
Non-contractual (e.g., disputes over intellectual property, investment rights).
2. The dispute is commercial in nature under Indian law.
Commercial matters include business, trade, financial investments, and intellectual property.
Non-commercial disputes such as family or inheritance issues are excluded.
3. The award was made on or after 11 October 1960, the date from which India enforced the New York Convention.
Example
If an arbitral tribunal seated in New York issues an award in a dispute between an Indian company and an American company, the award qualifies as a foreign award under section 44 of arbitration act, provided other conditions are met.
Sub-Section (a): Written Agreement Governed by the New York Convention
The arbitration must be based on a written arbitration agreement between the parties.
The agreement must fall under the New York Convention framework listed in the First Schedule of the Arbitration Act.
Example: Two companies sign a contract with an arbitration clause referring disputes to London-seated arbitration under ICC Rules. Any award made will be treated as a foreign award under section 44 arbitration act.
Sub-Section (b): Award Must Be Made in a Notified Convention Country
The foreign award must be made in a country that is:
A signatory to the New York Convention, and
Notified by the Indian Government as a reciprocating country.
India maintains a list of notified Convention countries through government notifications.
Example:
If an award is issued in Singapore (a notified country), it qualifies as a foreign award.
If the award is made in a non-recognized country, it will not qualify under Section 44.
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Key Elements of Section 44 of Arbitration and Conciliation Act
This section enunciates the fundamental requirements for the recognition of foreign arbitral awards under Indian law to make international arbitration agreements judicially enforceable.
1. Recognition of New York Convention Awards
The award should be made by a Convention country notified by the Indian government under the New York Convention.
This makes the enforcement of foreign arbitral awards in India smooth.
2. Commercial Nature of Dispute
The arbitration has to be on commercial transactions, including trade, business contracts, or investment arbitrations.
Disputes between individuals (e.g., family or inheritance) are not considered commercial under this section.
3. Enforceability in Indian Courts
A foreign award that satisfies the requirements of Section 44 may be enforced in India directly under Section 49, provided public policy is taken into account.
The award will be considered as a decree of an Indian court upon enforcement.
4. Exclusion of Non-Convention Awards
Non-signatory nation foreign arbitral awards are outside the purview of Section 44 and have an independent enforcement procedure.
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Judicial Interpretation of Section 44 of Arbitration and Conciliation Act
Indian courts have interpreted Section 44 to promote the enforcement of valid foreign arbitral awards while ensuring compliance with Indian law.
1: RM Investments & Trading Co. Pvt. Ltd. v. Boeing Co. (1994) 4 SCC 541
Facts: A dispute arose between an Indian company and Boeing Co. (USA). Boeing obtained a foreign arbitral award under the New York Convention.
Issue: Whether the award qualifies as a foreign award under Section 44 and is enforceable in India.
Judgment: The Supreme Court ruled that since the award was made under a recognised convention country (USA) and met the conditions of Section 44, it was enforceable in India.
Significance: Clarified that foreign awards do not require fresh litigation in Indian courts—they can be enforced directly under Part II.
2: Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2001) 6 SCC 356
Facts: An arbitration award was passed in England under the ICC Rules. The winning party sought enforcement in India.
Issue: Whether the English arbitration award could be enforced under Section 44.
Judgment: The Supreme Court ruled that England is a recognised convention country, and the award falls under Section 44, making it enforceable in India.
Significance: Confirmed that no separate lawsuit is needed to enforce a foreign award—parties can directly apply for enforcement under Part II, Chapter I.
3: Vijay Karia v. Prysmian Cavi E Sistemi Srl (2020 SCC 177)
Facts: An arbitral award was passed in London under the LCIA rules. The losing party objected to its enforcement in India.
Issue: Whether Indian courts can decline to enforce a New York Convention award under Section 44.
Judgment: The Supreme Court held that foreign awards should be enforced unless there are cogent reasons not to enforce them.
Significance: Renewed India's pro-arbitration policy, restricting court intervention in the enforcement of foreign awards.
Summing Up
Section 44 of Arbitration and Conciliation Act, 1996 lays down the foundation for recognizing and enforcing foreign arbitral awards in India under the New York Convention. By ensuring that only valid, commercial awards from notified Convention countries are recognized, it strengthens India’s pro-arbitration framework. Judicial rulings consistently support enforcement, limiting refusal to rare cases involving invalid agreements or violations of Indian public policy.
In essence, arbitration and conciliation act section 44 makes international arbitration awards enforceable in India and promotes India’s image as a global arbitration hub.
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Section 44 of Arbitration and Conciliation Act
Q1. What is Section 44 of Arbitration Act?
It defines a foreign arbitral award as one made in a notified New York Convention country, arising out of a commercial dispute under a valid written arbitration agreement.
Q2. What qualifies as a foreign award under Section 44?
It must involve a commercial dispute, be based on a written arbitration agreement, and be made in a recognized Convention country.
Q3. Is a foreign award enforceable in India?
Yes. If it complies with Section 44, it can be enforced under Section 49, carrying the same weight as a decree of an Indian court.
Q4. Does Section 44 cover all foreign arbitration awards?
No. Only awards from notified New York Convention countries are covered. Awards from non-signatory nations require separate enforcement procedures.
Q5. Can Indian courts refuse enforcement of a foreign award?
Yes, but only on limited grounds such as invalid arbitration agreements or if the award is against the public policy of India.
