Cross-border disputes are handled effectively through international arbitration. A systematic approach is adopted in the Arbitration and Conciliation Act 1996 in order to recognise and enforce foreign arbitral awards in India. Section 44 of Act defines foreign awards and lays down the basis for their recognition under Part II of the Act, incorporating the provisions of the New York Convention.
Understanding Section 44 of Arbitration and Conciliation Act
Section 44 of Arbitration and Conciliation Act, 1996, provides for what a foreign award under Part II, Chapter I of the Act is. It is in accordance with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, making international arbitration awards enforceable in India.
Section 44: Definition of a Foreign Award
Explanation:
A foreign award refers to an arbitral award given in an international arbitration proceeding.
It must arise from a legal relationship that is:
Contractual (e.g., business agreements, commercial contracts).
Non-contractual (e.g., disputes over investment rights, intellectual property).
The dispute must be commercial in nature as per Indian law.
The award must have been made on or after October 11, 1960, when India adopted the New York Convention on Arbitration.
Example:
If an arbitration award is passed in New York regarding a dispute between an Indian company and an American company, it qualifies as a foreign award under Section 44, provided it meets other conditions.
Sub-section (a): Agreement Must Be in Writing and Governed by the New York Convention
Explanation:
The arbitration must be based on a written agreement between the parties.
The arbitration agreement must be governed by the New York Convention (as listed in the First Schedule of the Act).
Example:
If two parties sign a contract that includes an arbitration clause referring disputes to London-seated arbitration under the ICC Rules, the award would qualify as a foreign award under this section.
Sub-section (b): The Award Must Be Made in a Notified Convention Country
Explanation:
The foreign award must have been passed in a country that is:
A signatory to the New York Convention.
Recognised by the Indian government as a country with reciprocal provisions for enforcing arbitration awards.
The Indian Central Government maintains a list of recognised New York Convention countries via official notifications.
Example:
If an arbitration award is given in Singapore, and Singapore is a recognised New York Convention country, the award can be enforced in India.
However, if the award is given in a non-recognized country, it may not qualify as a foreign award under Section 44.
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.
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
The 1996 Arbitration and Conciliation Act, through Section 44, determines how foreign arbitration rulings can be legitimately enforced in Indian territory. The adoption of New York Convention procedures in this provision makes India stand as a strong pro-arbitration jurisdiction that effectively resolves international disputes.
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FAQs on Section 44 of Arbitration and Conciliation Act, 1996
Q1. What is Section 44 of Arbitration Act?
Section 44 of Arbitration Act defines a foreign arbitral award as an award made in a New York Convention state based on a commercial dispute under a written arbitration agreement.
Q2. What is a foreign award under Section 44?
A foreign award should be made in a Convention country, concerning a commercial dispute, and be founded on a valid arbitration agreement.
Q3. Is a foreign award enforceable in India?
Yes, if the award is Section 44 compliant, it can be enforced under Section 49, equating to an Indian court decree.
Q4. Does Section 44 embrace all foreign arbitration awards?
No, it is only for awards of notified countries under the New York Convention. Non-signatory countries' awards have a different enforcement process.
Q5. Can Indian courts refuse to enforce a foreign award?
Yes, but on limited grounds only, like if the award is against Indian public policy or not supported by a valid arbitration agreement.
