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The convention relating
to Recognition and Enforcement of Foreign Arbitral Awards were done at New York
on 10th June 1958.it is considered as a part of international
arbitration and called as “New York Convention”. This convention mandates the
common standards for the recognition of arbitration agreements as well as
enforcement of foreign and non domestic arbitral awards. Non domestic awards refers
to that awards which are made in the state of enforcement were treated as
foreign under its law due to some foreign elements included in it. The main
object of courts to reduce their burden. It can be reduced with the help of
Arbitral institutions. Party cannot easily access justice under the premises of
courts, but arbitration functioning speedily or in expeditiously manner. Court
shall refer the subject matter of dispute to the Arbitral Tribunal.

Salient
Features of the New York Convention are as follows:

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Article I of the said
convention applicable to arbitral awards those made within the territory of
state other than the state where recognition and enforcement of such awards are
sought and they are arising out of such differences between persons, whether
they are physical or legal. It shall be applicable on all arbitral awards where
recognition and enforcement of arbitral awards are sought. Awards shall be made
by arbitrators as well as arbitral institutions. It may be permanent or Ad- hoc
institution. The state has a right to represent the “reciprocity reservation”
and “commercial reservation”. A contracting state may grant permission to the
state for make their recognition and enforcement of awards. A contracting state
has a power to declare about the differences arises from legal relationships,
whether they are contractual or not. These are considered as commercial under
the law.

Article II provides
that the arbitration agreement between the parties must be in writing. The
dispute or differences may be present or future. It originated from legal relationships,
these relationships may be contractual or not. It concerned with the subject
matter of dispute which settled by arbitration. The court can refer their
disputed matters to arbitral institutions on the request made by either of the
parties. If finds that whether arbitration agreement is valid or operative and
capable of being performed or not. It checks the validation of agreement,
afterwards it transferred the matter to arbitration. Party must state the
reason for making an application for resolution of differences. The copy of
arbitral award duly authenticated by court of law. That party must state its
proof for arbitral award sought, if it made against himself, it shall be proved
by that party against whom recognition and enforcement of arbitral award is
sought.

There are various
grounds for refusal made by competent authority in respect of foreign award:

1.     
Parties are incapable for performing the
contract.

2.     
Party against the whole proceedings
instituted did not serve proper not notice about the appointment of the
arbitrator or of the arbitral proceedings or any other cause.

3.     
The award was given by an arbitrator
beyond its jurisdiction. On other hand, we can say that it is not according to
arbitration agreement made between the parties.

4.      If
there are various kinds of matters, that awards can be enforced which are made
according to law, remaining portion should be left.

5.      The
composition of arbitral tribunal was not constituted accordance with the
agreement of the parties.

6.      Before
the final award, it can be set aside or suspended by a competent authority of
the country under which it is made.

On other hand, there
are various clauses where courts can refuse for the enforcement of an award. If
the court finds that:

1.     
The subject matter which refers to the
arbitration is not capable for settlement by arbitration under the law of
India.

2.     
The regulated award should be  enforced against the public policy of
india.it includes:-

a.       The
award was caused by fraud, corruption.

b.      It
makes contravention of Indian law.

c.       If
it made conflicts with the most basic notions of morality or justice.1

Status
of New York Convention in India

The foreign awards
(Recognition and Enforcement) Act, 1961 was enacted in India for given effect
to the Recognition and Enforcement of Foreign Arbitral Awards, 1958 in which
India was also a party. This Act was repealed due to the Arbitration &
Conciliation Act, 1996.

Foreign
Award

Foreign award means an
arbitral award on differences between persons arising out of legal
relationships, whether contractual or not, considered as commercial under the
law in force in India, made on or after 11th day of October, 1960.
On other hand, when central government satisfied to make reciprocal provisions
and passed through  by notification in
official gazette and declare the territories where this said convention
applicable2.

Foreign awards are
generally outcome of foreign arbitration. It should be rendered by foreign
Tribunal or Court. The subject matter of dispute must be international in
nature. It must be related to international level like international trade,
commerce and investment etc. the award should be made in foreign country. It is
separated from domestic award. It includes foreign elements or characteristics3.

Serajuddin
vs. Michael Golodetz4
in this case, court observed the meaning of foreign arbitration. It means when
arbitral proceedings run at foreign lands by the foreign arbitrators and
foreign law applied in proceedings and one party must represents foreign
national. It would be considered as foreign Arbitration. In this case,
proceedings held in America, these proceedings treated as foreign arbitration.

N.T.P.C.
vs. Singer Company5
the Supreme Court observed that interim award given to party made in London.
Arbitration agreement arose between parties and this agreement was governed by
laws of India. The Supreme Court of India refused to accept, that it was a
foreign arbitration. It considered it was a domestic arbitration, because it
was governed by laws of India in respect to contract and the arbitration.

Gas
Authority of India vs. Spie Capag S.A6
this case pertains to recognition of various protocol and Arbitration Act.
Arbitration & Conciliation Act, 1996 repealed the Foreign Awards
(Recognition and Enforcement) Act, 1961 and Arbitration (Protocol and
Convention) Act, 1937. In this case held that claim made by Gail’s can be filed
before the Arbitral tribunal for liquidated damages constituted by
International Chamber Of Commerce. On other hand, Spie capag did not file a
claim before arbitral tribunal because it had given no notice of the claim
which was required under arbitration agreement. The New York Convention shall
be applicable where arbitral awards made in one state other than a state where
their recognition and enforcement is sought and these kinds of matters sought
in foreign countries. It would also be applicable to domestic awards in the state.

Difference between
Domestic award and Foreign award as follows:-

Foreign award is differing
from domestic award if these conditions are fulfilled.

·        
One party must belongs to national of
foreign country.

·        
The subject matter of arbitration is
international in nature. It must include international trade, commerce and
investments also etc.

·        
The award rendered by foreign
arbitrators at foreign land.

·        
It must be made in foreign country.

Domestic award is that
which governed by the rules of Indian Arbitration Act. On other hand, we can
say that, domestic award can be treated if these above mentioned foreign
elements does not include in it.

Dorstener
Maschine (Germany) vs. Sand Plast India7
in this case injunction given against the foreign award in Germany but Delhi
High Court refused to make it enforced. Then their dispute referred to indo-
German Chamber of Commerce. There were two arbitrators, each appointed by the
parties. It rejected the claim of Dorstener and allowed the claim filed by sand
plast India. On receiving the copy of the award, sand plast made proceedings
continued in Germany for enforcement of award because Dorstener did not have
assets in India. So the Dorstener opposed to the enforcement of award. In this
case , respondent treated case proceeds as per foreign arbitration in the light
of New York Convention but sand plast considered it proceeded with domestic arbitration,
because case was instituted against German company in Germany ,it had no assets
in India. So India should not be allowed to restrain the Indian company from
enforcing award in Germany by seeking an interim injunction. It was held that
Court accepted sand plast plea’s and rejected Dorstener plea. it also held that
it includes all foreign elements and involvement of International trade and
Commerce so the New York Convention was also applicable to the case. Therefore,
the New York Convention deals with arbitration agreements ad well as arbitral
awards.

R.M.
Investments Trading Co. Pvt. Ltd. vs. Boeing Co.8 in
this case there was given wider interpretation of word “Commercial”. It covers
matters arising out from all relationships whether they are contractual or not.
It has no precise definition. it gives wider interpretation such as includes
any trade transaction, exchange of goods or services, commercial agency,
financing, banking, insurance, carriage of goods as well as passenger by air,
sea or road etc. in this instant case, there was agreement between Indian
company and foreign company. Boeing co. agreed to promote the services and sale
of Boeing aircrafts in India held to involve commercial relationship with the
meaning of section 44.

Bhatia
International vs. Bulk Trading S.A.9
the Supreme Court observed that award given by non- convention countries does
not amount to foreign award. All arbitral awards rendered under Part I
Arbitration & Conciliation Act, 1996 considered as Domestic award. On other
hand, Part II involves foreign awards. If any award does not cover under
specified area, it does not consider as domestic as well as foreign award.
Because it is made by non-signatory countries which is not based upon UNCITRAL
model law. 

Power
of Judicial Authority to refer parties to Arbitration

This section gives
over- riding effect to the provision contained in the Act,1996. This provision
provides when judicial authority seized to take effective action in agreement
which covered under preceding section. Then the subject –matter shall be
forward to the arbitration on the request of one of the parties and if any
person has bonafide interest in the case or parties claiming through or behalf
of him. Then matter shall be transferred for arbitration unless it finds that
agreement is null and void, inoperative or incapable of being performed. This
section given reference of arbitration instead of court, it would be mandated
for stay of suit or other legal proceedings10.

New York Convention
as well as Geneva Convention also gives a right to parties to claim a matter in
arbitration instead of court. Unless court finds it null and void, inoperative
etc. New York Convention imposed a responsibility upon the court to stay the
proceedings and parties must refer to arbitration.both conventions concluding
Section 45 and Section 54 relating to New York Convention and Geneva Convention
respectively. The plea or request of application can be made by either of the
parties to

1 Section 48 of Arbitration &
Conciliation Act, 1996

2 Section 44 of Arbitration &
Conciliation Act, 1996

3
Ibid.

4
AIR 1960 Cal. 49

 

5 AIR 1993 SC 998

6 AIR 1994 Del 75

7 (1995) 1 Arb LR 282

8
AIR 1994 SC 1136 ,1139-1140

 

9
AIR 2002 SC 1432

10
Section 45 of Arbitration & Conciliation Act,1996

 

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