An ever-growing increase in cross border transactions has given rise to a growing number of international disputes. A country’s ease of doing business index factors in the mode and manner of outcome of disputes much specifically the enforcement of judgements, decrees and arbitral awards where the subject matter of disputes situate. This note seeks to briefly outline the enforcement procedure of foreign judgments and awards in India.
ENFORCEMENT OF FOREIGN DECREES IN INDIA
A ‘judgment’ under the Code of Civil Procedure,1908 (‘CPC’) has been defined as the statement given by the Judge on the grounds of a decree or order1. A ‘foreign judgment’ under the CPC has been defined as the judgment of foreign court 2.
Thus, it can be deduced from aforesaid that a foreign judgment is a statement given by the judge of a court not being situated within the territory of India on the grounds of decree or order.
Ø Legislative Framework
The CPC deals with the execution of foreign judgments and decrees in India. The same is governed under Section 44-A read with Section 13 of the CPC. Where a decree is passed by a superior court of any reciprocating territory, the decree may be executed in India as if it had been passed by the District Court.3
Ø Enforceability of Decrees of Reciprocating Territories
A reciprocating territory means any country/territory outside India, which the Central Government may, by notification, in the official gazette declare to be a reciprocating territory. Further, superior court, with reference, to any such territory, means such Courts as may be specified in the said notification.4
On 17 January 2020, the Government of India issued a notification5 declaring UAE, a reciprocating territory for the purposes of section 44-A of the CPC, for enforcement of decrees passed by UAE courts in India (‘Notification’). The Notification was issued in pursuance of India-UAE agreement executed in the year 1999 for judicial cooperation in civil and commercial matters (‘Treaty’).
The Notification also sets out list of Courts of UAE, which are classified as ‘superior courts’ enabling the resultant decrees of these Courts to be directly executed in India. The UAE Courts enumerated in the Notification are: (i) Federal Supreme Court; (ii) Federal, First Instance and Appeals Courts in the Emirates of Abu Dhabi Sharjah, Ajman, Umm Al Quwain and Fujairah; (iii) Abu Dhabi Judicial Department; (iv) Dubai Courts; (v) Ras Al Khaimah Judicial Department; (vi) Courts of Abu Dhabi Global Markets; and (vii) Courts of Dubai International Financial Centre.
Pertinently, direct enforceability of a foreign judgment requires satisfaction of the conditions laid out in Section 13 of the CPC, which prescribes that a foreign judgment should be conclusive in nature. For a foreign judgment to be conclusive, the conditions prescribed are:
- Judgment should be pronounced by a court of competent jurisdiction;
- Judgment should be given on the merits of a case;
- Judgment should not appear on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable;
- Judgment should not have been obtained by fraud.
Thus, once a foreign judgment of a reciprocating territory is compliant with the above conditions, the foreign judgment can be enforced as per procedure prescribed under Order XXI of the CPC, which contains provisions of execution of decrees and orders.
An execution petition needs to be filed before a court in whose jurisdiction the judgment debtor is residing and/or carrying on business or where his/her properties are situated, for enforcing decrees passed in UAE. The decrees may be enforced by attachment and sale of the property of the judgment debtor, by arrest and detention of the judgment debtor, by appointing a receiver or any such manner which the nature of relief requires. Typically, an execution petition shall be filed before the Court within whose jurisdiction, the properties of the judgement debtor is located for efficient enforceability.
POINTS OF CONSIDERATION
i. Identification of properties
Execution of money decrees will be primarily followed by attachment of properties belonging to the judgment debtor. Therefore, complete details of the properties owned by the judgment debtor shall be provided and procurement of ownership documents from the government authorities for the courts to proceed with attachment and sale of properties is imperative. External investigation and surveillance agencies may be engaged for a client which can assists in asset identification, asset tracing, debtor verification, debtor tracing.
ii. Identifying solvency of debtors
Before initiating enforcement process in money claims, it is important to ascertain financial background, solvency and assets of the person against whom judgment is sought to be enforced. Hence, identifying solvency of debtor is important for evaluating success of execution action.
TIMELINE TO FILE EXECUTION PETITION IN INDIA
The Hon’ble Supreme Court in the case of Rahul S. Shah vs. Jinendra Kumar Gandhi & Ors.6 has held that the Executing Court must dispose of execution proceedings within six months from the date of filing, which may be extended only by recording reasons in writing for such delay.
The above decision of the Apex court provides respite to the decree holders from inordinate delays in execution proceedings. Since decrees of reciprocating territories, if satisfy the conditions set out in Section 13 of the CPC, the same can be enforced within a period of six months from the date of filing.
LIMITATION FOR FILING EXECUTION PETITION
In the case of Bank of Baroda vs. Kotak Mahindra Bank7, the Supreme Court has held that foreign decrees would fall under the category of Article 137 of Limitation Act and hence the limitation for filing such application is 3 years.
ENFORCEMENT OF FOREIGN AWARDS IN INDIA
India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (‘New York Convention’) and the Convention on the Execution of Foreign Arbitral Awards, 1927 (‘Geneva Convention’). When a party receives a binding arbitral award from a country signatory to the New York Convention or the Geneva Convention and the award is made in a territory which has been notified as country contracted by India, the arbitral award would then be enforceable in India.
It is a two-step procedure to enforce a foreign award in India which is initiated by filing an execution petition. Initially, the Court determines if award sought to be enforced adheres to the requirements of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’). Once an award is adhered to be enforceable, it may be enforced like a decree of that Court.
Though UAE seated arbitral awards are not directly enforceable in India as India is yet to notify the UAE in its official gazette under the Arbitration Act, however, by virtue of the Notification, the awards can be filed in the UAE Courts for ratification and conversion into decrees passed by the UAE Courts. For example, a party with a DIFC seated award could apply to the DIFC Courts to ratify the award and thereby convert the award into a DIFC Court decree. The party could then seek to execute the decree in India under the Notification.
REQUIREMENTS FOR ENFORCEMENT OF FOREIGN AWARDS
- Original award or a duly authenticated copy in the manner required by the country where it is made.
- Original agreement or duly certified copy.
- Evidence necessary to prove the award is a foreign award wherever applicable.
COURT OF ENFORCEMENT
A ‘Court’ for the purposes of enforcement of an award or any other subject matter falling under the Arbitration Act, would be the principal civil court of original jurisdiction in a district including High Court having jurisdiction to decide the questions forming subject matter of the arbitration, if the same was the subject matter of suit. This would mean that an award can be executed before any court in India within whose jurisdiction the assets or interests, which are subject matter of the arbitration situate.
Since the advent of the Commercial Courts Act, 2015, the legislature has provided for establishment of various Commercial Courts and Commercial in the High Courts and subordinate courts to reduce and ensure speedy disposal of inter-alia enforcement of foreign awards.
APPROPRIATE FORUM & LIMITATION
Forum for enforcement of foreign award: The Hon’ble Supreme Court in its recent ruling in Sundaram Finance Ltd. vs. Abdul Samad & Anr8 held that an award holder can initiate execution proceedings before any Court in India where assets of the defendant are located.
Limitation Period for enforcement of foreign award: The Hon’ble Supreme Court in the case of Government of India vs. Vedanta Ltd & Ors.9 has inter-alia observed that the time-limit for enforcement of foreign award under the Arbitration Act would be three years from when the right to apply accrues thereby coming under the ambit of Article 137 of the Limitation Act.
The Notification issued by the Government of India has opened up an avenue for execution of UAE Court decrees and arbitral awards India. This will play a key role in developing and enhancing the economic relationships between both the countries as it will pave an easy, quicker, and more efficient way to execute foreign decrees in India.
1 Section 2(9), Civil Procedure Code, 1908
2 Section 2(6), ibid
3 Section 44-A, ibid
4 Explanation I of section 44 A, ibid
5 Ministry of law and Justice, G.S.R. 38(E), 17.01.2020
6 (2021) 6 SCC 418
7 2020 SCC online 324
8 (2018) 3 SCC 622
9 CA No. 3185 of 2020.