New York Convention Awards: Definition, Reference to Arbitration, and When an Award Binds
Chapter Forty-Seven
Syllabus topic 3.1, "Enforcement of Certain Foreign Awards"
Pages 236 to 240 of 377
In one line
A court asked to try a dispute covered by a foreign arbitration agreement must send the parties to arbitration, and a party who then wants to enforce the award produces three things to a High Court.
In exam wording: section 45 requires a judicial authority seized of an action in a matter covered by a section 44 agreement to refer the parties to arbitration, section 46 makes a foreign award binding for all purposes, and section 47 prescribes the evidence to be produced on an application for enforcement.
Section 45: the foreign-award counterpart of section 8
Notwithstanding anything contained in Part I or in the Code of Civil Procedure 1908, a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it prima facie finds that the said agreement is null and void, inoperative or incapable of being performed.
Compare it with section 8, chapter 240, because the differences are examinable.
| Section 8, Part I | Section 45, Part II | |
|---|---|---|
| Opens with | Nothing corresponding | Notwithstanding anything in Part I or in the Code of Civil Procedure |
| Who may apply | A party, or a person claiming through or under him | The same |
| Deadline | Not later than the first statement on the substance | None stated: "at the request of one of the parties" |
| Test for refusing | Prima facie no valid arbitration agreement exists | The agreement is null and void, inoperative or incapable of being performed |
| Document requirement | Section 8(2): original or certified copy | None in the section |
Three points.
The three-fold formula is taken straight from article II(3) of the New York Convention, printed in the First Schedule. Null and void means invalid from the start. Inoperative means it was valid but has ceased to operate, for instance because the parties abandoned it. Incapable of being performed means something makes it impossible to carry out, such as the death of a named sole arbitrator with no replacement mechanism.
The words "unless it prima facie finds" were substituted by the 2019 amendment. Before that the section read "unless it finds". The change aligns section 45 with the reference-stage philosophy that chapters 240 and 270 describe: a shallow look, with the tribunal deciding the rest.
There is no express deadline corresponding to section 8's "first statement on the substance", although a party who takes part in the action without objecting may face difficulties of a different kind.
Section 46: when a foreign award binds
Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India, and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.
New York Convention Awards: Definition, Reference to Arbitration, and When an Award Binds
Read the words "would be enforceable". The award is binding if it would be enforceable under the Chapter; there is no requirement that it has already been enforced. That is the difference between recognition and enforcement in one phrase.
Why that matters practically. Suppose an Indian company loses a foreign arbitration and then sues in India on the same claim, hoping the award will be ignored. The other side does not need to enforce the award to stop it: under section 46 the award is binding for all purposes and may be relied on by way of defence. The section is a shield as well as a sword.
"By way of defence, set off or otherwise" is deliberately wide, and the closing words put the matter beyond argument: references to enforcing include references to relying on.
Section 47: what the applicant must produce
Section 47(1): the party applying for enforcement shall, at the time of the application, produce before the court:
- (a) the original award or a copy duly authenticated in the manner required by the law of the country in which it was made;
- (b) the original agreement for arbitration or a duly certified copy; and
- (c) such evidence as may be necessary to prove that the award is a foreign award.
Learn those three as a list; they are exactly the sort of thing a practical training paper asks a student to prepare. Note what clause (c) is for: it is where the applicant proves the section 44 elements, including that the territory has been notified.
Section 47(2): if the award or agreement is in a foreign language, the party seeking enforcement shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs, or certified as correct in such other manner as may be sufficient according to the law in force in India.
Note that a translation by any competent translator is not automatically enough; the section prescribes how it is to be certified.
The Explanation to section 47: which court
In this section and in the sections following in this Chapter, "Court" means the High Court having original jurisdiction to decide the questions forming the subject matter of the arbitral award if the same had been the subject matter of a suit on its original civil jurisdiction, and in other cases, the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Court.
New York Convention Awards: Definition, Reference to Arbitration, and When an Award Binds
The court for a foreign award is always a High Court. This Explanation was inserted by the 2015 amendment, and it removed a real difficulty: before it, enforcement could be sought in a district court, which meant a foreign award-holder might have to work through the whole hierarchy.
Compare the three definitions of "Court" in this Act, which is a fair question:
- section 2(1)(e)(i): domestic arbitration, the principal Civil Court of original jurisdiction in a district, or a High Court with ordinary original civil jurisdiction;
- section 2(1)(e)(ii): international commercial arbitration seated in India, the High Court;
- Explanation to section 47: foreign awards under Chapter I, the High Court.
A worked example
An Indian buyer loses an arbitration seated in London to a German seller, over a shipment of machinery. The award, in English, orders it to pay 800,000 euros. The buyer then files a suit in Mumbai against the seller for damages on the same contract.
Can the seller stop the suit? Yes, two ways, and they are different.
First, section 45. The contract contains an arbitration agreement to which the New York Convention applies, so on the seller's request the judicial authority shall refer the parties to arbitration unless it prima facie finds the agreement null and void, inoperative or incapable of being performed. Note that section 45 begins "notwithstanding anything contained in Part I or in the Code of Civil Procedure".
Second, section 46. There is already an award. Because it would be enforceable under Chapter I, it is binding for all purposes between these parties and may be relied on by way of defence in the Mumbai suit. The seller does not have to enforce it first.
Now the seller wants the money. It applies for enforcement, and under section 47(1) it produces the original award or a duly authenticated copy, the original arbitration agreement or a certified copy, and evidence that the award is a foreign award, which means proving the section 44 elements including the notification of the United Kingdom.
Which court? A High Court, under the Explanation to section 47.
The award had been in German. Then under section 47(2) the seller must produce an English translation certified as correct by a diplomatic or consular agent of Germany, or certified in another manner sufficient under Indian law.
What beginners get wrong
Section 45's test is not section 8's test. Null and void, inoperative or incapable of being performed, and since 2019 found prima facie.
New York Convention Awards: Definition, Reference to Arbitration, and When an Award Binds
A foreign award binds before it is enforced. Section 46 turns on whether it would be enforceable.
Section 46 is a defence as well as a claim. It may be relied on by way of defence or set off.
The court is a High Court, under the Explanation to section 47, not a district court.
A translation must be certified in the prescribed way, under section 47(2).
Quick revision
- Section 45: notwithstanding Part I or the Code of Civil Procedure, a judicial authority seized of an action in a matter covered by a section 44 agreement shall refer the parties to arbitration at the request of a party or one claiming through or under him, unless it prima facie finds the agreement null and void, inoperative or incapable of being performed. "Prima facie" inserted in 2019.
- Section 46: an award which would be enforceable is binding for all purposes between the parties and may be relied on by way of defence, set off or otherwise; enforcing includes relying on.
- Section 47(1): produce (a) the original award or a duly authenticated copy, (b) the original arbitration agreement or a certified copy, (c) evidence that the award is a foreign award. 47(2): a foreign-language document needs a certified English translation.
- Explanation to section 47: "Court" for this Chapter means a High Court.
Test yourself
1. On what grounds may a court refuse to refer parties under section 45? Only if it prima facie finds that the agreement is null and void, inoperative or incapable of being performed. The words "prima facie" were inserted by the 2019 amendment.
2. Must a foreign award be enforced before it can be relied on? No. Section 46 makes an award that would be enforceable under Chapter I binding for all purposes between the parties, and it may be relied on by way of defence, set off or otherwise, references to enforcement including references to relying on the award.
3. What three things must an applicant produce under section 47(1)? The original award or a copy duly authenticated in the manner required by the law of the country where it was made; the original arbitration agreement or a duly certified copy; and such evidence as may be necessary to prove that the award is a foreign award.
4. Which court hears an application to enforce a New York Convention award? A High Court. The Explanation to section 47 defines "Court" for that section and the following sections of the Chapter as the High Court having original jurisdiction over the subject matter had it been a suit, and otherwise the High Court having jurisdiction to hear appeals from courts subordinate to it.
New York Convention Awards: Definition, Reference to Arbitration, and When an Award Binds
5. The award is in French. What must the applicant do? Produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs, or certified as correct in such other manner as may be sufficient according to the law in force in India, under section 47(2).
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself for the same subject.