Dispute Resolution

The Guide to Challenging and Enforcing Arbitration Awards- Part II

Challenges against a decision refusing to recognise an arbitral award

There is a right of appeal under Section 50 of the Arbitration Act[1] against a decision refusing to arbitrate a foreign award to the High Court concerned. As an example, that, in the case of a domestic award, the courts can order its annulment Section 34 of the Arbitration Act[2] provides for domestic awards. If there is a challenge to the and the appeal is approved or denied. Section 37 of the Arbitration Act allows an appeal against such a decision.

A decision made under Sections 50 and 37 of the Arbitration Act[3] cannot be appealed a second time. Act. This does not mean that the parties have lost their right to prefer a Constitutional Article 136[4] Special Leave Petition Maintaining India and the same would be possible.

Procedure of courts to decide whether or not to recognise a person or enforce a law

On 23 October 2015, the Amendment Act, which revised the Arbitration Act, went into effect. For domestic awards, before the Amendment Act came into effect. There was a presumed stay on the execution of an award if, within the specified period of limitation. The award debtor filed an application under Section 34 of the Arbitration Act, challenging the award. No longer is there any considered stay on the execution of the award since the amendment act took effect, and a separate application must be made under Section 34 of the Arbitration Act for a stay of execution, which the court might grant subject to any conditions it deems appropriate. the modified sections 34 and 36 of the amendment act[5] shall apply to all cases in which Section 34 is filed after the amendment act came into force accompanied by a Section 36 application for stay.[6]

Please note that under Section 34(5), a party is required to notify the other party before submitting a request for the setting aside of a judgement award. When it comes to prior notice, the Supreme Court has made it clear that it is not essential in the case of State of Bihar vs. Bihar Rajya Bhumi Vikas Bank Samiti.[7]

It is well established that if the award is one that involves the payment of money. The courts may only order an injunction on enforcement proceedings. If the same conditions for granting an injunction on a money judgement under the CPC have been met. A money judgement is normally not held in abeyance. Since it does not cause irreparable harm, and in the event of a successful appeal, therefore the successful party has the right to reparation.[8]

Factors considered for suspending award’s operation:

  • Firstly, A stay of execution order must be grantedto protect the party seeking it.
  • Secondly, The application must also made without undue delay, and the applicant must provide security for the award’s performance.
  • Thirdly, An award from another nation may adjourn.
  • Fourthly, If an application to set it aside or suspend it has beemade to the country’s competent authority.

As a result of the combination of the provisions of Section 48(1)(e)[9] and Section 48(3)[10] of the Arbitration Act, Indian courts have held that the “competent authority” under Section 48(3) is the authority of the country of origin.

There is precedent in India for adjourning enforcement procedures when an award debtor has challenged the decision in his or her home country.[11] In fact, the Courts may, however, require a deposit of security while the execution proceedings halted.

If a court adjourns recognition or enforcement proceedings pending annulment proceedings

An award debtor may order to furnish sufficient security. Until the conclusion of annulment procedures under Sections 34 (domestic award) and 48 (foreign award) of the Arbitration Act.

A number of factors, including the award debtor’s financial condition and his or her likelihood of disposing of assets prior to payment of the award, may be relevant in this regard.[12]

It is possible for the courts to order an award debtor to deposit a sum equivalent to the amount awarded to the award holder in court. Or to give a bank guarantee of the same amount and keep it alive until the execution actions are pending before the court. In fact, Other options include directing that asset to keep aside for payment of the award. And prohibiting the award debtor from granting any third-party rights over those assets.

Chances of getting an arbitral award recognised and enforced at the place of arbitration but not by the courts

As a result of Section 48, a court cannot enforce a decision that is not binding on the contracts.

An award becomes binding between the parties if the award debtor does not contest it in the country where the delivery took place. And so becomes executable, according to Indian courts. Deshalb is an arbitral decision that was annulled to some extent or to its entirety unenforceable. If it was annulled at the place of arbitration.

Information about the process for serving documents to a defendant who lives outside of India

Provided the receiving country has signed the Hague Convention, extrajudicial and judicial documents may be served outside Indian territory in accordance with Hague Convention rules and regulations. If the receiving party is located in another country, the laws of that country may apply.

To serve summons in addition, Order V of the CPC[13] must be followed. If a defendant resides outside India and does not even have an agent authorised to accept service in India, Rule 25 of Order V of the CPC[14] states that summons shall be issued to the defendant’s home address. As per the rules of the High Court, the summons shall be sent to the defendant by registered mail. Or by a courier service authorised by the High Court, or via fax or email. Service of court documents is governed by the CPC as well as the norms of various High Courts in India.

Databases or publicly accessible registers that allow the identification of an award debtor’s assets

The Ministry of Corporate Affairs’ public records portal provides access to financial statements (including balance sheets) of corporations. Despite the fact that there is no publicly accessible database dedicated specifically to identifying assets of a company (www.mca.gov.in).

Does your jurisdiction have the ability to impose interim measures on assets? Such interim measures are applied to assets owned by a sovereign state by award creditors.

You can take temporary steps on assets. As a result according to Sections, 9[15] and 17,[16] parties may seek temporary measures of protection if the agreement contains an arbitration clause.

  • Firstly, securing the amount in dispute in the arbitration;
  • Secondly, the detention, preservation, or inspection of any property or thing that is the subject of the arbitration dispute
  • Thirdly, an interim injunction or the appointment of a receiver;

Fourthly, another interim measure of protection may appear to the court to be just and convenient.

therefore, following the CPC, these instructions can be executed.

Contrary to the United States and the United Kingdom, India does not have a distinct law on sovereign immunity.

Procedure for taking interim measures against real estate

If the property may be identified by boundaries or numbers in a record of settlement or survey, the boundaries or numbers must be specified in the application for attachment of immovable property belonging to a judgement debtor under Order XXI, Rule 13 of the CPC.[17] According to the applicant’s best knowledge and belief, the judgement debtor’s ownership interest in the property should be specified.

The Arbitration Act also provides that a party may apply to a competent court for an interim measure of protection in respect of immovable property by way of preservation, interim custody, or sale of immovable property; detention or inspection of any immovable property; an interim injunction or appointment of a receiver; and any other interim measure of protection.

Mechanism for taking interim measures against movable property

To attach movable property that belongs to a judgement debtor (but is not in the hands of the judgement debtor), an application must be presented, the court of execution, along with an inventory of the property giving a reasonably accurate description of the same.

The Arbitration Act further provides that a party may seek an interim measure of protection in relation to any movable property by way of a temporary injunction or receivership. As well as any other interim measure of protection that a court deems appropriate.

[1] Arbitration and Conciliation Act 1996, s 50.

[2] Ibid, s 34.

[3] Ibid, s 37.

[4] Constitution of India, art 136.

[5] Arbitration and Conciliation Act 1996, s 36.

[6] Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd, 2018, 6 SCC 287

[7] AIR 2018 SC 3862

[8] Sihor Nagar Palika Bureau v. Bhabhlubhai Virabhai and Co, 2005, 4 SCC 1

[9] Arbitration and Conciliation Act 1996, s 48(1)(e).

[10] Arbitration and Conciliation Act 1996, s 48(3).

[11] Naval Gent Maritime Limited v. Shivnath Rai Harnarain I, Ltd., 2009 SCC Online Del 2961

[12] Aditya Birla Finance Limited v. Carnet Elias Fernande’, 2014, SCC Online Bom 4774

[13] Civil Procedure code 1908, order V.

[14] Ibid order V rule 25.

[15] Arbitration and Conciliation Act 1996, s 9.

[16] Arbitration and Conciliation Act 1996, s 17.

[17] Civil Procedure code 1908, order XXI, rule 13

Try our Debt Resolution solutions today       Request a Demo

by RajkumarWP

Leave a Reply

Your email address will not be published. Required fields are marked *