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The Indian system of recognizing and enforcing foreign judgments and arbitral awards is constituted by Sections 13-14 of the Code of Civil Procedure (CPC), 1908[1], as far as judgments are concerned, and Sections 44-52 of the Arbitration and Conciliation (A&C) Act, 1996[2], as far as awards under the New York Convention are concerned.
India has a well-developed legal framework, but it is fraught with many challenges, among them being the problem of jurisdiction fragmentation, rigidity of reciprocity, and loose interpretation of public policy, which culminate in the unpredictability and ineffectiveness of cross-border dispute resolution.
The Dual Framework: Reciprocity and Recognition
The two-tier reciprocity-based enforcement system still exists in India. Only 13 territories are given notice of recognition of foreign judgments, as opposed to approximately 50 territories of foreign arbitral awards. The newest territory to receive notification of the award is Mauritius in 2015; a ten-year hiatus shows sluggishness in administration. This asymmetry creates serious barriers: where judgements given by non-reciprocating territories require new suits, with the foreign judgement merely evidence, judgements given by reciprocating territories are simply enforced under Section 44A (CPC).[3]
According to section 13 (CPC), the judgement made in foreign countries cannot be challenged unless one of the six things occurs: (i) the court lacks the right to hear the case; (ii) the judgement is not made on the merits of the case; (iii) the misuse of international law; (iv) the breach of natural justice; (v) fraud; or (vi) contravention of Indian law.[4] Section 14 is based on the assumption that the court is permitted to make a decision, but the mentioned exceptions make judging creditors more difficult and less predictable.[5] The need to have reciprocity, discretionary government business that does not have a fixed deadline or any specific requirement, makes it extremely difficult to transform India into a reliable settlement business when it comes to international disputes.
Public Policy and the Jurisprudential Evolution
In the case known as Renusagar Power v. General Electric (1993), the Supreme Court, in its landmark decision, defined public policy very strictly, believing that such a policy could be implemented only when it was against the basic interests of India, justice, or morality.[6] This was recognized internationally as a good example and went along with the simple approach of the New York Convention.
But ONGC Ltd. v. Saw Pipes Ltd. (2003) altered this line of thinking. ONGC appealed against an arbitral award in a bid to reestablish substantive merit review and argued that it was shocking to the conscience and patently illegal.[7] The Court adopted a wider perspective of the public policy, which could be intervened in terms of illegality. This was altogether contrary to the pro-enforcement bias of the Convention.
To prevent destabilisation, the Supreme Court in Ssangyong Engineering & Construction Co. v. National Highways Authority (2019) reiterated the narrow Renusagar meaning of the foreign awards in Section 48(2)(b). The Court indicated that the omission of patent illegality (since the 2015 Amendment to provide it where domestic arbitration is awarded pursuant to Section 34(2A) was accidental to ensure that India remained a good venue to conduct arbitration.[8] The difference remains a legal issue, yet it demonstrates that the lawmakers still intended to refer to the law when creating the New York Convention in the law.
The 2019 ruling in Vijay Karia v. Prysmian developed the theory believing that the technical breach of the foreign exchange laws does not necessarily mean that the enforcement cannot be made unless they are directly contradictory to the core policy.[9] Judges have taken a more advanced pro-enforcement position as it is evident in their recognition that international business transactions cannot be avoided.
Recognition of Foreign Judgments in Family Law
The most appropriate example of the conflicts between the philosophy of reciprocity and the constitutional right to personal law is marital disputes. The personal law system, which is based on Articles 25-28 of the Constitution, is what complicates the process of recognizing divorce and custody orders made in other countries in India. Foreign divorce decrees that satisfy the requirements that are set under Section 13 are generally recognizable as decided by the Supreme Court.[10] Ex parte decrees, however, have their own problems, especially in instances where the respondents had not been approached or surrendered to jurisdiction.
Indian courts may deny recognition in custody cases in cases where they believe that it would not be in the best interest of the child according to Indian standards. Despite the safeguarding role of this judicially developed override, it poses an uncertainty to the NRI parties that seek foreign contracts. Jurisdictional issues have only worsened because of the rise in NRI suits; Indian courts are presently claiming matrimonial jurisdiction where both parties are outside the country, with the principles of domicile or solemnization of a marriage as the arguments.[11]
Emerging Issues
Concurrent Jurisdiction and Conflicting Judgments: Section 10 (CPC) permits the concomitant action in Indian and foreign courts.[12] Though the Indian courts have the right in principle to stay proceedings using the doctrine of forum non conveniens, they rarely do so and demand evidence of either grave injustice or oppressive circumstances. This high threshold enables the existence of parallel proceedings, and it may consequently escalate the cost of litigation.
Evidentiary Verification Challenges: The e-commerce, cyber-torts, and international e-data transfer issues challenge the traditional notions of jurisdiction in the digital era. Section 14 with the presumption of competence, is not enough to determine the existence of digital notices being in the due process or the existence of online behaviour in creating a jurisdictional contact. Owing to the lack of a defined procedure for assessing the validity of digital evidence, Indian jurisprudence is vulnerable to false allegations.
Non-Reciprocating Territories: In the Government of India v. Vedanta Limited (2020), the court established a 3-year statute of limitations to invoke enforcement petitions under Article 137 of the Limitations Act.[13] It is not exactly known when the accrual will take place; however, where awards are offered by remote arbitrators, or in a foreign language, or where secrecy conditions are added. The jurisprudential evolution of the requirement of a sufficient cause of delay condonation has not emerged yet.
Patent Illegality Asymmetry: The 2015 Amendment, which deliberately leaves out the enforcement of foreign awards (Section 48) and introduces the illegality of patent domestic awards (Section 34(2A)), leads to the incoherence of its doctrines.[14] This difference may frustrate the intention by India to become a regional arbitration center because it will prompt it to manipulate the forums and deter any foreign party from choosing India as the arbitration venue.
Constitutional Dimensions and Sovereignty
The Indian Constitution adds complexity to the matter. The implementation of a foreign judgment can come into conflict with the declaration of the Fundamental Rights enforceable against the State under Part III (Articles 12-35).[15] Foreign judgments so disobedient to constitutional protectors as discrimination or infringement of freedom may be rejected on section 13(f) or public policy grounds. The point at which constitutionalism and recognition become one, exactly, however, is not well understood.
It has not been determined how to calculate whether the enforcement of foreign judgments constitutes a significant enough violation of the Constitution to justify non-recognition. The extraterritorial application of Indian regulatory standards by foreign judgments also raises sovereignty concerns. It remains ambiguous whether the distinction between lawful disputes and unlawful extraterritorialization is crossed, even with the ruling of the Vijay Karia case in favour of global commercial efficacy and not rigid regulatory protection.[16]
Comparative Perspectives
Comparative analysis indicates that India is rather weak in comparison to others. All three, UK, Singapore, and the US, are presumptively pro-enforcement regimes that have very limited grounds of refusal and significantly restricted appellate review.[17] Significantly, such jurisdictions have come to be known as well for foreseeable and light-touch types of jurisprudence, and have aimed to host international dispute resolution business.
The reciprocity requirement of India, the frequent expansionism of the Indian public policy in the face of retrenchment, and the fragmentation of the jurisdictions provide an environment that is perceived to be less predictable than that of the peer jurisdictions.[18] This has a massive implication on the Indian effort to embrace international dispute resolution and the enforcement of Indian judgments across borders.
Recommendations for Reform
Legislative Reforms:
(i) Specify methods to be followed in notifying of any additional reciprocating territories;
(ii) A uniform code of Principles of Private International Law must be enacted.[19]
(iii) Provide definitions of levels of public policy tiers, one of constitutional principle, which may not be recognized and enforced, and another of regulatory norm, where enforcement will proceed.
(iv) Cross-border expertise in special commercial courts.
Judicial Reforms:
(i) Consolidate fragmented jurisprudence on forum non conveniens and issue preclusion.
(ii) Develop standardized digital evidence protocols.
(iii) Establish principled constitutional dialogue regarding fundamental rights’ intersection with recognition.
International Engagement: India ought to have ratified the Convention on Choice of Court Agreements, 2005[20], and engaging in international harmonization of instruments would bring it to the par with the international best practice. Indicatively, cross-border enforceability would be greatly enhanced by expanding huge portions of reciprocating territories with large trading partners-such as the United States.
Conclusion
The system that regulates the enforcement of foreign judgments and awards in India is not only doctrinally sophisticated but also largely inefficient. Principled tests as laid down by the basic enabling statutes and Supreme Court jurisprudence, i.e., Renusagar and Ssangyong, are highly in line with the international best practice. Predictability and efficiency are sucked out by reciprocity rigidity, constitutional grey areas, concurrency, and technological issues.
As a regional arbitration center, India rationally requires systematic reforms in the spheres of legislative clarity, perfection by the judicial body, institutional facilities, and international institutions relations. In the course of such reforms, it is possible to maintain constitutional safeguards and internal legal autonomy in India, and this will help it to become more competitive within the world commercial dispute resolution environment and make a positive contribution to enhancing cross-border commercial confidence.
[1] Code of Civil Procedure, 1908, §§ 13–14 (India).
[2] Arbitration & Conciliation Act, 1996, §§ 44–52 (India).
[3] Code of Civil Procedure, 1908, § 44A (India).
[4] Code of Civil Procedure, 1908, § 13 (India).
[5] Code of Civil Procedure, 1908, § 13 (India).
[6] Renusagar Power Co. Ltd. v. Gen. Elec. Co., (1994) Supp. (1) SCC 644 (India).
[7] Oil & Nat. Gas Corp. Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 (India).
[8] Ssangyong Eng’g & Constr. Co. Ltd. v. Nat’l Highways Auth. of India, (2019) 15 SCC 131 (India).
[9] Vijay Karia v. Prysmian Cavi e Sistemi SRL, (2020) 11 SCC 1 (India).
[10] Code of Civil Procedure, 1908, § 13 (India).
[11] Satya v. Teja Singh, (1975) 1 SCC 120 (India).
[12] Code of Civil Procedure, 1908, § 10 (India).
[13] Gov’t of India v. Vedanta Ltd., (2020) 10 SCC 1 (India).
[14] Arbitration & Conciliation Act, 1996, §§ 34(2A) & § 48 (India).
[15] India Const. arts. 12–28.
[16] Vijay Karia, (2020) 11 SCC 1.
[17] Restatement (Third) of Foreign Relations Law § 482 (Am. L. Inst. 1987); Foreign Judgments (Reciprocal Enforcement) Act 1933 (U.K.).
[18] Saw Pipes, (2003) 5 SCC 705.
[19] See generally Gary Born, International Commercial Arbitration (3d ed. 2021).
[20] Hague Convention on Choice of Court Agreements, June 30, 2005, 44 I.L.M. 1294.
Author: Mr. Akhand Pratap Singh Chauhan, Partner