ENFORCEMENT/EXECUTION OF A FOREIGN JUDGMENT IN INDIA

 Sharath Mulia

In an International Contract, the parties are free to submit to jurisdiction of either of the countries from where the parties originate. Judgment from such Court(s) is considered as Foreign Judgment under Indian Law. As per the prevalent laws in India, there are two ways of enforcing/executing a conclusive foreign judgment or decree:

i.                    By filing an execution petition under Section 44A of the Code of Civil Procedure, 1908 before a court of competent jurisdiction, or;

ii.                  By filing a civil suit before a competent court based on the judgment of the foreign court.

We shall discuss in brief the conditions/ pre-requisites for doing the aforementioned. However, before we proceed to address the pre-requisite conditions, it is imperative that certain concepts governing foreign judgments be traversed.

Section 2(5) of the Code of Civil Procedure, 1908 (Hereinafter ‘the Code’) defines a Foreign Court as ‘a Court situated outside India and not established or continued by the authority of the Central Government’ and Section 2(6) of the Code defines a Foreign Judgment as ‘the judgment of a foreign Court’.

A foreign judgment shall be conclusive as to any matter directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except in the circumstances stated in Section 13.

It is to be noted that for a judgment of a foreign court to be conclusive between the parties, it must be a judgment pronounced by a Court of competent jurisdiction and the Competent Court must have adjudicated upon the matter on merits. A judgment is said to have been given on the merits when, after taking evidence and after applying its mind regarding the facts and circumstances of the case, the Court comes to a clear conclusion and decides the case.

The Supreme Court of India in the case of ‘Narsimha Rao vs. Venkata Lakshmi’ reported in [1991]  3 Supreme Court Cases 451 ,observed that if a foreign judgment has not been given on the merits of the case, the courts in India will not recognize such a judgment. 

The Supreme Court of India in the case of ‘International Woollen Mills Limited vs. Standard Wool (UK) Limited’ reported in (2001) 5 Supreme Court Cases 265 after a detailed analysis with reference to Section 13(b) and has dealt with the concept of merits of a case. The Supreme Court has held that a judgment based upon an incorrect view of International Law or a refusal to recognize the law of India, where such law is applicable, is not conclusive. In other words, a foreign judgment may be impeached on the ground that it is founded upon an inaccurate view of the law of India or of International Law

A foreign judgment is made conclusive as to any matter, thereby directly adjudicated upon between the same parties and it is the essence of a judgment of a court that it must be obtained after duly observing the judicial process e.g. principles of natural justice must have been followed, the judgment must be one without bias and the principles of audi alteram partem must have been followed. The concept of audi alteram partem is deemed to be of universal, not merely of domestic application.

The Code also provides for presumption of a foreign judgment and the same is laid down in Section 14 of the Code which states that ‘a Court shall presume, upon the production of any document purporting to be a certified copy of a foreign judgment, that such judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on the record; but such presumption may be displaced by proving want of jurisdiction.

Thus, a foreign judgment can be enforced/executed in India only if it satisfies the test of ‘conclusiveness’ enumerated under Section 13 of the Code.

ENFORCEMENT/EXECUTION:

As mentioned at the beginning of the article, it can be done by either filing an execution petition executing the judgment of the foreign court or by filing a civil suit based on the conclusive foreign judgment. The next question would definitely be as to the existence of two separate ways of enforcing/executing a foreign judgment.

A reading of Section 44A sheds light that a judgment of any superior foreign court of a reciprocating territory can be executed before a District Court in India as if it had been passed by the District Court. There is a term used in clause 1 of Section 44A viz. ‘reciprocating territory’. The term has been defined in Explanation 1 to Section 44A as ‘ Any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare as a reciprocating territory’.

As on date, the reciprocating territories declared by the Government of India are the United Kingdom, Singapore, Bangladesh, United Arab Emirates ,Malaysia, Trinidad & Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua and New Guinea, Fiji and Aden.

As seen from the above, any judgments from a superior court of the aforementioned territories can be directly executed before the District Courts in India as if it had been passed by the same.

As regards judgments from courts of ‘non-reciprocating territories’, such judgments can only be enforced only by filing a original civil suit in an Indian Court for a Judgment based on the foreign judgment which may be construed as a cause of action for the said suit and establishing the fact that the judgment is conclusive under the terms of Section 13 of the code. The general principle of law is that any decision by a foreign court, tribunal or quasi-judicial authority is not enforceable by a country, unless such decision is embodied in a decree of a court of that country. Judgments from a ‘Non-Reciprocating Territory’ only have evidentiary and persuasive value in the eyes of Indian Judiciary.

The Limitation Act, 1963 governs and prescribes the limitation period for filing specific suits. For a suit based on a foreign judgment, as per Article 101 of the Act, the limitation period is three years from the date of the judgment failing which the decree holder’s right to enforce the judgment becomes barred by limitation.

As regards the limitation for execution of a foreign judgment of a reciprocating territory, the limitation period is the same as is prescribed for execution of a judgment of an Indian Court viz. 12 (Twelve) years from the date of judgment.

DOCTRINE OF PUBLIC POLICY FOR THE PURPOSE OF ENFORCEMENT OF FOREIGN ARBITRAL AWARD UNDER GENEVA CONVENTION

Under Arbitration and Conciliation Act, 1996, (“the Act”) there are three provisions available to challenge an Arbitral Award namely under Section 34 of Part I against the Domestic Arbitral Award, Section 48 of Part II, Chapter I, Enforcement of Certain Foreign Awards, New York Convention Awards and under Section 57 of Chapter II, Geneva Convention Awards. The platforms under the said provisions vary from each other; however, “Public Policy” is one common concept which the aforementioned provisions are based upon. The language used in the above mentioned provisions illustrate the enforcement under each provision is different.

To place it precisely this write up is to analyze the recent Supreme Court judgment in ‘Shri Lal Mahal Ltd v Progetto Grano Spa’ reported in (2014) 2 SCC 433, wherein the Apex Court has overruled its earlier decision in ‘Phulchand Exports v O.O.O. Patriot’, (2011) 10 SCC 300. In the ‘Shri Lal Mahal Ltd’case, the Supreme Court has particularly dealt about the enforcement of a Foreign Arbitral Award under the Geneva Convention. Hence this write up is also narrowed down to analyze the particular point.

At the very outset, the doctrine of Public Policy has been evolved and enhanced by the Courts in India in accordance with the facts and circumstances corroborating with growth and developments. However, first in ‘Renusagar Power Co. Ltd v General Electric Co’, 1994 Supp 

(1) SCC 644, the Supreme Court had an opportunity to critically analyze the concept of Public Policy in depth. In ‘Renusagar Power’ matter the Apex Court carried out an exhaustive comparative analysis of judicial precedents of other sovereign countries and higher courts of countries such as United States of America, United Kingdom, Canada and Australia. Subsequently, the understanding was imported and interpreted to understand the doctrine of Public Policy in an Indian perspective. The Apex Court in Para 66 of the ‘Renusagar Power judgment; after observing all criteria, observed that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to:

(i)            fundamental policy of Indian law; or

(ii)          the interests of India; or

(iii)        justice or morality.

This interpretation was widened providing more scope for challenging the foreign award under the doctrine of Public Policy by the Supreme Court judgment in ‘ONGC Ltd v Saw Pipes Ltd’, (2003) 5 SCC 705. In the ‘ONGC case’, the Supreme Court while confirming the understanding given in ‘Renusagar Power’s case ’ (supra) supplemented one additional interpretation to the existing narrower meaning of the doctrine of Public Policy laid down in ‘Renusagar Power’ case. Thus, it was observed that an arbitral award shall be set aside if it is “patently illegal”. Further, it was also observed that, an award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court and such award is opposed to public policy and is required to be adjudged void.

Finally, as a new breath of air, the Supreme Court in its recent judgment in ‘Shri Lal Mahal Ltd’ case has overruled its earlier view on the doctrine of Public Policy.

The Supreme Court has observed that the application of doctrine of Public Policies of India for the purpose of Section 48(2)(b) of the Act is comparatively limited when it comes to application of the same expression in respect of the domestic award under section 34 of the Act. The Supreme Court further observed that the ‘enforcement court’ is not expected to re-determine question of facts while in the process of enforcement of a foreign arbitral award. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects like admitting inadmissible evidence or ignoring/rejecting the evidence which may be binding on parties’ et al. in the course of foreign arbitration cannot necessarily excuse or impede an award from being enforced in India on the ground of ‘Public Policy’.

It has been further observed that while considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award. Further, it it cannot enquire as to the fact/s that while rendering foreign award, some error has been committed. Under Section 48(2) (b), the enforcement of a foreign award can be refused only if such enforcement is found to be contrary to either fundamental policy of Indian law or the interests of India or justice /morality.    

CONCLUSION:

Thus, the foreign award being an international award covered by New York Convention is enforceable in India under Section 48 of the Arbitration Act, 1996 notwithstanding the plea that it was opposed to Indian Law. Further, the defense of ‘violation of doctrine of Public Policy’ with reference to a domestic award stands on a different pedestal compared to that of a foreign Arbitral award under New York Convention.