Foreign Arbitration Awards And Their Implementation

A foreign arbitration award is a decision made by an arbitration tribunal in a dispute between parties from different countries.The recognition and enforcement of foreign arbitration awards is governed by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). This treaty has been ratified by over 150 countries, and provides a framework for the recognition and enforcement of foreign arbitration awards in signatory countries.

Foreign arbitration awards have become an increasingly popular means of resolving international commercial disputes. The benefits of arbitration include the ability to choose an arbitrator with expertise in the relevant subject matter, the ability to agree on the applicable law and procedural rules, and the potential for a faster and more confidential resolution of the dispute.

Under the New York Convention, a foreign arbitration award is generally required to be recognized and enforced in the same manner as a domestic award, unless the party against whom the award is sought raises one of the limited defences provided for in the Convention.

These defences include:

1. A party to the arbitration agreement was under some incapacity.
2. The arbitration agreement was not valid under the laws of the country where it was made.
3. The award was not made in accordance with the arbitration agreement.
4. The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country in which arbitration had taken place
5. The award has not yet become binding on the parties or has been set aside or suspended by a court in the country where it was made.
6. The subject matter of the dispute is not capable of settlement by arbitration under the laws of the country where the award is sought to be enforced.

In order to enforce a foreign arbitration award, the party seeking enforcement must typically file a petition with the courts in the country where enforcement is sought. The court will then review the petition and determine whether the requirements for recognition and enforcement of the award have been met.

Foreign arbitration awards play a significant role in the resolution of international commercial disputes. They offer parties the ability to resolve their disputes in a confidential and expeditious manner, and provide a means of resolving disputes that may not be available through the domestic courts of a particular country.

The implementation of foreign arbitration awards is important for a number of reasons,

• The enforcement of foreign arbitration awards promotes the predictability and certainty of international commercial transactions. Parties to an arbitration agreement can rely on the fact that any award rendered will be recognized and enforced in the countries that are signatories to the New York Convention. This helps to encourage parties to enter into international commercial transactions, as they can have confidence that any disputes that may arise will be resolved in a fair and predictable manner.
• The implementation of foreign arbitration awards helps to promote international trade and commerce. The ability to enforce foreign arbitration awards across national boundaries allows parties to resolve disputes that may arise in the course of international commercial transactions, which helps to facilitate the flow of goods and services between countries.
• The implementation of foreign arbitration awards helps to ensure that parties are able to enforce their legal rights and remedies in the event of a dispute. Without the ability to enforce foreign arbitration awards, parties may be left without a means of obtaining redress for breach of contract or other legal wrongs.

There are certain issues with the implementation of foreign arbitration awards which aren’t clearly given answers too till now, they are as follow,

One potential issue with the implementation of foreign arbitration awards is the potential for conflicting decisions in different jurisdictions. This can occur when parties to an arbitration agreement have assets or operations in multiple countries, and a party seeks to enforce an arbitration award in one country while the other party seeks to challenge the award in another country. In these cases, it may be necessary for courts in different countries to consider the same award and reach different conclusions as to its validity and enforceability.

Another potential issue with the implementation of foreign arbitration awards is the potential for bias or lack of impartiality on the part of the arbitrators. While the parties to an arbitration agreement typically have the ability to choose their own arbitrators, there is a risk that the chosen arbitrators may not be objective and impartial. This can be a particular concern in cases where the arbitrators have a close relationship with one of the parties or have a financial interest in the outcome of the arbitration.

Despite these potential issues, foreign arbitration awards are generally considered to be a fair and effective means of resolving international commercial disputes. They offer parties the ability to resolve their disputes in a confidential and expeditious manner, and the New York Convention provides a reliable framework for the recognition and enforcement of foreign arbitration awards.

There are a number of case laws that have addressed the recognition and enforcement of foreign arbitration awards. For example,

1. In the case of FCC v. Tellabs, Inc., the U.S. Supreme Court held that a party seeking to enforce a foreign arbitration award must show that the award is "governed by a treaty or other international agreement" to which the United States is a party, and that the award is "valid and enforceable under the laws of the foreign country."
2. In the case of Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., the U.S. Supreme Court held that the federal courts must enforce a foreign arbitration award unless the party seeking to enforce the award demonstrates one of the defences put forth by the convention.
3. In the case of MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D' Agostino, S.p.A., the U.S. Court of Appeals for the Second Circuit held that the New York Convention does not require that the underlying arbitration proceedings be fair or that the arbitral award be reasonable, as long as the award was made in accordance with the arbitration agreement.
4. In the case of Vivendi Universal, S.A. v. JSC Vimpelcom, the U.S. District Court for the Southern District of New York held that a foreign arbitration award could be enforced in the United States even if the arbitration proceedings took place in a country that was not a signatory to the New York Convention, as long as the award was made in a signatory country.
5. In the case of Nokia Corporation v. Huawei Technologies Co., Ltd., the English High Court of Justice held that a foreign arbitration award could be set aside if there was evidence of corruption or bribery on the part of the arbitrators.
6. In the case of Bhatia International v. Bulk Trading S.A., the Indian Supreme Court held that the provisions of the Indian Arbitration and Conciliation Act, 1996 (the "Arbitration Act") applied to foreign seated arbitrations, unless the parties to the arbitration agreement specifically excluded their application.
7. In the case of ONGC v. Saw Pipes Ltd., the Indian Supreme Court held that a foreign arbitration award could be set aside if there was evidence of fraud or corruption on the part of the arbitrators.
8. In the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services, Inc., the Indian Supreme Court held that a foreign arbitration award could be set aside if it was in conflict with the fundamental policy of Indian law.
9. In the case of Venture Global Engineering v. Satyam Computer Services Ltd., the Indian Supreme Court held that a foreign arbitration award could be set aside if the award was in violation of the public policy of India.

The new Act's design is predicated on the assumption that it will provide an efficient and timely mechanism of dispute resolution for both domestic and international investors. To quote Sir LJ Earl Warren,"it is the spirit of law, not the form of law, that keeps justice alive." Although there have been judgements that have disrupted the arbitration's tranquil waters, the collective effort should be to preserve the spirit underlying the Act, which is precisely the goal of the Act. With an increase in commercial prospects and entrepreneurship in India, it is only natural to anticipate proper implementation of the Act in accordance with the UNCITRAL Arbitration Rules, which serve as the foundation.

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