INDIA'S SUPREME COURT PLACES NEW HURDLES ON ENFORCEMENT OF FOREIGN AWARDS: VENTURE GLOBAL AND THE CASES LEADING UP TO IT

Headnote

India's Supreme Court decision in the Global Ventures case makes foreign arbitration awards subject to a set-aside action under the domestic provisions of India's Arbitration Act, unless the parties clearly opt out of these provisions in their arbitration agreement.

In 2001, in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.,1 the Supreme Court of India reached an enforcementfriendly decision that eliminated the need for a prevailing party in arbitration to file two separate proceedings - one for enforcement of a foreign award and the other to execute on the award. However, the Court has become more interventionist and its recent decisions allow more judicial challenges to foreign arbitral awards under India's Arbitration & Conciliation Act 1996 (the 1996 Act)2 on the ground that they violate the public policy of India.

This has generated uncertainty within the international arbitration community regarding the enforceability of foreign awards in Indian courts. The Supreme Court's interventionist approach violates the separation of powers doctrine envisaged in India's Constitution.3 Its eagerness to step in to fill a so-called legislative lacunae in the 1996 Act has been a major obstacle in achieving the Legislature's objectives for the Act - meeting the needs of international commercial arbitration practice through a speedy arbitration proceeding, minimum judicial intervention, and uniformity of the law of arbitral procedure.

The Legislature was concerned with making India's antiquated laws on domestic arbitration consonant with, and more responsive to, contemporary requirements by following the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL).4 In 1996, it repealed the prior arbitration regime5 and enacted a new one, the 1996 Act, with the Model Law as its model.6 The new arbitration act did not just apply to international arbitration. It applied to both domestic and international arbitration proceedings that take place in India, as well as to the enforcement of foreign arbitral awards governed by the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the Geneva Convention. Part I of the 1996 Act, which is made up of 10 chapters and 43 sections, contains the general provisions governing domestic and international commercial arbitration in India. Part II governs the enforcement of New York Convention awards.7