An award may be recognized without being enforced but if it is enforced, it is necessarily recognized. This statement by the Supreme Court in 1994 in the case of Brace Transport Corporation of Monrovia v Orient Middle East Lines noted that when a court is asked to enforce an award, it must recognize its legal effect and use legal sanctions to ensure that it is carried out.
There has always been some question about the enforceability of foreign arbitration awards in India. The Arbitration and Conciliation Act, 1996, has been classified into various parts. Part I provides for the construction of the Arbitral Tribunals, their proceedings, the making of the order and enforcement. Part II contains the provisions which deal with enforcement of foreign awards.
The 2002 judgment of the Supreme Court in Bhatia International Limited v Bulk Trading S A provided that parties cannot override or exclude the non-derogable provisions of Part I in such arbitrations. By omitting to provide that Part I will not apply to international commercial arbitrations outside India the effect is that it also applies to international commercial arbitrations held out of India. But, by not specifically providing that the provisions apply to international commercial arbitrations held out of India, the intention of the legislature appears to be to allow parties to provide by agreement that Part I or any provision therein will not apply.
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Sanjay Asher is a partner and Bhumika Batra is an associate with Crawford Bayley & Co.
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