Supreme Court Lays Down Time Period For Foreign Arbitration Awards in Vedanta Case

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FOREIGN AWARD: enforceability and limitation

The apex court has laid down a very crucial judgment in the case of Government of India vs Vedanta limited,2020, in which it prescribed the period of filing petition in connection with a foreign decree. The judgment belongs to the matter in regards to the limitation act, 1963 and the Arbitration and Conciliation Act, 1966. It was held that there shall be 3 years of the period for filing a petition for enforcement of a foreign award under section 47 and 49 of the Arbitration and Conciliation Act, wherein such 3 years period is prescribed by the limitation act, hence the duration of limitation for filing a petition for foreign award enforcement would be regulated by article 137 of the limitation act. The enforcement courts may refuse enforcement of the foreign award but cannot set aside or correct a foreign award whether it contained the condition of section 48 of the arbitration and Conciliation act or not, lay down by the apex court.

In the case, the Vedanta and Videocon for the development of the Ravva oil and gas fields off the coast of Andhra Pradesh were favoured and appeal made by them was considered, also the court upheld a foreign arbitration award in the name of them. As well as the bench observed that till now article 136 of the Limitation Act dealt with the decrees of civil court in India but there were no provisions existed in connection with the application for execution of the foreign decree in the Limitation Act, and hence article 137 of the Limitation Act would be dealing with the application for execution of the foreign decree.

“Foreign awards are not decrees of an Indian civil court. By a legal fiction, Section 49 provides that a foreign award, after it is granted recognition and enforcement under Section 48, would be deemed to be a decree of “that Court” for the limited purpose of enforcement. The phrase “that Court” refers to the Court which has adjudicated upon the petition filed under Sections 47 and 49 for enforcement of the foreign award. In our view, Article 136 of the Limitation Act would not be applicable for the enforcement/execution of a foreign award, since it is not a decree of a civil court in India. The enforcement of a foreign award as a deemed decree of the concerned High Court [as per the amended Explanation to Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the High Court for the execution of foreign awards] would be covered by the residuary provision i.e. Article 137 of the Limitation Act. “

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The application under Sections 47 and 49 for enforcement of the foreign award is a substantive petition filed under the Arbitration Act, 1996. It is a well settled position that the Arbitration Act is a self-contained code. The application under Section 47 is not an application filed under any of the provisions of Order XXI of the CPC, 1908. The application is filed before the appropriate High Court for enforcement, which would take recourse to the provisions of Order XXI of the CPC only for the purposes of execution of the foreign award as a deemed decree. The bar contained in Section 5, which excludes an application filed under any of the provisions of Order XXI of the CPC, would not be applicable to a substantive petition filed under the Arbitration Act, 1996. Consequently, a party may file an application under Section 5 for condonation of delay, if required in the facts and circumstances of the case.”

A foreign award does not become a “foreign decree” at any stage of the proceedings. The foreign award is enforced as a deemed decree of the Indian Court which has adjudicated upon the petition filed under Section 47, and the objections raised under Section 48 by the party which is resisting enforcement of the award. A foreign award is not a decree by itself, which is executable as such under Section 49 of the Act. The enforcement of the foreign award takes place only after the court is satisfied that the foreign award is enforceable under Chapter 1 in Part II of the 1996 Act. After the stages of Sections 47 and 48 are completed, the award becomes enforceable as a deemed decree, as provided by Section 49. The phrase “that court” refers to the Indian court which has adjudicated on the petition filed under Section 47, and the application under Section 48.”

Case name: GOVERNMENT OF INDIA vs. VEDANTA LIMITED

Case no.: CIVIL APPEAL NO. 3185 OF 2020

Coram: Justices S. Abdul Nazeer, Indu Malhotra and Aniruddha Bose

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