Foreign arbitral award involving overseas parties can be enforced by Indian court when property within its territory: Karnataka High Court

The Karnataka High Court recently held that an Indian court can exercise jurisdiction to enforce an international commercial arbitral award rendered outside India, between parties who have no connection to India in certain circumstances [CTI Future Corporation v. Ducgiang Chemical and Detergent Powder Joint Stock Company].The Division Bench of Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj held that in light of the New York Convention that India is a signatory to, the Court can enforce a foreign arbitration award since the property is expected to dock in New Mangalore Port, which is within the territorial jurisdiction of the Court. .In this case, the petitioner and respondent are both companies incorporated outside India. The petitioner-company was registered in Korea, the respondent company was in Vietnam while the international arbitration proceedings were held in Singapore. The final award was registered with the Singapore International Arbitration Centre (SIAC) Registry of Awards. .Thus, the question before the Court was whether an international commercial arbitral award rendered outside India, between parties who have no connection to India can be enforced in India by filing proceedings under Sections 47 (Evidence), 48 (Conditions for enforcement of foreign awards) and 49 (Enforcement of foreign awards) of the Arbitration and Conciliation Act..Advocate Shreyas Jayasimha appearing for the petitioner submitted that a notification by the Central government on July 6,1999, declared that an arbitral award rendered in Singapore can be enforced in India in a court which has territorial jurisdiction to pass the necessary orders. In the present case, the property which belongs to the respondent is likely to dock at the New Mangalore Port, therefore the Karnataka High Court has the jurisdiction to enforce the award, he submitted. .The Court while examining whether they had the jurisdiction to take such a matter on file, noted that the arbitral award is an international commercial arbitral award, rendered in Singapore. In view of the notification of the Central government, it was not in dispute that the award is enforceable in India. However, in the peculiar facts and circumstances of the case, it was required to examine whether the Court could exercise jurisdiction when neither of the parties are connected to India and are not established within the territory of India, and particularly within the territory of the Court. .In this regard, the Court noted that a foreign award under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention has been given a special status, which India is a signatory to.The New York Convention requires that all the signatories enable execution of a foreign arbitral award rendered in a reciprocating country when a property against which the arbitral award is sought to be enforced is situated within the jurisdiction of that particular country..The Court noted that that the present application is filed under Sections 44 to 52 (Enforcement of Certain Foreign Awards) of the Arbitration and Conciliation Act, which deal with the New York Convention awards. Considering the obligations of India under Article 51(c) (to foster respect for international law and treaty obligations), the Court could exercise jurisdiction to enforce a foreign award since the properties of the respondent against which the enforcement is sought for is situated within the territorial limits of the Court, the Bench said.It, therefore, took the petition on record and issued notice to the respondent. .Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.