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JANUARY 2013
Legal Focus
43
Arbitration: Enforcing Awards India
The Indian Ministry of Law and Justice recently made the announcement that China is to be added to India’s official list of “gazetted” States, meaning that arbitral awards made in China will be recognisable and enforceable in Indian courts. A bold move, this is one that is thought will boost the attraction of bringing disputes connected to India to arbitration centres in China and Hong Kong. To find out more about this and the other implications for businesses surrounding enforcing arbitration awards, we speak to Shreyas Jayasimha, partner at AZB & Partners, one of India’s leading law firms.
What are your opinions on the recent announcement from the Indian Ministry of Law?
India and China are signatories of ‘New York Convention’ and which requires all Contracting States to recognize and enforce arbitral awards made in other States. This is subject to declarations and reservations made by all contracting states. In India, 46 countries have been notified by the central government with the recent inclusion of China also has been included through notification in March. The inclusion of China including Hong Kong and Macau to the “gazette” state list is an interesting development in the arena of international arbitration. It showcases the growing popularity of India as a seat for international commercial arbitration and deepens India’s economic ties with China. It would be interesting to note the number of Indian parties who now choose to seat arbitrations in Mainland China and Hong Kong and the potential increased use of China International Economic and Trade Arbitration Commission (CIETAC) and the Hong Kong International Arbitration Centre (HKIAC) by Indian parties
It is thought that this move will increase the attraction of bringing disputes connected to India to arbitration centres in china and Hong Kong. do you agree with this?
Inclusion of China to the list of “gazetted” states is a necessary step to attract disputes concerning Indian parties and foreign investors/purchasers and vice versa to arbitration centres in China. However, this may not be sufficient. There is a definite leverage in holding dispute resolution in neutral venues. Practically, Indian parties may be hesitant to accept China as a venue, in the event they have Chinese counterparts and may still prefer neutral venues.
How will this decision impact arbitration in India?
The notification of China as a recognised territory may have an indirect impact on arbitration in India in as much as it would expose Indian lawyers and parties to arbitration in Hong Kong and China through institutional arbitration and may provide a competitive impetus to further improve arbitration in India.
What, in your opinion, are the advantages of arbitration as a dispute resolution method as opposed to court action?
Arbitration, and particularly international arbitration, gives parties autonomy in choosing venue, law and institution. If run efficiently, arbitration has the capacity to save time and cost to parties as opposed to litigation. Unfortunately, the state of arbitration in India leaves much to be desired but recent decisions of the Supreme Court and other Courts are heartening in their intent to develop India into a more evolved arbitration environment.
What are the main challenges involved in enforcing arbitral awards?
The main challenges to enforcing international arbitral awards in India are time and uncertainty. An expansive definition of public policy is often used to convert challenges to awards into fully-fledged appeals on questions of law and sometimes on facts as well. At least after the BaLCO decision, Indian Courts will no longer hear challenges to foreign awards made in respect of agreements entered into after 6th September 2012.
do laws and regulations differ for domestic companies as opposed to foreign companies?
In the context of arbitration, laws are the same for domestic and foreign companies.
do you foresee the need for legislative change in 2013, if so why?
The Indian Government has made attempts to make India into an arbitration hub, primarily to combat docket explosion and to increase India’s presence as a commercially accepted and popular seat of international commercial arbitration. While recent trends have been towards removing lacunae in the law; the recent decision of the Supreme Court barring recourse to Indian courts for all disputes and arbitrations outside India for judgments executed after September 06, 2012 has raised the need for immediate legislative debate. Further, the enlarged definition of public policy needs to be curtailed to avoid frivolous litigation as regards setting aside awards, which requires legislative reform. LM
contact details:
Shreyas Jamasimha Partner aZB & Partners
aZB House, 67-4, 4th cross, Lavelle Road, Bangalore 560 001
tel: + 91 80 4240 0500 Fax: + 91 80 2221 3947 Shreyas.jamasimha@azbpartners.com