On What Grounds Can A Foreign Arbitral Award Be Refused In India?

The enforcement of foreign arbitral awards in India is generally supported under the Arbitration and Conciliation Act, 1996, which incorporates the New York Convention 1958. However, Indian courts may refuse enforcement if the award fails to meet certain legal criteria. These grounds are designed to protect parties from unfair, invalid, or procedurally flawed awards while maintaining India's commitment to international arbitration.

Grounds for Refusal of Foreign Arbitral Awards Under Section 48

1. Invalid Arbitration Agreement

If the arbitration agreement under which the award was made is not valid under the law chosen by the parties or Indian law, enforcement can be refused.

2. Lack of Proper Notice or Due Process

If the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or arbitration proceedings or was otherwise unable to present their case, the award can be refused.

3. Award Exceeds Scope of Arbitration Agreement

Enforcement can be refused if the award deals with matters not contemplated by or beyond the scope of the arbitration agreement.

4. Award Not Yet Binding or Set Aside in Country of Origin

If the award has not yet become binding on the parties or has been set aside or suspended by a competent authority in the country where it was made, Indian courts may refuse enforcement.

5. Subject Matter Not Arbitrable

If the dispute is about a subject matter that is not arbitrable under Indian law, enforcement may be refused.

Examples include certain matrimonial, insolvency, or criminal matters.

6. Contrary to Public Policy of India

Enforcement will be refused if the award is contrary to the public policy of India.

This is interpreted narrowly, usually involving violations of fundamental justice, fraud, corruption, or acts offending Indian sovereignty.

Example

Scenario:

A foreign arbitral award is sought to be enforced against an Indian company. The company argues that it never consented to arbitration and was not given notice of the proceedings.

Outcome:

The Indian court investigates the validity of the arbitration agreement and whether proper notice was served.

If either ground is proven, enforcement may be refused based on Sections 48(1)(a) and (b).

If not, the award is enforced.

Key Takeaway:

Indian courts apply strict but limited grounds to refuse enforcement, balancing respect for international arbitration with protection against injustice.