Below is a guest from Vaisakh Shaji. Vaisakh, in this post discusses the unsettled position on application of limitation in enforcing foreign awards in India.
The
question of limitation for enforcement of foreign award is still an unsettled
one. The High Courts of Bombay, Delhi & Madras in separate instances have
dealt this issue but a different interpretation by each of the courts has added
uncertainty.
The Bombay High Court
in Noy
Vallesina vs Jindal Drugs Limited held that the provision for limitation
as provided under article 136 and 137 of the Limitation Act would apply for
enforcement of foreign award under Part II Chapter 1 of the Act.
The Court dealt with
various contentions regarding the scope of limitation for enforcement of
Foreign Award. The parties relied on section 43(1) of the Act which provides
that Limitation Act will apply to proceedings made in arbitration as it applies
to proceedings in a court. Further the definition of Court in various parts of the Act contemplates the Principal Civil
Court of original jurisdiction in a district or the High Court exercising
ordinary original civil jurisdiction. By referring to various Supreme Court
cases, it was argued that when an
application is contemplated by any law to a Civil Court then the provisions of
the Limitation Act are applicable.
The Court drew
attention to section 46 of the Act, which reads as, “Any foreign award which would be enforceable under this Chapter..[..]” And
held that when a foreign award is yet to be found enforceable by a competent
court, it cannot be relied on for any purpose in India. The award is not
binding on the parties, until it is found to be enforceable in India for the
purpose of executing it as a decree or for any other purpose such as using it
as defence, set off etc.
The Court further held
that, looking at the scheme of sections 47, 48 and 49 of the Act, the principal
civil court as defined under explanation to
section 47 records a finding that the
award is enforceable, that award is deemed to be a decree of that court i.e it
is at that point of time that the award becomes a decree of the civil court.
Further, in order to
attract application of Article 136 of the Limitation Act, the decree or order
of which execution is sought must be a decree or order of any civil court. And
necessarily, section 136 would become applicable only after the foreign award
is deemed to be a decree of the principal civil court which records finding
that the award is enforceable in India. Therefore, once enforceability of foreign
award is satisfied by the court under section 49, such decree can be enforced
within twelve years.
Secondly, on the issue
of making an application for execution of a foreign award, there is no
provision given under the Limitation Act. Hence the Court held that, such
application will be governed by the residuary Article 137 of the Limitation Act
and therefore such application has to be made within a period of three years from the time the right to
apply accrues to the party.
Therefore, as per the
Court, first a party get a time period of three years to make an application
under Article 137 of the Limitation Act, and in the second stage, once the
application is determined by the civil court to be enforceable in India, such
decree can be executed within a period of twelve years as provided under
Article 136 of the Limitation Act.
On the other hand, the
Madras High Court in Compania Naviera vs Bharat Refineries Ltd, held
that a foreign award is already stamped as a decree and the party having a
foreign award can straight away apply for enforcement and in such
circumstances, the party having a foreign award has twelve years like that of a decree-holder. The Court did not
address the issue of limitation for making an application to a civil court
under Article 137 of the Limitation Act as decided in Noy Vallesina. Further, it did not clearly determine from what
stage the period of limitation would commence.
The Delhi High Court in
Hindustan
Petroleum vs M/s Videocon Industries Ltd
took a different view. The Court held that no limitation period is
provided under section 48 of the Act. It stated that the period of limitation
provided under Section 34 of the Act in Part I come under the chapter Recourse against Arbitral Award. A
similar provision is not provided for under Part II.
Secondly, section 34
provides for a mandatory period of limitation to challenge a domestic award and
no such period of limitation is provided for an application under section 48 of
the Act. Hence a proceeding is to be launched
under section 34 to assail the limitation period, whereas under section 48
it can only be initiated once its enforcement is sought. The Court therefore
held that, section 34 is proactive whereas
section 48 is reactionary in nature.
Further the Court held that the language of section 48 shows that it provides
for initiation of independent proceedings for assailing a foreign award before
a competent authority/ court and as such proceedings under section 48 cannot be
one to assail the foreign award, i.e. to
seek the setting aside of the award.
In each of the cases
discussed above, the courts have taken different interpretations. The Supreme
Court has not specifically dealt with this issue yet. It would be interesting
to see if this issue is settled in the near future. Or else, will remain
unsettled; similar to the issue regarding multi-tier arbitration as decided by
the Supreme Court in Centrotrade Minerals vs Hindustan Cooper Ltd in which a reference to a larger bench
is still pending due to difference of opinion by the two-judge bench.
In Conclusion, it can
be stated that, as the issue stands today, it will be open to parties to adopt
a reasoning which they find suitable based on facts and circumstances.
Below is the announcement of the Joint Academy on International Trade Law and Policy. The course which otherwise is very expensive, is being offered to Indians interested in this area at a very reasonable cost. 
