Cameron Miranda
Indian courts apply common law and uphold the principle of comity, which means they respect the exercise of jurisdiction by foreign courts and are reluctant to interfere with their proceedings. Indian courts will only pass orders in appropriate cases, such as anti-suit and anti-arbitration injunctions. While Indian courts can recognise and enforce foreign judgments, they will not execute them if they conflict with Indian law or public policy. In cases involving foreign parties, Indian courts follow the rules of Private International Law to determine jurisdiction and applicable law. Notably, the Delhi High Court affirmed that two Indian parties can choose a foreign law to govern their arbitration agreement. However, Indian law will be applied by default in international civil and commercial disputes unless there is a clear insistence on using a specified country's law.
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What You'll Learn
Foreign judgments and decrees
The recognition of a foreign judgment or decree is a precondition for its enforcement. Recognition involves the acceptance of a judicial decision by a foreign court without re-examining the substance of the original lawsuit. Enforcement, on the other hand, involves giving effect to the foreign judgment or decree by passing necessary orders.
For a foreign judgment or decree to be recognised and enforced in India, it must be passed by a "superior court" in a reciprocating territory, as notified by the Government of India. Reciprocating territories are countries that have entered into treaties with India regarding the enforcement of judgments and decrees. These include the United Kingdom, Aden, Fiji, the Republic of Singapore, the Federation of Malaya, Trinidad and Tobago, New Zealand, the Cook Islands (including Niue), the Trust Territories of Western Samoa, Hong Kong, Papua New Guinea, Bangladesh, and the United Arab Emirates.
If a foreign judgment or decree is passed by a court in a non-reciprocating territory, it cannot be directly enforced in India. Instead, a new civil suit must be filed in an Indian court, and the foreign judgment or decree will only hold evidentiary value. The Indian court will then follow its standard procedure, including the completion of pleadings, framing of issues, leading evidence, and examination of witnesses. The Indian court must be satisfied that the foreign judgment or decree is conclusive and not in violation of Indian law before passing its decree, which can then be enforced.
It is important to note that a foreign judgment or decree that is subject to appeal in the foreign jurisdiction or has not attained finality is not enforceable in India. Additionally, the Indian courts will not execute a foreign judgment or decree if it falls within the exceptions set out in Section 13 of the Code of Civil Procedure.
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International commercial arbitrations
Indian courts apply common law and uphold the principle of comity, which means they respect the exercise of jurisdiction by foreign courts. They are reluctant to interfere in cases where a foreign court has jurisdiction and tend to direct the aggrieved party to seek redress before the relevant foreign court.
The Indian judiciary is familiar and supportive of the practice of international arbitration, as evidenced by the strong track record of enforcement of foreign awards in India. The Arbitration and Conciliation Act, 1996, governs the enforcement of arbitral proceedings regarding domestic and international commercial arbitration conducted in India, as well as the execution of foreign awards. Part I of the Act deals with arbitrations with an Indian seat, while Part II focuses on the enforcement of foreign awards. The Act is largely based on the UNCITRAL Model Law and the UNCITRAL Rules 1976, which cover all stages of the arbitral process, including the Arbitration Agreement and the extent of court intervention.
In the case of Bhatia International v Bulk Trading (2002), the Supreme Court held that Part I of the 1996 Act, which applies to arbitrations seated in India, also extends to arbitrations held outside the country. This decision was followed in Venture Global Engineering v Satyam Computer Services Ltd (2008), where it was held that a foreign award could be challenged under Section 34 of the 1996 Act before Indian courts.
It is important to note that a foreign award passed in a jurisdiction that is not a signatory to the New York Convention or the Geneva Convention is not enforceable in India. Additionally, a foreign award passed in a signatory jurisdiction that has not been notified by the Government of India for this purpose also cannot be directly enforced.
While Indian parties can choose a seat outside India for arbitration, it is worth mentioning that in the case of ITI Ltd v Alphion Corpn (2022), the courts emphasised the need for all Indian courts to have the necessary jurisdiction to deal with international commercial arbitration matters.
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Foreign law applicability
The applicability of foreign law in Indian courts is a complex issue that depends on various factors, including the nature of the case, the jurisdiction involved, and the specific circumstances of the dispute. While Indian courts generally apply common law and respect the principle of comity, they also have the authority to pass orders and enforce their jurisdiction when necessary.
In general, Indian courts recognise and enforce foreign judgments or decrees passed by competent foreign courts in civil matters. However, they will not enforce a foreign judgment if it conflicts with Indian law or public policy. For example, a foreign court's decree for divorce cannot be confirmed by an Indian court if, under Indian law, the marriage is indissoluble. Similarly, a foreign judgment for a gaming debt or a claim barred under the Law of Limitation in India would not be enforceable in India.
In arbitration matters, a foreign award passed in a jurisdiction that is not a signatory to the New York Convention or the Geneva Convention is not enforceable in India. Additionally, a foreign award passed in a signatory jurisdiction that has not been notified by the Government of India for this purpose also cannot be directly enforced.
In the landmark case of TransAsia Private Capital vs Gaurav Dhawan, the Delhi High Court clarified that Indian courts are not required to determine and apply the governing law of a dispute unless the involved parties provide expert evidence regarding the applicability of foreign law. In the absence of such evidence, Indian law will be applied as the default jurisdiction. This decision empowers Indian courts to apply Indian law by default in international civil and commercial disputes, even if the parties have selected a different governing law, unless there is a clear insistence on applying a specified foreign law.
Furthermore, Indian courts can grant interim measures in matters subject to international commercial arbitrations. However, parties cannot apply for a stay of arbitral proceedings or challenge the existence, validity, or jurisdiction of the arbitral tribunal under Indian law. Instead, these challenges must be addressed to the relevant arbitral tribunal.
It is important to note that the recognition and enforcement of foreign judgments and decrees in India are subject to specific conditions and procedural requirements. The Indian courts will always prevail in conflicts between foreign and local judgments or proceedings involving the same issue. Additionally, judgments or decrees from non-reciprocating territories or non-convention countries will not be enforceable in India, although they may have some persuasive value.
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Recognition of foreign decrees and orders
The Indian legal system is appreciated for the importance it gives to the enforcement of foreign decrees and judgments. Indian courts apply common law and favour the principle of comity, which includes the respect granted by the local/domestic courts to the exercise of jurisdiction by foreign courts.
The recognition of a foreign judgment occurs when the court of one country accepts a judicial decision made by the courts of another “foreign” country, and issues a judgment in identical terms without rehearing the substance of the original lawsuit. Recognition of judgment will be denied if the judgment is substantively incompatible with basic legal principles in the recognizing country. Foreign judgments may be recognized based on bilateral or multilateral treaties or conventions or other International Instruments.
In the case of a foreign-seated arbitration, a foreign award must be enforceable and must originate from a jurisdiction/country that is a signatory to the New York or Geneva Conventions. Such a jurisdiction/country should be notified by the Government of India. The rules for enforcement of foreign judgments are governed by central acts and apply to the whole country. The limitation period for enforcement of a foreign judgment is three years from the date of passing of such judgment/decree/arbitral award.
A foreign judgment must fulfil certain conditions to be recognised and enforceable in India. The foreign judgment/decree must be passed by a competent court of the reciprocating territories. The Foreign Court which delivers the judgment or decree must be composed of impartial persons, must act fairly, without bias in good faith, and it must give reasonable notice to the parties to the dispute. It must also afford each party an adequate opportunity to present their case, in order to avoid any allegation of not fulfilling the principles of natural justice in case the judgment or decree comes to the Indian court for enforcement.
In the case of R.M.V. Vellachi Achi v. R.M.A. Ramanathan Chettiar, the respondent alleged that since he was not a subject of the foreign country and that he had not submitted to the jurisdiction of the Foreign Court (Singapore Court), the decree could not be executed in India. The Court held that the decree against the Respondent was not executable.
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Foreign law and public policy
Indian courts apply common law and uphold the principle of comity, which involves respecting the exercise of jurisdiction by foreign courts. In cases where a foreign court has jurisdiction, Indian courts generally refrain from interfering and direct the aggrieved party to seek redress from the relevant foreign court. However, there are exceptions to this pattern, such as anti-suit and anti-arbitration injunctions.
In the context of foreign law and public policy, it is essential to consider the impact of foreign judgments and decrees in India. A foreign judgment or decree that conflicts with Indian public policy will not be enforceable in India. For example, a foreign judgment related to a gaming debt or a claim barred under the Law of Limitation in India would not be recognised in India. Similarly, a foreign divorce decree cannot be confirmed by an Indian court if the marriage is considered indissoluble under Indian law.
The Indian courts have the authority to determine the enforceability of foreign judgments within their jurisdiction. When deciding whether to enforce a foreign judgment, Indian courts must ensure that the necessary conditions and procedural requirements are met. Additionally, the foreign judgment must not violate Indian law or conflict with local judgments or proceedings involving the same issue. In such cases, the decision of the Indian court will take precedence over the foreign judgment.
It is worth noting that Indian courts are not automatically required to determine and apply the governing law of a dispute. In the landmark case of TransAsia Private Capital vs Gaurav Dhawan, the Delhi High Court clarified that Indian law will be applied as the default jurisdiction unless the parties introduce expert evidence to establish the applicability of a foreign law. This decision highlights the importance of legal representatives arguing and proving the content of foreign law in international civil and commercial disputes.
Furthermore, in matters of international commercial arbitration, Indian courts can grant interim measures under the 1996 Act. However, parties cannot apply for a stay of arbitral proceedings or challenge the existence or validity of arbitration agreements or the jurisdiction of the arbitral tribunal under the same Act. A foreign award can be challenged under Section 34 of the 1996 Act before Indian courts.
In conclusion, while Indian courts generally respect the jurisdiction of foreign courts and enforce foreign judgments, they prioritise Indian law and public policy in their decision-making. Foreign laws and judgments that conflict with Indian public policy or violate Indian law will not be recognised or enforced in India. The Indian courts have the ultimate authority to determine the applicability and enforceability of foreign laws and judgments within their jurisdiction.
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Frequently asked questions
Indian courts apply common law and favour the principle of comity, which means they respect the exercise of jurisdiction by foreign courts. They will only apply foreign law in cases with a foreign party if the parties introduce expert evidence to that effect.
If there is a conflict between a foreign judgment and a local judgment or local proceedings relating to the same issue, the decision of the Indian court will prevail.
Yes, if it satisfies the conditions in Section 13 of the Civil Code and was passed by a superior court in a reciprocating territory.
A reciprocating territory is any country or territory outside India that has been declared by the central government to be a reciprocating territory for the purposes of Section 44A of the Civil Code. Examples include the UK, Singapore, and New Zealand.
Yes, the Delhi High Court has held that two Indian parties can choose a foreign law as the law governing arbitration between them.
