Introduction
In India, the Code of Civil Procedure, 1908 (“Code”) and the Arbitration and Conciliation Act, 1996 (“Act”) primarily cover the method for enforcing and applying arbitral rulings. Although a domestic award made by an arbitral tribunal is enforced in a manner similar to that of a court order, there is no legal presumption that an arbitral tribunal is equivalent to a court.
Jurisdiction
Courts under whose local jurisdiction the cause of action arose, the relevant property is located, or the defendant dwells, hear the civil proceedings. Sections 5 to Section 21 of the Code address the jurisdiction of the courts where cases may be filed. Execution of decrees and orders is governed by Sections 36 to 74. When a decree is issued, it can either be executed by the court that issued it or it can be transferred to another competent court that has jurisdiction over the party the decree has been issued against or the region where the property is located. The Supreme Court of the India ruled in Sundaram Finance Ltd. v. Abdul Samad and Anr. that an award holder might start execution proceedings before any Indian court where the assets have been placed.
The definition of ‘Court’ as per the Arbitration and Conciliation Act, with original jurisdiction to decide on the questions of formation on the subject matter of arbitration in case the subject matter of the suit is the same is mentioned in Section 2(1)(e) of the Act. Jurisdiction to hear awards deriving from that place arbitral agreements are determined in Sections 20, 31(4), and 42.
The place of arbitration and differences between the juridical seat and venue is enshrined under Section 20 of the Act. The Supreme Court in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc recognized the concept of the supervisory court, where the court practices supervisory jurisdiction over the arbitral proceedings. Later, in Indus Mobile Distribution (P) Ltd v. Datawind Innovations (P) Ltd. the court held that the jurisdiction of the court under the arbitration law is seat-centric because once the place of arbitration is determined, it is the judicial seat, irrespective of where the course of action took place.
The grounds for setting aside the arbitral award are mentioned under section 34 of the act. Further as per section 36 of the Act, the arbitral award will be enforceable as if it were a decree under the Civil Procedure Code.
Execution of the award
The Supreme Court ruled in Sundaram Finance Ltd. v. Abdul Samad that execution requests would not fall within S.42 of the Arbitration and Conciliation Act. The prerequisite of obtaining a transfer of decree is not necessary, and execution may be brought in any jurisdiction where the award may be enforced or executed. However, the court did not clarify how to handle the execution application for the enforcement of the award in cases where neither the judgement debtor’s residence nor any of its property is within the court’s territorial jurisdiction. In Mohit Bhargava v. Bharat Bhushan Bhargava the Supreme Court found that the executing court lacks the competence to hear proceedings against the property situated beyond its jurisdiction under section 39(4) of the CPC.
The Supreme Court recently ruled in the case of Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Ltd that “The law with regard to execution is not different for statutory corporations or the government.” The Delhi Metro Rail Corporation failed to pay termination expenses to DAMEPL, which is owned by Anil Ambani’s Reliance Infrastructure Limited, despite terminating the contract for running the airport metro line ahead of the deadline.
Conclusion
The business and commercial law system has seen significant change in recent years. Any arbitral awards must be carried out in accordance with the Sundaram Finance decision by the courts. The Supreme Court should also explain the territorial restrictions mentioned in Section 39(4) of the Code given the international nature of arbitration proceedings. The courts will need to address the aforementioned difficulties and make sure that future decisions offer remedies that take into consideration the actual realities of conflict resolution for India if they are to guarantee that dispute resolution is completely practicable in this circumstance.
Written By – Vartika Chahal