The Enforcement of UAE Seated Arbitral Awards in India
India Focus
In February 2024, Indian PM Narendra Modi visited the UAE and Qatar, signing a bilateral investment treaty with UAE President Mohamed Bin Zayed.
Law Update: Issue 370 - From Africa to Asia: Legal Narratives of Change and Continuity
Khushboo ShahdadpuriSenior Counsel,Dispute Resolution
In the beginning of the year, in February 2024, Indian Prime Minister, Narendra Modi, visited the United Arab Emirates (“UAE”) and Qatar as part of a state visit to the Middle East. This momentous visit led to the signing of the India-UAE bilateral investment treaty with the UAE president, Mohamed Bin Zayed on 13 February 2024. Along with the India-UAE bilateral investment treaty, the two leaders witnessed the signing of eight agreements between India and the UAE which contemplate the enhanced relationship between India and the UAE. These include the Comprehensive Economic Partnership Agreement (“CEPA“), the Intergovernmental Framework Agreement on the India-Middle East-Europe Economic Corridor and various Memorandum of Understandings to link the payment facilities for seamless cross-border transactions between the two countries.
With both governments’ intent to increase the trade and commercial relationship between the UAE and India, it is imperative that UAE investors have the confidence that any arbitral award obtained is enforceable in India.
Part II of the Indian Arbitration and Conciliation Act 1996 (“Indian Arbitration Act“) addresses the enforcement of arbitral awards under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). Foreign seated arbitral awards can only be executed in India if it is an arbitral award seated in a New York Convention signatory state, and on fulfilling the two conditions stipulated under Section 44 of the Indian Arbitration Act:
“(a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and
(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.”
As contemplated under Section 44(b) of the Indian Arbitration Act, the Indian government maintains a list of reciprocal territories in the Official Gazette to enforce those foreign seated arbitral awards in India directly. However, the UAE does not feature in this list of reciprocal territories that have been notified by the Indian government and therefore, UAE seated arbitral awards cannot be enforced in India directly.
The substantial investments flowing between India and UAE, makes it imperative for a robust arbitration framework.
The way around this technicality is by virtue of the Notification of 17 January 2020 (“Notification”) that was issued by the Indian government declaring the UAE as a reciprocating territory for the purposes of Section 44A of the Code of Civil procedure (“CPC”). Pursuant to Section 44A of the CPC, decrees passed by certain courts in the UAE, including the Dubai, Abu Dhabi, Ras Al Khaimah, DIFC, ADGM and all federal courts, are directly enforceable in India.
Therefore, to enforce UAE seated arbitral awards in India, parties need to file court actions to ratify their arbitral awards into decrees (i.e., judgments) in the UAE courts that have supervisory jurisdiction over the arbitration (i.e., the courts of the seat of the arbitration). Once the arbitral awards have been ratified and converted into court judgments, the parties can then enforce those court judgments as decrees in India under Section 44A of the CPC. For instance, a party with a Dubai or DIFC seated arbitral award could apply to the Dubai or DIFC courts to ratify that arbitral award and convert it into a DIFC or Dubai court judgment for it to be enforced in India as a decree pursuant to the Notification and Section 44A of the CPC.
While this provides parties with a way around the difficulty of enforcing UAE seated arbitral awards in India directly under Section 44 of the Indian Arbitration Act, it does result in longer timelines, additional costs of filing applications in the UAE courts and the risk of unnecessary challenges.
Incidentally, Article XXV of the Agreement between India and the UAE on Juridical and Judicial Cooperation in Civil and Commercial matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgements and Arbitral Awards (“Juridical and Judicial Cooperation Agreement“), stipulates that “arbitral awards given in the territory of either Party shall be recognised and enforced in the other Party” subject to fulfilment of certain conditions such as, the arbitral award being based on a written agreement of the parties and the arbitral award being made on matters that are arbitrable according to the law of the state. The party that is requesting the recognition and enforcement of an arbitral award is to produce a copy of the arbitral award accompanied by a certificate of the competent judicial authority in the requesting state to the effect that the arbitral award is executable along with a certified copy of the arbitration agreement between the disputing parties.
These potential challenges are one of the key reasons why Indian parties are not choosing the UAE as their seat of arbitration and why UAE parties are hesitant to enter into arbitration agreements with Indian parties.
The growing relationship between the UAE and India underscores the need for India to declare the UAE as a reciprocating territory to facilitate the enforcement of UAE seated awards in India. This is essential to promote the resolution of cross-border commercial dispute resolution for UAE investors in India, in line with the commitment to grow cross-border investments between the two jurisdictions. Such a move would build investor confidence and set the ground for sustained economic collaboration between India and the UAE.
The substantial investments flowing between India and UAE, makes it imperative for a robust arbitration framework. It also makes it compelling to streamline the dispute resolution landscape, in order to build cooperation in the judicial and legal spheres which includes the seamless recognition and enforcement of arbitral awards passed by both countries. This is a fortiori in light of India having emerged having as the key contributor of foreign direct investments into Dubai, along with the many Indian entrepreneurs who are setting up businesses and investments in the UAE.
For further information,please contact Khushboo Shahdadpuri.
Published in Septmeber 2024
