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Interpretation and Application of Public Policy in Enforcement of Foreign Arbitral Awards in India: Comparison with the interpretation of Public Policy under the Civil Procedure Act

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2020, (30), pp.263-286
  • DOI : 10.31839/ibt.2020.07.30.263
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law
  • Received : June 30, 2020
  • Accepted : July 31, 2020
  • Published : July 31, 2020

Choung, Young-Hwan 1,  SIDDHARTH SHUKLA 2

1인도 진달대학교
2Jindal Global Law School

Accredited

ABSTRACT

The purpose of this article is to identify the current issue of enforcement of the foreign arbitral award in India. For example, when a Korean corporation, that got a favorable outcome of arbitration in Seoul, file to enforce the award in India, the other party might resist the enforcement of the award in India, on the ground of public policy. In such a circumstance, the Indian judiciary might intervene in the arbitration process by its interpretation and application of the concept of public policy. Of course, we agree that, based on the New York convention Model law, each state ratified and enacted the arbitration law and each country’s judiciary has discretionary power to interpret and apply the notion of “public policy” or “good morals or social order.” However, the Indian judiciary slightly misleads us in understanding the application of “public policy” for enforcement of foreign arbitral awards in a series of cases. Therefore, this paper reviews this trend of cases regarding the historic development of “public policy.” Based on the Korean New Southern Policy, India could become the most important business partner in the 21st century. With the volume of trading between Korea and India on arise, it might be predicted that the number of legal disputes are also likely to increase. While the Indian judiciary is currently suffering from the huge backlog of pending cases, arbitration could be a good method to resolve disputes. However, the foreign arbitration award could be resisted in India based on the India “public policy” under section 48 of The Arbitration and Conciliation Act of 1996. After Korea and India ratified the New York Convention, each country made the Arbitration Acts based on this model law. In this model, section 5 provides an authority to review enforcement of foreign award within their territories based on the “public interest” or “public policy” or “good morals and other social order.” Also, the Korean judiciary could intervene on the recognition or execution of arbitral award based on “conflict with the good morals and other forms of the social order of the Republic of Korea” under section 39 of the Korean Arbitration Act. However, the Indian judiciary could intervene in the arbitration process of enforcement of foreign award depending upon of its interpreted the notion of “public policy” in a narrow or wide manner. Therefore, we request the India judiciary to provide stable interpretation and application of “public policy” for enforcement of foreign arbitral awards in India to reduce the intervention of India court in the arbitration process.

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