Conflict Of Laws: An Overview Of Enforcement Of Foreign Judgments And Foreign Awards In India

A reasoned and cautious approach by the Indian courts concerning the enforcement of foreign judgments and the enforcement of foreign awards, augurs well for the development of legal jurisprudence in India, writes Ramni Taneja

Introduction

With the advent of globalisation and with India poised as a major international and global player in the world economy, it is apposite to consider the law concerning enforcement of foreign judgments in India. This is primarily enshrined in Section 13 of the Code of Civil Procedure, 1908, which is a rather slender section; despite its brevity in terms of the statute, it has been subjected to the judicial scrutiny of various High Courts and the Supreme Court of India, through a tapestry of significant case law. The subject of the present article falls within the ambit of what is considered in law as the doctrine of “conflict of laws” or what has often been described as “Private International Law”. A trenchant exposition of this subject has been eloquently summarised by J H C Morris, in his classical treatise, The Conflict of Laws3 in the following terms: “The conflict of laws is that part of the private law of a particular country which deals with cases having a foreign element. ‘Foreign element’ simply means a contact with some system of law other than that of the ‘forum’, that is the country whose courts are seized of the case.” The Code of Civil Procedure, as its name suggests, governs all aspects of civil procedure. It is therefore somewhat surprising to find this law ensconced in an otherwise elaborate statute concerning procedural law. The Supreme Court of India has held in Sardar Maloji Nar Singh Rao vs. Sankar Saran,4 that the rules laid down in Section 13 are rules of substantive law and not merely of procedure.

The Relevance of Enforcement of Foreign Judgments and Foreign Awards

During the course of my legal practice overseas in Dubai between 1982 and 1997, I had the opportunity to examine and handle cases which pertained to the enforcement of judgments and arbitration awards passed in different parts of the world; the enforcement having to be done in the jurisdiction of Dubai, United Arab Emirates. This work galvanised my interest in the subject and after my return to India in 1997, I came across a wealth of case law enunciated by the Supreme Court, which proved to be both instructive and illuminating. There have been instances when divorce decrees passed by courts overseas, concerning non resident Indians [NRIs], have been tested by the courts in India. Further, decrees obtained by banks overseas are brought for enforcement in the courts in India, particularly in those cases where NRIs who may have been guarantors for banking facilities abroad, have left their overseas jurisdictions and returned to India. As India is entrenched in the global arena, it is therefore a logical sequitur that India’s pivotal role may pave the way for more judicial precedents being rendered by our courts in the realm of Private International Law. 

Judgments of the Supreme Court Concerning Section 13

Despite the staccato nature of Section 13, some of the Supreme Court’s finest decisions on Private International Law have been rendered in the context of this section. A judgment of a foreign court to be conclusive between the parties, it must be a judgment pronounced by a court of competent jurisdiction.5 Such a judgment must be by a court, competent both by the law of the State which has constituted it and in an international sense, it must have directly adjudicated upon the “matter” which is pleaded as res judicata.6  In order to operate as res judicata, a foreign judgment must have been given on the merits of the case.  A judgment is said to have been given on the merits when, after taking evidence and after applying his mind regarding the truth or falsity of the plaintiff’s case, the judge decides the case one way or the other. For instance, in In Narsimha Rao vs. Venkata Lakshmi,7 the Supreme Court observed that if a foreign judgment has not been given on the merits of the case, the courts in India will not recognise such a judgment.

In International Woollen Mills Limited vs. Standard Wool (UK) Limited,8the Supreme Court has rendered a well-reasoned decision,9 and has also given a comprehensive exhaustive analysis, with reference to the ingredient of Section 13(b), dealing with the “merits of the case”. A judgment based upon an incorrect view of International Law or a refusal to recognise the law of India, where such law is applicable, is not conclusive. In other words, a foreign judgment may be impeached on the ground that it is founded upon an inaccurate view of the law of India or of International Law.10 In Narsimha Rao vs. Venkata Lakshmi11, the Supreme Court of India noted that “where the judgment is founded on a refusal to recognise the law of this country in cases in which such law is applicable, the judgment will not be recognised by the courts in this country.” 

A foreign judgment is made conclusive as to any matter, thereby directly adjudicated upon between the same parties.  But it is the essence of a judgment of a court that it must be obtained after due observance of the judicial process, i.e. the court rendering the judgment must observe the minimum requirements of natural justice, it must be composed of impartial persons, acting fairly, without bias, and in good faith, it must give reasonable notice to the parties concerned and afford each party adequate opportunity of presenting his case.  The concept of audi alteram partemis deemed to be of universal, not merely of domestic application.12 

In a few leading decisions, it is heartening to observe the Supreme Court having been vigilant to detect an element of fraud in some of the judgments rendered by foreign courts. It is a well-established principle of Private International Law that if a foreign judgment is obtained by fraud, it will not operate as res judicata.13 In Chengalvaraya Naidu vs. Jagannath,14the Supreme Court   has categorically ruled as follows:  “It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non-est in the eyes of law.  Such a judgment/decree by the first court or by the highest court, has to be treated as a nullity by every court, whether superior or inferior.  It can be challenged in any court even in collateral proceedings.”

In Satya vs. Teja Singh,15 a husband obtained a decree of divorce against his wife from the Nevada Court in the USA averring that he was domiciled in America. The Nevada Court derived jurisdiction to entertain and hear the divorce petition on the basis of averment that the applicant was a bona fide resident of and domiciled in Nevada.  Since the statement was not true and as the applicant never lived in Nevada, the Supreme Court of India ruled that the Nevada Court had no jurisdiction to pass a decree of divorce and it was a nullity. In the incisive words of the court: “It is therefore wrong to think that judgments in rem are inviolable. Fraud in any case bearing on jurisdictional facts, vitiates all juridical acts whether in rem or in personam.”           

Where a foreign judgment is founded on a breach of any law in force in India, it cannot be enforced in India.  Similarly, a decree for divorce passed by a foreign court cannot be approved or recognised by an Indian court, if under the Indian law the marriage is indissoluble.16 The pithy observations of the Supreme Court in Satya vs. Teja Singh,16 with regard to public policy are indicative of the caution that the court has rightly exercised while considering the recognition and enforcement of foreign judgments.

Foreign Judgment and Res Judicata

The rule of conclusiveness of a foreign judgment as enacted in Section 13 of the Code of Civil Procedure, 1908, is somewhat different in its application from the rule of res judicata. In the leading case of Viswanathan vs. Abdul Wajid,17 Justice J.C. Shah explained the difference in the following manner:
“The rule of conclusiveness of a foreign judgment as enacted in Section 13 is somewhat different in its operation from the rule of res judicata.  Undoubtedly, both the rules are founded upon the principle of sanctity of judgments competently rendered. But the rule of res judicata applies to all matters in issue in a former suit which have been heard and finally decided between the parties, and includes matters which might and ought to have been made[a] ground of attack or defence in the former suit.  The rule of conclusiveness of foreign judgments applies only to matters directly adjudicated upon.  Manifestly, therefore, every issue heard and finally decided in a foreign court is not conclusive between the parties.  What is conclusive is the judgment……”

Doctrine of Merger

There has been considerable debate concerning the relevance of the legal doctrine of merger in the context of enforcement of foreign judgments. Justice J.R. Mudholkar in Badat and Company vs. East India Trading Company18sets out the following definitive propositions in the majority decision of the court: 
“No doubt, the English doctrine of merger has been consistently held in England not to apply to a foreign judgment with the result that despite the fact that a plaintiff has obtained a foreign judgment he may nevertheless sue in an English Court upon the original cause of action, instead [of] upon the judgment.  When he sues upon the original cause of action, no doubt, the court within whose jurisdiction the cause of action arose would be entitled to entertain the suit.  But, if on the other hand, he chooses to sue upon the judgment, he cannot found jurisdiction for the institution of the suit on the basis of the original cause of action because once he chooses to rest himself on the judgment obtained by him in a foreign court, the original cause of action will have no relevance whatsoever even though it may not have merged in that judgment.”

This proposition of law sets out one of the cardinal principles in Private International Law in the Indian context with regard to the legal basis on which the enforcement of the foreign judgment is perceived by the courts in India. The difference enunciated above by the Supreme Court is subtle, yet definitive.

Mode of Enforcement of Foreign Judgments

A foreign judgment which is conclusive under Section 13 of the Code of Civil Procedure, 1908, can be enforced in India by:

  1. instituting a suit on such judgment; or
  2. by instituting execution proceedings.

A foreign judgment may be enforced by instituting a suit on such foreign judgment. The general principle of law is that any decision by a foreign court, tribunal or quasi-judicial authority is not enforceable by a country, unless such decision is embodied in a decree of a court of that country.19 A suit on a foreign judgment must be filed within a period of three years from the date of the judgment.20

Execution Proceedings

A foreign judgment may also be enforced by proceedings in execution in certain specified cases mentioned in Section 44-A of the Code of Civil Procedure, 1908.  The case of  M.V.A.L. Quamar  vs. Tsavliris Salvage (International) Ltd. and others21 provides a fascinating insight concerning the interpretation of Section 44A of the Code of Civil Procedure, 1908 and contains an excellent overview of this very significant aspect of enforcement of foreign judgments.

Enforcement of Foreign Awards

India’s global exposure in international arbitration is well-known. Ever since the enactment of the Arbitration and Conciliation Act, 1996, there has been a surge in international commercial arbitration. It is noteworthy that the Arbitration and Conciliation Act, 1996,is based on what is popularly known as the UNCITRAL model. [The United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on International Commercial Arbitration in 1985]. With foreign direct investment flowing into India surely and steadily, international commercial arbitration with an India-centric focus is gaining momentum. In this context, the question of the enforcement of foreign awards has formed the subject of intense judicial debate. It is interesting to observe that the Legislature in its wisdom has consciously chosen to statutorily incorporate international covenants into domestic law. These are contained in Part II of the Arbitration and Conciliation Act, 1996 and include Chapter I, being the New York Convention Awards, and Chapter II, being the Geneva Convention Awards.               

 A leading case in point concerning foreign awards and their execution is Fuerst Day Lawson Ltd vs. Jindal Exports Limited. 23  The Supreme Court of India has carefully analysed the difference between the Arbitration Act, 1940 and has compared it with the Arbitration and Conciliation Act, 1996. A few important extracts from this judgment are quoted below:

    “30.Prior to the enforcement of the Act, the Law of Arbitration in this country was substantially contained in three enactments namely (1) The Arbitration Act, 1940, (2) The Arbitration (Protocol and Convention) Act, 1937 and (3) The Foreign Award (Recognition and Enforcement) Act, 1961. A party holding a foreign award was required to take recourse to these enactments. Preamble of the Act makes it abundantly clear that it aims at to consolidate and amend Indian laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The object of the Act is to minimize supervisory role of court and to give speedy justice. In this view, the stage of approaching court for making award a rule of court as required in Arbitration Act, 1940 is dispensed with in the present Act. If the argument of the respondent is accepted, one of the objects of the Act will be frustrated and defeated. Under the old Act, after making award and prior to execution, there was a procedure for filing and making an award a rule of court i.e. a decree. Since the object of the Act is to provide speedy and alternative solution of the dispute, the same procedure cannot be insisted under the new Act when it is advisedly eliminated.”

   “31… As per Section 49, if the Court is satisfied that a foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that court and that court has to proceed further to execute the foreign award as a decree of that court. If the argument advanced on behalf of the respondent is accepted, the very purpose of the Act in regard to speedy and effective execution of foreign award will be defeated.”

   Conclusion

The Indian courts have developed a reasoned, cautious and a sophisticated approach concerning the enforcement of foreign judgments and the enforcement of foreign awards. This necessarily augurs well for the growth and development of legal jurisprudence in India in the field of “conflict of laws”.


1 The research for this article is based on an analysis of important judgments of the Supreme Court of India as well as the commentary in Volume 1, Code of Civil Procedure, 2000 edition, published by Eastern Book Company, Lucknow, India, and Mulla, The Code of Civil Procedure, Volume 1, 17th Edition, 2007, published by LexisNexis Butterworths, India

2“13. When foreign judgment not conclusive—A foreign judgment shall not be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except—
(a) where it has not been pronounced by a court of competent jurisdiction;
(b) where it has not been given on the merits of the case;
(c) where it appears on the face of the proceedings to be founded on an incorrect view of the International Law or a refusal to recognise the law of  India in cases in which such law is applicable;
(d) where the proceedings in which the judgment is obtained are opposed to natural justice;
(e) where it has been obtained by fraud;
(f) where it sustains a claim founded on breach of any law in force in India.”

3 Morris: The Conflict of Laws: 5th Edition by David McClean, 2000, London, Sweet and Maxwell page  2

4Sardar Maloji Nar Singh Rao vs. Sankar Saran All India Reports  1962 Supreme Court 1737 (at page 1741)

5Viswanathan vs. Abdul Wajid 1963 Supreme Court 1 (at pages 14-15): : Satya vs Teja Singh; (1975) 1 Supreme Court Cases 120 (at pages 136-137):  Sankaran vs. akshmi, (1975) 3 Supreme Court Cases 351 (at page 368) 

6Viswanathan vs Abdul Wajid All India Reports  1963 Supreme Court 1 (at page 117)

7 (1991) 3 Supreme Court Cases 451

8International Woollen Mills Limited vs. Standard Wool (UK) Limited  (2001)  5 Supreme Court Cases 5 SCC 265

9 “We also cannot accept the proposition that the decree was on merits as all documents and particulars had been endorsed with the statement of claim. With the greatest of respect to the learned judges, they seem to have forgotten that at the stage of issuance of writ of summons the court only forms, if it at all does, a prima facie opinion. Thereafter the court has to consider the case on merits by looking into the evidence led and documents proved before it, as per its rules.  It is only if this is done that the decree can be said to be on merits.” (Paragraph  22 at page 277)

10Viswanathan vs. Abdul Wajid, All India Reports 1963 Supreme Court 1 (at pages 21-23)

11Narsimha Rao vs. Venkata Lakshmi  [1991]  3 Supreme Court Cases 451

12Sankaran vs. Lakshmi, (1975) 3 Supreme Court Cases 351 (at page 367);   Viswanathan vs. Abdul  Wajid, All India Reports 1963 Supreme Court 1    at page 25;    Narsimha Rao vs. Venkata Lakshmi  [1991]  3 Supreme Court Cases 451 at page 463

13Sankaran vs. Lakshmi, (1975) 3 Supreme Court Cases 351 (at pages 356, 359);   Chengalvaraya Naidu vs. Jagannath, (1994) 1 Supreme Court Cases 1 (at page 2)

14  (1994) 1 Supreme Court Cases  1

15  (1975) 1 Supreme Court Cases 120

16  Satya vs. Teja Singh  (1975) 1 Supreme Court Cases 120   Narsimha Rao vs. Venkata Lakshmi, 1991 3 Supreme Court Cases 451 

17Satya vs. Teja Singh  (1975) 1 Supreme Court Cases  120 “It is thus a truism to say that whether it is a problem of municipal law or of conflict of laws, every case which comes before an Indian court must be decided in accordance with Indian law.  It is another matter that the Indian conflict of laws may require that the law of a foreign country ought to be applied in a given situation for deciding a case which contains a foreign element.  Such a recognition is accorded not as an act of courtesy but on considerations of justice.  It is implicit in that process, that the foreign law must not offend against our public policy.”

1818Viswanathan vs. Abdul Wajid, All India Reports  1963 Supreme Court 1

1919[1964] 4 Supreme Court Reports 19

20Badat and  Company  vs. East India Trading Company (1964) 4 Supreme Court Reports 19; Roshanlal vs. Mohan Singh,  (1975) 4 Supreme Court Cases 628 (at page 637)

21 Article 101, Limitation Act, 1963

22[ 2000]  8 Supreme Court Cases 278

23 [2001]  6 Supreme Court Cases 356


Ramni Taneja is an Advocate practising in the Supreme Court of India, the High Court of Delhi as well as other courts and forums in Delhi and in India. She has her own law firm, Law Office of Ramni Taneja, in New Delhi, which handles corporate transactional work and litigation. Born in New Delhi and educated in Mumbai, Ramni Taneja obtained her Bachelors degree in English Literature from the Elphinstone College, University of Bombay and an LLB Degree from the Government Law College, University of Bombay. She headed the branch office of Little & Co. in New Delhi between 2002 and 2006. Her international legal experience has focused on the Middle East, where she practised as a legal consultant. She has written extensively for legal journals both in India and overseas. She can be reached at ramni@ramnitaneja.com