CRITICAL ANALYSIS OF ENFORCEMENT OF INVESTMENT ARBITRAL AWARDS UNDER INDIAN REGIME

AUTHOR – NIRBHAY ARORA, STUDENT AT SCHOOL OF LAW, CHRIST (DEEMED TO BE UNIVERSITY), BENGALURU

BEST CITATION – NIRBHAY ARORA, CRITICAL ANALYSIS OF ENFORCEMENT OF INVESTMENT ARBITRAL AWARDS UNDER INDIAN REGIME, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 4 (1) OF 2024, PG. 248-256, APIS – 3920 – 0001 & ISSN – 2583-2344

Abstract

Through this research paper, the author attempts to delve into the binding nature of arbitral awards and the corresponding compliance obligations imposed on parties to arbitration. It explores the prevalent belief that parties involved in investment treaty disputes generally adhere voluntarily to arbitral awards, with judicial enforcement rarely necessary. This inclination towards compliance is attributed to factors such as potential political repercussions, economic ramifications, and the desire to uphold a favourable image for prospective investors. The paper underscores the pivotal role played by efficient enforcement mechanisms, notably governed by two principal conventions: the New York Convention and the ICSID Convention. The New York Convention, applicable to both commercial and investment arbitration, facilitates the enforcement of awards rendered under various institutional or ad hoc arbitration rules. Conversely, the ICSID Convention exclusively governs enforcement for investment arbitration. Author has attempted to delineate distinct enforcement procedures under both regimes. Under the ICSID Convention, enforcement is straightforward and mandatory for contracting states, treating awards akin to national court judgments. The convention limits parties from seeking appeals outside its framework, emphasizing constrained review procedures. Enforcement proceedings may take place in the host state, the investor’s home state, or another contracting state. Whereas, in contrast to the same, the New York Convention mandates court proceedings for recognition and enforcement in the state where awards are sought and such a process entails submitting arbitral award documents and translations, subject to specified exceptions and challenge grounds outlined in Article V.

The paper highlights disparities in enforcement focus between the ICSID and New York Conventions, particularly underscoring challenges encountered by states adhering to the latter but not the former. Furthermore, it delves into India’s investment treaty journey, emphasizing challenges in attracting Bilateral Investment Treaties (BITs) and enforcing investment arbitration awards due to its non-party status to the ICSID Convention. In conclusion, the paper advocates for a re-evaluation of the scope of the Arbitration Act in India to encompass investment treaty arbitrations, drawing insights from the UNCITRAL Model Law and the New York Convention. It proposes adopting a broader interpretation of ‘commercial relationships’ to facilitate the enforcement of investment arbitration awards within India’s legal framework.

Keywords: Arbitral Award, Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID), Investment, New York Convention, United Nations Commission on International Trade Law (UNCITRAL)