Globalization of the economy has opened up new horizons for the businesses which were earlier a distant dream in a closed economy. As business transactions have taken a whole new dimension across the border, hence there are various problems which were earlier not faced by the people. The emergence of disputes across the border is also a genre of globalization of business. In these disputes, jurisdiction may also be outside India and when a decree is passed by a foreign court, its execution or validity is also a question which was not easy to answer.
This article focuses on the binding nature of the foreign decrees given by courts of reciprocating foreign territories. It also talks about the ambit of section 13 of C.P.C with respect to section 44-A, the enforcement of foreign arbitral awards.
LAW RELATED TO ENFORCEMENT OF FOREIGN DECREE
Multilateral trade and international commercial transactions have led to a steep rise in international commercial disputes. India is a major global player in the world economy; therefore laws related to enforcement of foreign judgments are of utmost importance to the foreign investors interested in entering the Indian market. Foreign decrees in India are enforced solely according to the provisions of the Code of Civil Procedure, 1908 (CPC).
A decree is defined in section 2(2) of the CPC and judgment is defined in section 2(9). A judgment decides the rights and liabilities of the parties, whereas a decree follows the judgment and is its operating part. The civil procedure code also provides for the definition of a foreign judgment under section 2(6). The bare perusal of this section suggests that a ‘Foreign judgment’ is a judgment given by a court that is situated outside India or where the cause of action in a case arises out of India.
A foreign judgment in India can be enforced in the following ways:
- Decrees from Courts can be enforced directly by filing before an Indian Court an Execution Decree.
- The time limit to file a suit in India is within the three years of the foreign judgment.
Execution of foreign Decrees by reciprocating territories in India is governed by section 44-A, CPC. The said section explains the execution of any decree passed by a reciprocating territory, i.e. any country or territory outside India which is declared to be a reciprocating territory by the central government.
“Reciprocating Territory” is defined in explanation 1 to Section 44-A of Civil Procedure Code as:
In this Reciprocating Territories under the Civil Laws in India are United Kingdom, Singapore, Bangladesh, UAE, Malaysia, Trinidad & Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua and New Guinea, Fiji, Aden.
Enforcement under section 44A is barred by the exceptions enshrined in section 13 of the CPC. These exceptions are:
- Where it has not been compulsory pronounced by a Court of competent jurisdiction.
- Where it has not been pass on the merits of the case.
- In this where the proceedings in which the judgment was obtained by opposed to natural justice.
- Where it has been obtained by fraud.
Thus, “A combined reading of section 13 and 44A makes it clear that a decree of a reciprocating territory can be executed through a district court, and the judgment debtor is entitled to contest the execution petition if it can be shown that the judgment is not conclusive, i.e., it comes within any of the exceptions under section 13 (f )”