Section 55 of the Arbitration and Conciliation Act, 1996 - Foreign Awards When Binding

Section 55 forms part of Part II, Chapter II of the Arbitration and Conciliation Act, 1996, which deals with Geneva Convention Awards. It states the legal effect of a foreign award that is enforceable under Chapter II and explains how such an award may be relied on in legal proceedings in India.

Text of Section 55 - Foreign awards when binding

Meaning and scope of Section 55

Section 55 gives legal effect in India to a foreign award that satisfies the enforceability requirements of Part II, Chapter II. The provision is concerned with Geneva Convention foreign awards as defined by Section 53.

The section does two related things. First, it declares that an enforceable Chapter II foreign award is binding for all purposes between the persons as between whom it was made. Second, it confirms that those persons may rely upon the award in Indian legal proceedings, including by way of defence or set-off.

When is a foreign award binding under Section 55?

The opening words of Section 55 are important: the provision applies to a foreign award "which would be enforceable under this Chapter". The binding effect therefore depends on the award satisfying the requirements of Chapter II.

The principal conditions for enforceability are contained in Section 57. Evidence required for enforcement is addressed in Section 56.

How may the award be relied on?

Section 55 expressly allows a qualifying foreign award to be relied upon:

• By way of defence: a party may rely on the award to resist or answer a claim in legal proceedings.
• By way of set-off: a party may rely on the award as a set-off where the applicable procedural and substantive requirements are satisfied.
• Otherwise: the wording is broader than defence and set-off and permits reliance on the award in other legally permissible ways in proceedings in India.

The precise procedural use of an award in a particular case depends on the nature of the proceeding, the relief sought, applicable procedural law, and the facts.

"Enforcing" includes "relying on" an award

The final part of Section 55 provides an interpretive rule for Chapter II. References in the Chapter to enforcing a foreign award are to be construed as including references to relying on an award.

This wording ensures that the Chapter II enforcement framework also applies where the foreign award is invoked in a legal proceeding rather than only where a party seeks affirmative execution or enforcement relief.

Connection with Section 57 - Conditions for enforcement

Section 57 sets out the statutory conditions for enforcement of a Chapter II foreign award. These include requirements concerning the validity of the arbitration submission, arbitrability under Indian law, constitution of the arbitral tribunal, finality of the award, and Indian public policy and law, together with additional grounds on which enforcement must or may be refused.

Since Section 55 applies only to an award that would be enforceable under Chapter II, Section 57 is central to determining whether the binding and reliance effects described in Section 55 are available.

Relationship with Sections 56 and 58

Section 56 specifies the evidence that a party applying for enforcement must produce, including the award, proof of finality, and other evidence required by the statute. Section 58 addresses the effect of the court being satisfied that the foreign award is enforceable under Chapter II.

Related provisions

Section 55 should be read with Section 53 - Interpretation, Section 54 - Referral to arbitration, Section 56 - Evidence, Section 57 - Conditions for enforcement, Section 58 - Enforcement, Section 59 - Appealable orders, and Section 60 - Savings.