India

Commercial disputes/claims, and the treatment and adjudication thereof are exclusively governed by the Commercial Courts Act, 2015 (“Act”), which was enacted with a view to ensure specialised, streamlined, and time-bound resolution of commercial disputes/claims. The Act adopts a broad and inclusive definition of a “commercial dispute”, covering disputes arising inter alia from mercantile and trade transactions, import and export of goods and services, joint venture and shareholder agreements, intellectual property rights, disputes relating to immovable property used exclusively for trade or commerce, and so on, for a minimum pecuniary limit of INR 300,000. The judicial hierarchy of Indian commercial courts is as follows:

• Commercial courts (section 3). These are the commercial courts at the district level all across the country, and deal with commercial disputes having a pecuniary limit of INR 300,000.
• Commercial divisions (section 4). These divisions are established within some of the High Courts in India that exercise original jurisdiction in the first instance, namely the high courts at Delhi, Bombay, Madras and Calcutta. The pecuniary limits for these courts differ from state to state. For example, the minimum pecuniary limit for the Bombay High Court is INR 100 million.
• Commercial appellate divisions (section 5). These are appellate divisions set up to hear any appeals that arise from the decisions and/or orders of the commercial divisions and/or the commercial courts at the district level.

The procedural architecture governing commercial litigation in India is the Code of Civil Procedure, 1908 (“Code”) read with the Act, specifically the modifications to the Code as introduced by the Act. While commercial suits follow the same procedure as a civil suit, the modifications introduced by the Act to the Code seek to streamline commercial litigations using the following procedures:

• Mandatory pre-institution mediation (PIM) before instituting a commercial suit under section 12A of the Act. For suits that do not contemplate an urgent relief, an institutional mediation through a relevant legal authority has to be completed. In many instances, disputes settle at this stage and are not required to be litigated.
• Pleadings. Once the summons of the suit are served upon the defendants, a strict timeline of 30 days, extendable to 120 days, commences for the filing of written statement(s). This period is not extendable under any circumstances. See SCG Contracts (India) (P) Ltd. v. K.S. Chamankar Infrastructure (P) Ltd., (2019) 12 SCC 210.
• Filing of a statement of truth by the plaintiff under Order 6, rule 15A of the Code. This prevents the institution of false and vexatious claims and ensures the integrity of the submissions.
• Case management hearing under Order 15A of the Code. Under this, the court can set mandatory, strict timelines for disclosure, evidence, and arguments immediately after issues (points of determination) are framed, ensuring the trial adheres to a set schedule.
• Provision for summary judgment under Order 13A of the Code. Permits the court to pass judgment without a full trial if the court is of the opinion that the defendant has no real substance to successfully defend the claim or if the claim itself is unsustainable.

For a commercial action to materialise, the plaintiff must satisfy crucial tests of the subject matter falling under the Act and meeting the pecuniary and territorial threshold specified under the Act. Apart from this, the Act stipulates the aforesaid PIM under section 12A of the Act. This provision mandates that a suit which does not contemplate any urgent interim relief must not be instituted until the plaintiff exhausts its remedy of PIM through the relevant legal services authority. If this pre-requirement is not satisfied, any action filed shall necessarily fail. This is confirmed by the Supreme Court in in Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd., (2022) 10 SCC 1.

The critical exception to PIM is the assessment of urgency. If the plaintiff is of the opinion that its matter requires immediate intervention for any reason whatsoever it may bypass the PIM requirement upon specifically pleading the grounds of urgency and the exact nature of interim relief sought.

Beyond the statutory requirement, practical pre-action steps involve serving a formal legal demand notice on the opposing party, detailing the breach and the quantum of claim.

In India, large commercial disputes are increasingly resolved through ADR mechanisms, which offer flexibility, confidentiality and efficiency when compared to traditional litigation, and are largely as follows:

• Arbitration is the most common and frequently used mechanism, governed by the Indian Arbitration and Conciliation Act, 1996 (ACA). It is a party-driven, speedy and binding adjudicatory process where disputes are decided by a neutral tribunal chosen by the parties, with limited judicial intervention and enforceable outcomes. Arbitration is particularly favoured in high-value and cross-border commercial contracts due to its finality and cross-border enforceability.
• Mediation is another ADR mechanism which involves a neutral mediator who facilitates consensual negotiation between the parties in order to help them to arrive at a voluntary settlement. Pursuant to the introduction of the Indian Mediation Act, 2023, a mediated settlement agreement is deemed to have the same validity and/or treated akin to the decree of a civil court.
• Conciliation is also a key method, which is governed by Part III of the ACA. Under this ADR mechanism, the conciliator assists the parties in arriving at an impartial settlement. In conciliation, if the parties successfully execute a settlement agreement, it is deemed to have the same status, validity and effect as an arbitral award on agreed terms on the substance of the dispute, making it immediately enforceable as such.
• Additionally, Lok Adalats, also known as “People’s Court”, are a unique feature of the Indian legal system, established under the Legal Services Authorities Act, 1987. The aim of Lok Adalat is to provide a forum where the disputes are settled in a speedy and low-cost manner, whereunder these Lok Adalats utilise a blend of mediation and conciliation to aid the parties in arriving at an amicable settlement. For commercial disputes, Lok Adalats offer a mechanism for arriving at a compromise, and any decision rendered/compromise arrived at by/before the Lok Adalat is final and binding upon the parties and is treated/enforceable akin to the decree of a civil court.

Out of the aforesaid mechanisms, arbitration emerges as the preferred method for resolution of high-value commercial disputes.

In India, the stage of trial commences pursuant to completion of pleadings and framing of issues (i.e. points of determination) by the court or authority (as the case may be).

The time taken for a matter to reach the stage of trial is largely dependent on the nature of the dispute and the conduct of the parties. Further, variables such as completion of pleadings, hearings at the interim stage (which precedes trial), timely compliance with directions, and availability of court dates also play a significant role.

Usually, any case conducted in a metro city takes three to five years to reach trial, and in a non-metro city takes two to four years. However, this depends on the aforementioned variables coupled with the complexities of each case.

Under the Code, parties must file all documents in their power, possession, custody, or control at the time of submitting their primary pleadings (plaint/written statement). This obligation covers not only documents they rely upon, but all material documents relevant for the determination of the dispute. A document immaterial or irrelevant to the dispute may not be required to be disclosed, unless specifically called upon for production by the opposing side or the court.

Courts may further direct production of specific documents and suppression of relevant material may lead to adverse inference being drawn against the respective party.

Parties are also required to disclose prior and/or pending legal proceedings concerning the subject matter of the case. The Supreme Court, in its decisions in Prestige Lights Ltd. v. State Bank of India, (2007) 8 SCC 449, K. D. Sharma v. Steel Authority of India Ltd., (2008) 12 SCC 481 and Kusha Duruka v. State of Odisha, (2024 INSC 46), has held that litigants must approach the court with clean hands, and any concealment of pleadings amounts to abuse of the judicial process and may warrant dismissal at the threshold. The Supreme Court stressed that full disclosure is essential to prevent multiplicity of proceedings and to ensure fairness in adjudication.

During the trial of a case, the witness(es) must file their respective affidavits testifying to the facts/documents of the case. The witnesses must then depose, confirm and prove their testimonies and withstand cross-examination from the opposing counsel. Without the witness personally deposing, the fact/document would not be proved. The affidavit of the witness would gain evidentiary value only when the witness deposes to the same.

Thus, the presence of the witness is mandatory. This is further stipulated under the Code, which also empowers the court to summon witnesses and, if required, enforce their attendance through coercive measures.

Sections 135 to 138 of the Indian Evidence Act, 1872 set out the requirement and procedure for examination in chief, cross-examination and re-examination, and establish cross-examination as an essential component of oral evidence. If a witness fails to appear or avoids cross-examination, the court may disregard their testimony and draw an adverse inference.

Accordingly, witnesses can be compelled to attend trial, and their participation in cross-examination is integral to the evidentiary process.

The court’s power in making costs orders in commercial disputes is discretionary in determining whether to grant costs, quantum of such costs, and the mode, manner and timing of their payment. The general rule is that the unsuccessful party shall be ordered to pay the costs incurred by the successful party. This principle enforces accountability and deters frivolous litigation.

The Act also allows the courts to grant “actual costs” to the successful party, which include reasonable legal fees, expenses incurred for witnesses, and any other expenses in connection with the proceedings.

In determining costs, the court is mandated to consider several circumstances, including inter alia the conduct of the parties, whether a party succeeded on only a part of its case, the unreasonable refusal of a reasonable offer to settle, or the institution of a vexatious proceeding and wasting judicial time. This discretionary power is also flexible, allowing for imposition of costs only for a distinct/specific part of the proceedings (such as an application made therein) as opposed to the proceedings as a whole.

Interim remedies are the urgent, temporary orders granted by the commercial courts/divisions to protect the rights of the parties pending final adjudication of the suit and are primarily governed by the Code. The most commonly availed interim reliefs include:

• Temporary injunctions. Restrains a party from doing a specific act, such as alienation/disposition of property, disclosure of confidential information and maintaining status quo during the pendency of the proceeding. For the court to grant a temporary injunction, it requires the party to establish a prima facie case, show that balance of convenience is in its favour and that it has suffered or is likely to suffer irreparable injury.
• Attachment before judgment. Secures the assets of the defendant if the court is satisfied that the defendant intends to dishonestly dispose of the property to obstruct the execution of a future decree.
• Appointment of receiver. A receiver may be appointed for the custody, management and preservation of disputed assets when necessary.
• Ashok Kumar order (John Doe injunction). This is a powerful and frequently used remedy in commercial intellectual property disputes whereunder the court issues temporary ex parte injunctions and search/seizure warrants against unknown persons who are infringing rights, but whose identities are yet to be ascertained. This remedy is crucial in enforcement against online piracy allowing the courts to protect assets and prevent ongoing losses.

The primary law governing arbitration in India is the ACA, which establishes a legislative mandate compelling local courts in India to adopt a fundamentally pro-arbitration and supportive approach. This pro-arbitration stance has materialised through upholding the core principles of arbitration, namely party autonomy and kompetenz-kompetenz (i.e. the arbitral tribunal’s power to rule on its own jurisdiction), thereby ensuring minimal judicial intervention.

The ACA is directly based on the UNCITRAL Model Law (“Model Law”), containing its own nuances to suit the Indian legal landscape. This adoption of the Model Law ensures that the Indian regime aligns with globally recognised principles, promoting the autonomy of the arbitral tribunal, and facilitating mandatory referral by the court for arbitration and the limited scope of judicial intervention.

The court’s functions are restricted to supporting the arbitral process, which include:

• Referral. Courts are obligated to refer the parties to arbitration under section 8 of the ACA if, prima facie, a valid arbitration agreement exists between the parties. This is considered a mandatory action, upholding the sanctity of the agreement.
• Support. Courts retain the power to grant necessary interim measures of protection under section 9 of the ACA, such as freezing assets, preserving evidence, appointing a court receiver to preserve the subject matter, and so on, before, during or after the arbitral proceedings, to aid the tribunal. The courts will typically not exercise jurisdiction during the pendency of arbitral proceedings unless it is demonstrated that no efficacious remedy is available to the applicant before the arbitral tribunal.
• Supervision. The courts’ supervisory role is limited to challenging/setting aside the final award and appellate review of specific interlocutory orders. This involves hearing challenges to the final arbitral award under section 34 of the ACA, which has a deliberately narrow scope focused on procedural integrity, not re-evaluation of the merits or evidence. Furthermore, the courts are empowered to hear appeals against specific orders of the arbitral tribunal under section 37 of the ACA. These appealable orders include those granting or refusing interim relief under section 17, and orders accepting/rejecting the plea that the tribunal lacks jurisdiction. The limited nature of such appeals upholds the finality of the arbitration.

Yes, the arbitral tribunal under section 17 of the ACA possesses the authority/power to grant interim measures with a view to protect and preserve the subject matter of the arbitration and to balance the equities of the parties. The scope of the powers of the tribunal is akin to that of a civil court (see Amazon.Com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209), allowing the tribunal to grant reliefs inter alia of securing the amount in dispute, interim custody or preservation of goods, interim injunctions and appointment of a receiver, and so on.

The ACA further enhances the effectiveness of the arbitral tribunal’s orders, as under section 17(2) of the ACA, an order passed by the arbitral tribunal granting interim reliefs is deemed to be an order of court for all purposes. This makes a tribunal’s orders directly and immediately enforceable, akin to a decree of a civil court.

Under Indian law, an arbitral award cannot be subjected to a merits-based “appeal” in the traditional sense as judicial interference is strictly limited to uphold the finality of the arbitral process. An award can only be challenged and set aside by a court through an application made by a party under section 34 of the ACA. However, such an application must satisfy the stringent conditions of the section, inter alia, invalidity of the arbitration agreement under the subject curial law, non-arbitrability of the subject dispute, incapacity of a party, the award being in conflict with the public policy of India or against the principles of natural justice, amongst others.

Even in such an application, the court cannot re-appreciate evidence or sit in appeal over the merits of the arbitral award. The Supreme Court in Associate Builders v. DDA, (2015) 3 SCC 49, has confirmed that the court’s jurisdiction under section 34 of the ACA is corrective, not appellate, and does not permit the court to re-evaluate evidence and/or substitute a view taken by the arbitral tribunal with its own view.

India is party to two major international conventions governing the recognition and enforcement of foreign arbitral awards:

• Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”); and
• Geneva Convention on the Execution of Foreign Arbitral Awards, 1927.

Awards rendered in countries that are signatories to either of these conventions and notified as “convention countries” by India are enforceable in India under the framework of the ACA.

Under this regime, a foreign award from a notified New York or Geneva Convention country may be enforced in India through a two-stage process: the court first determines whether the award meets the requirements of enforceability under the Act, and once such determination is made, the award is executed in the same manner as a decree of an Indian court.

Accordingly, India’s participation in the New York Convention and the Geneva Convention forms the basis of its international commitments on enforcement of arbitral awards. Enforcement of foreign court judgments, by contrast, is not governed by any multilateral treaty and is dealt with solely under domestic legislation.

In commercial matters, all domestic judgments are enforceable, subject to any appeals that may have been filed to challenge such judgments.

As regards foreign commercial judgments, these are enforceable only if they meet the requirements of section 13 of the Code. A judgment that satisfies these statutory conditions is treated as conclusive and is capable of enforcement. Judgments from reciprocating territories may be enforced directly by filing an execution petition in India under section 44A of the Code, while judgments from non-reciprocating territories can be enforced only by filing a fresh civil suit based on the judgment.

Judgments that are enforceable include those rendered on the merits where the foreign court had competent jurisdiction, followed proper judicial process, and adjudicated the dispute after considering evidence. Courts have recognised that even ex parte judgments may be enforceable if the decision was based on consideration of evidence, as noted by the Bombay High Court in Marine Geotechnics LLC v. Coastal Marine Construction and Engineering Ltd., (2014) 183 Comp Cas 438. Judgments based on consent or settlement terms are also treated as judgments on the merits and are enforceable, as observed in HSBC Bank, U.S.A. v. Silverline Technologies Ltd., 2006 SCC OnLine Bom 120.

Generally, judgments are excluded from enforcement in India if they fall within any of the exceptions under section 13 of the Code. These include judgments that are delivered by a court lacking jurisdiction, or those not given on the merits of the case, or those obtained by fraud or in violation to Indian law/opposed to principles of natural justice, and so on.

The Supreme Court, in R. Vishwanathan v. Rukn-Ul-Mulk Syed Abdul Wajid, AIR 1963 SC 1, held that a judgment that does not observe basic judicial process or denies reasonable opportunity to the parties will not be enforceable. Similarly, judgments where jurisdiction was not voluntarily submitted to by the defendant may be denied enforcement, as recognised in Raj Rajendra Sardar Maloji v. Sri Shankar Saran, AIR 1962 SC 1737.

Accordingly, only foreign commercial judgments that are conclusive under section 13 of the Code and satisfy the requirements of jurisdiction, merit-based adjudication, and due process are enforceable in India, while those tainted by jurisdictional defects, fraud, procedural irregularity, or breach of Indian law are excluded.

Foreign judgments do not require registration in India. Their enforcement is governed exclusively by the Code. Judgments from reciprocating territories are executed directly under section 44A of the Code while those from non-reciprocating territories must be enforced through institution of a fresh civil suit or on the underlying original claim by the successful party in India. The Registration Act, 1908 has no application to foreign court judgments.

Foreign arbitral awards likewise do not require stamping or registration under the Indian Stamp Act, 1899 or the Registration Act, 1908. The Delhi High Court, in Naval Gent Maritime Ltd. v. Shivnath Rai Harnarain (I) Ltd., (2004) 54 DRJ 639, confirmed that foreign awards may be enforced directly as decrees. Their enforcement proceeds under Part II of the ACA, beginning with an application under section 47 of the ACA. The Supreme Court has clarified that the documents listed in section 47 need not accompany the application at the initial stage. Once the award meets the enforceability requirements under section 48 of the ACA, it is executed as a decree of the court.

Accordingly, neither foreign judgments nor foreign arbitral awards undergo any registration process in India; both are enforced solely through the statutory mechanisms contained in the Code and the ACA.

Once a foreign judgment (from a reciprocating territory) or a foreign arbitral award has been declared enforceable and is treated as a decree of the Indian court, execution proceeds in accordance with the provisions of the Code. The available modes of execution include all methods applicable to domestic decrees.

The court may execute the decree by attachment and sale of the properties of the judgment debtor, arrest and detention in civil prison (where possible) of the judgment debtor, appointment of a receiver to intercept the property of the judgment debtor, deposit of monies in court, furnishing of securities, and so on.

Accordingly, once the foreign judgment or award attains the status of a decree, it becomes fully executable through the enforcement mechanisms available under the Code.

Pending the enforcement of a foreign judgment or arbitral award, courts may grant interim measures to ensure that the eventual decree is not defeated. The most common interim measure is to direct for a deposit of monies in court while the enforcement proceedings are underway. Additionally, the judgment debtor may be directed to file an affidavit of disclosure qua its assets and liabilities enabling the grant of further interim reliefs depending on the disclosures.

Courts may also issue asset preservation orders to prevent dissipation or alienation of property pending enforcement and may direct parties to maintain status quo in respect of the assets that may be required for execution. As execution proceeds under the Code, courts may employ protective steps to secure the fruits of the decree.

Accordingly, interim measures may include stays (conditional or unconditional), securing the decretal amount, and protective directions aimed at preserving assets until final enforcement.

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

(The award under the assumed facts is referred to as “Award”)

Article V (1):­ scope and applicability

Article V (1) (a) and (c) of the Convention deal with the validity and scope of the arbitration agreement under the seat country’s law opted for by the parties. On the assumed facts, we understand that the laws of the seat country support the scope of arbitration decided by the parties, and that the Award is made in accordance with the decision of the parties and keeping in mind the applicable curial and substantive law and legal framework.

Under Indian law, the Award would not by itself be refused if it meets the criteria of validity under the seat country’s laws but not necessarily Indian law.

Article V (1) (b), (d) and (e) deal with instances of incurable procedural and statutory irregularities, which the assumed facts do not highlight and so these sub-clauses would not be applicable in the instant scenario.

Article V (2) (a): arbitrability under Indian law

Article V (2) (a) deals with the arbitrability of the dispute in view of Indian law.

Under the Indian arbitration regime, a valid arbitration process includes an underlying dispute being referred to arbitration, application of substantive and procedural law to the dispute and an adjudication of the rights of the disputing parties. We also see limited disputes for quantification of damages/monetary liability of a defaulting party, commonly seen in railway, insurance, construction or works contracts, being arbitrable.

The Award meets the four-fold test of arbitrability (as laid down in the Indian Supreme Court’s judgment of Vidya Drolia v. Durga Trading Corporation [2020 2SCC 1]) that the dispute has to be an act in personem, must not affect any third party rights (erga omnes), must not relate to a sovereign function and must not be necessarily barred by a statute.

Additionally, we note that the arbitrator’s mandate extends to adjudication of aspects such as determining if payment is due, penal interest should be levied, payment has been made in entirety, reconciliation of accounts is done correctly, whether any interim security ought to be granted, and so on. This includes application of relevant law, adjudicating rights of parties etc. The fact that non-payment of the decretal amount leads to a breach of a contractual obligation also aids in showing that the dispute arises out of a contractual term and requires due consideration and interpretation by the arbitrator. More particularly, there is no specific law in India which bars this kind of dispute to be referred to arbitration.

In view of the above, the dispute arising out of the assumed facts would be considered arbitrable under Indian law.

Article V (2) (b): public policy

Article V (2) (b) deals with the ambit of public policy restricting enforcement of foreign awards.

The ambit of public policy is not specifically defined either under the Convention or Indian law and is a discretion that has to be exercised by the relevant court. In recent years, Indian courts have taken a pro-enforcement approach and have restricted refusal of enforcement on grounds that the award is contrary to: (a) fundamental policy of Indian law; or (b) the interests of India; or (c) justice or morality (Supreme Court of India in Renusagar Power Co. Ltd v. General Electric Co. [1194 AIR 860]).

Considering the above guidelines, the enforcing court does not review or re-examine the merits of the dispute; even procedural defects or factual errors are not seen as a ground for refusing enforcement (Supreme Court of India in Government of India v. Vedanta Ltd. [AIR 2020 Supreme Court 4550]).

Due to a lack of defined or structured law/rules for this exception, it becomes important for the enforcing party to make a case that the Award satisfies the conditions laid down for enforcement under the New York Convention and the Indian arbitration regime (under sections 44-49 of the Arbitration Act) and ought to be enforced as per the enforcement mechanism under Order 21 of the Code (as specified in the above answers).

While the aforesaid threshold criteria is straitjacket, the difficulty arises when the court has to exercise discretion. The only aspect of the Award which would require the court to exercise discretionary power would be while considering the possibility of a dual recovery by the enforcing party, that is, the decree which is otherwise final and binding, and the award which is equally valid and binding. The court must be convinced of how the enforcing party would not simultaneously, or at any later stage, seek enforcement of the decree. A possibility of double enforcement may trigger the public policy exception as it would specifically be against the public policy of India, however, appealing to the discretion of the court and satisfying the court on how the award holder would not seek enforcement of the decree, would aid in countering the exception.

We note that the Award largely meets the test of arbitrability and enforceability and, subject to satisfying the Court on dual enforcement aspects, would not be in conflict with Indian public policy.