/551

Statement of Objects and Reasons.-The procedure for settlement, through arbitration, of disputes arising from international trade was first regulated by the Geneva Protocol of Arbitration Clauses, 1923, and the Geneva Convention of 1927 to which India was a party and which were given effect to in India by the Arbitration (Protocol and Convention) Act, 1937. This Act was, therefore, enacted to adopt the then prevailing practices of arbitration in India to the regulations of the Geneva Protocol on Arbitration Clauses of 1923 and Geneva Convention on the Execution of Foreign Arbitral Awards of 1927.

(2) It was, however, felt that the Geneva Convention hampered the speedy settlement of disputes through arbitration and hence no longer met the requirements of the international trade due to the following principal defects:-

(a) it placed an undue emphasis on the law of the land, the selection of arbitrators, the procedure to be followed by these tribunals, etc., and

(b) it laid too much emphasis on the remedies that were open to parties to invoke the law of the country for the purposes of setting aside the awards.

Therefore, in order to remedy, inter alia, the above-mentioned defects, a draft Convention was prepared by the International Chambers of Commerce, which was considered by the United Nations Economic and Social Council in consultation with the Governments of various countries and non-Governmental organisations and finally a new International Convention on the Recognition and Enforcement of Arbitral Awards was adopted at New York on the 10th June 1958. This Convention was duly ratified by the Government of India and was deposited with the Secretary-General of the United Nations on the 13th July, 1960.

(3) The Geneva Convention shall cease to have effect between the contracting States on their becoming bound by the New York Convention. It was, therefore, considered desirable to replace Act 6 of 1937 by a new piece of legislation. This Bill provides for the filing and enforcement of foreign awards in Courts in accordance with New York Convention.

(4) The new Bill, when brought into operation, will apply only to foreign awards made on or after the 11th day of October, 1960, and the foreign awards made before that date will continue to be governed by the 1937 Act.

Amendment Act 47 of 1973-Statement of Objects and Reasons.-The Foreign Awards (Recognition and Enforcement) Act, 1961 was enacted to give effect to the International Convention on Recognition and Enforcement of Foreign Arbitral Awards, done at New York on the 10th day of June, 1958. Article 11 of this Convention provides for recognition by contracting States of agreements, including arbitral clauses in writing, by which the parties to the agreement undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration. The article also provides that when the Court of a contracting State is seized of a matter in respect of which the parties have made an agreement to which the article applies, the Court shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. In such cases, according to the article, the mere existence of a valid arbitration agreement would render it mandatory for the Court to refer the parties to arbitration and stay the proceedings before it. In V/O Tractors Export Moscow v. Tarapore & Co. [(1970) 2 S.C.A. 316] the Supreme Court has, however, held, by a majority of 2 : 1, that section 3 of the Act does not give full effect to Article 11 of the Convention. According to the Court, the section is applicable only in a case where not only is there an arbitration agreement in force between the parties, but there has also been an actual reference to arbitration. It is, therefore, proposed to amend the section suitably to bring out the intention clearly.

2. The Bill seeks to achieve the above object.

[30th November, 1961]

An Act to enable effect to be given to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on the tenth day of June, 1958, to which India is a party and for purposes connected therewith.

Be it enacted by Parliament in the Twelfth Year of the Republic of India as follows:-

The Act has been extended to the Union territory of Pondicherry by Act 26 of 1968, Section 3 and Schedule (w.e.f. 18.12.1968).