Proposed Draft Senate Bill for Implementing New York Convention of 1996

PART III

Other Notifications Orders, etc.

SENATE SECRETARIAT

Islamabad, the 18th July, 1996

The following Bill was introduced in the senate on the 17th July, 1996

SENATE BILL NO.XVII OF 1996

BILL

To provide for the recognition and enforcement of foreign arbitral awards

WHEREAS PAKISTAN is signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, subject to reservation of its application to the awards made in the territory of another Contracting State and by a non-Contracting State entering into a reciprocal treaty;

AND WHEREAS it is expedient to provide for the recognition and enforcement of foreign arbitral awards made in pursuance of the Convention and for matters connected therewith and incidental therein.

It is hereby enacted as follows: -

1. Short title, extent, application and commencement.-(1) This Act may be called the Recognition and Enforcement of Foreign Arbitral Awards Act, 1996;

(2) It shall extent to the whole of Pakistan;

(3) It shall apply to all foreign awards, except to such awards which were made and filed under the provisions of the Arbitration (Protocol and Convention Act 1937 (VI of 1937);

(4) It shall come into force on such date as Federal Government may, by notification in the official Gazette appoint.

2. Definition.- In this Act, unless there is anything repugnant in the subject or context.-

(a) “Convention” means the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, dated the 10th June, 1958, set forth in the Schedule to this Act;

(b) “Foreign award” means an arbitration award made in the treaty State or outside the territorial limits of Pakistan and areas under direct of indirect control of Pakistan on a dispute arising out of relationship considered as commercial under any law in force in Pakistan; and

(c) “treaty State” means a State which is a party to the Convention and with which Pakistan has entered into a treaty or agreement for recognition and enforcement of foreign awards.

3. Recognition and enforcement of foreign arbitral awards.- Subject to the provisions of this Act, a foreign award shall be enforceable in Pakistan as if that award were made on a matter referred to arbitration in Pakistan.

4. Foreign Awards not enforceable. – (1) The Court shall refuse to enforce a foreign award where it is satisfied that –

(a) parties to the foreign award were under any disability under the law applicable to them; or

(b) the agreement containing an arbitral clause is not valid under the law to which the parties have subjected it, or in absence of any such stipulation, is contrary to the law of the country where the foreign award was made; or

(c) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case for any cause the responsibility of which cannot be attributed to him.

(d) The foreign deals with the dispute not contemplated by, or not failing within, the terms of the submission to arbitration.

Provided that parties to a foreign award mutually agree in writing for submission to the jurisdiction of the Court;

(e) The foreign award is beyond the scope of the submission to arbitration;

Provided that if the decision matters submitted to arbitration can be separated from those not so submitted and such part of the ward which contains decisions on matters submitted to arbitration may be recognized and enforced;

(f) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement between the parties.

(g) The foreign award has not yet become binding on the parties or has been set aside or suspended by a competent authority of Pakistan or a treaty Sate;

(h) The subject matter of arbitration is contrary to the law of arbitration of Pakistan;

(i) The recognition or enforcement of the foreign award is contrary to the public policy of Pakistan; and

(j) The subject matter of the award cannot lawfully be referred to arbitration under the laws of Pakistan.

5. Filing of foreign award in Court.- (1) A person in a foreign award may apply in writing to a court of competent jurisdiction that the award be filed in Court.

(2) The application referred to in sub-section (1) shall be registered and tried as a suit between the applicant as Plaintiff and the opposite party as defendant.

(3) Notwithstanding any other proof as the Court may require, every application referred to in sub-section (1) shall accompany.-

(a) the foreign award in original or its duly certified copy; and

(b) the original agreement for arbitration or its duly certified copy; and

(c) evidence that the foreign award has become final

(2) Where a document required to be produced under sub-section 91 is in a foreign language, the party who seeks to enforce the foreign award shall produce an English translation of such document certified by an officer authorized under the relevant law relating to taking of oaths, notary public or a diplomatic or consular agent.

6. Stay of proceedings.- Notwithstanding anything contained in the Code of Civil Procedure, 1908 (V of 1980), it any party to an agreement to which the convention set forth in the Schedule applies, or any person claiming through or under him commences any legal proceedings may after appearance but apply to the court to stay the proceedings and the court may, if it considers proper, stay the proceedings and may order the other party to give suitable security.

7. Enforcement of foreign arbitration award. – Where the Court is satisfied that the foreign award is enforceable under this Act, it shall order the award to be filed and pass judgment and decree accordingly.

8. Savings. – Nothing in this Act deprive any interested party of any right, he may avail for the enforcement of a foreign award in the manner and to the extent allowed by the law enforced in Pakistan.

9. Rules. – A High Court may make rules for carrying out the purposes of this Act.

SCHEDULE

CONVENTION ON THE RECOGNITION AND ENFORCEMENT

OF FOREIGN ARBITRAL AWARDS

Done at New York, 10 June, 1958

Article I

1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.

2. The term “arbitral awards” shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.

3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration.

Article II

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

2. The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, 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.

Article III

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.

Article IV

1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:

(a) The duly authenticated original award or a duly certified copy thereof;

(b) The original agreement referred to in article II or a duly certified copy thereof.

2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.

Article V

1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

(b) The recognition or enforcement of the award would be contrary to the public policy of that country.

Article VI

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V (1) (e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

Article VII

1. The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.

2. The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound, by this Convention.

Article VIII

1. This Convention shall be open until 31 December 1958 for signature on behalf of any Member of the United Nations and also on behalf of any other State which is or hereafter becomes a member of any specialized agency of the United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any other State to which an invitation has been addressed by the General Assembly of the United Nations.

2. This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General of the United Nations.

Article IX

1. This Convention shall be open for accession to all States referred to in article VIII.

2. Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations.

Article X

1. Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned.

2. At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later.

3. With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories.

Article XI

In the case of a federal or non-unitary State, the following provisions shall apply:

(a) With respect to those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States;

(b) With respect to those articles of this Convention that come within the legislative jurisdiction of constituent states or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent states or provinces at the earliest possible moment;

(c) A federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United Nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action.

Article XII

1. This Convention shall come into force on the ninetieth day following the date of deposit of the third instrument of ratification or accession.

2. For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument of ratification or accession.

Article XIII

1. Any Contracting State may denounce this Convention by a written notification to the Secretary-General of the United Nations. Denunciation shall take effect one year after the date of receipt of the notification by the Secretary-General.

2. Any State which has made a declaration or notification under article X may, at any time thereafter, by notification to the Secretary-General of the United Nations, declare that this Convention shall cease to extend to the territory concerned one year after the date of the receipt of the notification by the Secretary-General.

3. This Convention shall continue to be applicable to arbitral awards in respect of which recognition and enforcement proceedings have been instituted before the denunciation takes effect.

Article XIV

A Contracting State shall not be entitled to avail itself of the present Convention against other Contracting States except to the extent that it is itself bound to apply the Convention.

Article XV

The Secretary-General of the United Nations shall notify the States contemplated in article VIII of the following:

(a) Signatures and ratifications in accordance with article VIII;

(b) Accessions in accordance with article IX;

(c) Declarations and notifications under articles I, X and XI;

(d) The date upon which this Convention enters into force in accordance with article XII;

(e) Denunciations and notifications in accordance with article XIII.

Article XVI

1. This Convention, of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic, shall be deposited in the archives of the United Nations.

2. The Secretary-General of the United Nations shall transmit a certified copy of this Convention to the States contemplated in article VIII.

STATEMENT OF OBJECTS AND REASONS

The “Convention on the Recognition and Enforcement of Foreign Arbitral Award” was adopted at New York on 10th June, 1958 (New York Convention) by the United Nations Conference on International Commercial Arbitration. The Arbitration (Protocol and Convention) Act, 1937 (VI of 1937) does not cater to the complex problems of expanding international trade and foreign investment. The present Bill, inter alia, provides right of appeal against the enforcement of arbitral awards which right is not available under the existing statute. It also provides legal cover to the Convention to which Pakistan is a signatory.

2. The Bill seeks to achieve the aforesaid objects.

Sd/-

Minister-in-Charge

ABDUL QAYYUM KHAN,

Secretary