In order to enjoy reciprocating ties with UAE, India, in October 1999, entered into an agreement with UAE on Juridical and Judicial co-operation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgments and Arbitral Award.
ET CONTRIBUTORS|Last Updated: Feb 10, 2020, 12.00 PM IST
Execution of Judgment and Decree passed by foreign courts in other countries has always been an important aspect globally. India is no exception as it is emerging as a global player and is poised to become a super-economic power since India opened to foreign investment in 1990s.
Our policy makers have always endeavoured to match up with other nations in recognising foreign judgments in India as a measure of judicial co-operation. There have been various bilateral treaties/ conventions/agreements where countries have agreed to provide mutual co-operation in recognition and execution of judgments and decree passed by competent courts of foreign countries. India has been entering into such agreements with countries on a select basis.
From time immemorial, the trade relations between India and UAE have been flourishing and vast number of businesses are controlled and operated by people of Indian origin. The banks of UAE have been providing steady credit facilities to those business houses.
However, off late there has been a tendency for those business houses to not honour their commitments and flee the country leaving little or no asset for banks to redeem their debts.
In order to enjoy reciprocating ties with UAE, India, in October 1999, entered into an agreement with UAE on Juridical and Judicial co-operation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgments and Arbitral Award. However, India had not notified UAE as reciprocating territory so far because of which, despite an agreement between both countries, decrees of UAE courts could not be executed in India. This also made UAE banks and financial institutions sceptical to realise their dues from the defaulters who flee to India without settling dues.
In India, the law governing recognition and enforcement of foreign decrees is provided in Section 44A of the Code of Civil Procedure, 1908 (CPC). It provides that any decree passed by superior courts of any reciprocating territory may be executed in India, as if it has been passed by Indian courts. However, the law requires India to notify countries as reciprocating territories.
Further, Section 13 of the CPC lays down the tests, which a foreign decree must satisfy for its conclusiveness before it is put to execution.
Therefore, decrees passed by foreign courts of reciprocating territories can be put to execution straightaway subject to satisfying the test provided in Section 13 CPC. A judgment debtor cannot resist such a decree on any grounds on merits once the said judgement becomes conclusive. The executing court will then issue process of attaching the assets of the judgment debtor in India and to auction such assets to satisfy the decree.
The process for executing decree passed by foreign courts of nonreciprocating territories is cumbersome and expensive. The decree holder is required to file a fresh civil action based on the foreign decree in India and obtain a fresh Indian decree before putting it to execution. To lay such action, law provides a limitation period of three years from the date of decree. This long procedure of obtaining an Indian decree on basis of foreign judgement/decree was in a way deterrent for foreign banks and financial institution.
Finally, now the Government of India has issued the notification u/s 44A of CPC and has declared UAE to be a reciprocating territory and declared various courts of UAE to be the Superior Courts.
This gives a boost to banks and financial institutions in UAE to put such un-executed decrees passed by its foreign courts to execution in India against defaulting debtors.
This would further encourage these institutions to take more proactive steps to realise their dues from their defaulter who have fled to India. This notification brings up an end to a long awaited confusion whether UAE is a reciprocating territory or not, as earlier the bilateral agreement between the two nations to provide for the recognition of the Foreign Judgements was not acceptable by the Indian courts for want of notification. With UAE added to the list, now the notified reciprocating territories by India are United Kingdom, Fiji, Singapore, Malaysia, Trinidad & Tobago, New Zeeland, Hong Kong, Papua and New Guinea and Bangladesh.
With this positive step, India has further strengthened its ties with UAE and now judgments passed by the courts at UAE can be straight away put to execution before Indian courts.