In the case of Jaldhi Overseas Pte. Limited v. Steer Overseas Private Limited, decided that a foreign award was insufficient to start insolvency proceedings against the corporate debtor under the Insolvency and Bankruptcy Code, 2016 ("IBC").
In the instant case titled Jaldhi Overseas Pte. Limited v. Steer Overseas Private Limited the issue raised for clarification before the Court was:
Whether or not a foreign award is sufficient to file an IBC insolvency petition against the Corporate Debtor?
With regard to this issue, Foreign awards differ from domestic prizes, according to the Court. Unlike a domestic award, which can be used to start legal action against a corporate debtor under the IBC, a foreign award must pass specific requirements before it can be enforced as an award or presumed decree. The Court further clarified this by holding that the mere submission of a foreign award is insufficient to have an effect, citing the Supreme Court's ruling in Government of India v. Vedanta Limited [2020 SCC online SC 749]. The 1996 Act's Part II, Chapter I, which addresses the execution of foreign awards in India, specifies that "the court" solely applies to High Courts in Section 47 (Evidence) of the 1996 Act.
The Court further stated that in order to enforce foreign awards in India, the party in whose favour the award stands must file the documents referred to in Sections 47(l) and (2) of the 1996 Act and that the enforcement of a foreign award is subject to the satisfaction of the relevant High Court. Only after the High Court has expressed satisfaction with the enforcement of a foreign award, shall the foreign award become enforceable and shall be deemed to be a decree as per Section 49 (Enforcement of foreign awards) of the 1996 Act.
In light of the aforementioned, the Court denied the Operational Creditor's application.
The Court categorically stated that,
"The foreign award is not a decree in itself. A foreign award cannot directly constitute a debt to initiate proceedings against a Corporate Debtor under IBC. The mere production of foreign awards is not enough to give an effect. Part II Chapter I of Arbitration and Conciliation Act 1996 deals with the enforcement of foreign awards in India. As per explanation to Section 47, 'the court' mentioned therein denotes only High Courts.”