The Tug of War between Enforcement of Foreign Judgments and Supremacy of Domestic Laws: Critical Analysis of Section 13(f) of the Code of Civil Procedure, 1908

Introduction

The standards regulating the acceptance of judgments handed down in foreign jurisdictions are one of the basic elements of the debate on private international law. In addition, the English courts have imposed international judgments since the 17th century.[1] Although there may be many grounds for imposing international decisions, the concept of comitology of nations is of particular significance in the light of the debate to follow. The doctrine refers essentially to the legal reciprocity between different nations and to the act of extending courtesy to other nations by recognizing their legal, executive and judicial orders.[2] The standards regulating the area of international judgment recognition are remarkably uniform.[3] If it is universal treaties or various legal structures globally, the reasons for non-recognition of foreign judgments are strikingly identical and act as an exception to the general rule of foreign judgment recognition.[4] Such reasons are: (I) the lack of jurisdiction of the foreign court, (ii) the judgment not given on the merits of the case, (iii) the judgment appears to be based on an erroneous interpretation of international law, (iv) the proceedings have not adhered to the standards of natural justice, (v) the judgment obtained by deception and, lastly, (vi) the judgment against the public policy of the State in which it is to be applied.[5]

In India, section 13 of the Civil Procedure Code, 1908, is the primary law regulating the recognition of international judgments. However, if one compares the same with the aforementioned principles, it is important to note that while the first five principles have been repeated almost identically in section 13 (corresponding to clauses (a), (b), (c), (d) & (e), respectively), the sixth principle is slightly different from clause (f) of section 13.[6] While the international standards emphasize the following state’s “public policy,” clause (f) emphasizes the infringement of Indian laws (“the Indian approach“). This project seeks to analyse the impact of this substantial departure and thereby seeks to suggest appropriate changes to the law in light of the same.

A Critical Analysis of the Indian Approach

Private International Law strikes a delicate balance between the comitology concept between nations and a sovereign’s sovereignty within its own territorial limits. In the current sense, the aim is to extend sufficient deference to international judgments while still ensuring that domestic interests are supported and granted a degree of primacy.[7] Therefore the decision should be applied until such time as an international decision does not adversely affect these domestic interests.[8] It is this fundamental concept that expresses itself in the form of primacy granted to ‘public policy‘ in cases related to the acceptance of international judgments through different legal systems. In other words, when ‘violation of public policy’ is the set threshold for non-recognition of foreign judgments, a proper balance between the principles of comity and supremacy is best achieved according to internationally established norms. [9]Therefore, it may be assumed by way of multiple repetitions that ‘public policy‘ is generally considered to be the correct marker of domestic interests. However, as mentioned above, the ‘Indian Private International Law’ principles enunciated in clause (f) render a significant deviation from this globally defined threshold of public policy derogation. The provision essentially restricts the scope of the principles laid down by focusing primarily on Indian laws and hence on the text of those laws. These undue constraints could pose a number of problems.[10] Additionally, there are several ambiguities with respect to the clause text itself. Such ambiguities, as well as the possible issues that could occur, were discussed in the presiding paragraphs.

Law in Force in India

As noted above, clause (f) places sole emphasis on Indian law, rather than Indian public policy. This might theoretically cause the courts to take a hyper-technical approach when deciding if there has actually been a breach of Indian legislation. This is essentially due to the fact that clause (f) does not distinguish between the different types of legislation. Therefore, theoretically, a court treading along the lines of an extremely optimistic definition of the word ‘law‘ may refuse a foreign judgment based on details regarding irrelevant procedural rules.[11] Even a procedural law that has absolutely no relation to public policy, for example, is in principle a law that is in effect in India. And the same may theoretically be a basis for an international decision not to be remembered. It cannot be denied that such non-recognition would not serve any useful purpose, and would merely help to increase court workload. Furthermore, it may also be viewed as a significant derogation from the concept of comity of nations. The word “law” was, however, not specified anywhere in the Code. This, coupled with a lack of proper jurisprudence, raises a number of fundamental questions regarding the scope of the clause itself. Is ‘law‘ consistent with ‘law’ under Article 13(3) of the Constitution[12] pursuant to section13 (f)? In other words, does the ‘law’ ambit even include executive orders? Or should the scope of ‘law’ be limited to meaningful statutes only, given that case laws have so far only applied the provisions to laws? It is important to understand the value of these issues because after all, the validity of a large number of international decisions will depend solely on the same issue. However, these questions remain largely unanswered, and only case laws or the legislature itself can clarify them in the future.

The importance of “Founded” in legitimizing a Foreign Judgment

Section 13(f) of the Code of Civil Procedure requires a claim by a foreign court to be “founded” by an infringement of Indian legislation. To this respect a vast majority of cases are straightforward and do not pose any controversial problem. For example, where a claim was based on a foreign divorce decree on a ground that was not recognized by the parties’ personal law, the court in India refused to enforce the same.[13] Again, the court did not uphold an argument based on a guarantee provided in direct violation of section 26(6) of the Foreign Exchange Regulation Act, 1973[14]. Obviously, the courts have looked into the character and substance of the claims to determine if the same violates Indian law. In other words, the focus was placed on the ultimate effect that a claim sustainment would have, i.e. whether the claim’s ‘compliance’ would actually contravene an Indian statute.[15]

The landmark judgment “Indian and General Investment Trust Ltd. v. Raja of Khalikote[16]presents a contradictory interpretation of the word ‘founded’. The brief facts of this case relate to a debenture loan levied in England by the father of the respondent, the Raja of Khalikote. The plaintiffs were trustees who held the estates of the Raja for redemption from the said loan. The question before the court was whether the claimants were entitled to recover more after they had already recovered significantly more than double the loan amount from the respondent. This depended essentially on the applicability of an Orissa legislation, which exempted a borrower from repaying more than double the principal amount. In addressing the same subject in the light of Section 13(f), the court found very interestingly, “The claim was in no way based on the law as prevailing in India. The plaintiffs rightly or wrongly alleged that the parties were governed by English law, rather than Indian law. The English Court acknowledged the plea and subsequently did not uphold a lawsuit based on any violation of the Indian law”. Therefore, the court looked at the plaint’s contents solely to decide if the argument of the plaintiffs was based on a violation of Indian law. On a fair reading of section 13(f)[17], one would conclude that the court complied perfectly with the same criteria. In effect, however, sustaining this claim clearly led to a breach of the Orissa legislation in question. The position remains unclear as to what interpretation is correct. However, this case also provides a glimpse of one of the Indian approach’s major problem. As mentioned above, a strict black-letter reading of clause (f) allowed the complainants to bypass the Orissa law – a law that represented the State’s economic policy. Repeated maintenance of similar claims, i.e. violations of such economic policies across the nation, could have serious economic impacts. Public policy, whether economic, social or otherwise, is paramount to a nation’s proper governance. No derogation from the same should be permitted, as per set norms. However, clause (f) makes these derogations specifically through a positive interpretation of the term ‘founded’. It can also be inferred that this interpretation of the word “founded” could lead to an unreasonably large number of foreign judgments being recognized. This could, again, undermine sovereign supremacy.[18] Moreover, as is obvious, this could theoretically result in justice being granted at the cost of the nation’s welfare which is unreasonable

“Public Policy” – A Need of the Hour

Public policy” can be defined as the general political approach of a given system of law. In other words, public policy refers to the basic values behind all the legislations.[19] It generally stresses the purpose of a specific piece of legislation, the overarching objective a law aims to accomplish, and not the technicalities it defines. In addition, given the concept’s versatile nature, these technicalities can also be included, if the facts of the case so require. Thus, ‘public policy’ will allow the relevant law to adapt to the facts and circumstances of the case, forming the basis of recognition or non-recognition. In addition, as is evident from the intention of the Legislators, an unreasonably high or unreasonably low number of foreign judgments could be recognized on the basis of a positive interpretation of the terms “founded” and “law” respectively.[20] This, in effect, could disturb the balance between comity values and sovereign supremacy. In addition, as is evident from the above discussion, an unreasonably high or unreasonably low number of foreign judgments could be recognized on the basis of a positive interpretation of the terms “founded” and “law” respectively. This, in effect, could disturb the balance between comity values and sovereign supremacy.[21] It is argued that peace between the two can only be achieved if, in compliance with internationally accepted norms, the specified criterion for non-recognition of foreign judgments in India (in addition to the other requirements) is a violation of public policy. That, in fact, is also in line with the Sixty-Fifth Law Commission’s recommendations.

Conclusion

Having regard to the possible problems that could occur with the existing provision of section 13(f), it is submitted that the same is not viable as in compliance with international standards. Various interpretations of the clause can lead to serious derogations from the comitology principle of the nations. The countries like England and other European nations through the process of “Trial and Error” have learned to utilize the judgments of foreign jurisdictions to their benefits and not creating a straight forward ruckus with the domestic laws. For comparison, the same can also adversely affect India’s domestic interests. Consequently, it is argued that a ‘public policy’ clause must complement, if not supplant, clause (f) of section 13. Only then will justice be served in terms of this area to the ultimate goal of private international law. The Supreme Court in the recent past has started taking the Foreign Judgments into consideration for the better functioning of the Indian Courts and to speeding up the process of taking the domestic laws in parity with the International notions.

[1]  Dicey & Morris, The Conflict of Laws 960-967 (8ed. JHC Morris, 1967).

[2] Such a view has also been endorsed by the Supreme Court in R. Vishwanathan v. Abdul Wazid AIR 1963 SC 1, ¶16.

[3] USLegal, Comity – Conflict of Law, USLEGAL (July 21st, 2020, 4.40PM), https://conflictoflaws.uslegal.com/comity/.

[4] The Hague Convention on the Recognition and Enforcement of Judgments in Civil and Commercial Matters, February 1, 1971, 144 U.N.T.S. 249.

[5] Setalvad, Conflict of Laws 185-194 (3 ed. LEXIS NEXIS, 2014).

[6] The Code of Civil Procedure, 1908 §13.

[7] USLegal, Comity – Conflict of Law, USLEGAL (July 21st, 2020, 4.40PM), https://conflictoflaws.uslegal.com/comity/.

[8] Law Commission of India, Recognition of Foreign Divorces, Report No. 65, 102-110.

[9] SETALVAD, CONFLICT OF LAWS 198-234 (3 ed. LEXIS NEXIS, 2014).

[10] Anubha v. Vikas Aggarwal & Ors. 100 (2002) DLT 682.

[11] DICEY & MORRIS, THE CONFLICT OF LAWS 980-984 (8ed. JHC Morris, 1967).

[12] The Constitution of India 1950 Art. 13.

[13] Y. Narasimha Rao & Ors v. Y. Venkata Lakshmi & Anr 1991 SCR (2) 821.

[14] The Foreign Exchange Regulation Act 1973 § 26(6).

[15] Algemene Bank Netherland v. Satish Dayalal Choksi, 1991 72 CompCas 501 Bom.

[16] Indian and General Investment Trust Ltd. v. Raja of Khalikote AIR 1952 Cal 508.

[17] The Code of Civil Procedure 1908 § 13(f).

[18] Yazman Hume Quarries Sdn. v. Chellappan, MANU/TN/1252/1996.

[19]   Law Commission, 65th Report, supra note 7, 102.

[20] Renusagar Power Co. Ltd. v. General Electric Co., AIR 1994 SC 860.

[21] Joao Gloria Pires v. Ana Joaquina Rodriguese Pires, AIR 1967 Goa, D & D 113.


ABOUT THE AUTHOR

Mayukh Mandal

Picture of Mayukh Mandal

Mayukh is a third-year law student from West Bengal National University of Juridical Sciences (WBNUJS). His areas of interest include inter-connection of Law with Human Rights, Constitutional Law, Corporate Laws, and International Law. He enjoys researching and writing articles on the International Conventions regarding Human Rights and other contemporary International issues related to the legal field.

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