India has added one more step towards becoming a three trillion economy by declaring UAE as a reciprocating territory. The UAE has recently shown a major interest in investing in the Indian economy, UAE has recently made an arrangement to invest 75 billion dollars in the infrastructure sector and major investment in the agriculture sector as well as other sectors. This gives new rise to new political, economic ventures that will help India to reach the target of a three trillion economy, and by declaring UAE as India reciprocating territory the trade and economic collaboration between the two states will take a giant leap.
Section 44 A of Civil Procedure Code defines the foreign degree and how it is to be applied to the Indian courtrooms. But before searching into what and how a foreign degree is applied what is the meaning and process of reciprocating must be known.
What the law says
If the Indian central government declared any territory or state as reciprocating on official gazette then that country will be a reciprocating territory of the Indian state and foreign decree passed by the courts of the reciprocating state will be assumed to be a decree as in passed by an Indian court. There are many other states that are already India’s reciprocating territories like UK, Singapore, Bangladesh, Malaysia, Trinidad & Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua New Guinea, Fiji, Aden, and now one more state has been added that is UAE.
Indian legal system adopted this process through the CPC, 1908, section 13, 14, 44A. The section 2 defines what is a foreign decree and what is the foreign court is section 2(6) defines foreign judgment it says that any judgment passed by the foreign court is foreign judgment and section 2(5) defines foreign court which says that court which is situated outside the territory of India and if it is not established under the authority of Indian Government is a foreign court.
Section 13 and 14 define rule book for the foreign judgment how and when they are to be applicable in an Indian court. Section 13 has given certain rules under which the foreign decree will not be applicable if following conditions are present:
- When it is not passed by a court of competent jurisdiction
- When the court has not produced the final merits of the case.
- When the proceeding failed to recognize the International laws as well as Indian laws if applicable to the case
- When the decree is obtained by fraud
- When the proceeding is in the breach of natural justice
- Where it sustains a claim founded a breach of any law in force in India.
Section 14 of CPC is presumption to foreign judgments which says that foreign judgments that are passed by the foreign competent courts are applicable to Indian Courts unless any contrary papers have appeared before the court or it is proved to be incompetent in nature. In a very famous case, Narshima Rao v. Venkata Lakshmi the Supreme Court held that mere production of photocopies does not legitimate the competency of the foreign court.
Section 44 A is regarding the decree passed in reciprocating territory. In this, there are some norms that have been set up to make foreign decree applicable in India. These are:
- The certified copy of foreign decree passed in foreign court will be applicable in India as if it has been passed by a court in India.
- Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.
- The decree if falling under the exception stated in section 13 of the CPC than it will not be applicable to the court proceeding.
- This section allows the revenue foreign decree to be applicable in India and these provisions help in fastening the court proceeding.
Advantage of declaring a reciprocating territory
As above it has been discussed that how the reciprocating territory is declared and how it benefits the Indian legal system and economy. The next question is, as UAE has been added to this list what will be its effect? As discussed above, that the trade rituals between India and UAE are moving towards its peak, this declaration will decelerate the activities that cause harm to both the countries trade like tax evasion cases and other major illegal activities.
Situation prior to the declaration
The prior situation was that the decree of a UAE court was not directly applicable to the Indian district Court which led to a major setback to the people in obtaining justice in Indian Court. This mainly harmed the investors who have invested the amount in the country and for recovery of debt, they have to go through rigorous legal proceedings by filling the suit again in the court.
Situation after the declaration
This will create a new dawn in the legal system of both the countries especially when it comes to the insolvency code in India, this declaration will bring all the laws under one roof and will help in speeding insolvency process. The major relief will be for the creditors who have invested large amounts in the country and because of defaults of debtors they are finding it difficult to regain their amount from defaulters, as this law will speed up the bankruptcy and insolvency code process.
The pain of filing suit again in Indian courts will be reduced as prior to notification the suit has to be filed again and the witness and other formalities have to be done again but after this notification, the issue of the refiling of the suit will not be there and direct execution of foreign court decree will be there. This will result in speeding up the execution of the foreign decree in Indian courts and provide relief to the people at the earliest.
The arbitration issue will also be resolved after this notification, as before UAE was not in the list of the countries whose foreign arbitral decree can be applicable in India as per section 44 of the Arbitration and Conciliation Act, 1996. But after this notification, the arbitral decree will be applicable in the Indian Courts.
The above notification has been passed by the Central Government of India on 17 January 2020 which says that the UAE decree will be applicable to Indian District Courts but there are some ambiguities relating to the notification. Firstly, whether it will have a retrospective or prospective effect. Secondly, whether people who have received the decree earlier will get relief or not as it has a time limit of three years from default. Thirdly, whether the people in the UAE can directly move to the notified courts so that their decree can be applicable in Indian Courts.
These questions are a major hump in making the relations cordial and to speed up the justice delivery system. But for the time being, this notification is a major leap in the relation between both the countries and will strengthen up the relations between both the countries whether it is political or economic.
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