India is one of the few jurisdictions to statutorily define public policy through the Arbitration and Conciliation Amendment Act, 2015. Within the definition of public policy, India has statutorily included the grounds of fraud, corruption, fundamental policy of Indian law and basic notions of justice and morality.
The aforesaid statement
[1] depicts the elusive nature of ‘public policy’ in legal proceedings that draw upon its presence in statute, conventions and legal systems. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“
New York Convention”) is a critical international convention that gives room for public policy considerations while assessing enforcement of a foreign arbitral award (foreign award). Article V(2)(b) of the New York Convention states:
“(V)(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
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The words of J. Burrough aptly justify the unpredictability of
the interpretation of the term 'public policy' when he
says, "
Public Policy is an unruly horse where once you
stride on it you do not know where it's going to take
you."
For decades India has been perceived as a jurisdiction which is
not arbitration friendly and where enforcement of foreign arbitral
awards is problematic. As per section 34(2)(b)(ii) of the
Arbitration Act, 1996 an arbitral award can be set aside by the
court if it is against the "public policy of India".