Execution: The Aim Of The Game

By Sahil Kanuga

Posted: 11th June 2012 10:08

It is often said that getting an award or a judgment in your favour is only half the battle won, the actual victory is when the hard currency hits your account.  Often it is necessary to bring additional, enforcement proceedings in order to turn your award into cash.  It is common knowledge that enforcing an arbitral award or a court’s judgment in India is not easy.  The process takes time and is usually the subject of innumerable challenges through the court system for a second time (this time challenging the execution rather than the merits of the award/judgment itself).  We often hear moans and whines about the time it can take to enforce an award or a judgment in India.  New York courts are willing to offer effective practical remedies and therefore, opportunities. 

One must keep in mind that today, cross-border is the name of the game and more often than not, parties have multi-million dollar business with tentacles in different parts of the world.  Sometimes, all it takes to ensure an amicable resolution to a dispute is an order of pre-arbitration or pre-judgment attachment to ensure that the possible dues are secured.  Such an order can be sufficient to get the proposed defendant to settle the matter without further proceedings.  On the other hand, when a party has gone through the entire dispute-resolution process and obtained an award or a judgment, how can he enforce it in a timely and efficient manner? Recent appellate decisions from New York point towards it becoming a rather enforcement-friendly forum where judgments and awards from anywhere in the world can be enforced or even secured in advance without personal jurisdiction over the debtor as long as the debtor’s assets or a garnishee holding the debtor’s assets are within the jurisdiction of the New York court.

Pre-award Attachment

In re Sojitz Corp., a Japanese claimant was able to obtain an attachment of the New York assets of an Indian respondent to secure a possible award in a Singapore arbitration case that the claimant had not yet commenced and “where there was non connection to New York by way of subject matter or personal jurisdiction.”  Such attachment in aid of foreign arbitration is expressly authorised by a New York statute.

Foreign Judgment: Enforceable in New York

In Lenchyshyn v.  Pelko Electric Inc., the court granted recognition and enforcement to a Canadian judgment between Canadian parties even though there was no showing that the judgment debtor was subject to personal jurisdiction in New York or had any assets in New York.  The court ruled that “no jurisdictional basis for proceeding against a judgment debtor need be shown before a foreign judgment will be recognised or enforced in a given state.”

Drag them into New York

In Koehler v.  The Bank of Bermuda Limited, the New York’s highest court held that “a court sitting in New York may order a bank over which it has personal jurisdiction to deliver stock certificates owned by a judgment debtor (or cash equal to their value) to a judgment creditor .  .  .  when those stock certificates are located outside New York,” without consideration to whether the judgment debtor himself is subject to New York jurisdiction.  In Koehler, the judgment debtor was a resident of Bermuda and the stock certificates against which enforcement was granted were being held by the bank in Bermuda.

Conclusion:

These rulings are controversial, and new cases based on these rulings can be expected to meet some resistance.  The New York banking industry is particularly vigorous in trying to find ways around the Koehler decision, which would appear to apply to a debtor’s assets held anywhere in the world by any bank having a branch or representative office in New York.  But our take-away is that New York might now well provide effective tools for enforcement of any judgment from anywhere in the world.  New York courts appear to be willing to grant an order of attachment prior to award, or garnishment post judgment or award, without having personal jurisdiction over the debtor, presenting judgment creditors with opportunities they have not had before.


Sahil Kanuga is currently a Senior Associate working with AZB & Partners, one of the most prominent Indian Law Firms.  He earned his LL.B.  and Masters in Law (Business Laws) from the Mumbai University and works with the Dispute Resolution Team.  Articles authored by him have been published in reputed international legal journals. 

Sahil can be contacted via email at sahil.kanuga@azbpartners.com or alternatively by phoning +91 22 6639 6880.


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