Enforcement of Foreign Arbitral Awards in Nepal

Legal framework

The primary provision is Section 34 of the Arbitration Act, 2055 (1999) (“Arbitration Act”), supplemented by Rule 13 of the Arbitration (Court Procedure) Regulations, 2059 (2002) (“Arbitration Regulations”).

Nepal is also a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, commonly known as the New York Convention.

Conditions for enforcement

Section 34(2) of the Arbitration Act provides for recognition and enforcement of awards made, after commencement of the Act, in the territory of a State party to the relevant treaty, subject to that treaty and Nepal’s reservations. It requires that:

• The arbitrators were appointed and the award was made in accordance with the law and procedure specified in the agreement;
• The parties received timely notice of the arbitration proceedings;
• The award remained within the terms of the agreement or the matters submitted to arbitration;
• The award became final and binding under the law of the country where it was made;
• Neither the law of the applicant’s country nor that of the country where the arbitration took place contains a legal prohibition on enforcement of an award made in Nepal; and
• The enforcement application was filed within 90 days of the date of the award.

These requirements should be reviewed before filing. The arbitration agreement, procedural record and status of any challenge to the award are relevant to that assessment.

Filing deadline

Section 34(2)(f) of the Arbitration Act expressly requires an application within 90 days from the date of the award. The statutory wording refers to the award’s date, rather than the date on which the award holder receives it.

Award holders should arrange certification, translations and Nepalese legal representation promptly. They should not assume that negotiations, a demand for voluntary payment or proceedings in another country extend the filing period.

Court and required documents

An application for enforcement must be filed before the competent High Court under Section 34(1) of the Arbitration Act. The required documents are:

• The original arbitral award or a certified copy;
• The original arbitration agreement or a certified copy; and
• A formal Nepali translation of the award where it is not in Nepali.

Article IV of the New York Convention also addresses authentication, certification and translations of both the award and arbitration agreement. Where the agreement is in another language, an appropriately certified Nepali translation should therefore also be prepared.

Rule 13 requires the application to state the respondent’s identifying particulars, address, business address and available contact details useful for service or correspondence. It must also state that the conditions in Section 34(2) of the Arbitration Act have been satisfied. Documents evidencing notice, appointment of the tribunal and the award’s binding status should be retained to support the application and answer any objections.

Recognition and execution procedure

At the preliminary hearing, if the High Court considers that the foreign award appears enforceable, Rule 13 of the Arbitration Regulations provides for notice to the respondent. The respondent is directed to appear with written objections within 90 days, excluding the applicable allowance for travel time.

This response period is separate from the award holder’s 90-day filing deadline. Rule 13 of the Arbitration Regulations further provides that, after the respondent appears or the appearance period expires, the High Court should ordinarily hold the hearing within ten days. This procedural provision should not be understood as a guarantee that the entire enforcement process will conclude within ten days.

If the High Court is satisfied that the requirements are met, it sends the original case file and an enforcement order to the relevant District Court. The District Court then executes the award in accordance with the Rules, in the same manner as an award made in Nepal.

Grounds for refusing enforcement

Section 34(4) of the Arbitration Act prohibits enforcement where the dispute cannot be resolved by arbitration under Nepalese law or enforcement would be contrary to public policy.

Article V of the New York Convention also permits refusal on specified grounds, including incapacity or an invalid arbitration agreement; lack of proper notice or inability to present a case; an award exceeding the submission to arbitration; improper tribunal composition or procedure; and an award that is not binding or has been set aside or suspended by a competent authority in the relevant country. The party relying on the grounds in Article V(1) must furnish proof.

Pending challenges abroad

A pending application to set aside or suspend an award abroad may affect the enforcement proceedings. Article VI of the Convention allows the enforcing court to adjourn its decision where an application has been made to the competent authority described in Article V(1)(e). On the award holder’s application, the court may also require suitable security from the opposing party.

A pending challenge should be distinguished from an order actually setting aside or suspending the award. The relevant application, orders and their effect on the award’s binding status require examination.

How Alpha Law Associates can assist

Alpha Law Associates assists clients with assessing the enforceability of foreign arbitral awards, preparing enforcement applications and supporting documents, coordinating certification and translations, and representation before the High Court and District Court. The Firm also advises on objections to enforcement, pending challenges abroad and recovery considerations. Early legal review helps clients meet filing deadlines and develop an appropriate enforcement strategy.

This article provides general information. Advice on a particular award requires examination of the arbitration agreement, award, procedural record and applicable law.