Arbitral Award in India ( Domestic Award )

INTRODUCTION

In India, an arbitral award is a final and binding decision rendered by an arbitrator or a panel of arbitrators in a private dispute resolution process known as arbitration. This method of resolving disputes outside of traditional court systems is governed by the Arbitration and Conciliation Act, of 1996. Here’s a brief introduction to key aspects of arbitral awards in India:

1. Legal Framework: The Arbitration and Conciliation Act, of 1996, is the primary legislation governing arbitration in India. It provides the legal framework for conducting arbitrations, enforcement of arbitral awards, and related matters.
2. Definition: An arbitral award is a decision on the merits of the dispute made by the arbitrator(s) after considering the evidence and arguments presented by the parties. It settles the issues in dispute and is intended to be final and binding.

Types of Awards :

Arbitral awards in India can be of various types:

• Final Award: Resolves all issues in the dispute.
• Interim Award: Addresses specific issues during the arbitration process.
• Partial Award: Resolves some but not all of the issues in dispute.
• Consent Award: Made when parties settle the dispute by mutual agreement during the arbitration proceedings.

Essentials of Award –

1. Clarity and Completeness: The award should be clear, concise, and complete. It should clearly state the decision on each issue submitted to arbitration and the reasons behind it.
2. Finality and Binding Nature: An arbitral award should be final and binding on the parties involved. Once rendered, it generally cannot be appealed except in very limited circumstances.
3. Jurisdiction: The award should confirm that the arbitral tribunal had jurisdiction to hear and decide the dispute. This typically involves confirming that the arbitration agreement was valid and that the tribunal was properly constituted.
4. Substance and Merits: The award should address the substantive issues raised in the dispute and provide a reasoned decision based on the facts and applicable law. It should clearly state the relief granted or denied.
5. Neutrality and Impartiality: The award should demonstrate that the arbitral tribunal acted impartially and without any bias towards either party. This helps to ensure the integrity of the arbitration process.
6. Enforceability: The award should be enforceable under the applicable law and international conventions. It should facilitate the parties in enforcing their rights or obligations under the award if necessary.
7. Timeframe: While there is no strict requirement, a reasonable timeframe for rendering the award is essential. Delays can undermine confidence in the arbitration process.
8. Formal Requirements: The award should meet any formal requirements set out in the arbitration agreement or applicable law. This may include signatures of the arbitrators and a proper notification process to the parties.
9. Confidentiality: If confidentiality is required by the parties or by law, the award should maintain the confidentiality of the proceedings and the parties involved.
10. Costs and Fees: The award should address the allocation of costs and fees associated with the arbitration, including the arbitrator’s fees and expenses.
11. Language and Translation: The award should be in the agreed-upon language or languages of the arbitration. If necessary, translations should be provided to ensure understanding by the parties.

Requirements for Enforcing Arbitral Award-

1. Valid Arbitration Agreement: The arbitral award must be based on a valid arbitration agreement between the parties. This means that the parties must have agreed to submit their disputes to arbitration.
2. Clear Identification: The award should clearly identify the parties involved, the arbitrators, and the case reference or number.
3. Statement of Jurisdiction: The award should confirm that the arbitral tribunal had jurisdiction over the dispute, typically by referencing the arbitration agreement or applicable law.
4. Decision on the Merits: The award should contain a clear decision on the substantive issues submitted to arbitration. This includes determining the rights and obligations of the parties.
5. Reasoning: While not always required, providing reasoning for the decision enhances the award’s clarity and may be necessary in certain jurisdictions or for complex disputes.

An Award can be appealed or set aside on the following points –

Section 34(2) of the Arbitration and Conciliation Act, 1996 in India provides grounds on which an arbitral award can be set aside by a court. Here are the grounds specified in Section 34(2):

1. Incapacity of Party: If a party to the arbitration agreement was under some incapacity or the agreement itself is not valid under the law to which the parties have subjected it, or failing any indication thereon, under the law for the time being in force.
2. Invalid Arbitration Agreement: If the arbitration agreement is not valid under the law chosen by the parties, or failing any indication thereon, under the law of the country where the award was made.
3. Lack of Proper Notice: If the party making the application was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings, or was otherwise unable to present his case.
4. Composition of Arbitral Tribunal or Procedure not in Accordance with Agreement: If the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties unless such agreement was in conflict with a provision of the Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act.
5. Jurisdictional Issues: If the subject matter of the dispute is not capable of settlement by arbitration under the law of India, or if the award is in conflict with the public policy of India.
6. Contrary to Public Policy: If the award is against the public policy of India.
7. Conflict with the Law: If the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.
8. Non-Compliance with Legal Procedure: If the arbitral tribunal has failed to follow the procedure required by the law governing the arbitration unless such failure was by the agreement of the parties.

Time limit for applying set aside an arbitral award

1. Within Three Months: The application for setting aside an arbitral award must be made within three months from the date of receipt of the award by the party making the application.

This time limit is critical and is intended to promote finality and certainty in arbitration proceedings. However, the court may condone a delay in filing the application if sufficient cause is shown.

It’s important to note that the three-month period begins from the date of receipt of the arbitral award, not from the date of its publication or communication by the arbitral tribunal.

Conclusion : In India, arbitral awards play a crucial role in the resolution of disputes, providing an alternative to traditional court litigation. Here’s a conclusion about arbitral awards in India, also known as domestic awards.Arbitral awards offer a faster resolution of disputes compared to traditional court proceedings, contributing to the efficiency of the legal system. Parties can often tailor the arbitration process to their specific needs, leading to quicker decisions.