PROCEDURE FOR EXECUTION OF ARBITRAL AWARDS

 INTRODUCTION

We have recognized Arbitration worldwide as one of the most reliable modes of alternative dispute resolution. Arbitration is very effective in resolving trade disputes with more and more predictability, certainty, and efficacy.

Arbitration in India, during the present times, can be traced back to the British rule in India after the establishment of the Legislative Council in India in 1834. The Legislative council enacted the Indian Arbitration Act of 1899. This was the first time that legislation on Arbitration enacted. Further, in the Code of Civil Procedure Act of 1908, Arbitration provisions included. The First schedule extending to the territories of India and the Second Schedule to deal with arbitration outside the Indian Arbitration Act 1899.

The Arbitration and Conciliation Act 1996 enacted in India came into force on 25th January 1996. The Act consolidated the Arbitration laws and went much beyond the Arbitration Act of 1940. The 1996 Act is based on the UNCITRAL model to make our arbitration laws in sync with the international model law. The 1996 Act provides for domestic arbitration, international arbitration, and enforcement of domestic and foreign awards. It also contained provisions for conciliation.

Also Read: International Commercial Arbitration 

Arbitral Award

In India, an Arbitral Tribunal passes arbitral award seated in India in accordance with the substantive law for the time being in force in India, referred to as ‘Domestic award’. In international commercial arbitration, the arbitral award issued by a foreign seated arbitral tribunal, referred to as ‘Foreign Awards’.

Section 44 of the Arbitration and Conciliation Act 1996 defines “foreign award”.

In domestic arbitrations, the time limit set to the Arbitral tribunal for issuing the arbitral award is twelve months from the date on which the Arbitrator/ all the arbitrators receive notice in writing of their appointment.

Procedure to apply for setting aside Arbitral Awards

The Arbitration and Conciliation Act, 1996 provides recourse to the party against whom the arbitral award pronounced. It is done for setting aside the arbitral award by prescribing separate procedures for setting aside domestic and foreign awards.

In case of a domestic award, an application under Section 34 of the Act shall file before Court before three months from the date on which the party making that application had received the arbitral award. Section 34(3) allows the party if it satisfies a further period of 30 days after the expiry of three months if sufficient cause prevented the party from making the application. Moreover, The court can entertain no application for setting aside the award after the expiry of these additional thirty days.

Procedure to enforce the Arbitral awards

The following govern the procedure for enforcement and execution of the Domestic awards and Foreign awards primarily:

(i) The Arbitration and Conciliation Act, 1996 and

(ii) The Code of Civil Procedure, 1908.

Moreover, It enforces arbitral awards as a decree of the Court, and principles of natural justice apply to the execution proceedings. Further, It deals with the execution of the domestic awards under Part I of the Arbitration and Conciliation Act 1996. While it deals with the foreign awards under Part II of the Act.

Regarding enforcement of domestic awards, after the period for applying under section 34 for setting aside the arbitral award is over and irrespective of whether a separate application under Section 34 is filed or not, Section 36 (as per 2015 Amendment Act) mandates that the award shall be enforced as if it were a decree of the court as per the Code of Civil Procedure 1908 unless the court grants an order of stay of the operation of the arbitral award for payment of money on such a separate application with due regard to Code of Civil Procedure 1908.

Appropriate Court for the execution of the Arbitral Award

In case of domestic awards, the jurisdiction for the execution of arbitral awards would be:

(i) The Commercial Courts exercising such jurisdiction which would ordinarily lie before any Principal Civil Court of original jurisdiction in a district, and

(ii) The Commercial Division of the High Court in the exercise of its ordinary original civil jurisdiction.

The Supreme Court, in Sundaram Finance Ltd. v. Abdul Samad and Anr, has stated that ‘the enforcement of an award through its execution can be filed anywhere in the country where such a decree can be executed and there is no requirement for obtaining a transfer of a decree from the Court, which would have jurisdiction over the arbitral proceedings’. 

Limitation Period

Since it executes the domestic awards as a decree of the court, the Limitation Act of 1963 applies to Arbitration. Under the act, it prescribes 12 years to enforce such an award.

Also Read: Efficiency and Cost vs. Procedural Fairness and Substantive Quality in ICA  

Stamping and registration of Awards

Section 35 of the Stamp Act 1899 states that an insufficient stamp award is inadmissible. Moreover, The amount of the stamp duty varies from state to state depending upon where the award made. Also, under section 17 of the Registration Act 1908, registration of award is mandatory if it affects the immovable property, it will render else invalid.

Conclusion

The procedures for execution of the awards should be unambiguous, time-efficient, and cost-effective. Only then the arbitration process as an alternative dispute resolution method will become a win-win situation for the parties, the nation, and the international community.