Arbitration is a means for resolving disputes between parties using an arbitral tribunal. Moreover, such an arbitral tribunal is either chosen by the parties to the dispute or by the court at a party’s request. In other words, it is a different approach for resolving disputes than going to court.
The English Arbitration Law serves as the foundation for Indian arbitration law. The Arbitration Act of 1940 served as the Indian law governing arbitration until it was amended in 1996 by the new Arbitration and Conciliation Act.
The United Nations Commission on International Trade Law serves as the foundation for Indian arbitration law (UNCITRAL Model Law). The law of arbitration is based on the idea that the parties should be given the option to replace the regular court system with a domestic tribunal made up of arbitrators of their choice.
In this law note, we will study the concept of arbitral award under the Arbitration Act, starting from its meaning to its enforcement.
Meaning of Arbitral Award
The arbitral award and the court’s ruling are treated equally. The arbitral award has the same legal power and effect as a judicial order. In several arbitration-related domains, the adjustment between the parties eliminates the need for litigation.
An arbitral ruling is final and binding on the parties, and there is no possibility of appeal. However, an aggrieved party has the option of going to court to set aside the arbitral award for one or more of the reasons listed in section 34 of the Arbitration and Conciliation Act, 1996.
A temporary, interlocutory, or partial arbitral decision is included in the definition of an arbitral award. It is the decision of the arbitral tribunal about the nature of the case that was presented to it.
At any time throughout the arbitral procedures, the arbitral tribunal may issue an interim arbitral award on any topic for which it will issue a final arbitral decision. The interim award may be used in the same manner as the arbitration’s final award. Within 30 days of receiving the arbitral award, a party may request the arbitral tribunal to make an extra arbitral award for the matters brought in the arbitration procedures which are not covered under the award unless the parties agree differently.
Must See: 6 Grounds on Which the Court Can Set Aside an Arbitral Award
Evolution of Arbitral Awards in India
The Arbitration and Conciliation Act, 1996 and the Code of Civil Procedure, 1908, govern the recognition and execution of arbitral awards (CPC).
Domestic and foreign awards are enforceable in the same way as a court order in India. Even consent awards are issued as a result of a settlement between parties that are valid in this situation. However, depending on where the arbitration took place, there are differences in the procedures for enforcing a judgement. The provisions of the Arbitration and Conciliation Act apply to the enforcement and execution of an arbitral award seated in India (a domestic award). In comparison, the same provisions do not apply to the enforcement of foreign-seated awards (or foreign awards).
The provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the New York Convention) and the Convention on the Execution of Foreign Arbitral Awards (the Geneva Convention), both of which have been ratified by India, are incorporated into and given effect by Part II of the Arbitration and Conciliation Act, 1996. No other treaty governing the execution of foreign awards has India as a signatory.
The Civil Procedure Code governs the issuance and execution of decrees in India. Whereas the Arbitration and Conciliation Act and the CPC primarily control the application of arbitral awards.
Related: What Is Patent Illegality in India?
Categories of Arbitral Award
An arbitral award can be classified into two broad categories: domestic award and foreign award.
Domestic Award
Part I of the Arbitration and Conciliation Act governs domestic awards. A domestic award is one that was made in accordance with sections 2 to 43 of the Act.
Awards that arise through domestic arbitration are referred to as domestic awards. It is limited to the Indian territory. Herein, the parties must share a connection to India or be of Indian ancestry, and the area is primarily relevant for domestic arbitration reasons. Domestic arbitration includes decisions made by arbitral tribunals in India as well as decisions made by a foreign government in cases where both parties are Indian, and their nationality is subject to Indian law.
Foreign Award
International arbitration, often known as foreign arbitration, is covered under Part II of the Arbitration and Conciliation Act of 1996. Section 44 of the Arbitration and Conciliation Act defines the term “foreign award”. The result of a foreign arbitration is a foreign award. The award made during such proceedings shall be referred to as a foreign award if the parties decide to use a foreign arbitration institution or consent to an ad hoc arbitration abroad.
Related: International Commercial Arbitration With Respect to India
Essential Elements of Arbitral Award
These are the main essentials of an arbitral award:
- An award must be in writing.
- All the members of the arbitral tribunal must sign the award.
- The award must provide the justification for its decision.
- The award should include the date and place of the arbitration.
Enforcement of Arbitral Award
The Civil Procedure Code governs the enforcement of judgments in India. Whereas the Arbitration & Conciliation Act and the CPC primarily manage the process for enforcing arbitral awards.
Domestic and foreign awards are enforced in the same manner as an Indian court order. Nevertheless, there are variations based on the location of the arbitration. Part I of the Arbitration and Conciliation Act regulate seated arbitral awards (domestic award), and Part II of the Act regulates the enforcement of overseas seated decisions (international award).
Conclusion
An arbitral award is basically an award or result that arises out of an arbitration proceeding. Moreover, this arbitral award is enforceable in the court of law, and it is treated equally to the order of a court. Whereas for an arbitral award to be enforceable, it has to fulfil a certain requirement, and only the court of law has the power to set aside the arbitral award on appeal of either of the party.
Read Next:
1. Meaning, Objects, and Essentials of Arbitration Agreement
2. Arbitration Council of India – Composition, Functions, and More
3. Concept of Conciliation Under ADR – Arbitration and Conciliation Act, 1996
- 13 Characteristics of a Company Under the Companies Act - 5th March 2024
- Lee vs Lee’s Air Farming Ltd – Case Explained - 5th March 2024
- Relevant Facts Under the Indian Evidence Act - 14th January 2024
