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Arbitral award

According to the Definition given under Section 2(c) it is clear that the 1996 Act doesn’t give a concrete definition of
Arbitral awards. It only affirms that arbitral awards include interim awards too. However, the final decision given by the
arbitral tribunal [as per Section 2(d)] is the arbitral award.

Case Laws

Calcutta High Court described an arbitral award as a result of the consensual justice of the parties[1]. In the old case of
Bhajahari v. Bihari arbitral award was defined as the final determination of the claim or issue, by an arbitrator of the
parties of own choice[2].

In Pandit Munsi Ram and associates v. Union of India[3] it was interpreted that since an arbitral award is considered a
decree as under Section 35 of the 1996 Act, the court held that an arbitral award is an order which determines the rights
of parties involved by finally determining the particular claim or issue in the course of arbitral proceedings.

In Harinarayan Bajaj v. Sharedeal Finance[4] it was held that as per definition under Section 2(c) an arbitral award
includes an interim award. However, an interim award to be an award had to decide a claim with finality. Once the claim
is decided, the Tribunal could not adjudicate further on that claim and become functus officio. Furthermore, the
procedural orders passed during the arbitral proceeding is necessarily excluded from the concept of award.

In Paradise Hotel v. Airport Authority of India Ltd[5] the enforcement of an award is complete only when it has been
enforced under CPC in the same manner as if wee a decree of court.

Types of arbitral awards

There are 2 types of awards –

Domestic awards- this type of award is governed under Part I of the Act

Foreign awards- this type is subsequently governed under Part II

Domestic awards, as per Section 2(7), are wholly dealt with in part one till Section 43 of the act whereas Sections 44 to
60 deal with different kinds of foreign arbitral awards. 

The arbitral award is worth only to the extent of the parties’ ability to enforce the terms they initially agreed
upon. Section 36 lays down provisions for the speedy enforcement of the domestic awards. Under this very section, it is
made clear that a domestic award is enforceable in the same manner as that of a decree passed by a court. In practice in
domestic arbitrations, it is easier to enforce an arbitral award than judgment by a court. If the assets of the parties are
almost in one and the same jurisdiction, the enforcement of domestic wards s much easier.

Chapter 1 of Part II deals with the New York Convention awards. Chapter 2 lays down provisions regarding the
enforcement of Geneva Convention awards. Section 48 under Chapter 1 deals with the refusal of enforcement of the
foreign award. Section 57 under Chapter 2 deals with the Geneva Convention awards.

In Serajuddin v. Michael Golodetz[6] the Calcutta HC laid down the essential conditions of a ‘foreign arbitration’ where
the award is further called a foreign arbitral award, the main points laid down were:

Arbitration should have been held in foreign a foreign country

By a foreign arbitrator.

Arbitration by applying foreign laws.

One of the parties consists of foreign nationals.

It is to be noted that all these conditions need to be necessarily satisfied.

Brief explanation of bare provisions (Section 28 to 31)

Section 28

An Arbitrator must decide the dispute in justice and in good faith. However, there is a condition precedent, only if both
the parties expressly authorize an arbitrator to adjudicate then only he can decide the dispute between them.

Domestic arbitrations must follow Indian arbitration law. However, for international arbitrations agreements based in
India, the arbitral tribunal must follow the laws the parties have agreed to apply in their agreement to settle disputes.
The designated law as agreed in the agreement must be construed unless expressly agreed otherwise.

It must also be kept in mind that while applying the law of a different legal system, the substantive laws of India
shouldn’t be in conflict with them. In the absence of any such agreement or any indication of what would be the
applicable laws when a dispute arises, the arbitral tribunal shall apply laws that are appropriate and relevant to the
dispute.

Furthermore, the arbitral tribunal must apply provisions only according to the terms of the contract between parties.
However, the tribunal must also take into account the usages and the current trade practices that are relevant to the
contract.

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Section 29

The decision of the Arbitral Tribunal will be by the majority. The arbitral award is the final stage of the arbitral
proceedings. The decision made by the majority of the members of the tribunal will be declared in the form of an
award.

Section 30

This section permits the encouragement settlement amongst the parties by the arbitral tribunal. If the parties
successfully agree to a settlement then the same can be incorporated in the form of an award. Such settlements are
recorded as the Arbitral award on agreed terms. Such amicable arbitral awards must be made according to Section 31. It
has the same status and effect as that of an arbitral award passed by an independent tribunal to substance a dispute.

Section 31

According to this Section Arbitral awards shall be in writing and signed by all the members of the tribunal constituted.

The reason applied behind the award must be stated clearly. However, if the parties have agreed for settlement that no
reason behind an award on agreed terms, need to be showcased. The date of declaration of an Award and the place
where it is made shall be mentioned. Place of the award is also known as the seat of arbitration. A copy of the award
shall be issued to each party. Arbitral Tribunals can pass an interim award.

In Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya[7] non-signatories to an arbitration agreement can also participate in
arbitration proceedings provided that the proper and necessary parties to the agreement are present. This is applicable
to both domestic arbitration and Indian seated International Commercial Arbitration.

Termination of Arbitral proceedings

Section 32 of the Arbitrational and Conciliation Act, 1996 is completely coherent with Article 32 of UNCITRAL Model
Law. According to Section 32(1) of the Act termination of Arbitral proceedings takes place after the final award declared
by the arbitral tribunal. The other 3 grounds of termination are given under Sub-section 2 of Section 32.

The arbitral tribunal shall issue an order to terminate the arbitration proceedings if:

the plaintiff withdraws their claim.  It can also be terminated if the respondent objects to the claim. Looking at which
the tribunal acknowledges that it has a legitimate interest in obtaining a final settlement.

The parties themselves agree to terminate the proceedings.

If the arbitral tribunal finds that the continuation of the proceedings is either unnecessary or impossible for any other
reason.

Sub-section (3) of this section lays down that the above provisions are subject to section 33 and Section 34(4). Lastly,
the mandate of the arbitral tribunal will terminate with the termination of the procedure itself.

Recent Development

In 2019 in the case of Sai Babu v. M/S Clariya Steels Private Limited[8] the SC held that once the sole arbitrator
terminates the arbitration proceedings under Section 32(2)(c) of Arbitration and Conciliation Act, 1996 (“Arbitration
Act”), the same cannot be subsequently recalled. In order to reach a conclusion in this case the Supreme Court chalked
out a difference between the termination of Arbitral proceedings under Section 32 and Section 25 of the Act.

The court relied on SREI Infrastructure Finance Ltd v. Tuff Drilling Private Ltd[9] where it stated that “On the termination
of proceedings under Section 32 sub-section (1) and (2), Section 32(3) further contemplates termination of proceedings
by Arbitral Tribunal on any other grounds or due to the fact that carrying out the proceedings is unnecessary. The
conditions laid down under the above clauses is missing in Section 25. However, if the claimant shows sufficient cause as
to why he wants the arbitral proceedings then it can be recommenced. The SC also noted that section 32(3) provides for
the termination of the mandate of the Arbitrator once a termination order is passed under section 32.

https://indianlegalsolution.com/arbitral-award-and-termination-of-an-arbitral-award/

BARE ACT PROVISION

Making of arbitral award and termination of proceedings

28.Rules applicable to substance of dispute.- (1) Where the place of arbitration is situate in India,-

(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute
submitted to arbitration in accordance with the substantive law for the time being in force in India;

(b) in international commercial arbitration,—-

(i) the arbitral tribunal shall decided the dispute in accordance with the rules of law designated by the parties as
applicable to the substance of the dispute;

(ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise
expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules;

(iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law
it considers to be appropriate given all the circumstances surrounding the dispute.

(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly
authorised it to do so.

(3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into
account the usages of the trade applicable to the transaction.
29.Decision making by panel of arbitrators.- (1) Unless otherwise agreed by the parties, in arbitral proceedings with
more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members.

(2) Notwithstanding sub-section (1), if authorised by the parties or all the members of the arbitral tribunal, questions
of procedure may be decided by the presiding arbitrator.

30.Settlement.- (1) It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage
settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation
or other procedures at any time during the arbitral proceedings to encourage settlement.

(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings
and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an
arbitral award on agreed terms.

(3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state that it is an arbitral
award.

(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the
substance of the dispute.

31.Form and contents of arbitral award.- (1) An arbitral award shall be made in writing and shall be signed by the
members of the arbitral tribunal.

(2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the
majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature
is stated.

(3) The arbitral award shall state the reasons upon which it is based, unless——

(a) the parties have agreed that no reasons are to be given, or

(b) the award is an arbitral award on agreed terms under section 30.

(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and
the award shall be deemed to have been made at that place.

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any
matter with respect to which it may make a final arbitral award.

(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money,
the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems
reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which
the cause of action arose and the date on which the award is made.

(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate
of eighteen per centum per annum from the date of the award to the date of payment.

(8) Unless otherwise agreed by the parties,—-

(a) the costs of an arbitration shall be fixed by the arbitral tribunal;

(b) the arbitral tribunal shall specify—-

(i) the party entitled to costs,

(ii) the party who shall pay the costs,

(iii) the amount of costs or method of determining that amount, and

(iv) the manner in which the costs shall be paid.

Explanation.—For the purpose of clause (a), costs means reasonable costs relating to—-
(i) the fees and expenses of the arbitrators and witnesses,

(ii) legal fees and expenses,

(iii) any administration fees of the institution supervising the arbitration, and

(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.

32.Termination of proceedings.- (1) The arbitral proceedings shall be terminated by the final arbitral award or by an
order of the arbitral tribunal under sub-section (2).

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where-

(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a
legitimate interest on his part in obtaining a final settlement of the dispute,

(b) the parties agree on the termination of the proceedings, or

(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary
or impossible.

(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with
the termination of the arbitral proceedings.

33.Correction and interpretation of award; additional award.- (1) Within thirty days from the receipt of the arbitral
award, unless another period of time has been agreed upon by the parties— –

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any
electrical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an
interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the
correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form
part of the arbitral award.

(3) The arbitral tribunal may correct and error of the type referred to in clause (a) of sub-section (1), on its own
initiative, within thirty days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days
from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as so claims presented
in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the
additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an
interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award
made under this section.

SLIDESHARE

In a International commercial arbitration the tribunal would decide the dispute in accordance with either the a)Rules
of law designated by parties b)In accordance with rules of law of any country decided by the parties c) If nothing
agreed under (a) then tribunal will apply rules as appropriate to the circumstances of the dispute. In an arbitration
other than a International commercial arbitration the tribunal would use the substantive law prevailing in India at the
time of arbitration Section 28
1. 4.  When deciding the case the tribunal should take into account the terms of the contract and trade usages
applicable to the transaction. Above is a change/amendments in the new act wherein the tribunal is given
wider latitude to decide the case so long as its in line with public policy rather than the earlier act where the
tribunal was mandated only to decide as per the prevailing law 1996 clause: In all cases, the arbitral tribunal
shall decide in accordance with the terms of the contract and shall take into account the usages of the trade
 applicable to the transaction. After amendments: While deciding and making an award, the arbitral tribunal
shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.
ONGC v/s Saw pipes 2003 The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur
only if the parties have expressly authorised it to do so. Ex aequo et bono or amiable compositeur( for
"according to the right and good“. In the context of arbitration, it refers to the power of arbitrators to dispense
with consideration of the law but consider solely what they consider to be fair and equitable in the case at
hand. Section 28 …….(continued)
2. 5.  Both parties may agree to extend the above period of 12 months but not beyond 6 months If award is
made within 6 months then the tribunal needs to rewarded as agreed between parties  Award to be made
within 12 months thus putting an outer limit for the decision making  if so authorized by the parties, all
questions of procedures may be decided by the presiding arbitrator. Section 29 A  If there are more than
one arbitrator then the decision will be by majority unless both the parties agree otherwise Section 29
decision making by the panel of arbitrators
3. 6.  If the arbitrators are substituted then the new tribunal would start from where the old one left off The
above extension can be granted by court only if any one party applies.The court has the right to substitute
one or all the arbitrators  However if the tribunal does not give any decision within the above period then
court may extend the date or dissolve the tribunal or even reduction of fees of the tribunal but not above 5 %
of the fees for each month of delay. Section 29A …….(continued)
4. 7.  An application filed by any party shall be disposed off by Court as expeditiously as possible and
endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of
notice on the opposite party. It shall be open to the Court to impose actual or exemplary costs upon any of
the parties under this section. Section 29A …….(continued)
5. 8.  Fees of the arbitrators will be as decided between parties. The award shall be announced within 6
months  There is a provision in the act wherein , if both the parties agree then they can request the tribunal
for a “fast track procedure” Section 29 B Fast track procedure
6. 9.  In case the award is not made within the period of six months, the provisions of Section 29A (3) to (9)
shall apply with respect to extension of time period etc. Award must be made within six months from the
date when the Arbitral Tribunal enters reference  The Arbitral Tribunal may call for further information or
clarification from the parties in addition to the pleadings  the dispute shall be decided on the basis of
written pleadings, documents, and submissions filed by the parties without any oral hearing  The parties to
arbitration may agree to a sole arbitrator when wishing for a fast track procedure. The arbitrator to be
chosen by the parties Section 29 B Fast track procedure..contd
7. 10.  This settlement shall have the same status as the arbitral reward. If both parties settle their dispute
and request the arbitral tribunal then the tribunal can express that settlement as an arbitration award. Hence
an award made pursuant to a settlement / by consent of the parties, need not state any reasons.  The
arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral
proceedings to encourage settlement. Section 30 Settlement
8. 11.  Part 3 of the act deals with conciliation. Conciliation´ means settling of disputes without litigation.´
Conciliation is the process by which discussion between parties is kept going through the participation of the
conciliator. The main difference between arbitration and conciliation is that in arbitration proceedings the
award is the decision of arbitral tribunal while in the case of conciliation the decision is that of the parties
arrived at with the assistance of the conciliator. Arbitration 'literally means settlement´ of differences or
disputes by mutual understanding or agreement by the parties where the rights and liabilities of the parties
are adjudicated which are binding on them, such settlement may be before the arbitral tribunal but not by
the court of law  As per clause (a) of Art 2 of UNICTRAL model law ,Arbitration´ is the means by which the
parties to dispute get the matter settled through the intervention of an agreed third person. Arbitration´ is a
process that is carried out pursuant to an agreement to arbitrate the disputed matter Difference between
Arbitration/Conciliation/Mediation
9. 12.  Mediation is most frequently adopted ADR technique. It contemplates the appointment and intervention
of neutral third person who helps the parties to reach a negotiated settlement. He does not have the power
to adjudicate or impose an award. It is conducted on a confidential basis and without prejudice to the legal
rights and remedies of the parties. The process may have to pass through several stages like preparation,
joint sessions, private meetings and final result.Difference between Arbitration/Conciliation/Mediation
…………………….Continued
10. 13.  The award should have the following a) Signed by members of the tribunal and if there are more than
one arbitrator then majority should sign b) State the reasons for reaching that award unless both parties
agree otherwise or it’s a settlement. c) The award shall state the date and place of arbitration d) Signed
copies delivered to each party If the award consists of any sum to be paid then the tribunal may also include
an interest at the rate of two percent higher than the current rate of interest prevalent on the date of award,
from the date of award to the date of payment. NOTE: current rate of interest” means the highest of the
maximum rates at which interest may be paid on different classes of deposits (as per clause (b) of section 2
of the Interest Act, 1978 )Section 31 contents of an arbitral award
11. 14.  An agreement where a party is to pay the whole or part of the costs of the arbitration in any event shall
be only valid if such agreement is made after the dispute in question has arise When determining the cost
the court or tribunal will consider various things like conduct of parties/whether the party has been partly
successful etc  General rule is that the unsuccessful party pays the amount but in some cases the court or
tribunal can also make a different order , but must give reasons for such an order  Tribunal can also decide
the amount to paid along with the interest if any. It can also decide the time when the amount is to be paid.
 Under this act the tribunal has the power to decide if any cost is to be paid by one party to another
Section 31 A Regime of costs
12. 15.  The tribunal feels that it is unnecessary to continue. The mandate of the tribunal finishes with the
termination of the arbitration Claimant withdraws his claim but only if the respondent does not object to it
as he may be interested in a final settlement of the dispute.  Both the parties agree Section 32
Termination of proceedings An arbitration proceeding can be terminated when
13. 16.  The tribunal may on its own initiative make any corrections within 30 days of the award If the tribunal
accepts the above request then it must make the corrections or give required explanation within 30 days of
receipt of the request.  Within 30 days of receipt of award , a party may with notice to the other party seek
a) Correction of any errors in the award b) Seek any explanation of some section of the award Section 33
Correction and interpretation of award; additional award
14. 17.  The trib A party may within 30 days and with notice to the other party seek for additional award if the
tribunal has omitted anything for which the claim was made Section 33 ……(continued) unal if accepts the
above request then must give the additional award within 30 days of the receipt of request. From the above
its evident that the termination of the tribunal is subject to section 33 also
15. 18. CHAPTER VII RECOURSE AGAINST ARBITRAL AWARD
16. 19. Section 34: Application for setting aside arbitral award (1) Recourse can be made to a court against a
tribunal order (2) Arbitral award may be set aside by court only if a)Party making the application proves that
i)Party was in some way incapacitated ii)Arbitration agreement itself is not valid under the law its subjected
to or the prevailing law. iii)The party giving notice was not informed of the appointment of arbitrator or not
given chance to properly present his case. iv)The award is for a dispute which has nothing to do with the
dispute submission or decision is beyond the submissions in arbitration. Here it should be noted that that if
the award has matters both submitted and not submitted then only those which are not submitted can be set
aside.
17. 20.  The constitution of tribunal or procedure was not in line with agreement between parties b) The court
finds that, i) Matters submitted for arbitration are not capable under the law in force ii) Award is in conflict
with public law 3) An application for setting aside should be made within 3 months of award and if a notice is
moved then within 3 months of the said notice. This may be extended by court to a maximum of 30 days
provided the court feels that the concerned party was prevented from moving the application.Section 34
……(continued)
18. 21. Section 34 ……(continued) 4.On receiving the application the court may adjourn the proceedings for a
time to give tribunal to remove the reason for which application was moved. 5.An application can be moved
by a party only after giving adequate notice to the other party and an affidavit that he has informed the other
party. 6.An application moved under this section has to be moved expeditiously but not later than one year
19. 22.  Venture Global Engineering LLC v Satyam Computer Services Ltd (‘Venture Global’) SC permitted the
Indian courts to reopen and set aside awards rendered in arbitrations seated outside India. In yet another
controversial extension of the Bhatia International ruling, in Indtel Technical Services Pte Ltd v WS Atkins
PLC8 , the Supreme Court ruled that it was empowered to appoint arbitrators in the event of a deadlock
between the parties, even in cases where the seat of the arbitration was outside India.
https://singaporeinternationalarbitration.com/2013/08/05/the-end-of-doctrine-of-patent- illegality-for-foreign-
awards-in-india/ Bhatia International v Bulk Trading SA (‘Bhatia International’) In this highly controversial
decisions the SC considerably extended the scope for Indian courts to interfere in arbitrations seated
outside India. The ruling also cast a shadow of uncertainty over internationally-seated arbitrations involving
Indian parties, due to an overlap of supervisory jurisdiction between the Indian courts and the courts of the
seat of the arbitration SOME MONUMENTAL JUDGEMENTS
20. 23.  BALCO v Kaiser Aluminium Hon’ble SC reversed its earlier decisions under Bhatia InternationalSOME
MONUMENTAL JUDGEMENTS ……continued & Venture Global by ruling that the Indian courts cannot set
aside arbitral awards made, or otherwise intervene in arbitrations seated, outside India, the Supreme Court
has firmly signalled that the Indian courts will give effect to party autonomy and efficacy to the parties’
choice of a foreign seat. [T]he Indian Supreme Court [in BALCO ] has shown its keenness to direct the
development of Indian law into a pro-arbitration path. The main consequence of this judgment will be to
insulate arbitrations seated outside India from unwelcome interference by the Indian courts