ARBITRAL AWARDS

1. INTRODUCTION

Arbitration is a legal process, which takes place outside the courts, but still results in a final and
legally binding decision similar to a court judgment. Arbitration is a flexible method of dispute
resolution, which can give a quick, inexpensive, confidential, fair and final solution to a dispute.
It involves the determination of the dispute by one or more independent third parties rather than
by a court. The third parties, called arbitrators, are appointed by or on behalf of the parties in
dispute.1 The arbitration is conducted in accordance with the terms of the parties' arbitration
agreement, which is usually found in the provisions of a commercial contract between the
parties. Arbitration Award is a determination on the merits by an arbitration tribunal in
arbitration, and is analogous to the judgment in the Court of Law.

2. ARBITRAL AWARDS: DOMESTIC AND FOREIGN

Arbitral awards refer to the decision of an arbitral tribunal, whether in a domestic or international
arbitration. Arbitral awards include interim awards. Domestic awards are governed by Part I
whereas foreign awards are governed by part II of the Arbitration and Conciliation Act of India.
A domestic award is an award passed under the provisions of Section 2 to 43 of the Act.

A domestic award is a result of domestic arbitration, hence it confines itself to the territory of
India, the parties should have a nexus or birth to Indian origin, basically territory comes into play
in order to asses a domestic arbitration. Award given by an arbitral institution in India or an
award even if given by a foreign state for a dispute where both the parties are of an Indian origin
and the nationality is also governed by the Indian laws shall also come within the purview of
domestic arbitration.2

1
Arbitration & Conciliation Act 1996 (No 26 of 1996).
2
Shodhganga, ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA, shodhganga (2016), available at,
http://shodhganga.inflibnet.ac.in/bitstream/10603/110130/16/16_chapter%206.pdf.
A Foreign award as per section 44 means an arbitral award which relates to differences relating
to the matters considered as commercial under the law in force in India.3 Hence it is safe to say
that a foreign award means an arbitral award made as a result of foreign arbitration not being a
domestic one.

Further clarity was given in the case of Serajuddin v. Michael Golodetz4 where the Calcutta High
court laid down the necessary conditions or the essential elements for an arbitration to be called a
foreign arbitration, where the award could further be called as a foreign arbitral award, the main
points laid out were (must include all)-

a. Arbitration should have been held in foreign a foreign country.

b. Done by a foreign arbitrator.
c. Arbitration by applying foreign laws.
d. One of the parties consists of foreign nationals.

3. ENFORCEMENT OF ARBITRAL AWARDS

DOMESTIC ARBITRAL AWARDS:

One of the declared objectives of the 1996 Act is that every final award: ‘is enforced in the same
manner as if it were a decree of the Court’5. Hence, the scheme of the Act is that it is up to the
losing party to object to the award and petition the court for setting it aside. The winning party
has to make no procedural move. If the objections to the award are not sustained (or if there are
no objections within the time allowed) the award itself becomes enforceable as if it were a decree
of the court.6 It would be noticed that the Indian law has thus fundamentally departed from the
Model Law in this regard. The Model Law requires an application for enforcement (Art 35) and
the grounds on which enforcement of an award may be refused are as set forth in Art 36 thereof.
This has been departed from under the Indian regime as stated above with the result, that in so
far as domestic awards are concerned, if there is no application to set aside an award under s 34
(or if the objections if made have been rejected), the award can straightaway be executed as a

3
Ibid.
4
AIR 1960 Cal.49.
5
Statement of Objects and Reasons to the 1996 Act, para 4(vii).
6
S 36, 1996 Act.
decree of the court. Thus, when the period for filing objections has expired or objections have
been rejected, the award can be enforced under the Civil Procedure Code (CPC) in the same
manner as if it were a decree passed by a court of law. Section 36 declares that an arbitral award
has the force of the decree, though in fact it is not a decree. An ex parte Award passed by an
Arbitral Tribunal under Section 28 of the Act is also enforceable under Sec. 36. Even a
settlement reached by the parties under Section 30 of the Act can be enforceable under Sec. 36 of
the Act as if it is a Decree of the Court.7

FOREIGN ARBITRAL AWARDS:

India's Arbitration and Conciliation Act, 1996 provides a statutory framework for the
enforcement of foreign arbitral awards given in countries which are signatories to either the 1927
Convention on the Execution of Foreign Arbitral Awards (Geneva Convention) or the 1958
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York
Convention).8

One of the prerequisites for the enforcement of a foreign arbitral award in India's courts is that it
should be a foreign award under the Geneva Convention or the New York Convention.9

In the case of Bhatia International vs Bulk Trading10, the Supreme Court held that an arbitration
award not made in a convention country will not be considered a foreign award and, as such, a
separate action will have to be filed on the basis of the award.

7
Nakul Dewan, ‘Enforcing Arbitral Awards in India’ (LexisNexis 2017).
8
Mostafa Fahim Nia, ‘The Enforcement Of Foreign Arbitral Awards: A Closer Look At The New York Convention
(Law, Crime And Law Enforcement)’ (Nova Science Publishers, Inc. 2017).
9
Ray Turner, ‘Arbitration Awards: A Practical Approach’ (Wiley-Blackwell, 2005).
10
AIR 2002 SC 1432.