Final year student,
New Law College, BVP, Pune
Whenever a case is referred or is being resolved by arbitration, a neutral third party is appointed known as an arbitrator. The function of the arbitrator is to decide the case based on arguments put forward by the parties and render a decision. This decision is known as an arbitral award which is very similar to a judgment given by a judge in any court proceedings. The decision so rendered by the arbitrator(s) comprising the arbitral tribunal is binding on the parties. In India, the arbitral proceedings are governed by the Arbitration and Conciliation Act, 1996. The arbitral award must be made in accordance with the Lex Arbitri.
What is an arbitral award?
An arbitral award is a decision rendered by the arbitrator(s) comprising the arbitral tribunal, during the arbitration proceedings. Arbitral Award is defined under section 2 (c) of the Arbitration and Conciliation Act, 1996 (hereinafter, the Act) as the arbitral award also includes an interim award. The Act fails to define the arbitral award, but the forms and contents of the arbitral award are mentioned in the Act.
Section 31 of the Act provides as follows:
1. The arbitral award must be in writing and must be signed by all the members comprising the arbitral tribunal.
2. If in any case, the signature of all the arbitrators cannot be obtained due to justifiable reasons, the award must contain the signs of majority arbitrators.
3. The award must provide the reasoning based on which such an award is rendered unless otherwise agreed by the parties.
4. The award must contain the date and place as to ascertain when and where that award is made.
5. The signed copy of the award must be provided to all the parties.
6. The tribunal is empowered to provide the parties with any interim relief which is concerned with the subject-matter of the case.
7. If in any case the award so rendered is concerning the payment of money, the award shall contain the amount and the rate of interest which it thinks reasonable. If the award fails to provide for any rate of interest then by default, it carries an interest rate of two per cent, higher than the current rate.
Types of arbitral Award:
There are various types of the arbitral award, which are as follows:
1. Final Award: This is the award that is rendered by the tribunal after hearing all the arguments presented by all the parties. This award concludes the arbitration proceeding. The final award discusses all the issues at hand.
2. Partial Award: If the case at hand involves various issues to be resolved, then the award, may be explicitly rendered for each issue and this award individually be referred to as partial award.
3. Interim Award: interim relief means temporary award. This award is rendered when one party is satisfied that if the temporary relief is not granted, the party will suffer irreparable loss or the subject-matter of the case will be affected. Therefore, in order to protect the party or the property, which is the subject matter of the case, the tribunal can grant interim award to the parties.
4. Agreed Award: The agreed Award is also known as a consent award. Section 30 of the Act provides that the arbitral tribunal may encourage the parties for settlement and if it thinks fit, the tribunal can use mediation, conciliation or any other technique for settlement. If the parties reach any settlement, then the tribunal can pass such settlement as the arbitral award. This arbitral award is known as the agreed award.
5. Default Award: A default award is one where one of the parties does not participate in the arbitration proceedings. The tribunal must give the non-participating party a chance of presenting the case to make sure that the principles of equal treatment and due process are upheld. This will further deter the non-participating party to challenge the validity of the award.
Points to be considered while drafting an arbitral award:
Apart from the form and content prescribed under section 31 of the Act, the following points must be kept in mind while drafting an award:
1. The award must contain the name and address of all the arbitrators, parties and their counsel.
2. The award must provide for the facts which led to the initiation of the dispute.
3. The award must contain the issues and arguments presented by both the parties.
4. The award must include the findings of the tribunal. This is essential as this will provide the basis on which the tribunal thinks it fit to deliver such an award.
5. In the end, the decision, along with the signature, must be provided.
6. The award must provide for the fees to be paid and the proportion in which the parties will pay the fees.
7. The award must be in continuity, i.e., the paragraph numbering must go in continuity even after a new heading.
Sample of an arbitral award:
MADE ON : (date)
SEAT OF ARBITRATION:
NATURE OF THE DISPUTE: ____________
ISSUES IN DISPUTE
FINDINGS AND REASONING
NAME AND SIGNATURE OF ARBITRATOR(s)
Effects of a final award:
Section 33 of the Act provides for the scope of corrections and interpretation of the award. The section further empowers the arbitrator to deliver any additional award. The section provides that the parties can request the arbitrator to provide any clarifications or interpretation of the content of the award post the award has been rendered. If any of the issues have been left out or award has not been passed with regards to that issue, with the consent of all the parties, the arbitrator may render an additional award within 60 days.
Section 35 of the Act provides that the arbitral award will be final and binding on the parties.
As per section 36 of the Act, the award may be enforced as a decree of the court as per the provisions of the Civil Procedure Code, 1908. Even if the application for setting aside the award has been filed in the court, it does not render the award unenforceable, unless the court has granted a stay order.
The Act provides an in-depth process as to how and on what ground an arbitral award can be challenged. The award has to be made following the rules and must be so precise that any party can raise no questions as to its ambiguity. The parties while applying setting aside the award must keep in mind that the reason for which they have agreed to resolve their issue through arbitration is to save time and then only such an application has to be filed in the court. Section 29A and 29B of the Act provides for the time limit and fast tract procedure for arbitration proceedings, respectively.
Disclaimer: Kindly note that the views and opinions expressed are of the author, and not Law Colloquy.