Introduction
An arbitral award is the decision made by an arbitral tribunal that resolves the dispute between the parties. It is the final outcome of arbitration proceedings and is legally binding. In India, arbitral awards are governed by Part I, Chapter VI (Sections 28–33) of the Arbitration and Conciliation Act, 1996.
The Act recognizes:
- Domestic Awards
- International Commercial Awards
- Interim Awards
- Consent Awards
Types of Arbitral Awards
- Final Award – Concludes all disputes submitted to arbitration.
- Interim Award (Section 31(6)) – Decides certain issues before the final award.
- Partial Award – Deals with part of the dispute, not the entire subject matter.
- Additional Award (Section 33(4)) – Made on claims presented in arbitration but omitted from the award.
- Consent Award – Based on a settlement agreed upon by parties under Section 30.
Legal Framework
Section 28 – Rules Applicable to Substance of Dispute
- Tribunal must decide the dispute in accordance with:
- The law chosen by parties.
- Indian substantive law in domestic arbitration.
- Terms of the contract and trade usages.
Section 29 – Decision by Panel
- In arbitration with more than one arbitrator, decisions are made by majority.
- Parties may agree otherwise.
Section 30 – Settlement
- Encourages amicable settlement.
- Tribunal may use mediation or conciliation techniques.
- If settlement is reached, the tribunal records it as a consent award.
Section 31 – Form and Contents of Arbitral Award
- Must be in writing and signed by all members.
- Must state:
- Reasons for the decision (unless parties agree otherwise).
- Date and place of arbitration.
- Must be delivered to each party.
- Can include:
- Interest (pre and post-award)
- Allocation of costs
Section 32 – Termination of Proceedings
- Proceedings terminate by:
- Final award, or
- Order of termination due to withdrawal, agreement, or other reasons.
Section 33 – Correction and Interpretation of Award
- Within 30 days:
- Clerical or computational errors can be corrected.
- Tribunal may interpret specific parts of the award if agreed.
- Additional awards can be made on omitted claims.
Characteristics of a Valid Arbitral Award
- Written and signed (Section 31(1))
- Based on reasoned decision (unless waived)
- Within jurisdiction of arbitration
- Not against public policy or laws of India
- Delivered to both parties
Doctrine: Finality and Binding Nature
An arbitral award is final and binding under Section 35. It can be enforced like a decree of the court under Section 36, subject to challenge under Section 34.
Grounds for Challenge (Section 34)
- Incapacity of parties
- Invalid arbitration agreement
- Violation of natural justice
- Award deals with matters beyond the scope of arbitration
- Award is in conflict with public policy
Case Laws
- ONGC v. Saw Pipes Ltd., (2003) 5 SCC 705
- Expanded the scope of “public policy” as a ground for setting aside awards.
- Associate Builders v. DDA, (2015) 3 SCC 49
- Laid down a structured approach to interpreting “public policy of India”.
- MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163
- Reiterated limited scope of interference by courts post-2015 Amendment.
- Ssangyong Engineering v. NHAI, (2019) 15 SCC 131
- Clarified interpretation of “fundamental policy of Indian law”.
Recent Developments
- 2015 Amendment:
- Made arbitral awards enforceable immediately unless a stay is granted under Section 36(2).
- 2019 Amendment:
- Introduced timelines and institutional arbitration, improving award-making discipline.
- 2021 Ordinance:
- Introduced automatic stay on awards if fraud or corruption is alleged (subject to Section 36).
Mind Map (Text Format)
Arbitral Award
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Types Sec 31 Characteristics Sec 34 (Challenge) Sec 36 (Enforcement)
(Final, Interim, Content Written, Grounds: Fraud, Like court decree
Partial, Consent) Reasoned, Public policy,
Signed, Within Natural justice
jurisdiction
Situation-Based Questions and Answers
Q1. The tribunal forgets to decide one of the claims. What can a party do?
Answer: Apply under Section 33(4) for an additional award on the omitted claim, within 30 days of receiving the award.
Q2. Can an award be set aside for not stating reasons?
Answer: Yes, unless the parties have agreed that no reasons are required (Section 31(3)).
Q3. Can a consent award be enforced like a normal award?
Answer: Yes. As per Section 30(4), a consent award has the same status as an arbitral award and is enforceable under Section 36.
Q4. Can an award grant interest and legal costs?
Answer: Yes. Under Section 31(7), the tribunal may grant pre-award and post-award interest, as well as costs.
Frequently Asked Questions (FAQs)
Q1. What is the difference between a final and interim arbitral award?
A final award resolves all issues submitted, while an interim award resolves only some or provides temporary relief.
Q2. Can an arbitral award be challenged in any court?
No. A challenge must be filed under Section 34 in the court having jurisdiction, usually where the seat of arbitration is located.
Q3. Is it mandatory for the award to provide reasons?
Yes, unless the parties have agreed otherwise in writing.
Q4. How long does a party have to challenge an arbitral award?
A party has 3 months from the date of receipt of the award (extendable by 30 days if sufficient cause is shown).
Q5. Can the tribunal modify its award after publishing it?
Only minor errors can be corrected under Section 33(1), and omitted claims can be addressed under Section 33(4).
Q6. Can a party delay enforcement by filing a challenge?
No. Post-2015 amendment, filing a challenge under Section 34 does not automatically stay enforcement. A separate application for stay must be filed.
References
- Arbitration and Conciliation Act, 1996 – https://legislative.gov.in
- Law Commission of India Report No. 246
- Key judgments from Supreme Court – https://indiankanoon.org
- Arbitration Council of India (proposed) – https://legalaffairs.gov.in