Arbitral Award under ADR

Meaning

An arbitral award is a judgment pronounced by an arbitral tribunal on disputes and differences referred to it for arbitration. The term ‘arbitral award’ has not been defined in the arbitration and conciliation act, 1996. But Section 2(1)(c) of the act states that an arbitral award includes an interim award. Section 31(6) of the act states that “ the arbitral tribunal may, at any time during the arbitral proceedings make an interim arbitral award on a matter with respect to which it may make a final arbitral award.” Thus the interim award may be a final arbitral award.

Therefore it can be said that an arbitral award is an instrument which embodies a decision of an arbitrator or arbitrators as regards the matters referred to him or them.

Section 36 of the act provides that an award shall be enforced as if it were a decree of the court. Thus an award stands at the same footing as the decree of the courts and therefore it is binding upon the parties.

The arbitral award shall be made within the period of 12 months from the date the arbitral tribunal enters upon the reference i.e. appointment of arbitrators. And the parties may, by consent, extend the period by another six months.

However, if the dispute is resolved by fast-track procedure, then the award shall be made within a period of 6 months from the date the arbitral tribunal enters upon the reference.

Every arbitral award must include the following essentials or contents that are –

Should be in writing and signed by the members.
Where there are more than one arbitrator, the signatures of the majority of the members.
State the reasons upon which the award has been passed.
Date and place at which the arbitration took place.

Types of Arbitral Award

Interim award – This is a temporary award until the tribunal has given its final decision.
Additional award – Usually once the final award is made, the tribunal has no further authority. However, the parties can request an additional award be made on an undecided issue still in dispute.
Settlement or agreed award – when the parties to the dispute enter a mutually settlement agreement to settle the disputes. It ensures that the disputes end in amicable terms leaving each party satisfied.
Final award – This should usually be in writing and signed by all the arbitrators. The award must contain reasons and state where the arbitration took place. It must also be dated. Once the final award is made this ends proceedings.
Domestic award – 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 assess a domestic arbitration.
Foreign award – any award which is made outside of India is known as foreign award.

Requirements of a valid arbitral award

A valid award has to satisfy the following requirements-

The arbitrator should confirm the terms of the agreement under which he is appointed and supposed to function. He has no authority to arbitrate that which is not submitted to him. Hence, an award which is outside the submission is void.
The arbitral award must be certain in its operative particulars. For example there must be certainty as to the party who has to perform, receive the payment, the time and mode of payment and the amount payable.
The award should be consistent in all its terms and must not be vague.
The award must be complete and final and the arbitrator should finally dispose of the matter before him.

Appointment of Arbitrator

Though any person can be appointed as an arbitrator, generally impartial and independent persons in whom the parties show confidence are to be selected and appointed as arbitrator. Parties are free to determine the number of arbitrators, provided that such number shall not be an even number.

If the arbitration agreement is silent in this respect, the arbitral tribunal shall consist of a Sole Arbitrator and in the cases where three arbitrators are to be appointed each party will appoint one arbitrator and the two appointed arbitrators will jointly appoint a third arbitrator, who will be the Presiding arbitrator.

Section 11 of the act says that a person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

Section 11 also lays down the procedure for the appointment of an arbitrator where the parties fail to arrive at an agreement in this regard each party must appoint their arbitrator within the period of 30 days.

Where the parties fail to agree as to the appointment of a sole arbitrator within 30 days of the receipt of the request, then in such circumstances the appointment is to be made by the SC or the HC or by any person or institution designated by such court.

if An application made under this section for appointment of an arbitrator or arbitrators it shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as soon as possible and an endeavour shall be made to dispose of the matter within a period of 60 days from the date of service of notice on the opposite party.

Grounds of challenges (Section 12)

According to this section an arbitration may be challenged only if –

When the circumstances exist that gives rise to justifiable doubts as to the independence or impartiality OR
He does not possess the qualification agreed to by the parties.

Usually the grounds for challenging the arbitrator may be as follows –

Refusal to exercise jurisdiction or exceeding jurisdiction by the arbitrator
Misconduct of the arbitrator
Disqualification of the arbitrator
Allegation of fraud
Bias on the part of arbitrator

Termination of proceedings (Section 32)

Section 32 provides for the manner in which the arbitration proceedings may be terminated. This section states that the arbitration proceedings may be terminated in two ways –

When the arbitral tribunal passes the final award,
By an order of the arbitral tribunal with making the final award.

Another way in which the arbitral proceedings may be terminated is where no final award is passed but the arbitral tribunal by its order causes the proceeding come to an end, an order for termination of an arbitral proceeding can be passed by the arbitral tribunal in the circumstances –

When the claimant withdraws his claims and the respondent does not object to such withdrawal.
When the parties by mutual agreement decide to terminate the proceeding,
When the arbitral tribunal finds that the continuation of proceedings has for any other reason become unnecessary or impossible.

Setting aside the arbitral award (Section 34)

If a party not satisfied with the arbitral award may within 3 months of receiving a copy of the award, apply to the court for setting aside the award on the grounds mentioned in section 34 of the Act. However, if the court is satisfied with the application within the aforesaid period it may entertain the application within a further period of 30 days, but not thereafter.

The court has to dispose of such applications within a period of one year from the date on which notice is served upon the other party.

The grounds for setting aside the arbitral awards may be summed up as follows –

When a party was under some incapacity,
When the arbitration agreement is not valid,
When the party was unable to present the case and was not given proper notice,
When the award is beyond the terms of arbitration then it’s beyond the terms of reference to arbitration,
When the award is in conflict with the public policy of India,
When the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties.
When the subject matter of the dispute is not capable of being settled by arbitration under law for the time being in force,
When the award is vitiated by patent illegality appearing on the face of the award.

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