An arbitration award is the sum decided upon by the arbitrator. One party may be required to pay the other party money as part of this award. It can also be a non-monetary reward, such ending a particular corporate practice or introducing an incentive for employment. Arbitral awards, or simply awards, are the judgments of arbitral tribunals in both local and international arbitration.

Arbitrator

An arbitrator’s responsibility is to settle conflicts that the parties have agreed to have arbitrated. The arbitral award, a document that must follow specific requirements in order to be considered the arbitrator’s conclusions. The specific type of arbitration used, the procedural law that applies to the arbitral procedure, the powers granted to the arbitrator under the applicable arbitration agreement, and the content and format of an arbitral award can all affect how arbitrators can make their decisions.

Definition of award:

The Act does not give a concrete definition of the term ‘arbitral award’. Section 2(1)(c) merely states that for the purposes of Part I of the Act, the term includes an interim award within its meaning.

Types of awards:

The type of award is generally stated in its title. There are four distinct types of awards defined under the Act, each of them fulfilling specific purposes:

Interim award:

It is an award that affects the rights of the parties but is not a final award. An 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.

Additional award:

Such an award is made upon application by a party when a claim or claims are presented in the arbitral proceedings but omitted from the arbitral award.

As per the Act, such a request for an additional award must be made within thirty days from the receipt of the arbitral award. Notice of the same must also be given to the other party.

Settlement award:

If during the 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.

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

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

Final award:

It is an award that brings finality to the arbitral proceedings. The final award is passed after the disputes have been adjudicated by the arbitrator based on all the pleadings and evidence led by the parties. It has the effect of terminating the arbitration proceedings

Challenges

There are four major out comes when an award is challenged before the court.

1. Set aside – For the reasons mentioned above, the court considering the award may decide to set an award aside. Once an award has been thrown out, it is no longer subject to the law. It has lost its legal validity and is no longer an award. It has no legal significance and is merely a piece of paper.
2. Confirm- The reviewing court additionally verifies the entirety of the award. A ruling that is confirmed by the court indicates that it believes the award satisfies all legal standards and has no legal flaws.
3. Modify – The award may be changed by the court such that it cannot be revoked.
4. Remit back to the Arbitral tribunal – the court may instead of setting aside the award, send the matter back to the arbitral tribunal to rectify some defect, which if not corrected would lead to setting aside of the award.

An award holder would have to wait for a period of 90 days after the receipt of the award prior to applying for enforcement and execution. During the intervening period, the award may be challenged in accordance with Section 34 of the Act. After expiry of the aforesaid period, if a court finds the award to be enforceable, at the stage of execution, there can be no further challenge as to the validity of the arbitral award.Prior to the Arbitration and Conciliation (Amendment) Act, 2015, an application for setting aside an award would tantamount to a stay on proceedings for execution of the award.

However, by virtue of the Amendment Act, a party challenging an award would have to move a separate application in order to seek a stay on the execution of an award.[Section 36(2) & (3)] When the time for making an application to set aside the award has expired or when such application has been made but rejected then the award can be enforced. Enforcement of an award shall happen under the CPC in the same manner as if it were a decree of the court. [Section 36(1)]

SETTING ASIDE ARBITRARY AWARD

The grounds for setting aside an award rendered in India (in a domestic or international arbitration) are provided for under Section 34 of the Act. An award can be set aside if:

1) Incapacity of Party – If a party to arbitration is not capable of looking after his own interests and he is not represented by a person who can protect his interest, the award will not be binding on him and may be challenged.

2) Invalidity of Agreement- If the arbitration agreement is invalid, the reference under it and consequently the award based on such reference would be invalid and can be set aside. The test of validity of AA is on the touchstone of the law to which it is subjected.

3) Notice not given- Notices to be given to the parties regarding the following-

 Appointment if arbitrator

 Arbitral proceedings

Notice is required to be given to enable the other party to file their statement of defence within the reasonable time period u/s 23. Sec 24 also requires that parties be given sufficient advance notice of any hearing or meeting of the arbitrators.

4) Award beyond scope of reference – The reference of a dispute under an agreement defines the limits of the authority and jurisdiction of arbitrator. The arbitrator‟s authority has authority in the source in reference and he cannot go beyond it.

5) Illegality on composition of tribunal – An application u/s 34 can be made on following grounds:

 The composition of the tribunal was not in accordance with the agreement.

 The procedure agreed to by the parties was not followed in the conduct of proceedings

 In the absence of agreement as to procedure, the procedure prescribed by the ACT was not followed.

6) Dispute not arbitrable – In general, matters of public right cannot be decided by arbitration i.e. matters of probate, insolvency, appointment of guardian cannot be subject to arbitration.

7) Public Policy – The Supreme Court has referred many cases and tried to interpret the application of the public policy of India in the present case Oil and Natural Gas Corporation v. Saw Pipes [(2003) 5 SCC 705] adopted the wider meaning to the term „public policy‟ adding an additional ground of“patent illegality” to challenge the award. The court stated that if the award is patently against the statutory provisions of substantive law which is in force in India or is passed without giving an opportunity of hearing to the parties as provided under Section 24 or without giving any reason in a case where parties have not agreed that no reasons are to be recorded, it would be against the statutory provisions. In

APPEALS

An appeal shall lie from any other order part from those mentioned in Section 37.

1. In case of an appeal from the order of the court, the appeal lies to the court authorized by law to hear appeals from original decrees of the court passing the order.

2. Section 37(3) prohibits making of second appeal from an order passed in appeal under Section 37(1) and (2) of the Act but the right to appeal to the Supreme Court is always open to a party aggrieved.

3. The Supreme Court may in its discretion grant special leave to appeal where the needs of justice demand interference by the highest court of the land. The power conferred upon the Supreme Court is a residuary and extraordinary

Conclusion

The process for ending a case and establishing an arbitral award is quite easy to understand. The Supreme Court has occasionally proposed necessary interpretations and modifications. It’s important to note that Section 25 and Section 32 have differing provisions for how arbitral procedures must end. The Arbitration and Conciliation Act’s Section 32 and three more grounds for termination are marked by the award’s conclusiveness. There haven’t been many dramatic rulings on the aforementioned problem, but Sai Babu v. M/S Clariya Steels Private Limited is considered to be the case law.