Making of arbitral award and termination of proceedings is completely addressed with in CHAPTER VI

of the Arbitration and Conciliation Act, 1996. From sections 28 to 33 it’s all about “making of arbitral
award and termination of proceedings”

Arbitral Award under Arbitration and Conciliation Act, 1996

According to the definition given under Section 2(c) it’s clear that the 1996 Act doesn’t provide a
concrete definition of Arbitral awards. It solely affirms that arbitral awards include interim awards too.
However, the ultimate call given by the arbitral tribunal [as per Section 2(d)] is the arbitral award.

Accordingly, an arbitral award could be defined as the binding and final decision made by an arbitral
tribunal or a sole arbitrator, that resolves, wholly or in part, the dispute submitted to
his/its jurisdiction.

The award can give a spread of remedies to the parties depending on the issue of the dispute. This
include:

 Injunctive Remedies: Once a court orders that a party should take an action or stop an
action, it’s called an injunction. An arbitrator may offer the same award in a dispute wherever
one party needs such relief.
 Money: Several award can decide that one party will need to pay the opposite party based on
the contract or dispute controlling the award.
 Creative Relief: Typically, the dispute between the parties can have several underlying
emotions and interests that are driving the parties. Whereas the arbitrator will not have as
much freedom as a mediator to assist the parties come to a reasonable agreement, an
arbitrator could have one party issue an apology or provide a positive employment reference.
 Incentives: An arbitrator could add incentives for certain behaviours to encourage the parties
to suits the award.
Calcutta High Court described an arbitral award as a result of the consensual justice of the parties[1].
Within the case of Bhajahari v. Bihari arbitral award was outlined as the final determination of the
claim or issue, by an arbitrator of the parties of their own choice

There are two types of awards –

 Domestic awards- this sort of award is governed under Part I of the Act
 Domestic awards, are altogether dealt with in part one till Section 43 of the Arbitration and
conciliation act whereas Sections 44 to 60 deal with different kinds of foreign arbitral awards.

 The arbitral award is worth solely to the extent of the parties’ ability to enforce the terms they
ab initio prescribed. Section 36 lays down provisions for the speedy enforcement of the
domestic awards. Under this very section, it is made clear that a domestic award is
enforceable within the same manner as that of a decree passed by a court. In domestic
arbitrations, if the assets of the parties are almost in one and the same jurisdiction, the
enforcement of domestic award abundant easier. And it is easier to enforce an arbitral award
than judgment by a court.

 Foreign awards- this type is subsequently governed under Part II

Part II of Chapter 1 deals with the New York Convention awards. In this Section 48 deals with the
refusal of enforcement of the foreign award. Chapter 2 Section 57 deals with the provisions regarding
the enforcement of Geneva Convention awards.
Calcutta High Court laid down the essential conditions of a ‘foreign arbitration’ where the award is
further called a foreign arbitral award, the main points of this case were:

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

2. By a foreign arbitrator
3. Arbitration by applying foreign laws
4. One of the parties consists of foreign nationals

Conditions of a valid award

For an award to be valid, it must meet the following requisites:

 Be made pursuant to a valid arbitration agreement.

 The parties were afforded equal opportunity to submit and argue their case.
 The award itself should not travel beyond the scope of the arbitration agreement.
It must deal with the dispute as contemplated by the arbitration agreement.
 The composition of the arbitral tribunal must be in conformity with the agreement
between the parties.
 The dispute should be arbitrable, and the award should not be against the public
policy of the enforcing country.
 Further, the arbitral tribunal must pass an award that is reasoned unless the
parties agree otherwise.

Essential elements of a valid award

As per Section 31 of the 1996 Act, the following elements are necessary for an arbitral
award to be construed as valid:

 Firstly, the arbitral award must be in written form.

 Secondly, it must be signed by the members of the tribunal. However, it is
pertinent to mention that the signatures of all members are not mandatory to
make an award valid. In the event that the arbitral tribunal is composed of
more than one arbitrator, it is not mandatory that the signatures of all the
members be provided. If the majority of the members of the tribunal provide
their signature, that shall suffice so long as the arbitrator who has not signed
provides the reason behind such an omission.
 Thirdly, the award must be a reasoned one.
 Fourthly, the award should provide the date of passing the award. As per
Section 31 of the 1996 Act, the award should also provide the place at which it
was made.

Finality of an award
Every arbitration proceeding has one ultimate objective, which is to result in an award
that is both valid and enforceable. For this reason, the final award must be such that it
fully decides all the issues and differences that had arisen between the parties and were
in dispute between the parties, which they had ultimately raised for determination in the
arbitration proceeding. Section 35 of the 1996 Act confers the status of finality on an
arbitral award. It goes on to state that an arbitral award shall be final and binding not
just on those who have been parties to the arbitration proceedings but also on every
person claiming under the parties. Therefore, this arbitral award that has attained
finality and which has decided all the differences raised and in dispute between the
parties would be binding on the parties as well as those other persons who seek to claim
through the parties.

After the arbitral tribunal forms an opinion and subsequently passes the award, the
award may be challenged in accordance with the grounds provided under Section 34 of
the 1996 Act. If a challenge to the award has been made and is unsuccessful, or if the
grounds under Section 34 of the 1996 Act have not been made out, the award attains
finality in terms of Section 35 of the 1996 Act. Further, as already discussed above, this
final award becomes binding on both the parties to the proceedings and their privies who
claim through the parties.

When does the award become enforceable

According to Section 36(1) of the 1996 Act, an arbitral award can be enforced only when
the time limit for challenging the award under Section 34 of the 1996 Act has passed.
This time limit for challenging the award under the grounds mentioned in Section 34 of
the 1996 Act has been specified under Section 34(3). As per Section 34(3) of the 1996
Act, the arbitral award may be challenged within 3 months from the date on which the
arbitral award is received. Apart from a challenge, the parties are further free to seek
any correction in the award, any interpretation of the award, or any part of the award. If
the parties opt for either a correction of the award or its interpretation, the limitation for
such a request would be 3 months from which such a request for correction has been
disposed of by the tribunal.

Section 34 of the Arbitration and Conciliation Act, 1996

Section 34 of the Arbitration and Conciliation Act of 1996 specifies grounds for challenging an
arbitral award rendered under Section 31. However, the challenge to an award under Section 34
is subject to certain limitations, such as the fact that it may only be contested within three
months of receiving the award, which can be extended for another 30 days.

Conditions in which an arbitral award can be set aside

There are several grounds on account of which the Court can set aside the arbitral award, which
is as follows:

1. Incapacity of the party:

If any of the parties is under the age of majority or is a minor, they are not obligated to
follow any agreement in place. As a result, the agreement becomes void, and any award
made in such a case may be revoked by the court.

2. Agreement is not valid:

For a contract to be enforceable, all of its essential elements must be met. If the contract
is illegal, the arbitration agreement will be declared void as well, and the arbitral award
 can be revoked.

3. Another party was not notified:

Arbitral award shall be revoked if the party applying was not provided with advance
notice of the arbitrator's appointment or the arbitral procedures or was otherwise
unable to submit his case.

4. Subject matter beyond the arbitration clause:

The arbitral award will be challenged if it deals with an issue that is not addressed by the
arbitration agreement or contains decisions on subjects that are outside the scope of the
arbitration agreement.

Termination of Arbitral Proceedings under Arbitration and Conciliation Act, 1996

Section 32 of the Arbitrational and Conciliation Act, 1996 is totally coherent with Article 32 of
UNCITRAL Model Law. According to Section 32(1) of the Act termination of Arbitral proceedings takes
place once the final award declared by the arbitral tribunal. The other three grounds of termination of
arbitral proceedings are given under Sub-section 2 of Section 32.

To terminate the arbitration proceedings arbitral tribunal shall issue an order:

 The parties themselves agree to terminate the proceedings.

 If the arbitral tribunal finds that the continuation of the proceedings is either unnecessary or
impossible for any other reason.
 the plaintiff withdraws their claim. It can also be terminated if the respondent objects to the
arbitral award. Looking at which the arbitral tribunal come to a conclusion that it has a
legitimate interest in obtaining a final settlement.

Section 37 of Arbitration and Conciliation Act, 1996- Appeal

Appeals (Section 37)- the right of appeal is a statutory right. It is a right given by a statute.

The right of appeal can be exercised only if it is provided in the statute.

 Appeal against an order passed by the court

 Appeal against an order passed by the arbitrator

Appeal against an order passed by the court S. 34 (1)

 Granting or refusing to grant any interim relief under S.9 or

Setting aside or refusing to set aside an arbitral award under section 34.

Appeal against an order passed by the arbitrator S. 34 (2)

An order admitting or allowing the objection raised by a party stating that the arbitral tribunal
does not have jurisdiction or an order admitting or allowing the objection raised by a party
stating that the arbitral tribunal is exceeding the scope of its authority or An order granting an
interim relief u/s 17 or An order refusing to grant an interim relied on u/s 17.
The time limit for filing appeals u/s 37

 If the appeal is being filed in a High Court, within 90 days

 If the appeal is being filed in any other Court, within 30 days from the date of the order.

Arbitral Tribunal - According to Section 2(1)(d) - Arbitral tribunal” means a sole

arbitrator or a panel of arbitrators.

COMPOSITION

Section 10 - NUMBER OF ARBITRATORS - There is no restrictions on number,

qualification or characteristics of arbitrators. However, the tribunal must comprise an

uneven number of arbitrators. If the parties want more than one arbitrator, they will

have to expressly provide so in the agreement otherwise reference is to be a sole

arbitrator appointed with the consent of the parties.

APPOINTMENT OF ARBITRATORS

1. Parties are free to agree upon any procedure to appoint the arbitrator. [Section 11(2)]

2. Where the procedure for appointment of an arbitrator has been agreed upon by the

parties, the court’s role is to only implement that procedure.

3. The parties have agreed upon an arbitrator or have already named an arbitrator in the
arbitration agreement - he is to be appointed.

4. If the panel is to consist of 3 arbitrators, the parties shall appoint one arbitrator each
and the two appointed arbitrators shall appoint the third arbitrator, who shall act as a
presiding arbitrator in the proceedings. [Section 11(3)]

5. When the agreement does not name any arbitrator and parties fail to agree upon the
procedure or name of arbitrator, then only the court gets the power of appointment.

The Arbitration & Conciliation Act does not contemplate removal of arbitrator by the
court but either by the parties themselves or the Arbitration Tribunal.

When a person has been approached for appointment as an arbitrator, he has to

disclose in writing any circumstances which may show –

 Any relationship with or interest in any of the parties.

 Any relation to subject matter of the dispute like financial, business professional or any
kind.
  Any grounds which may cast any justifiable doubts as to his independence or
impartiality.

 Any grounds which are likely to affect his ability to devote sufficient time to arbitration
and ability to complete the work within 12 months.

 If he lacks qualifications required by the parties.

The duty to disclose any such interest continues after his appointment and throughout
the arbitral proceedings. [r.w. Section 12(2)]

Enforcement of foreign awards

Chapters (I and II) of Part II of the Arbitration and Conciliation Act, 1996 deal with the

enforcement of certain foreign awards made under the New York Convention and the Geneva Convention,
respectively.

Sections (44 and 53) of the Act define the foreign awards as to mean an arbitral award on differences between
persons arising out of legal relationship, whether contractual or not,considered commercial under the law in
force in India made on or after the 11th day of October 1960 in the case of New York Convention awards and
after the 28th day of July 1924 in the case of Geneva Convention awards.

Any foreign award whether made under New York Convention or Geneva Convention,which would be
enforceable under the Act have been treated as binding for all purposes on the persons as between whom it was
made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any
legal proceedings in India.

The Constitutional bench of Supreme Court HELD that the Act of 1996

has accepted the territoriality principle which has been adopted in the UNCITRAL Model

Law. Section 2(2) makes a declaration that Part I of the Arbitration Act, 1996 shall apply to all arbitrations
which take place within India. In the opinion of Supreme Court, the provisions contained in Arbitration Act,
1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I
with the provisions contained in Part II of the Arbitration Act, 1996.

In a foreign seated international commercial arbitration, no application for interim relief

would be maintainable under Section 9 or any other provision, as applicability of Part I of the Arbitration Act,
1996 is limited to all arbitrations which take place in India.

In this case hon‟ble Supreme Court concluded that Part I of the Arbitration Act, 1996 is

applicable only to all the arbitrations which take place within the territory of India.

Conditions for Enforcement of Foreign Awards [Section (48 & 57)]

 The enforcement of a foreign award in India is a two-stage process which is initiated by

filing an execution petition.

 Initially, a court would determine whether the award adhered to the requirements of the

Act.
 Once an award is found to be enforceable it may be enforced like a decree of that court.

Requirements for enforcement of Foreign Award [Section 47]

Section 47 of the Act provides that the party applying for enforcement of foreign award

“shall” at the time of application produce before the court

1. The original award or a duly authenticated copy thereof;

2. The original arbitration agreement or a duly-certified copy thereof; and

3. Such evidence as may be necessary to prove that the award is a foreign award.

4. Where the award or agreement is in a foreign language, the party seeking to enforce the

award is required to produce a certified translated copy in English.

5. Where the Court is satisfied that the foreign award is enforceable, the award shall be

deemed to be a decree of that Court.

Foreign Award when not enforceable [Section 48]

1. The Indian courts may refuse to enforce the foreign award on satisfactory proof of any of

the grounds mentioned in Section 48(1) of the ACT, 1996, by the party resisting the

enforcement of the award. The provisions set out in Section 48 are in the nature of

defenses available to the party resisting the enforcement application.

2. The party, against whom the award is invoked, may use any of the following grounds as

defence before the Court for the purpose of refusal of enforcement of the foreign awards:

 the parties were under some incapacity under the law applicable to them or the

arbitration agreement is not valid under that law; or

 the party against whom the award is invoked was not given proper notice of the

appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to

present his case; or

 the award deals with a difference not falling within the terms of submission to

arbitration OR

 the composition of the arbitral authority or the arbitral procedure was not in

accordance with the agreement of the parties or in the law of the country where the

arbitration took place; or

the award has not yet become binding, or has been set aside or suspended by a

competent authority of the country in which or under the law of which, the award was

made; or

 the subject-matter of the difference is not capable of settlement by arbitration under

the law of India; or

3. The enforcement of award would be contrary to the public policy of India.

Process of enforcement of the Geneva Convention Awards

Part II, Chapter II, of the 1996 Act deals with the enforcement of awards made in
pursuance of the Geneva Convention. This chapter, titled “Geneva Convention Awards,”
runs from Sections 53-60. In order to enforce a foreign award under Part II of Chapter II
of the Arbitration and Conciliation Act, 1996, Section 57(1) lays down five conditions.
These are:

 Arbitration agreement should be valid

Section 57(1)(a) of the 1996 Act provides that the foreign award would be liable to be
enforced only if such award is made in accordance with a valid arbitration agreement.

 Subject matter should be arbitrable

Section 57(1)(b) of the 1996 Act provides that the subject matter of the award must be
arbitrable as per Indian law. If the same is not arbitrable in accordance with Indian law,
then the foreign award would not be enforceable.

 Constitution of the tribunal and due process

Section 57(1)(c) of the 1996 Act provides that the award must be made by such
an arbitral tribunal as was provided in the submission to arbitration by the
parties. Further, the constitution of the tribunal should be in a manner as agreed
by the parties.

 Constitution of the tribunal and due process

Section 57(1)(c) of the 1996 Act provides that the award must be made by such
an arbitral tribunal as was provided in the submission to arbitration by the
parties. Further, the constitution of the tribunal should be in a manner as agreed
by the parties.

 Enforcement should not be against public policy

According to Section 57(1)(e) of the 1996 Act, if the enforcement of the foreign award is
against the public policy of India, then the award would be denied enforcement in India.

Section 58: Enforcement of the Geneva Convention Awards

Section 58 of the 1996 Act provides that upon satisfaction of the Court that the award is
enforceable under Chapter II of Part II, such award would be deemed to be a decree of
the Court.