The arbitration concept provides a fundamental basis for

dispute resolution outside the orthodox court, offering an

expeditious and relatively cheaper alternative through which
disputes are settled. The finality and enforceability of arbitral
awards are some of the most salient characteristics of
arbitration, such that once disputes are resolved through
arbitration, they acquire a conclusive status and are enforceable
in almost the same way as the decrees of the courts. This results
in the principle of legal certainty and respect for arbitration as a
viable alternative mechanism of dispute resolution.
In the Indian context, it is Chapter VIII of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as "the Act") which
regulates finality and enforcement of arbitral awards.
Specifically, Sections 35 and Section 36 thereof detail the setting
and procedural stages regarding the binding nature of awards
and the process for execution.

Meaning of Arbitral Award

An arbitral award refers to the decision given after due
consideration of the evidence and arguments presented to an
arbitral tribunal by the parties to the dispute. It is the final
determination of the matters referred to arbitration. Though a
judgment is public in origin, the arbitral award is a private
pronouncement made under the arbitration agreement between
the parties; it has the same binding force as a court decree and
is thus enforceable under the Arbitration and Conciliation Act,
1996.
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Validity of an Arbitral Award

The validity of an arbitral award is governed by the provisions of
Sections 34 and Section 36 of the Arbitration and Conciliation
Act, 1996. While Sections 34 and 36 deal with challenging and
enforcing arbitral awards, Section 35 establishes the binding
nature of a valid arbitral award. An award becomes valid only if
it adheres to the following conditions:
1. Written Form: The award must be made in writing and
signed by the members of the arbitral tribunal.
2. Reasoning: It must state the reasons upon which it is based
except where parties opt for a non-reasoned award or the
award happens to be a consent award.
3. Compliance with Arbitration Agreement: It should conform
to the terms and scope of the arbitration agreement;
4. Delivery to Parties: The award must be in a form that is
served to each party in a signed copy for the award to be
effective;
5. Finality and Binding Nature: It is binding on the parties
once delivered subject to any challenges filed under
Section 34.
6. No Contravention of Public Policy: The award must not be
contrary to the fundamental policy of Indian law, morality,
or justice.
7. Jurisdiction of Tribunal: The tribunal must have jurisdiction
over the matters decided in the award.
8. Absence of Fraud or Corruption: The awards influenced by
fraud or corruption are invalid under Indian law.
Section 35 deals with the enforcing aspect of the award, but
Section 34 provides the grounds for setting aside the award in
case such an award is held to be invalid on account of, inter alia,
procedural irregularities and breach of public policy, etc.
Then, in case no successful challenge under Section 34 occurs,
Section 35 ensures the finality of the award to send it to
enforcement under Section 36.

Meaning of Finality of Awards:

Finality: An arbitral award is said to be final and cannot be re-
litigated and not re-opened in most cases.
Section 35 of the Act: An arbitral award shall be binding on the
parties and to their respective successors unless under Sections
34 etc.

Meaning of Enforcement of Awards:

Enforcement ensures compliance with the arbitral award. If the
award is not complied with through voluntary action then it is
possible to execute upon a court decree in the same manner as
a decree obtained in the Code of Civil Procedure, 1908.

Explanation of Chapter VIII in Detail

Section 35: Finality of Arbitral

Awards
This section embodies the rule of finality in arbitration. Main
features:
 Binding Nature: The arbitral award is binding on:

 The parties to arbitration

  Persons claiming any right through such party, e.g., legal
heirs, assignees.
 Exceptions: The finality is liable to Part I of the Act, which
enumerates grounds under Section 34 to set aside the
awards.
Key Implications:
 Once the challenge period provided for under Section 34

lapses, arbitral awards cannot be challenged before the

courts on their merit.
 It binds the parties with the disputes coming to an end and

disputes are not allowed to go on interminably.

Section 36: Enforcement of

Arbitral Awards
This section has given proper procedural guidance on the
enforcement of arbitral awards strictly in accordance with the
legal requirement. The provision was substantially overhauled
under the Arbitration and Conciliation (Amendment) Act, 2015,
and consequently brought clarity and precision.

Sub-section (1): Precondition for Enforcement

 An award can be treated as a rule only when:
 The period for moving an application to set aside an award
under Section 34 has expired, or
 The moving application is rejected by the Court.
 After such circumstances are satisfied, the award is of the
same nature as that of a decree of court.

Sub-section (2): Application to Set Aside

  A presentation of an application to set aside an award
(under Section 34) does not work as a stay of its execution.
 It helps prohibit frivolous challenges from delaying the
process of enforcement.

Sub-section (3): Stay on Operation of Awards

 A separate application should be filed to grant a stay of
enforcement.
 The court can grant a stay with conditions like:
 The reasons for the stay must be committed to writing.
 Special treatment be given to monetary awards so that it
serves the provisions of the Code of Civil Procedure.

Provisos of Section 36
There are two important provisos of this provision:

1. Unqualified Stay for Fraud or Corruption:

 If there is a prima facie case of fraud or corruption:
 In the arbitration agreement or contract.
 In the making of the arbitral award.
 The court shall stay the enforcement unconditionally.
 This aspect underscores the gravity of ethical conduct
during the arbitration procedure.

2. Retrospective Operation:
 The proviso shall apply irrespective of whether the
proceedings relating to the arbitration or at court were
commenced prior to or subsequent to the 2015
amendment.
 This clarification eliminates ambiguity in the application of
these provisions to pending disputes.
Explanation
 This section categorically clarifies that the amendments of

2015 apply to all the relevant cases on the removal of

disparities.
Know the Key Differences Between Arbitration & Conciliation

Judicial Interpretations and Key

Principles

1. Binding Effect:
The Supreme Court of India, in various judgments, clearly
observed that it is an award that is binding and there can only
be interference on restricted grounds under Section 34.

Case: ONGC Ltd. v. Saw Pipes Ltd. (2003)

Facts of the Case: In this case, Oil and Natural Gas Corporation
Ltd. (ONGC) and Saw Pipes Ltd. were parties to an arbitration
agreement. A dispute arose, and the matter was taken to
arbitration. The arbitral tribunal issued an award in favor of Saw
Pipes Ltd., which ONGC challenged in court under Section 34 of
the Arbitration and Conciliation Act, 1996.
Judgment: The Supreme Court held that while arbitral awards
are generally binding and the scope for judicial interference is
limited, an award could be set aside if it is in conflict with the
public policy of India. The Court clarified that an award is
contrary to public policy if:
1. It is illegal or patently illegal.
2. It goes against the fundamental policy of Indian law.
3. It is in conflict with the interests of India.
 4. It is against justice or morality.
The Court, thus, expanded the scope of "public policy" under
Section 34, allowing for limited judicial intervention if an award
is found to be patently illegal or unjust.

2. Stay of Enforcement:
The discretionary power of the court to condition its
pronouncement upon the award debtor balances abuses of the
challenge process with the legitimate concerns of the award
debtor.

3. Fraud and Corruption:

Recent judicial pronouncements reinforced that arbitral awards
that have been induced by fraud or corruption cannot stand.
This conforms to the standard norms in the global arbitration
world.

Case: Venture Global Engineering v. Satyam Computer

Services Ltd. (2008) 4 SCC 190
Facts of the Case: This case involved a dispute between Venture
Global Engineering (VGE) and Satyam Computer Services Ltd.
over an agreement in which they were joint venture partners. An
arbitral award was passed in favor of Satyam, but VGE
challenged the award, alleging fraud on the part of Satyam,
especially after the corporate fraud at Satyam came to light.
Judgment: The Supreme Court held that arbitral awards induced
by fraud cannot be enforced. The Court emphasized that if an
award is based on fraudulent practices, it violates the principles
of public policy and cannot be allowed to stand. The judgment
reinforced the idea that awards affected by fraud fall within the
purview of judicial review under Section 34 of the Arbitration
and Conciliation Act, 1996.

Importance of Finality and

Enforcement of Arbitral Awards
 Legal Certainty: Ensures that not even for disputes that are
resolved through arbitration do they lie there forever.
 Efficiency: It frees courts from the burden of considering
arbitration matters and induces parties to respect the
arbitrators' decisions.
 Investor Confidence: This strengthens arbitration,
especially in the context of international commercial
disputes.
 Balance of Interests: It is thereby tempered with fast
enforcement and sufficient protective measures against
manifestly unjust awards.

Challenges and Reforms

Despite this, however, while the provisions do aid in making the
arbitration process more streamlined, some challenges persist:

Delays in Enforcement:
 Section 34 is widely resorted to, and the resultant delay in
the process diminishes the whole idea of efficiency in
arbitration.
 Courts take long times to decide on stays, affecting the
interests of the parties concerned.
Uniformity in Interpretation:
 Courts producing various interpretations on conditions for
stay affect predictability.

Conclusion
Chapter VIII of the Arbitration and Conciliation Act, of 1996,
provides for finality and enforcement of arbitral awards; these
provisions form the bedrock on which arbitration as a disputive
mechanism in India is built on a foundation of reliability.
Sections 35 and 36 reflect a sound framework that ensures
awards are binding and enforceable but present defenses
against the exercise of malpractices. Continued judicial backing
and periodic legislative updates will further increase the
effectiveness of arbitration in India and provide a pro-arbitration
environment to both domestic and foreign parties.
If you're interested in learning more about the Arbitration and
Conciliation Act, 1996, you might find the following sections
particularly insightful: Section 33, Section 14, Section 13, Section
16, Section 9, Section 4, Section 11, Section 8, Section 37