Arbitral awards - Legality, Interpretation, Appeal, Modification

According to §2 (1) (c) of the Arbitration and Conciliation Act, 1996, "arbitral award" includes an interim award;

Explanation - Arbitral award means decision of an arbitrator, which is binding on parties to the dispute.

The Privy Council in Laldas v. Bai lal, 11 Bom. LR 20 laid down that -

“an arbitral award is equivalent to the judgement of a Court.”

Essentials of an Award: Sec. §31 of the Arbitration and Conciliation Act, 1996, provides for form and contents of an arbitral award, as stated below -

§ 31. Form and contents of arbitral award

(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.

(2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.

(3) The arbitral award shall state the reasons upon which it is based, unless -

• the parties have agreed that no reasons are to be given, or
• the award is an arbitral award on agreed terms under section §30.

(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section §20 and the award shall be deemed to have been made at that place.

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

(6) The 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.

(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.

(8) Unless otherwise agreed by the parties-

(a) the costs of an arbitration shall be fixed by the arbitral tribunal;
(b) the arbitral tribunal shall specify -

• the party entitled to costs,
• the party who shall pay the costs,
• the amount of costs or method of determining that amount, and
• the manner in which the costs shall be paid.​

Explanation - For the purpose of clause (a), "costs" means reasonable costs relating to -

• the fees and expenses of the arbitrators and witnesses,
• legal fees and expenses,
• any administration fees of the institution supervising the arbitration, and
• any other expenses incurred in connection with the arbitral proceedings and the arbitral award.

Effect or Finality of Arbitral Award: Sec. §35 of the Arbitration and Conciliation Act, 1996, states thus -

§35. Finality of arbitral awards

Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.

The principle of Res Judicata applies to the Arbitral Award. The Calcutta High Court held in Sudhir Kumar v. J.N. Chemicals, AIR 1985 Cal. 454, wherein it was held that -

“where all the disputes referred to arbitration are decided by the award, the agreement ceases to exist and merges into the award. Therefore, no second award can be made on the basis of that agreement.”

Suggested Readings:

1. Johari's, Commentary on Arbitration and Conciliation Act, 1996, Kamal Law House.
2. O.P. Tiwari, The Arbitration and Conciliation Act (2nd Ed.), Allahabad Law Agency.
3. Acharya N.K., Law relating to Arbitration and ADR, Asia Law House, Hyderabad
4. Tripathi S.C., Arbitration, Conciliation and ADR, Central Law Agency, Allahabad.
5. Avatar Singh, Arbitration and Conciliation, Eastern Law Book House, Lucknow.
6. KSR Murthy, An introduction to ADR Mechanism, Gogia Law Agency, Hyderabad
7. P.C. Rao, Alternate Dispute Resolution (2001 Ed.), Universal Book Traders, New Delhi.
8. S.D.  Singh, Alternate  Dispute  Resolution,  Universal  Book  Traders, New Delhi
9. Baddi, A. (2016, Dec 25). ARBITRAL AWARDS - LEGALITY, INTERPRETATION, APPEAL, MODIFICATION. Retrieved from http://satyagraha.com/portal/articles/9-business-law/1571-arbitral-awards-legality-interpretation-appeal-modification.html

Author Bio:

Anil hails from a Consulting Background in the area of Business, Technology and Project Management. This Article is a humble effort to the aforementioned domains by making a foray into Legal Research. The Author may be reached via anil [at] Satyagraha [dot] com