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Alternate Dispute Resolution system: ARBITRATION ( Part 3 )

Updated: Mar 6

You all might have seen the mention of the term “Arbitral Award” a lot in the previous blog of this Alternate Dispute Resolution (Arbitration) series. This blog will help you understand the concept of the Arbitral Award with more clarity. The characteristics of Arbitral awards are:

  1. It refers to the final order of the Arbitral Tribunal on the matter at hand.

  2. It can be both monetary and non-monetary. A few examples of non-monetary Awards are inserting a clause that refrains the party from committing a certain act that is the cause of dispute in the view of the other party, putting in an Employment incentive, and directions to do an act that will help resolve the conflict of opinions between the two parties.

  3. It is identical to the judgement of the conventional courts.

  4. It facilitates the provision of interim relief to the parties.

  5. There is no clear definition is given in the Arbitration and Conciliation Act, of 1996 (amended in the year 2015).

  6. Sections 28 to 34 of the Arbitration and Conciliation Act, of 1996 (amended in the year 2015) deals with Arbitrational awards.

Conditions for a Valid Arbitral Award and its contents:

  1. It should be an express Award in writing.

  2. It should contain the following:

  • Date, Time and Place in compliance with Section 20 of the Arbitration and Conciliation Act, of 1996 (amended in year 2015)

  • Signatures of the constituents of the Arbitral Tribunal. In case of more than one Arbitrator, the signatures of the majority will suffice as long as the justification has been furnished to the Arbitrators whose signatures are absent. Both parties are given a signed copy of this Arbitrational award.

3. It should not be ambiguous and incompatible for the parties.

4. It should not be attainable.

5 . It should be reasonable and should be backed by logic unless the following is the case:

  • The parties have unanimously accepted the absence of any reason for the Award given to them by the Arbitrational Tribunal

  • The Arbitral Award is furnished on the unanimously agreed conditions of the parties.

6. An Interim arbitral award can be given to the party to provide them temporary relief at any point, during the Arbitrational proceeding, as deemed fit by the Arbitrational Tribunal.

7. The Arbitral Tribunal must specify the following in case of monetary Arbitral Award:

  • Amount of the Award.

  • Method of determining that amount.

  • the method of payment.

  • The Party who will be the payer.

  • The party who will be the payee.

8. If the Arbitral Award is monetary then the Arbitral Tribunal may take into account a reasonable interest rate on the part of the whole amount or on the whole amount of the Award which is to be paid by one party to the other, as they deem fit. The period for such an award is also decided by the Arbitrational tribunal at their discretion, starting from the date of the cause of action to the date on which the Arbitral award is furnished.

9. The Rate of interest on the amount of payment is provided as 18% per annum from the date of furnishing of the award to the date of payment of the amount Unless the parties sa settle on a different rate.

Alternative against the Arbitral Award:

The grounds for that aside of the Arbitral Award:

1. The application for the setting aside of the Arbitral award must comply with Section 2(3) of the Arbitration and Conciliation Act, of 1996 (amended in the year 2015)

  • The Applicant party has to prove either of the following:

  • The incapacity of the Applicant party. OR

  • The invalidity of the Arbitral Agreement from legal point of view or its path thereof. OR

  • The Arbitral award includes the subjects which are beyond the scope of the dispute submitted by the parties in the Arbitral Tribunal. OR

  • The Applicant party was not provided a proper notice for the following:

Appointment of the Arbitrator/ Arbitral Tribunal.

About the Arbitral proceeding. OR

  • The Applicant party was not able to put forth there stance properly. OR

  • The Arbitral tribunal was not constituted or the Arbitral proceeding was not conducted in compliance with the agreement among the disputing parties. OR

2. If the following are the discoveries of the Court:

  • The way of Arbitration will not help the disputing parties in getting that or an amicable settlement because the subject matter of the dispute is incapable of being resolved without the intervention of the Conventional Courts. OR

  • The Arbitral Award is not in compliance with the Public Policies of India.

Conditions for such application:

There are 2 conditions under which the Application for the setting aside the Arbitral Award can not be submitted:

  1. If 3 months have passed from the date on which the Applicant party received the Arbitral award. OR

  2. If then request made under Section 33 of the Arbitration and Conciliation Act, of 1996 (amended in the year 2015) deals with Arbitrational awards, has been denied by the Arbitral Tribunal.

If the Application gets accepted then the following takes place:

The court adjourns the Arbitral proceedings by taking into account the request of the Applicant party for the duration determined the court itself to give an opportunity to the Arbitral Tribunal to resolve the conditions which has compelled the Applicant party to submit the application of setting aside the Arbitral Award

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