November 9, 2023
Arbitration is a form of alternative dispute resolution (ADR) that allows parties to settle their disputes or claims without resorting to litigation. Arbitration is governed by the Arbitration and Conciliation Act, 1996 in India, which is based on the UNCITRAL Model Law on International Commercial Arbitration. One of the key aspects of arbitration is the arbitral award, which is the final and binding outcome of the arbitral process.
The Arbitration and Conciliation Act, of 1996 does not provide a clear definition of “award” in its provisions. However, it can be inferred from the context that an award is the final decision or determination of a dispute or claim that has been submitted for arbitration by the parties. The award can either be monetary or non-financial, such as a cessation of a particular act or an addition of employment. The award can also be interim or final, depending on whether it resolves some or all of the issues in dispute.
The jurisdictional issues related to the award are addressed in Section 42 of the Act, which states that “Not withstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.”This means that once an application related to an arbitration agreement is made in a court,that court will have exclusive jurisdiction over all matters arising out of that agreement and the arbitration proceedings. This provision is intended to avoid a multiplicity of proceedings and conflicting decisions by different courts. However, this provision does not apply to execution applications when it comes to the enforcement of an award through its execution.
The execution of an award is the process of giving effect to the award by ensuring that the party who has won the award receives what they are entitled to. The execution of an award can be done either voluntarily by the losing party or compulsorily by the intervention of a court. The execution of an award is governed by Section 36 of the Act, which states that “Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall been forced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. ”This means that an arbitral award can be executed as a decree of a court after the expiry of the time limit for challenging the award or after the dismissal of such challenge.
However, unlike Section 42, Section 36 does not specify which court will have jurisdiction to execute the award. This issue was clarified by the Supreme Court in Sundaram Finance Ltd. v. Abdul Samad, where it held that an arbitral award can be filed for execution in any court whereas sets are located, irrespective of which court passed the award or decree. This decision was reiterated by the Allahabad High Court in Cheran Properties Ltd v. Kasturi and Sons Ltd, where it held that there is no need to obtain a transfer of decree from one court to another for executing an arbitral award. It is important to note that Section 32 of the Act states that arbitral proceedings stand terminated by the final arbitral award, and execution can only be sought after the final award is rendered. Therefore, an execution application can be filed by an award holder before any Indian court where the award is enforceable, without the need to obtain a transfer of decree from the court that passed the award or decree.
The Arbitration and Conciliation Act of 1996 provides a comprehensive framework for arbitration in India. It covers various aspects such as definition, jurisdiction, and execution of arbitral awards. The primary goal of the Act is to promote arbitration as a speedy and effective mode of dispute resolution. It also aims to ensure minimal judicial intervention and maximum party autonomy. Furthermore, the Act seeks to align Indian arbitration laws with international standards and best practices.