The Arbitration and Conciliation Act 1996 is the key law governing arbitration in

India. The act has four parts:

 Part I sets out general provisions on domestic arbitration;

 Part II addresses the enforcement of foreign awards (Chapter 1 deals with
New York Convention awards and Chapter II with awards under the 1927
Geneva Convention);
 Part III deals with conciliation; and
 Part IV sets out certain supplementary provisions.
Parts I and II are the most significant and are based on the UNCITRAL Model Law
and the New York Convention respectively.
The act also contains seven schedules which are as follows:

 the 1958 New York Convention on the Recognition and Enforcement of

Foreign Arbitral Awards (Section 44);
 the 1923 Geneva Protocol on Arbitration Clauses (Section);
 the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards
(Section 53);
 the Model Fee Schedule for Calculating Arbitrators’ Fees (Section 11(14));
 the Arbitrator Guidelines on Impartiality and Independence (Section
12(1)(b));
 the Model Form for Arbitrators’ Disclosure of Independence and
Impartiality (Section 12(1)(b)); and
 the grounds for ineligibility in case of an arbitrator’s relationship with the
parties or counsel (Section 12(5))
 ndia is a party to the Geneva Protocol on Arbitration Clauses 1923 and the
Geneva Convention on the Execution of Foreign Arbitral Awards 1927. It is
not a signatory to the International Centre for the Settlement of Investment
Disputes Convention 1965.
  As of February 2018, India had signed around 85 bilateral investment
treaties (BITs) and bilateral investment promotion and protection
agreements. Around July 2016, India sent termination notices to 58 countries
with which it has BITs and whose initial duration had expired or was about
to expire. Consequently, India notified these countries that it wished to
replace these BITs with a new set of BITs based on India’s 2015 Model BIT.
However, this list has not been made public and the identity of the countries
remains unknown. In all, of the 85 BITs that India has signed 11 are not yet
in force, and of the 74 that are in force, termination notices have been issued
for 58, leaving 16 BITs untouched. In February 2016 India asked for joint
statements to clarify ambiguities in 25 BITs which were then in force to
avoid expansive interpretations by arbitral tribunals. In July 2017 it was
reported that India’s cabinet had approved a joint interpretative statement for
the India-Bangladesh BIT.
 The Indian government is also negotiating treaties with the United States,
Russia, the European Union and Canada based on India’s 2015 Model BIT.
The current status of these negotiations is unknown.
 India has additionally signed comprehensive economic cooperation
agreements, which contain investment protection provisions, with major
investment partners such as Japan, South Korea and Singapore, the other
Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation (Bangladesh, Bhutan, Burma, India Nepal Sri Lanka and
Thailand), the Association of Southeast Asian Nations and the European
Union.
The Arbitration and Conciliation Act does not require unanimous agreement from
the tribunal.
Unless otherwise agreed by the parties, any decision of the tribunal can be made by
a majority of all its members. If the parties and the tribunal agree, the presiding
arbitrator may be authorised to decide questions of procedure.
In case of disagreement, a dissenting arbitrator can issue a separate opinion, but the
Arbitration and Conciliation Act prescribes no rules as to the form of such a
dissenting opinion.
Arbitrability
Are there any disputes incapable of being referred to arbitration?
Disputes that are non-arbitrable include:

 disputes relating to rights and liabilities which arise out of criminal offences;
 matrimonial disputes (relating to divorce, judicial separation, restitution of
conjugal rights and child custody);
 guardianship matters;
 insolvency and winding-up matters;
 matters relating to public charities or public charitable trusts under the
Public Trusts Act;
 testamentary matters (grant of probate, letters of administration and
succession certificate); and
 eviction or tenancy matters.
Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a
party to an arbitration ask the courts to determine an issue relating to the tribunal’s
jurisdiction and competence?
The principle of competence-competence is recognised in India. The Arbitration
and Conciliation Act empowers the tribunal to decide matters pertaining to its own
jurisdiction, including any issue relating to the existence and validity of the
arbitration agreement.
When a tribunal rules on its own jurisdiction and competence, the party disputing
jurisdiction can challenge the award of the tribunal only when it is rendered.
However, an Indian court may rule on the tribunal’s jurisdiction and competence in
two situations:

 Where it is asked to appoint an arbitrator, the court may examine the

existence and validity of an arbitration agreement before making such an
appointment; and
 Where a party objects to the court’s jurisdiction in an ongoing matter
because of the existence of an arbitration agreement, the court will test the
validity of the arbitration agreement and not automatically refer the matter to
arbitration.
 There was no provision under the Arbitration Act of 1940 which allowed the
Arbitral Tribunal to make a decision on its own jurisdiction and it was the
job of the court to decide on the jurisdiction of the arbitral tribunal. But
under Section 16 of the Arbitration and Conciliation Act, 1996 the Arbitral
Tribunal has been granted the power to make a ruling on its own
jurisdiction. Section 16 (1) of the Arbitration and Conciliation Act states that
the Arbitral Tribunal may rule on its own jurisdiction, including ruling on
any objection with respect to the existence or validity of the arbitration
agreement.
 Section 16 of the Arbitration and Conciliation Act incorporates the principle
of competence-competence. It has two aspects: first, that the tribunal may
decide on its jurisdiction without support from the courts and secondly, that
the courts are prevented from determining this issue before the tribunal has
made a determination on this issue. But does this determination by the
Arbitral Tribunal have a binding effect? Can it not be challenged in courts?
 In the case of Union of India vs. M/s. East Coast Boat Builders & Engineers
Ltd. it was stated:
 “From the scheme of the Act it is apparent that the legislature did not
provide appeal against the order under section 16(5) where the arbitral
tribunal takes a decision rejecting the plea that the arbitral tribunal has no
jurisdiction. The intention appears to be that in such case, the arbitral
tribunal shall continue with the arbitral proceedings and make an award
without delay and without being interfered in the arbitral process at that
stage by any court in their supervisory role.”
 In the case of Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.)
vs. Ram Sharma and Associates it was stated that if a plea is rejected by the
Arbitral Tribunal under section 16(5) of the Arbitration and Conciliation Act
the arbitral proceedings shall continue, an award shall be given and the
aggrieved party shall have to wait till the giving out of the award and there is
no separate remedy against such order.
  But under section 37(2) of the Arbitration and Conciliation Act a decision of
the tribunal accepting the plea that it does not have jurisdiction or is
exceeding its scope of authority is appealable. In the case of Pharmaceutical
Products of India Ltd. vs. Tata Finance Ltd. it was stated:
 “Where the Arbitral Tribunal decides to reject the plea regarding its
jurisdiction, sub-section (5) clearly empowers the Tribunal to continue with
the arbitral proceedings and make an arbitral award. Sub-section (5)
provides for the manner in which such an arbitral award may be challenged.
It provides that such an award can only be challenged in accordance with
section 34. On the other hand, if the Arbitral Tribunal decides to accept the
plea that it has no jurisdiction, then such an order is appealable under section
37(2) of the Act… .”
 Thus we see that when the Arbitral Tribunal decides to reject a plea
regarding its jurisdiction then the order made regarding its jurisdiction is not
appealable but when the Arbitral tribunal decides to accept the plea that it
has no jurisdiction then such an order is appealable under section 37(2) of
the Arbitration and Conciliation Act.

JURISDICTION OF ARBITRAL TRIBUNAL WHEN CONTRACT

CONTAINING ARBITRATION CLAUSE DECLARED VOID

 There may be instances when the arbitration agreement may not be made as
a separate agreement. Instead, it may be embedded, or inserted, as a clause,
in the contract between the parties. And it may happen that the agreement or
the contract between the parties is declared void or illegal. What happens to
the agreement in such cases? Will the arbitration clause in such cases
become void?
 In the case of Jawaharlal Burman vs. Union of India it was stated:
 “It is, therefore, theoretically possible, that a contract may come to an end
and the arbitration contract may not. It is also theoretically possible that the
arbitration agreement may be void and yet the contact may be valid; and in
that sense there is a distinction between the arbitration agreement and the
contract of which it forms a part; but… in the present case, the challenge to
the contract itself involves a challenge to the arbitration agreement; if there
is a concluded contract the arbitration agreement is valid. If there is not a
 concluded contract the arbitration agreement is invalid… indeed, we
apprehend that in a very large majority of cases where the arbitration
agreement is a part of the main contract itself, challenge to the existence or
validity of one would mean a challenge to the existence or validity of the
other.”
 Then in the case of Waverly Jute Mills Co. Ltd. Vs. Raymon and Co. (India)
Ltd. it was stated:
 “A dispute as to the validity of a contract could be the subject-matter of an
agreement of arbitration in the same manner as a dispute relating to a claim
made under the contract. But such an agreement would be effective and
operative only when it is separate from and independent of the contract
which is impugned as illegal. Where, however, it is a term of the very
contract whose validity is in question, it has, as held by us in Khardah Co.
Ltd. case, no existence apart from the impugned contract and must perish
with it.”
 In the case of Jaikishan Dass Mull vs. Luchhiminarain Kanoria & Co. it was
stated by the court:
 “Now there can be no doubt that if a contract is illegal and void, an
arbitration clause, which is one of the terms thereof, must also perish along
with it. As pointed out by Viscount Simon, L.C. in Heyman vs. Darwins
Ltd. “… if one party to the alleged contract is contending that it is void ab
initio, the arbitration clause cannot operate, for on this view the clause itself
is void”. The arbitration clause being an integral part of the contract cannot
stand, if the contract itself is held to be illegal.”
 But the position has changed now. The Arbitration and Conciliation Act was
enacted in 1996. And Section 16 (1) of this Act states that the arbitration
clause if inserted in a contract shall be considered to be an independent from
the rest of the contract and a decision by the Arbitral Tribunal that the
contract is null and void shall not entail ipso jure the invalidity of the
arbitration clause.
 In the case of Olympus Superstructures vs. Meena Vijay Khaitan [11] it was
stated:
 “It will be noticed that under the Act of 1996 the arbitral tribunal is now
invested with power under sub-section (1) of section 16 to rule on its own
jurisdiction including ruling on any objection with respect to the existence or
 validity of the arbitration agreement and for that purpose, the arbitration
clause which forms part of the contract and any decision by the arbitral
tribunal that the contract is null and void shall not entail ipso jure affect the
validity of the arbitration clause. This is clear from clause (b) of section
16(1) which states that a decision by the arbitral tribunal that the main
contract is null and void shall not entail ipso jure the invalidity of the
arbitration clause.”
 And in the case of National Agricultural Coop. Marketing Federation India
Ltd. vs. Gains Trading Ltd. it was stated that a decision that the contract is
null and void shall not entail ipso jure the invalidity of the arbitration clause.
 Thus we see that though the invalidity of the main clause affected the
validity of the arbitration clause inserted in it earlier, now the law has
changed after insertion of Section 16(1) into the Arbitration and Conciliation
Act, 1996. And now the invalidity of the main contract does not result in the
invalidity of the arbitration clause inserted in it, ipso jure because of the
application of the doctrine of separability, which results in the arbitration
clause being treated as independent from the main contract.
 LOSS OF COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON
ITS OWN JURISDICTION
 There may be certain instances when the Arbitral Tribunal may lose the
competence to rule on its jurisdiction.
 Section 11(6) of the Arbitration and Conciliation Act states that a party may
request the Chief Justice or his designate to take required steps when under
an appointment procedure agreed to by the parties, one of them fails to act as
required under the procedure, or the parties or the two arbitrators fail to
reach an agreement expected of them under the procedure, or a person or
institution fails to perform a function entrusted to him under such procedure.
And section 11(7) states that a decision taken by the Chief justice or his
designate under section 11(4), section 11(5) or section 11(6) shall be final.
Which means that the arbitral tribunal cannot look into the question of its
own jurisdiction when the Chief Justice has looked into it earlier.
 In the case of Konkan Railway Corporation Ltd. vs. Rani Construction Pvt.
Ltd. it was stated by the court that the constitution of the Arbitral tribunal
by the Chief Justice may be challenged before the Arbitral Tribunal on the
ground of being in violation of the Act. It was observed by the court:
 “It might also be that in a given case the Chief Justice or his designate may
have nominated the arbitrator though the period of thirty days had not
expired. If so, the Arbitral Tribunal would have been improperly constituted
and be without jurisdiction. It would then be open to the aggrieved party to
require the Arbitral tribunal to rule on its jurisdiction. Section 16 provides
for this. It states that the Arbitral Tribunal may rule on its own jurisdiction.”
 But in the case of SBP and Co. vs. Patel Engineering Ltd. it was stated that
the Arbitral tribunal could not rule on its own jurisdiction once it had been
appointed by the Chief Justice. It was stated:
 “The question, in the context of sub-section (7) of Section 11 is, what is the
scope of the right conferred on the Arbitral Tribunal to rule upon its own
jurisdiction and the existence of the arbitration clause, envisaged by section
16(1), once the Chief Justice or the person designated by him had appointed
an arbitrator after satisfying himself that the conditions for the exercise of
power to appoint an arbitrator are present in the case. Prima facie, it would
be difficult to say that in spite of the decision of the Chief Justice, the
Arbitral tribunal can still go behind that decision and rule on its own
jurisdiction or on the existence of an arbitration clause.
 Section 16 cannot be held to empower the Arbitral tribunal to ignore the
decision given by the judicial authority or the Chief justice before the
reference to it was made. The competence to decide does not enable the
Arbitral tribunal to get over the finality conferred to an order passed prior to
its entering upon the reference by the very statute that creates it.”
 This case overruled the judgment given in the case of Konkan Railway
Corporation Ltd. vs. Rani Construction Pvt. Ltd .
 Thus we see that if the Chief Justice or his designate has looked into the
existence of the arbitration clause and on its jurisdiction then the Arbitral
Tribunal cannot look into the question of its jurisdiction. It would in such a
case be barred from looking into the matter of its jurisdiction.

 Heyman vs. Darwins Ltd. 1942 AC 356

 Jawaharlal Burman vs. Union of India AIR 1962 SC 378
 Waverly Jute Mills Co. Ltd. vs. Raymon and Co. (India) Ltd. AIR
1962 SC 1810
 Jaikishan Dass Mull vs. Luchhiminarain Kanoria (1974)2 SCC 521
  Union of India vs. m/s. East Coast Boat Builders and Engineers Ltd.
76 (1998) DLT 958
 Olympus Superstructures vs. Meena Vijay Khaitan (1999)5 SCC 651
 Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.) vs.
Ram Sharma and Associates MANU/DE/0704/2000
 Konkan Railway Corporation Ltd. vs. Rani Construction Pvt. Ltd.
(2002)2 SCC 388
 Pharmaceutical Products of India Ltd. vs. Tata Finance Ltd. (2002)4
AllMR 412
 SBP and Co. vs. Patel Engineering Ltd. (2005)8 SCC 618
 National Agricultural marketing Federation India Ltd. vs. Gains
Trading Ltd. (2007)5 SCC 692
 Konkan Railway Ltd. vs. Rani Construction Pvt. Ltd. (2002)2 SCC
388
 SBP & Co. vs. Patel Engineering Ltd. (2005)6 SCC 288

Conduct of Arbitral proceedings

Starting an arbitration proceeding
Under the Arbitration and Conciliation Act, a party can commence arbitration by
issuing a notice in writing to the other party of its intention to refer the dispute to
arbitration. Unless otherwise agreed by the parties, arbitration proceedings are
deemed to have commenced on the date on which the respondent receives such
notice from the claimant.
Limitation periods
The Limitation Act 1963 applies to all proceedings under the Arbitration and
Conciliation Act, just as it applies to proceedings in the Indian courts, except to the
extent expressly excluded by the Arbitration and Conciliation Act. Any arbitration
proceedings commenced after the limitation period (three years from the date on
which the cause of action arose) will be time barred.
Procedural rules
The parties can agree on the procedure for conducting the arbitration proceedings.
If no such procedure is agreed by the parties, the tribunal is authorised to conduct
the proceedings in such manner as it considers appropriate. The tribunal is
expressly exempt from applying the provisions of the Civil Procedure Code 1908
and the Evidence Act 1872. If, under the arbitration agreement, the arbitration is to
be administered by an arbitration institution, the rules of that institution become a
part of the arbitration clause by implication.
The Arbitration and Conciliation (Amendment) Act inserted amendments into the
Arbitration Act that require the tribunal to, as far as possible, hold oral hearings for
the presentation of evidence or for oral argument on a day-to-day basis, and not
grant adjournments unless sufficient cause is provided. The tribunal may impose
exemplary costs on the party seeking frivolous adjournments.
Dissenting arbitrators
Dissenting opinions are permitted under the Arbitration and Conciliation Act. The
dissenting arbitrators have the option to prepare a separate award or to give their
opinion in the same document which contains the award of the majority members
of the tribunal. However, this dissenting opinion or award does not form part of the
majority decision and is not enforceable.
Judicial assistance
Local courts can intervene in domestic arbitration proceedings. This includes the
power to issue interim orders, order evidence to be produced directly to the
tribunal and appoint arbitrators.
Courts can assist in selecting arbitrators if the parties are unable to agree on the
appointment of a sole arbitrator or if the two party-appointed arbitrators fail to
appoint a chairperson.
If a respondent fails to participate in arbitration without sufficient cause, the
tribunal may proceed ex parte or adjourn the proceedings. If the respondent fails to
communicate its statement of defence, the tribunal may treat the respondent’s right
as being forfeited or continue the proceedings without considering such failure to
be an admission of the claimant’s allegations.
While arbitrators cannot compel third parties to appear before them, the tribunal or
a party, with the tribunal’s approval, may apply to the court for assistance in taking
evidence. The court may make an order requiring third parties to provide evidence
directly to the tribunal. If a person fails to attend in accordance with such order of
the court, it is subject to the same penalties and punishments as it may have
incurred during court proceedings.
Third parties
In what instances can third parties be bound by an arbitration agreement or award?
The Arbitration and Conciliation Act grants no powers to a tribunal to enjoin a
third party to pending arbitration proceedings. Non-signatories to the arbitration
agreement can be bound by the arbitration agreement under the ‘groups of
companies’ doctrine where a clear intent to bind such non-signatories can be
established.
Default language and seat
The parties can agree on the language(s) and location to be used in the arbitration
proceedings. In the absence of such agreement, the tribunal has the discretion to
determine the language(s) and location.
Gathering evidence
The parties are free to agree on the rules of gathering and submitting evidence. If
the parties do not agree on these matters, the tribunal has the discretion to
determine how evidence may be gathered and submitted to it. The courts can assist
the tribunal in taking evidence if such assistance is sought either by the tribunal or
by one of the parties with prior approval of the tribunal. The tribunal is required to
observe the fundamental principles of natural justice when considering evidence.
Chapter V of the Act deals with the conduct of arbitral proceedings. The Act
provides for giving of equal opportunity to all parties to arbitration to present their
case. It further enumerates that the parties are free to decide the manner in which
the arbitral proceedings are to be conducted. If the parties to fail in arriving at a
decision, the Arbitral Tribunal may determine the manner of proceedings and also
the admissibility, relevance, materiality and weight of any evidence.

Place of Arbitration- Section 20(1) of the Act gives the parties the freedom to
decide on a place of arbitration, however, failing such agreement the place is to be
decided by the Arbitral Tribunal having regard to the circumstances of the case
including the convenience of parties.

Language of Arbitration- Section 22 of the Act gives freedom to the parties to

agree upon the language or languages to be used in arbitral proceedings. It
provides that the Tribunal subject to agreement between the parties has the power
to determine the language/es to be used in arbitral proceedings.

Sections 23 to 27 of the Act stipulate the procedure to be followed in arbitration

proceedings. The Act entails a comprehensive guidance regarding the procedure to
be followed like submission of claim and defence, amendment of claims etc.

Statement of Claim and defence- Section 23 of the Act provides that within the
period of time agreed, the claimant shall state the facts supporting his claims and
also the relief sought. The act also provides for the amendment of statement of
claims during the arbitral proceedings under Section 23(3). However, the Law
empowers the Arbitral Tribunal to disallow amendment of claims on the grounds
of delay.

Section 24 of the Act also enumerates the manner in which proceedings are to be
conducted. It envisages the law regarding hearings and submission of written
proceedings before the Tribunal. Under this provision, the Act empowers the
Tribunal to decide whether the proceedings shall be conducted orally or on the
basis of documents and other materials on record.

Power to terminate the proceedings– The Act under Section 25 empowers the
arbitrator to terminate the proceedings where the without any sufficient cause, the
claimant fails to communicate his statement of claim within the stipulated period.
However, if the respondent fails to submit his statement of defence within the
predetermined period, the arbitrator shall continue with the proceedings without
treating such a failure in itself as an admission of claimant’s allegations.

Appointment of experts by the Arbitral Tribunal (Section 26) – The Act also
empowers the Tribunal to appoint one or more experts to report to it in specific
issues to be determined by the Arbitral Tribunal. The provision also requires the
party to give expert any relevant information or to produce, or provide access to
any relevant documents, goods or other property for his inspection.

Court Assistance- The Act under Section 27 provides that an Arbitral Tribunal can
take Court’s assistance in securing the attendance of witness or for the production
of documents. The Act also extends the Court the authority to issue summons for
examination of witnesses and for the production of documents.

TYPES OF ARBITRATION PROCEEDINGS

The arbitral proceedings in India have been broadly classified into Ad-hoc
arbitration and Institutional arbitration. The Law Commission’s 222nd Report on
Need for Dispensation of Justice through ADR (Alternative Dispute
Resolution) elaborated on the concept of Ad-hoc and Institutional arbitration.

The Commission stated that under Ad-hoc arbitration parties determine the
conduct of arbitration proceedings i.e. arbitration proceedings are agreed to and
arranged by the parties themselves without recourse to an arbitral institution. In ad
hoc arbitration, if the parties are not able to agree as to who will be the arbitrator or
one of the parties is reluctant to cooperate in appointing the arbitrator, the other
party will have to invoke Section 11 of the Act, whereunder the Chief Justice of a
High Court or the Supreme Court or their designate will appoint the arbitrator. In
case of domestic arbitration, it will be the Chief Justice of a High Court or his
designate. In case of international commercial arbitration, it will be the Chief
Justice of India or his designate. In ad hoc arbitration, the fee of the arbitrator will
have to be agreed to by the parties and the arbitrator. The Report also states that
under the prevailing circumstances, the fee of the arbitrator is quite high in ad hoc
arbitration.

Under Institutional arbitration, arbitration is administered by an arbitral

institution. The parties may stipulate in the arbitration agreement to refer an
arbitral dispute between them for resolution to a particular institution. The Indian
institutions include the Indian Council of Arbitration and the International Centre
for Alternative Dispute Resolution. International institutions include the
International Court of Arbitration, the London Court of International Arbitration
and the American Arbitration Association. All these institutions have rules
expressly formulated for conducting arbitration. These rules are formulated on the
basis of experience and hence, they address all possible situations that may arise in
the course of arbitration.
There are no specific rules in arbitration with respect to the disclosure of
documents. The parties must state the facts supporting their claims while filing
their statement of claim and may submit with their statement of claim all
documents they consider to be relevant or add a reference to the documents or
other evidence that they intend to submit. The strict provisions of the Indian Code
of Civil Procedure or the Evidence Act do not apply to an arbitrator.
There is no express or implied obligation to treat an arbitration agreement, any
proceedings arising from it or the award as confidential, under the Arbitration Act.
The parties may agree to confidentiality.

Making of arbitral award

1. Where the place of arbitration is situate in India,—

a. in an arbitration other than an international commercial

arbitration, the arbitral tribunal shall decide the dispute
submitted to arbitration in accordance with the substantive law
for the time being in force in India;
b. in international commercial arbitration,—
 i. the arbitral tribunal shall decide the dispute in accordance
with the rules of law designated by the parties as
applicable to the substance of the dispute;
ii. any designation by the parties of the law or legal system
of a given country shall be construed, unless otherwise
expressed, as directly referring to the substantive law of
that country and not to its conflict of laws rules;
iii. failing any designation of the law under sub-clause (ii) by
the parties, the arbitral tribunal shall apply the rules of
law it considers to be appropriate given all the
circumstances surrounding the dispute.
2. The arbitral tribunal shall decide ex aequo et bono or as amiable
compositeur only if the parties have expressly authorised it to do so.
3. In all cases, the arbitral tribunal shall decide in accordance with the
terms of the contract and shall take into account the usages of the
trade applicable to the transaction.

Decision making by panel of arbitrators—

4. Unless otherwise agreed by the parties, in arbitral proceedings with

more than one arbitrator, any decision of the arbitral tribunal shall be
made by a majority of all its members.
5. Notwithstanding sub-section (1), if authorised by the parties or all the
members of the arbitral tribunal, questions of procedure may be
decided by the presiding arbitrator.

Settlement—

6. It is not incompatible with an arbitration agreement for an arbitral

tribunal to encourage settlement of the dispute and, with the
agreement of the parties, the arbitral tribunal may use mediation,
conciliation or other procedures at any time during the arbitral
proceedings to encourage settlement.
7. If, during arbitral proceedings, the parties settle the dispute, the
arbitral tribunal shall terminate the proceedings and, if requested by
the parties and not objected to by the arbitral tribunal, record the
settlement in the form of an arbitral award on agreed terms.
8. An arbitral award on agreed terms shall be made in accordance with
section 31 and shall state that it is an arbitral award.
 9. An arbitral award on agreed terms shall have the same status and
effect as any other arbitral award on the substance of the dispute.

Form and contents of arbitral award—

10.An arbitral award shall be made in writing and shall be signed by the
members of the arbitral tribunal.
11.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.
12.The arbitral award shall state the reasons upon which it is based,
unless—

a. the parties have agreed that no reasons are to be given, or

b. the award is an arbitral award on agreed terms under section 30.
13.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.
14.After the arbitral award is made, a signed copy shall be delivered to
each party.
15.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.
16.
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.
17.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—
 i. the party entitled to costs,
ii. the party who shall pay the costs,
iii. the amount of costs or method of determining that
amount, and
iv. 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.

The Act provides that after passing the Award, a signed copy of the Award shall be
delivered to each party. The Tribunal if required can also pass an interim arbitral
award.

Correction and Interpretation of Arbitral Award- Section 33 of the Act deals with
the correction and interpretation of Arbitral award. It provides that the Tribunal
may correct the award within 30 days from the receipt of award. If the Tribunal
finds the request for correction to be reasonable, then it shall make a correction or
interpretation of a specific point or part of the award within 30 days of the receipt
of request. However, if the Tribunal deems it necessary it can also extend the
period of time within which it will make correction in the Award or interpretation
of the Award.

The Act also makes provision for Additional Award– It states that unless otherwise
agreed by the Parties, a party with notice to the other party may request the
Tribunal for passing an Additional Award as to the claims presented in the Arbitral
proceedings but erroneously omitted from the Arbitral Award.
Enforcement of Arbitral Award– Section 36 of the Act provides that if the time for
making application to set aside an award under Section 34 has expired or the
application has been refused then the Award shall be enforced under the Code of
Civil Procedure in the same manner as a decree of a Court.

JUDICIAL DICTA

Unreasoned Arbitral Award [Section 31(1)]– In this case, the Petitioners filed for
setting aside the award under Section 34 on the ground that the award passed by
the Arbitral Tribunal is an unreasoned award and liable to be set aside in view of
the provision under Section 31(1) of the Act. In the case of Hemadari Cements
Pvt. Ltd. v. Walchandnagar Industries Ltd.x, the Division Bench of Andhra
Pradesh High Court held that an award even if it is valid is liable to be set aside, if
the award in question does not contain any reasons.

What is a reasoned or speaking award?

he Supreme Court in the case of Jajodea (Overseas) Pvt. Ltd. v. IDC of Orissa
Ltd., settled the legal position that A speaking or reasoned award is one which
discusses or sets out the reasons which led the Arbitrator to make the award.
Setting out the conclusions upon the questions of issues that arise in the arbitration
proceedings without discussing the reasons for coming to these conclusions does
not make an award a reasoned or speaking award. A similar observation was
made by the Court in the case of Union of India v. Hindustan Motors
Ltd., wherein the Supreme Court stated that there is no elaborate discussion does
not mean that the reasons have not been articulated. The rational basis of the
award is revealed in the narration. In our opinion it is a speaking award, and not a
silent award, though it speaks in few words. We must therefore proceed on this
footing.

Stamping of Arbitral Award– On several occasions, the Courts have been

confronted with the issue whether an arbitral award which is not stamped is
enforceable or not. In the case of Naval Gent Maritime Ltd. v. Shivnath Rai
Harnarain (I) Ltd.. In any case the issue of Stamp Duty cannot stand in the way of
deciding whether the award is enforceable or not. The Supreme Court decided a
similar issue in the case of M. Anasuya Devi & Anr. v. M. Manik Reddy and
Ors., wherein the Apex Court had observed that the question as to whether the
award is required to be stamped and registered, would be relevant only when the
parties would file the award for its enforcement under Section 36 of the Act. It is at
this stage the parties can raise objections regarding its admissibility on account of
non-registration and non-stamping under Section 17 of the Registration Act. In
that view of the matter the exercise undertaken to decide the said issue by the Civil
Court as also by the High Court was entirely an exercise in futility. The question
whether an award requires stamping and registration is within the ambit of Section
47 of the Code of Civil Procedure and not covered by Section 34 of the Act.

SETTING ASIDE OF ARBITRAL AWARD

Section 34 of the Act provides for setting aside of an Arbitral Award by the Court.
The Act provides a comprehensive list of circumstances under which an Arbitral
Award can be set aside by the Court and they are:

1. The party is under some incapacity;

2. Arbitration agreement between the parties is not valid;
3. Lack of notice of appointment of arbitrator or of holding of arbitral
proceeding;
4. Arbitral award deals with a dispute not contemplated by or not falling
within the terms of the submission to arbitration or it contains decisions
on matters beyond the scope of submission of arbitration;
5. Composition of arbitral tribunal or arbitral procedure was not in
accordance with the agreement of the parties;
6. The Court finds that the subject matter of the dispute is not capable of
settlement by arbitration under the Law;
7. The Award is in conflict with the Public Policy
Termination of arbitral proceedings

There are many reasons why a party to arbitration proceedings may wish to end
such proceedings before the final award is published, for example, due to financial
difficulties or strategic concerns. In such circumstances, is a party entitled to
terminate the arbitral proceedings unilaterally by giving the other party a notice?
Also, after termination, what is the position regarding any counterclaim in those
arbitral proceedings?
Unilateral Termination or By Consent?
As pointed out by Mustill & Boyd in Commercial Arbitration (2nd edition; 1989),
termination of an arbitration or abandonment of the claim in arbitration should be
distinguished from abandonment of the agreement to arbitrate:-
“‘I do not wish to pursue my claim against the respondent’ is not the same as ‘I
refuse to perform my obligation to submit the claim to arbitration’. The claimant
can of course effectively give up his right to recover what he originally claimed,
and such an abandonment may be inferred from conduct as well as words. It does
not, however, dispose of the contract to arbitrate.”
A claimant is always entitled to discontinue arbitral proceedings, and it would be
unjust to force them to continue the proceedings. As such, the claimant can
terminate the arbitral proceedings unilaterally by serving a notice on the other
party. This should be contrasted with termination of an arbitration agreement,
which cannot be brought to an end unilaterally.
While a party is entitled to withdraw its claim and give up their right to recover,
the right to enforce the arbitration agreement is a right which cannot be taken away
by a party’s unilateral act. If the respondent to the proceedings has a counterclaim,
the respondent is still entitled to refer that counterclaim to arbitration, pursuant to
the arbitration agreement, if such counterclaim has not yet been raised in the
terminated arbitration.
Counterclaim: Fresh Proceedings
If the limitation period for a respondent’s counterclaim (yet to be raised in the
terminated proceedings) will expire soon after such termination, the respondent
should immediately commence arbitration for their counterclaim in accordance
with the arbitration agreement, by giving a fresh notice of arbitration to the
claimant. This is to avoid the counterclaim being time-barred by the statutory
limitation period under the Limitation Ordinance (Cap. 347), which applies to
arbitral proceedings by virtue of section 14 of the Arbitration Ordinance (Cap.
609).
Where a claimant has terminated the arbitration after a respondent has already
raised a counterclaim, the arbitration will not be terminated. In such case, the
respondent can continue with their counterclaim in the same arbitration. In such
case, there would be no question of expiry of the limitation period since section 35
of the Limitation Ordinance provides that the counterclaim made in the course of
any arbitral proceedings shall be deemed to have commenced on the same date as
the original arbitral proceedings.
Accordingly, upon a claimant’s termination of arbitration proceedings, the
respondent should immediately reassess and satisfy themselves that they have put
forward any counterclaims they have, to avoid being time-barred from raising the
same under the Limitation Ordinance.
Case name: M/s SCOPE v. Karnataka State Open University

According to the impugned clause all the disputes arising out of the agreement
were to be settled through mutual consultation and in case of settlement not
coming through the dispute would fall under the purview of the Arbitration and
Conciliation Act, 1996.

The Petitioner in the case had issued notice for appointment of arbitrator, however
the respondent university did not take any steps for appointment of arbitrator as
required by the arbitration agreement.

The High Court of Karnataka thus held that termination of agreement did not
terminate the arbitration clause and directed that the adjudicator shall decide all the
dispute between the parties and claims and objection relating to the agreement in
question.

 The arbitral proceedings shall be terminated when:-

 The final arbitral award is made,

 The claimant withdraws his claim, and the respondent does not object
to it,

 The parties agree on the termination,

 The continuation of proceedings has for any other reason become
unnecessary or impossible.

 SAI BABU
 v.
 M/S CLARIYA STEELS
 (civil appeal no. 4956 of 2019) dated: 1st MAY 2019
 FACTS
 This appeal arises from the Karnataka High Court judgment dated
14.06.2017.
 The parties in this case were involved in an arbitration proceeding. However,
for certain reasons the Sole Arbitrator terminated the arbitration proceedings
under Section 32 (2) (c).
 This termination of proceedings order was pronounced on 4.05.2017.
However, on 5.05.2017, the Arbitrator received an application asking to
recall the termination order and citing reasons for continuation of arbitration
proceedings.
 Hence, on 18.05.2017 the Arbitrator having found merit in the reasons,
recalled his termination order and continued with the arbitration
proceedings.
 This order was challenged in the Karnataka High Court by the Appellant.
However, the challenge was dismissed by the Karnataka High Court on
14.06.2017.
 The appellant thus filed an appeal to the Supreme Court on the basis of the
above-mentioned facts.
 ISSUE BEFORE SC
 Whether the Sole Arbitrator, after termination of proceedings under Section
32 (2) (c), can recall the order?
 OBSERVATION
 The Supreme Court, in the bench comprising of Justice Rohinton Nariman
and Justice Vineet Saran, heard both the parties thoroughly.
 The Court simplified the interpretation of Section 32 of the Arbitration &
Conciliation Act, 1996.
 Section 32 talks about "Termination of Proceedings" and provides different
situations under which the parties or the arbitrator can terminate the
proceedings.
 Sub – section 1 provides for a situation for automatic termination when the
arbitration proceedings shall get terminated on account of pronouncement
of the final award.
 Sub – section 2 provides for a situation where the Arbitral Tribunal may
issue an order of termination of proceedings. The cases under which such a
situation can happen are as under:
 (a) the claimant withdraws his claim, unless the respondent objects to the
order and the arbitral tribunal recognises a legitimate interest on his part in
obtaining a final settlement of the dispute,
 (b) the parties agree on the termination of the proceedings, or
 (c) the arbitral tribunal finds that the continuation of the proceedings has
for any other reason become unnecessary or impossible.
 Out of the reasons mentioned above, this case fell under the category (c)
where the Arbitrator had terminated the proceedings because he found
that it was unnecessary or impossible for him to continue the
proceedings.
 The Court also took note of the circumstances of the case and took Section
25(a) into consideration.
 Section 25(a) talks about a situation where the Arbitral Tribunal can
terminate the proceedings if the Claimant does not provide for his Statement
of Claim without giving a sufficient reason.
 The Court considered the usage of words "unnecessary" and "impossible" in
Section 32 (2) (c). The Court found that the purpose of using these words
particularly shall not encompass a situation already covered under Section
25 (a). The situation covered under Section 25 provides for a specific
termination which is not covered under Section 32 and hence cases under
Section 32 shall be separate from termination cases under Section 25.
 The Court also noted that sub – section (3) of Section 32 provided for the
termination of mandate of the arbitrator once a termination order under
Section 32 has been provided.
 However, the same eventuality and finality was not attached to termination
orders under Section 25.
 Hence, the Court opined that the Arbitrator could not recall its
termination order since his mandate was terminated along with the
termination of the proceedings, as he had passed a termination order
under Section 32 and not under Section 25.
 The Court also took note of the need for quick resolution of the dispute and
appointed a substitute arbitrator as per the requirement under Section 15 (2).
 CONCLUDING VIEW
 The Supreme Court observed that this case was no longer res integra. There
was a precedent available for a similar situation, in order to base their
interpretation of law.
 The Supreme Court relied on the findings of the case of SREI
Infrastructure Finance Ltd v. Tuff Drilling Private Ltd. [ (2018) 11 SCC
470]
 In this case, the Court had stated:
 "The eventuality as contemplated under Section 32 shall arise only when the
claim is not terminated under Section 25(a) and proceeds further. The words
"unnecessary" or "impossible" as used in clause (c) of Section 32(2), cannot
be said to be covering a situation where proceedings are terminated in
default of the claimant. The words "unnecessary" or "impossible" has been
used in different contexts than to one of default as contemplated under
Section 25(a). Subsection (3) of Section 32 further provides that the mandate
of the Arbitral Tribunal shall terminate with the termination of the arbitral
proceedings subject to Section 33 and Section 34."
 The Court further held the following:
  "On the termination of proceedings under Sections 32(2) and 33(1), Section
33(3) further contemplates termination of the mandate of the Arbitral
Tribunal, whereas the aforesaid words are missing in Section 25. When the
legislature has used the phrase "the mandate of the Arbitral Tribunal shall
terminate" in Section 32(3), non-use of such phrase in Section 25(a) has to
be treated with a purpose and object. The purpose and object can only be
that if the claimant shows sufficient cause, the proceedings can be
recommenced."
 Thus, taking note of the above-mentioned case, the Court passed an order in
this case to not let the Arbitrator recall the termination order that he had
passed under Section 32
 In the present case, the Court gave importance to following a precedent that
the Supreme Court had already set.
 The Court also correctly distinguishes the intention of the termination order
under Section 32 and the finality attached to it, from the termination order
under Section 25(a).
 The Court also appointed a substitute arbitrator for quick resolution of the
dispute which in our view was the correct and just way to move ahead and
was the correct interpretation of the law.

Enforcement of Award
The growth of international commerce has necessitated the creation of efficient
methods of resolution of disputes like arbitration and enforcement of the
consequent awards that determine the rights and obligations of the parties. In some
situations securing an award or a final judgment from the courts may only be a
battle half won; this is especially true in the Indian context. We have come across
situations where the opposite parties decide not to participate in the arbitral process
or abandon it mid-way. The enforcement of these awards/judgments where the
party is in absentio is sometimes more complicated than one where the opposite
party has participated in the proceedings. In some situations, objections have been
raised even against costs awarded by the tribunal or the jurisdiction of the tribunal
or court, as the case may be. Therefore, the stage of execution of an award or
decree warrants a high degree of caution. The procedure for enforcement and
execution of decrees in India is governed by the Code of Civil Procedure, 1908
(“CPC”) while that of arbitral awards in India is primarily governed by the
Arbitration & Conciliation Act, 1996 (“Act”) as well as the CPC. Domestic and
foreign awards are enforced in the same manner as a decree of the Indian court.
This is true even for consent awards obtained pursuant to a settlement between
parties. However, there is a distinction in the process for enforcement of an award
based on the seat of arbitration. While the enforcement and execution of an India -
seated arbitral award (“domestic award”) would be governed by the provisions of
Part I of the Act, enforcement of foreign - seated awards (“foreign award”) would
be governed by the provisions of Part II of the Act.1 A few steps that are crucial
for ensuring successful enforcement of arbitral awards and execution of decrees
are: ƒ Making effective service on opposite party/ judgment debtor is crucial to
prevent objections at later stage; ƒ Taking necessary steps by way of attachment/
notice/ arrest/ appointment of receiver or in another manner; ƒ Remember that
principles of natural justice apply to even execution proceedings.
Enforcement of domestic awards
An award holder would have to wait for a period of 90 days after the receipt of the
award prior to applying for enforcement and execution. During the intervening
period,
the award may be challenged in accordance with Section 34 of the Act. After
expiry of the aforesaid period, if a court finds the award to be enforceable, at the
stage of execution, there can be no further challenge as to the validity of the
arbitral award. Prior to the recent Arbitration and Conciliation (Amendment) Act,
2015 (“Amendment Act”), an application for setting aside an award would
tantamount to a stay on proceedings for execution of the award. However, by
virtue of the Amendment Act, a party challenging an award would have to move a
separate application in order to seek a stay on the execution of an award.
Enforcement of foreign awards
India is a signatory to the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, 1958 (“New York Convention”) as well as the Geneva
Convention on the Execution of Foreign Arbitral Awards, 1927 (“Geneva
Convention”). If a party receives a binding award from a country which is a
signatory to the New York Convention or the Geneva Convention and the award is
made in a territory which has been notified as a convention country by India, the
award would then be enforceable in India. Out of the 196 countries in the world
only 50 countries have been notified by the Central Government as reciprocating
countries, with the most recent addition being Mauritius.3 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. However at this stage parties would have to be
mindful of the various challenges that may arise such as frivolous objections taken
by the opposite party, and requirements such as filing original/ authenticated copy
of the award and the underlying agreement before the court.
Requirements for enforcement of foreign awards ƒ Original award or a duly
authenticated copy in the manner required by the country where it is made. ƒ
Original agreement or duly certified copy. ƒ Evidence necessary to prove the
award is a foreign award, wherever applicable. Section 47 of the Act provides that
the above “shall” be produced before the court, at the time of the application for
enforcement of the foreign award. However, in a recent judgment, the Supreme
Court of India interpreted that the word “shall” appearing in Section 47 of the Act
relating to the production of the evidence as specified in the provision at the time
of application has to be read as “may”. 4 It further observed that such an
interpretation would mean that a party applying for enforcement of the award need
not necessarily produce before the court a document mentioned therein “at the time
of the application”. Nonetheless, it further clarified that such interpretation of the
word “shall” as “may” is restricted “only to the initial stage of the filing of the
application and not thereafter.”
Conditions for enforcement of arbitral awards – domestic and foreign
A party may resort to the following grounds for challenging an award. Such an
award would be rendered unenforceable when:
ƒ The parties to the agreement were under some incapacity.
ƒ The agreement in question is not in accordance with the law to which the
parties have subjected it, or under the law of the country where the award was
made (especially in case of foreign awards).
ƒ There is a failure to give proper notice of appointment of arbitrator or arbitral
proceedings.
ƒ Award is ultra vires the agreement or submission to arbitration.
ƒ Award contains decisions on matters beyond the scope of submission to
arbitration.
ƒ Composition of the arbitral authority or the arbitral procedure is ultra vires
agreement.
ƒ Composition of the arbitral authority or the arbitral procedure is not in
accordance with the law of the country where the arbitration took place (in case of
foreign awards).
ƒ The award (specifically a foreign award) has not yet become binding on the
parties, or has been set aside or suspended by a competent authority of the country
in which, or under the law of which that award was made.
ƒ Subject matter of the dispute is not capable of settlement by arbitration under
Indian law.
ƒ Enforcement of the award would be contrary to the public policy of India.
Stamping and registration requirements of awards – domestic and foreign
I. Domestic Awards
II. ƒ The Stamps Act 1899 provides for stamping of arbitral awards with
specific stamp duties and Section 35 provides that an award which is
unstamped or is insufficiently stamped is inadmissible for any purpose,
which may be validated on payment of the deficiency and penalty
(provided it was original). Issues relating to the stamping and registration
of an award or documentation thereof, may be raised at the stage of
enforcement under the Act. (M. Anasuya Devi and Anr v. M. Manik
Reddy and Ors). The Supreme Court had also observed that the
 requirement of stamping an award and registration is within the ambit of
Section 47 of the CPC and not covered by Section 34 of the Act.
III. ƒ The quantum of stamp duty to be paid would vary from state to state
depending on where the award is made. Currently, as per the Maharashtra
Stamp Act, the stamp duty for arbitral awards stands at five hundred
rupees in Maharashtra; and in case of Delhi, as per Schedule 1A to the
Stamp (Delhi Amendment) Act 2001, the stamp duty is calculated at
roughly 0.1% of the value of the property to which the award relates.
IV. ƒ Under Section 17 of the Registration Act, 1908 an award has to be
compulsorily registered if it affects immoveable property, failing which,
it shall be rendered invalid. II. Foreign Awards ƒ As far as foreign
awards are concerned, the Supreme Court of India has categorically held
that a foreign award is not liable to be stamped
V. ƒ Previously, the Delhi High Court in Naval Gent Maritime Ltd v
Shivnath Rai Harnarain (I) Ltd., had observed that a foreign award would
not require registration and can be enforced as a decree, and the issue of
stamp duty cannot stand in the way of deciding whether the award is
enforceable or not. A similar approach had been adopted by the Bombay
High Court in the case of Vitol S.A v. Bhatia International Limited and
the High Court of Madhya Pradesh in Narayan Trading Co. v. Abcom
Trading Pvt. Ltd.

Enforcement of arbitral awards: Appropriate forum & limitation

The Supreme Court in its recent ruling in, Sundaram Finance Ltd. v. Abdul Samad
and Anr clarified that an award holder can initiate execution proceedings before
any court in India where assets are located. In case the subject-matter of the
arbitration is of a specified value, commercial courts established under the
Commercial Courts, Commercial Division and Commercial Appellate Division of
High Courts Act 2015 (“Commercial Courts Act”) would have jurisdiction, as
given below:
I. Award arising out of an India seated arbitration (being an International
Commercial Arbitration) By virtue of the Commercial Courts Act and the
Amendment Act, the Commercial Division of a High Court where assets of
 the opposite party lie shall have jurisdiction for applications relating to
enforcement of such awards if the subject matter is money. In case of any
other subject matter, Commercial Division of a High Court which would
have jurisdiction as if the subject matter of the award was a subject matter
of a suit shall have jurisdiction, i.e., where the opposite party resides or
carries on business or personally works for gain.
II. Award arising out of an India seated arbitration (not being an International
Commercial Arbitration) As per the Commercial Courts Act and the
Amendment Act, for such cases, the appropriate court would be the
Commercial Court exercising such jurisdiction which would ordinarily lie
before any principal Civil Court of original jurisdiction in a district, as well
as the Commercial Division of a High Court in exercise of its ordinary
original civil jurisdiction.
III. Foreign Awards Where the subject matter is money, the Commercial
Division of any High Court in India where assets of the opposite party lie
shall have jurisdiction. In case of any other subject matter, Commercial
Division of a High Court which would have jurisdiction as if the subject
matter of the award was a subject matter of a suit shall have jurisdiction.

Limitation period for enforcement of awards

i. Domestic awards Since arbitral awards are deemed as decrees for the
purposes of enforcement (as observed by the Supreme Court in M/s Umesh
Goel v. Himachal Pradesh Cooperative Group Housing Society, the
Limitation Act 1963 applies to arbitrations. The limitation period for
enforcement of such an award is twelve years. ii. Foreign awards Various
High Courts have given varying interpretations on the limitation period
within which a party may enforce an award. The Bombay High Court has
observed that since a foreign award is not a decree per se and would not be
binding on parties unless a competent court records it as enforceable, it
would undergo a two-step process. Thus, the application for enforcement of
a foreign award would fall within the residuary provision of the Schedule to
the Limitation Act, that is, the limitation period would be three years.
Thereafter, on recognizing the award as a decree, the limitation period for
 execution of such a decree would be twelve years therefrom. However, the
Madras High Court held a contrary view by referring to foreign awards as
deemed decrees, and the corresponding limitation period would be twelve
years. It held that, “the foreign award is already stamped as a decree and the
party having a foreign award can straight away apply for enforcement of it
and in such circumstances, the party having a foreign award has got 12
years’ time like that of a decree holder.” The Act provides that certain
conditions (as listed above) have to be assessed prior to enforcement of a
foreign award, and where the court is satisfied that the foreign award is
enforceable, the award would be deemed to be a decree of that court. The
Supreme Court in M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd. , held
that under the Act a foreign award is already stamped as the decree. It
observed that, “In one proceeding there may be different stages. In the first
stage the Court may have to decide about the enforceability of the award
having regard to the requirement of the said provisions. Once the court
decides that foreign award is enforceable, it can proceed to take further
effective steps for execution of the same. There arises no question of
making foreign award as a rule of court/decree again.
Challenges in executing foreign arbitral awards in India
Getting an award from a foreign arbitral tribunal in your favour is somewhat a half
battle won as it still needs to be enforceable in India. There have been various
cases, where, despite of receiving a favourable award in a foreign arbitral tribunal,
the party failed in getting it enforced in competent Indian courts. Hence, no way
out exists in order to get an arbitral awards imposed than to get into litigation, from
which both the parties refrained from at the first place. As it is time consuming an
order which has already been passed by a foreign arbitral tribunal will take more
time to actually become effective rendering the process to take more time in
application of justice. But this route cannot be avoided as it provides more of a
structured process and ensures due scrutiny on behalf of the courts is applied
making the award enforceable.

Pressure by local governments, especially local parties which have more political
power may try to annul the award or the total effect of the award, which carries a
potential to frustrate the award issued by the international arbitration seat.
Part II of the Indian Arbitration & Conciliation Act, 1996 (“the Act”) deals with
Enforcement of foreign awards whereas Chapter I (Section 44-52) deals
particularly with Convention related awards. As per Section 44(b) , a “foreign
award” must be made in one of such territories as the Government of India, upon
being satisfied about the existence of reciprocal provisions, may by notification in
its Official Gazette, declare it to be the particular territory where the convention
shall be applicable. However, there is a reason why this requirement of getting
gazetted mention needs to be removed, in order to bring India’s arbitration regime
into sync with the standards of the convention. The requirement of gazetting
creates unnecessary ambiguity with respect to enforcing foreign awards made in
countries which are contracting states to the Convention but have not yet been
notified in the gazette.

Overall, India does not pose to be a jurisdiction carrying anti-arbitration bias.

Previously there were no rules and regulations on enforcement of foreign awards in
India. Hence, it can easily be argued that the legal system of India strives towards
creating a facilitative environment for enforcement of foreign awards. A major
problem with the Arbitration and conciliation Act, 1996, is regarding enforcement,
it treats foreign arbitral awards and foreign court decisions similarly. Because of
lack of distinction between foreign arbitral awards and court decisions, issues
particularly relating to foreign awards are not properly addressed in Indian Law.
Enforceable awards
There are several requirements for a foreign arbitral award to be enforceable under
the AC Act.

(i) Commercial transaction: The award must be given in a convention country to

resolve commercial disputes arising out of a legal relationship. In the case of RM
Investment & Trading vs Boeing, AIR 1994 SC 1136, the Supreme Court observed
that the term "commercial" should be liberally construed as having regard to
manifold activities which are an integral part of international trade.

(ii) Written agreement: The Geneva Convention and the New York Convention
provide that a foreign arbitral agreement must be made in writing, although it need
not be worded formally or be in accordance with a particular format.
(iii) Agreement must be valid: The foreign award must be valid and arise from an
enforceable commercial agreement. In the case of Khardah Company vs Raymon
& Co (India), AIR 1962 SC 1810, the Supreme Court held that an arbitration
clause cannot be enforceable when the agreement of which it forms an integral part
is declared illegal.

(iv) Award must be unambiguous: In the case of Koch Navigation vs Hindustan

Petroleum Corp, AIR 1989 SC 2198, the Supreme Court held that courts must give
effect to an award that is clear, unambiguous and capable of resolution under
Indian law.

Unenforceable awards
Under sections 48 and 57 of the AC Act, an Indian court can refuse to enforce a
foreign arbitral award if it falls within the scope of the following statutory
defenses:
(i) the parties to the agreement are under some incapacity;

(ii) the agreement is void;

(iii) the award contains decisions on matters beyond the scope of the arbitration
agreement;

(iv) the composition of the arbitral authority or the arbitral procedure was not in
accordance with the arbitration agreement;

(v) the award has been set aside or suspended by a competent authority of the
country in which it was made;

(vi) the subject matter of dispute cannot be settled by arbitration under Indian law,
or

(vii) the enforcement of the award would be contrary to Indian public policy.

Enforcement and execution

The party seeking enforcement of a foreign award under the provisions of the Act
must make an application to the court of competent jurisdiction with the following
documents:
(i) the original/duly authenticated copy of the award;

(ii) the original/duly authenticated copy of the agreement, and

(iii) such evidence as may be necessary to prove that the award is a foreign award.

In the case of Fuerst Day Lawson vs Jindal Exports, the Supreme Court held that a
single application will hold good to decide the question of the execution of the
foreign arbitral award as well as the decree of the award.

A binding agreement
On fulfilling the statutory conditions mentioned above, a foreign award will be
deemed a decree of the Indian court enforcing the award and thereafter will be
binding for all purposes on the parties subject to the award.

Difficulties Experienced In Enforcement

Main difficulties which a party experiences while seeking enforcement of an
Arbitral Award are :
· An Arbitral Award under the 1996 Act cannot be enforced as a Decree till the
period of challenge under Sec.34 (3) is over or the objections filed have been
dismissed. It is a common practice that whenever an Arbitral Award is made, the
party adversely affected by it files a petition u/s 34 of the Act in the Court and the
Court issues notice. Then, till the time this objection petition is dismissed the said
award cannot be enforced. Given the delays in our judicial system, it almost takes
years for the Objection Petition to be disposed off and till such time the party
having the arbitral award in its favour remains in limbo. Thus, the laudable
objective behind doing away of legal proceedings to make the arbitral award a
Rule of Court under the 1940 Act by introducing Sec.36 in the 1996 Act has been
diluted to a great extent.

It is proposed to provide for, inter alia, that mere filing objection petition under
Sec.34 will not operate as stay of the award and the court may grant stay of the
operation of the award subject to imposition of such conditions as it may deem fit
to impose and the power to impose conditions include the power to grant interim
measures not only against the parties to the award but also against the third parties
in order to protect the interest of the party in whose favour the award is passed.
· The Execution procedure laid down in Order XXI of CPC is lengthy, complex
and time consuming and almost a never ending story.

· By the time the stage of filing execution comes, the party against whom the
award had come, cleverly disposes off its assets so as to defeat the execution
proceedings. Unless a party has taken interim orders u/s 9 of the Act against
disposal of assets etc. there are good chances that by the time execution application
is filed, the judgment debtor would have practically spirited away all its assets.