Proceedings subsequent to issuance of award

Interpretation and correction of awards

Does the arbitral tribunal have the power to correct or interpret an award on its own or at the parties’ initiative? What time limits apply?

Section 33 of the Arbitration Act provides that the arbitral tribunal may:

  1. at the request of a party, with notice to the other party, correct computational, clerical, typographical or other errors that have arisen by accident or by omission within 30 days from the receipt of such request;
  2. at the request of a party, with notice to the other party, give interpretation of a specific point or part of the award within 30 days from the receipt of such request; or
  3. on its own motion make a correction of the kind mentioned in item 1 above within 30 days from the date of the arbitral award.

 

The arbitral tribunal may also, at the request of a party and with notice to the other party, make an additional award on claims presented in the arbitral proceedings but omitted from the arbitral award within 60 days of the receipt of such request. Additionally, the arbitral tribunal may extend the period within which it shall make a correction, give an interpretation or make an additional award, if necessary.

Challenge of awards

How and on what grounds can awards be challenged and set aside?

An award can be challenged under section 34 of the Arbitration Act, by an application to the court for setting aside the award on the following grounds established on the basis of the record of the arbitral tribunal:

  • incapacity of a party;
  • the arbitration agreement being invalid under the law;
  • improper notice of the appointment of an arbitrator or of the arbitral proceedings to the applicant, or the applicant was unable to present his or her case;
  • the arbitral award decided on a dispute beyond the scope of the reference to arbitration or contains decisions beyond the scope of the submission to arbitration;
  • the procedure for the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
  • the subject matter of the dispute is incapable of being settled by arbitration under the law at the time; or
  • the arbitral award is in conflict with public policy (this includes awards:
    • affected by fraud or corruption;
    • in contravention with fundamental policy of Indian law or basic notions of morality or justice; and
    • those in violation of confidentiality and admissibility of evidence provisions in the Act.

 

An application for setting aside an award must be made before the expiry of three months from the date on which the applicant received the arbitral award, unless it is extended by the court for a further period of 30 days if the applicant shows sufficient cause for delay.

In light of the decision of the Supreme Court in the case of Bharat Aluminium Company v Kaiser Aluminium Technical Service Inc 2012 (8) SCALE 333 (the BALCO judgment), parties to a foreign-seated arbitration no longer had recourse to any Indian courts for relief. Courts in India had also granted a wide meaning to public policy and had interpreted that even an illegality under Indian law would be against public policy. The recourse to setting aside an award under section 34 is also no longer available to any party to a foreign-seated arbitration, which was earlier extended by the courts through judicial interpretation. All parties to any such foreign arbitration upon receipt of an award of a foreign tribunal, if required to be enforced in India, would need to present such an award for enforcement under section 48 of the Arbitration Act. An Indian court can review the foreign award to the limited extent provided under section 48 to examine whether it should be enforced. BALCO applies to all agreements that have been executed after 6 September 2012 for foreign-seated arbitrations.

The 2015 Amendment Act has clarified the reversal of position in the BALCO judgment, by way of insertion of a proviso to section 2(2). The proviso states that sections 9 (interim relief by courts), 27 (court assistance in taking evidence), 37(1)(a) (appeals in respect of interim relief by the courts) and 37(3) (appeals to the Supreme Court) will also be made applicable to international commercial arbitrations, even where the seat of arbitration is outside India, and an award of the said arbitration will be enforceable and recognised under Part II of the Arbitration Act.

In another significant ruling in the case of Shri Lal Mahal v Progetto Grano Spa Civil Appeal No. 5085 of 2013, decided on 3 July 2013, the Supreme Court not only restricted the interpretation of ‘public policy’ in the context of enforcement proceedings, but also held that the scope of public policy is narrower under section 48 than under section 34. The court held that enforcement under section 48 can only be opposed on grounds of public policy where it is contrary to fundamental policy of Indian law, the interest of India or justice and morality. In the case of ONGC v Western Geco International Ltd Civil Appeal No. 3415 of 2007, the scope of public policy under section 34(2)(b)(ii) of the Arbitration Act was once again under consideration. The Supreme Court reduced the amount awarded to Western Geco by one-third, stating that the tribunal had committed a ‘palpable error’. Further, the court, while examining if the award was in conflict with ‘public policy of India’, elaborated the scope of ‘fundamental policy of Indian law’ to include three principles to be followed by the tribunal: a judicial approach, principles of natural justice and the Wednesbury principle of reasonableness.

The Supreme Court in the case of Associate Builders v Delhi Development Authority Civil Appeal No. 10531 of 2014, stated that section 34 of the Arbitration Act does not ordinarily permit the courts to review findings of facts made by arbitrators, and subsequently restored the award. The court merely clarified and has not restricted the law concerning public policy and stated that an award can be set aside if it is contrary to fundamental policy of Indian law, interest of India, justice or morality, or if it is patently illegal.

Through the introduction of section 34(2A) by the 2015 Amendment Act, an application for setting aside the award on the ground of ‘patent illegality’ as a violation of public policy shall only be applicable to awards in domestic arbitrations. Furthermore, an award shall no longer be liable to be set aside merely on the ground of erroneous application of law or re-appreciation of evidence.

As per the amendment to section 36 of the Arbitration Act, the mere filing of a challenge to an award under section 34 does not render the award unenforceable unless an application is made by the challenging party, upon which the court may grant a stay on the enforcement of the award. In other words, filing of an application under section 34 does not automatically operate as a stay on enforcement proceedings. A separate application for stay will have to be applied for.

Levels of appeal

How many levels of appeal are there? How long does it generally take until a challenge is decided at each level? Approximately what costs are incurred at each level? How are costs apportioned among the parties?

Ordinarily an appeal under the domestic arbitration regime may be preferred against certain orders of the arbitral tribunal, as enumerated under section 37 of the Arbitration Act. It provides that the following orders shall be appealable to the court authorised to hear such appeals from original decrees of the court passing the order:

  • refusal to refer the parties to arbitration under section 8 of the Act;
  • a grant or refusal to grant an interim measure under section 9 of the Act;
  • setting aside or refusing to set aside an arbitral award under section 34 of the Act;
  • a grant of the plea of a party by the arbitral tribunal that it does not have jurisdiction;
  • a grant of the plea of a party by the arbitral tribunal that it is exceeding the scope of its authority; and
  • a grant or refusal to grant an interim measure by the arbitral tribunal under section 17 of the Act.

 

No second appeal shall automatically lie against an order passed in appeal under section 37 of the Act. However, it is clarified that nothing in section 37 shall affect or take away a right to seek special leave to appeal to the Supreme Court under article 136 of the Constitution of India against an order passed in appeal under section 37.

There is no set procedure or time line for decisions on the challenge; the actual time generally varies from six months to three years. The costs involved at each level are the attorneys’ fees and other legal expenses. Courts usually grant costs to the successful party; however, these costs are generally notional and not commensurate with the actual costs.

Recognition and enforcement

What requirements exist for recognition and enforcement of domestic and foreign awards, what grounds exist for refusing recognition and enforcement, and what is the procedure?

Domestic and foreign awards are enforced in India in the same manner as a decree of the Indian courts. This Is true even with respect to consent awards resulting from a settlement between the parties. The distinction between the process of enforcement of an India seated arbitration and a foreign seated arbitration is the application of the Arbitration Act. Part I applies to an India seated arbitration while Part II applies to a foreign seated arbitration.

A foreign award may be enforced in India under the multilateral international conventions or the New York Convention if the conventions apply to the relevant arbitration, the award was made in a country that is a party to the above conventions and the award was made in a country that is notified as a reciprocating territory. The countries notified as reciprocating territories include Australia, Austria, Belgium, Botswana, Bulgaria, the Central African Republic, Chile, Cuba, Czech Republic, Slovakia, Denmark, Ecuador, Egypt, Finland, France, Germany, Ghana, Greece, Hungary, Ireland, Italy, Japan, South Korea, Kuwait, the Malagasy Republic, Malaysia, Mauritius, Mexico, Morocco, the Netherlands, Nigeria, Norway, China (including the Special Administrative Regions of Hong Kong and Macao), the Philippines, Poland, Romania, San Marino, Singapore, Spain, Sweden, Switzerland, Syria, Tanzania, Thailand, Trinidad and Tobago, Tunisia, the United Kingdom, the United States and Ukraine.

It has been held by the courts in India that if a state has been notified as a reciprocating territory for the purposes of recognition and enforcement of awards, then all territories forming part of that state would be covered under such notification. Where such state thereafter separates into different territories, as long as the new territory is also a signatory to the New York Convention, no separate notification would be required for each new territory for the purpose of recognition and enforcement of awards.

In respect of domestic awards, prior to the 2015 Amendment Act, section 36 of the Arbitration Act provided that where the time limit for preferring an application under section 34 of the Arbitration Act has expired or such application has been dismissed, an arbitral award shall be enforceable in the same manner as if it were a decree of the Court. The provision as it stood then came to be interpreted by the Supreme Court as an implied automatic stay on enforceability of an award till such time as a challenge under section 34 of the Arbitration Act may be successful.

Thereafter, the 2015 Amendment Act substituted a new section 36 of the Arbitration Act which provides that the filing of an application under section 34 of the Arbitration Act shall not by itself render the award unenforceable unless the Court grants an order of stay. In considering an application for grant of stay of an arbitral award for payment of money, the Court shall have due regard to the provisions governing grant of stay of money decrees under the provisions of the Code of Civil Procedure 1908. Requisites for the successful enforcement of arbitral awards include:

  • lapse of the three-month period from the date of receipt of the award;
  • effective service of notice on the opposite party;
  • award to be made on a stamp paper of appropriate value;
  • steps to attach, arrest or appoint a receiver; and
  • compliance with the principles of natural justice.

 

Requisites for the enforcement of a foreign awards include:

  • the original award or an authenticated copy in the manner required by the country where it is made; and
  • the original agreement or a certified copy.

 

The Supreme Court, in its decision in Board of Control for Cricket in India v Kochi Cricket P Ltd & Ors (2018) 6 SCC 287, clarified the effect of this amendment as applicable to court proceedings arising out of arbitrations that were initiated after the coming into effect of the 2015 Amendment Act (ie, on 23 October 2015). It further clarified that the amended section 36 of the Arbitration Act would also be applicable to court proceedings pending before the Court on 23 October 2015.

Subsequent to this decision, the legislature, by the 2019 Amendment Act, inserted section 87 of the Arbitration Act so as to nullify the effect of the decision of the Supreme Court in Kochi Cricket. The validity of this inserted provision was challenged and in the Supreme Court’s decision in Hindustan Construction Co Ltd v Union of India (decision dated 27 November 2019 in Writ Petition (Civil) 1074 of 2019 and Connected Matters), the inserted section 87 of the Arbitration Act was struck down as unconstitutional on the ground of it being vitiated by manifest arbitrariness.

Thus, the position of law as it stands today is that no automatic stay of an arbitral award shall operate merely due to the pendency of an application under section 34 of the Arbitration Act in respect of any arbitration proceeding, whether initiated prior to or subsequent to the commencement of the 2015 Amendment Act.

Time limits for enforcement of arbitral awards

Is there a limitation period for the enforcement of arbitral awards?

The Arbitration Act does not specify a time limit for filing an application for enforcement of an arbitral award under section 36 of the Act. However, section 43 of the Act sets out that the limitation act applies to arbitration. Article 136 of the limitation act prescribes that the application for enforcement must be made within 12 years from the date at which it becomes enforceable.

Enforcement of foreign awards

What is the attitude of domestic courts to the enforcement of foreign awards set aside by the courts at the place of arbitration?

Under section 48 of the Arbitration Act, enforcement of a foreign award may be refused, at the request of a party against whom it is invoked, only if that party furnishes to the court proof that:

  • the parties to the agreement were under some incapacity;
  • the arbitration agreement is not valid under the law to which the parties have subjected themselves;
  • the party against whom the award has been invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case;
  • the arbitral award deals with a difference not contemplated or not falling within the terms of submission to arbitration or it contains decisions beyond the scope of the submission to arbitration;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties and failing such agreement, was not in accordance with the law of the country where the arbitration took place;
  • the award has not yet become binding on the parties;
  • the award has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made;
  • the subject matter of the dispute is incapable of being settled by arbitration under the laws of India; or
  • the enforcement of the arbitral award would be contrary to public policy.

 

Further, it has been held that a foreign award not bearing stamp duty under the Indian Stamp Act 1899 would not render it unenforceable (M/s Shriram EPC Limited v Rioglass Solar SA 2018 SCC Online SC 1471).

Enforcement of orders by emergency arbitrators

Does your domestic arbitration legislation, case law or the rules of domestic arbitration institutions provide for the enforcement of orders by emergency arbitrators?

No, the concept of emergency arbitrators does not yet exist under the Arbitration Act or the new 2019 Amendment Act. Hence, enforcement of orders by emergency arbitrators is also not yet provided under the law. However, through the introduction of section 29B, the 2015 Amendment Act has introduced the concept of fast-track procedure whereby the award shall be made within six months from the date the arbitral tribunal entered upon the reference.

Cost of enforcement

What costs are incurred in enforcing awards?

Costs incurred in the enforcement of an arbitral award are the costs of an attorney and court fees.

Law stated date

Correct on:

Give the date on which the information above is accurate.

20 November 2020