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What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?
The award must be in writing and be signed by all members of the tribunal or signed by the majority with reasons for any omitted signatures. The Arbitration and Conciliation Act requires the award to set out the reasons on which it is based, unless the parties have agreed that no reasons are to be given. The award should state the date and place of the arbitration, and a signed copy must be delivered to each party.
Timeframe for delivery
Are there any time limits on delivery of the award?
In accordance with the Arbitration and Conciliation (Amendment) Act, the tribunal must render awards within 12 months of the date that it enters the reference. This period can be extended by up to six months if all of the parties agree. If the award is not made within 12 months or within the mutually extended period, the tribunal’s mandate would be terminated, unless the period has been extended by the court.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
The Arbitration and Conciliation Act imposes no specific limitations on the remedies available through arbitration. The limitations are thus the same as those applicable in any Indian court proceedings. The tribunal can order specific performance and award damages, injunctions, declarations, costs and interest. Under Indian law, exemplary or punitive damages for breach of contract are not available.
Indian courts can issue interim measures pending constitution of the tribunal. Thereafter, this power continues through the proceedings until the declaration of the award, only if the courts find that interim measures ordered by the tribunal would not be effective.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
Both courts and tribunals can issue interim measures, but courts have wider powers to grant interim protections.
Available interim measures include:
- appointment of a receiver;
- orders for preservation, custody, sale and protection of goods;
- securing the amount in dispute in the arbitration; and
- any other interim measure that may be just and convenient.
The Arbitration and Conciliation (Amendment) Act has clarified that Indian courts will have the ability to grant interim measures of protection in relation to arbitrations seated outside India.
Can interest be awarded?
Subject to any agreement between the parties, the tribunal has discretion on matters relating to the award of interest. It may award interest at such rate as it deems reasonable on the whole or part of the amount, for the whole or part of the period between the date on which the cause of action arose and the date of the award.
At what rate?
The Arbitration and Conciliation (Amendment) Act provides that an award will carry interest at the rate of 2% higher than the existing rate of interest prevalent on the date of award, unless the award otherwise directs.
Is the award final and binding?
Under the Arbitration and Conciliation Act, the award is final and binding on the parties (subject to any right to challenge the award).
What if there are any mistakes?
The act allows a tribunal to:
- correct any computation, clerical, typographical or similar error;
- provide its interpretation of a specific point or part of an award; and
- make an additional award as to claims omitted from the original award.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
The right to challenge an award is a statutory right and thus cannot be waived or taken away by an agreement between the parties.
What is the procedure for challenging awards?
An application to challenge the award must be filed in court within three months of receipt of the award. In certain circumstances, the court may consider an application for setting aside within a further period of 30 days if it is satisfied that there was sufficient cause for such delay. If the court rejects the application for challenge, the award is enforceable as a decree of the court. The unsuccessful party has only one right to appeal an order setting aside or refusing to set aside an award and no second appeal can be made against an appellate order. However, there is a constitutional right to file an appeal before the Supreme Court of India (a ‘special leave petition’). The Supreme Court will exercise its discretion sparingly and consider such an appeal only if there is a gross error of law or an important issue of law is involved.
The parties cannot enter into an agreement to waive their right to challenge an arbitral award.
On what grounds can parties appeal an award?
The Arbitration and Conciliation Act allows for challenges to the award. The grounds for challenging domestic awards under Indian law are largely based on Article 34 of the UNCITRAL Model Law. A challenging party can raise the following grounds:
- lack of capacity of the parties to conclude an arbitration agreement;
- lack of a valid arbitration agreement;
- lack of proper notice of appointment of an arbitrator or of the arbitration proceedings, or inability of a party to present its case;
- lack of impartiality or independence of the arbitrator;
- composition of the tribunal or conduct of the proceedings contrary to the effective agreement of the parties;
- non-arbitrability of the subject matter of the dispute; or
- conflict with the public policy of India.
The public policy ground has been narrowly defined by the Arbitration and Conciliation (Amendment) Act, confining its application to cases of fraud or corruption in the making of the award, where the award is in “contravention with the fundamental policy of Indian law”, or where the award is in “conflict with the most basic notions of morality or justice”. It further clarifies that the public policy ground shall not entail a review on the merits of the dispute. In domestic arbitrations, “patent illegality appearing on the face of the award” provides an additional public policy-based ground for challenge.
What steps can be taken to enforce the award if there is a failure to comply?
The Arbitration and Conciliation Act states that an award may be enforced as if it were an Indian court decree.
Can awards be enforced in local courts?
A domestic award does not require separate enforcement application proceedings. On the other hand, a foreign award (ie, an award in arbitration seated outside India) is enforced through an enforcement process in any court within the territorial limits where the defendant resides or has its business or where its assets are located.
How enforceable is the award internationally?
India is a party to the New York Convention. The enforceability of an award issued by a tribunal seated in India in an international jurisdiction will therefore depend on whether that jurisdiction has signed the New York Convention and its reservations at the time of signature.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
The defence of sovereign immunity is not available to state entities at the enforcement stage where those state entities are engaged in commercial activities.
Are there any other bases on which an award may be challenged, and if so, by what?
Section 48 of the Arbitration and Conciliation Act lists the grounds on which the enforcement of a New York Convention award may be refused and is based on Article V of the New York Convention.
How enforceable are foreign arbitral awards in your jurisdiction?
Awards issued in most of the major arbitration centres of the world are enforceable in India. Part II of the Arbitration and Conciliation Act, which governs enforcement of foreign awards in India, applies only to awards issued in jurisdictions notified by the Indian government as jurisdictions in which the New York Convention applies. The government has notified all key centres of international arbitration, including France, the United Kingdom, China, Singapore, Sweden, Switzerland and the United States.
A party enforcing an award issued in an arbitration seated outside India under the New York Convention must apply to court and produce the following documents:
- the original award or an authenticated copy;
- the original arbitration agreement or a duly certified copy;
- such evidence as may be necessary to prove that the award is a foreign award; and
- translations of these documents into English, if necessary.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
Indian courts will not enforce a foreign award that has been set aside by the court at the place of arbitration.
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