Arbitration

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

The formal requirements of an enforceable arbitration agreement are contained in section 7 of the Indian Arbitration Act, which provides that an arbitration agreement is an agreement to submit to arbitration all or certain disputes that may arise in respect of a defined legal relationship, whether contractual or not. Pertinently, an arbitration agreement is required to be in writing and the same may be in the form of an arbitration clause in a contract or a separate agreement.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Under the Indian Arbitration law, the parties are free to decide upon the procedure of arbitration. However, although strict rules of evidence and civil procedure are not applicable; however, generally these principles act as a guiding light for determining procedure.

Award

When and in what form must the award be delivered?

After the recent amendment to the Indian Arbitration Act in 2015, an arbitral award must be passed within a period of 12 months from the date on which the tribunal enters upon the reference. This period of 12 months is extendable by a further six months by consent of the parties. For any further extension, an application is required to be made to the court.

The Indian Arbitration Law provides that an award must be in writing and signed by the members of the tribunal. Further, the award must state the reasons upon which it is based unless otherwise agreed between the parties or the award itself is a settlement. The award must specify the date on which it is made and the seat of arbitration. The tribunal may also pass interim or partial awards on the issues pursuant to which it may pass the final award.

Appeal

On what grounds can an award be appealed to the court?

Section 34 of the Indian Arbitration Act sets out the ground on which the court may set aside an arbitral award, being that:

  • a party to the arbitration was under some incapacity;
  • the arbitration agreement was not valid under the law to which the parties have subjected it or, failing any indication thereon, the law in force;
  • the applicant party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his or her case;
  • the 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 the submission to arbitration. If, however, the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award containing decisions on matters not submitted to arbitration may be set aside;
  • the composition of the tribunal or the procedure followed was different from that agreed by the parties or, in the absence of agreement, as per Part I of the Act;
  • the subject matter of the dispute was incapable of resolution or settlement by arbitration under law for the time being in force; or
  • the award is in conflict with the public policy of India.

Any party aggrieved by the decision of the court may prefer an appeal under section 37 of the Indian Arbitration Act. An order passed under section 37 is not appealable. However, the same does not restrict the right of a party to approach the Supreme Court of India by way of a special leave to appeal under article 136 of the Indian Constitution.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

A domestic arbitral award is enforceable in the same manner as if it were a decree of a civil court in India. Therefore, all modes of execution, including attachment, sale delivery of property, furnishing of security, etc, are available.

Subject to the conditions for enforcement prescribed under section 48 of the Indian Arbitration Act, a foreign arbitral award (only of the signatory countries to the New York Convention) is enforceable as a decree of the Indian court enforcing the same. Thus, once enforced by an Indian court, a foreign award can be executed as per the provisions of the civil procedure code in India.