Arbitral Award

  • What is an award?

An arbitral tribunal pronounces numerous decisions during the course of its proceedings. These decisions are mainly divided into two categories: ‘Orders’ and ‘Awards’. It is very important to define what an award is. While an award deals with substantial issues which resolve the issues in dispute, an order resolves the procedural issues which play a secondary role in the arbitral process. An award determines an issue of substance finally. It cannot be revisited or reversed and has a res judicata effect. An award however can be challenged in a court of law. An order, on the other hand, maybe of an interim nature, and can be revisited or changed by the tribunal. An order cannot be challenged before a court, unlike an award. This is to ensure the independence of the arbitration tribunal.

Section 2(1)(c) of the Arbitration and Conciliation Act, 1996 defines ‘arbitral award’ as including the interim award. Article 1(2) of the Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958 defines an ‘arbitral award’ as an award given by arbitrators appointed for a particular case, as well as one given by permanent arbitral bodies. These definitions do not provide any conceptual clarity on what an award really is.

In Centrotrade Minerals and Metal Inc. v. Hindustan Copper Ltd., the Supreme Court has explained the characteristic features of the award without giving a definition of the same. In this case, the parties had provided for two-tier arbitration mechanisms i.e. an appeal can be made to another tribunal if a party is not satisfied with the decision of the first tribunal. The issue before Court was whether the decision of the first tribunal is an award? In the process, the court mentioned that an award has the following features:

“(i) An award is made by the arbitrators;

(ii) An award resolves a dispute;

(iii) An award is a binding decision; and

(iv) An award may be partial.”

These features are drawn by the Court from a well-known decision of the French Supreme Court, wherein the French court has given a proper definition of the term award, which is as follows: “decisions made by the arbitrators which resolve in a definitive manner all or part of the dispute that is submitted to them on the merits, jurisdiction or a procedural matter which leads them to put an end to the proceedings.”

  • Types of Awards

The Arbitration and Conciliation Act, 1996 contemplates the following types of awards:

  1. Final Award

A final award is contemplated under Section 35 of the Arbitration and Conciliation Act., 1996. The end product of the arbitral process is a decision in the form of an award that is final and binding on the parties to the proceedings. The objective of instituting arbitration proceedings is to secure a decision that finally resolves the dispute between the parties. Consequently, once a final award is passed this objective is met and the arbitration proceedings are terminated with the mandate of the tribunal becoming functus officio according to Section 32(1). However, there is no internationally accepted definition of the term ‘award.

2. Additional Award

An additional award is provided for under Section 33(4) of the Arbitration and Conciliation Act, 1996. In the absence of an agreement to the contrary, a party upon giving notice to the other party may in 30 days of receiving the award, make a request to the arbitral tribunal to make an additional arbitral award. The purpose of this additional award is to finally decide claims that were presented during proceedings, but are omitted in the award. If the tribunal considers such a request to be justified, it shall make the additional award within 60 days of receiving such a request. A tribunal is also empowered to extend the period of time within which the additional award must be passed, if necessary. The rules contained in Section 31 pertaining to the form and contents of arbitral awards shall be applicable to any additional award as well.

3. Interim Award

Section 2(1)(c) of the Arbitration and Conciliation Act, 1996 which defines the term ‘arbitral award’ states that it includes an interim award. Section 31(6) empowers a tribunal to make an interim arbitral award on any matter on which it may make a final award.

The Supreme Court of India noted in McDermott International Inc v. Burn Standard Co. Ltd., while clarifying the meaning of the term ‘interim award’ has noted that the 1996 Act nowhere uses the term ‘partial award’ and only refers to ‘interim or final award’. However, the court further clarified that the two terms mean one and the same:

“An interim award in terms of the said provision is not one in respect of which a final award can be made, but it may be a final award on the matters covered thereby, but made at an interim stage. … If the partial award answers the definition of the award, as envisaged under Section 2(1) (c) of the 1996 Act, for all intent and purport, it would be a final award… [W]e are of the opinion that an [interim award] is final in all respects with regard to disputes referred to the arbitrator which are subject matter of such award. We may add that some arbitrators instead and in place of using the expression “interim award” use the expression “partial award”. By reason thereof, the nature and character of the award is not changed.”

4. Consent Award

Section 30 of the Act provides that if the parties to the arbitration settle their disputes during the course of arbitration proceedings then, upon a request by the parties, and where not objected to by the tribunal, the terms of settlement shall be recorded in the form of an arbitral award. The phrase “not objected to by the tribunal” has been lifted from Article 30 of the UNICITRAL Model Law. It was included because the arbitrators should not be forced to attach their signatures to a Settlement agreed by the parties, since such a settlement may be against public policy, in contravention of laws including conceptions of justice and fairness.

REFERENCES

  • Nigel Blackaby, ‘Redfern and Hunter on International Arbitration’, Kluwer Law International (6th Edn.)
  • Emmanuel Gaillard and John Savage, ‘Fouchard Gaillard Goldman on International Commercial Arbitration’
  • M/S. Centrotrade Minerals and Metal Inc. v. Hindustan Copper Ltd. AIR 2017 SC 185
  • McDermott International Inc v. Burn Standard Co. Ltd., (2006) Arb LR 498, 521
  • Howard M. Holtzmann & Joseph E. Neuhas, A Guide to the UNCITRAL Model Law

Aishwarya Says:

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