The arbitral award is the final decision of the arbitral tribunal on the dispute submitted to it. It is the culmination of arbitral proceedings and is equivalent in effect to a decree of court. The Act regulates the rules applicable (S.28), decision-making (S.29), form and content (S.31), termination of proceedings (S.32), and correction/interpretation (S.33).
Why: The award is the product that parties invest time and money in. Its form, content, and legal soundness determine whether it will be enforceable or vulnerable to challenge.
Legal Framework
| Section | Content |
|---|---|
| S.28(1) | Domestic: Tribunal decides in accordance with the substantive law for the time being in force in India |
| S.28(1)(a)-(b) | International: Tribunal applies rules of law designated by parties; failing designation, rules determined by conflict of laws |
| S.28(2) | Tribunal decides ex aequo et bono (equity) or as amiable compositeur only if parties expressly authorise |
| S.28(3) | In all cases, decide in accordance with terms of contract and usages of trade |
| S.29 | Decision by majority (default); procedural questions may be decided by presiding arbitrator if authorised |
| S.29A | Time limit: 12 months (extendable by 6 months) from completion of pleadings |
| S.31(1) | Award in writing; signed by members of tribunal (majority signatures sufficient with stated reasons for omissions) |
| S.31(2) | Shall state reasons (unless parties agree no reasons or it is an award on agreed terms under S.30) |
| S.31(3) | Shall state date and place (seat) of arbitration |
| S.31(4) | Copy delivered to each party |
| S.31(5) | Award on agreed terms (S.30 settlement during arbitration) has same force as award on merits |
| S.31(6) | Tribunal may make interim award at any stage |
| S.31(7) | Tribunal may award interest (pre-award and post-award) |
| S.31(8) | Costs of arbitration: tribunal may fix; includes fees/expenses of arbitrators, institution, legal representation |
| S.32 | Termination of proceedings: by final award; or by order of tribunal (under S.25(a), S.32(2) circumstances) |
| S.33 | Correction of computation/clerical errors; interpretation of specific point; additional award (within 30/60 days) |
Types of Arbitral Awards
| Type | Section | Nature |
|---|---|---|
| Final award | S.31 | Decides all issues; terminates proceedings (S.32(1)) |
| Interim award | S.31(6) | Decides specific issues during proceedings; binding but proceedings continue |
| Award on agreed terms | S.30/S.31(5) | Records parties' settlement; same status as award on merits |
| Additional award | S.33(4) | Covers claims presented but not dealt with in original award; made within 60 days |
| Corrected award | S.33(1) | Corrects computation, clerical, or typographical errors; within 30 days |
Form and Content (S.31)
| Requirement | Detail |
|---|---|
| Writing | Mandatory (S.31(1)) |
| Signatures | All members; or majority with reasons for omitted signatures |
| Reasons | Mandatory unless: |
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(a) parties agreed no reasons
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(b) award on agreed terms |
| Date | Must state date of award | | Place | Must state place of arbitration (seat); determines supervisory jurisdiction | | Delivery | Signed copy delivered to each party (S.31(5)) | | Limitation for challenge | 3 months from receipt of award (S.34(3)) |
Costs and Interest
Interest (S.31(7))
| Type | Position |
|---|---|
| Pre-reference | On sum found due; period before arbitration commenced |
| Pendente lite | During arbitral proceedings |
| Post-award | From date of award until payment (S.31(7)(b): 2% above current rate) |
| Rate | S.31(7)(a): Unless otherwise agreed, reasonable rate. Post-2015: 2% above current rate |
Costs (S.31(8))
Tribunal may fix costs including: arbitrator fees and expenses, administration fees of institution, legal costs incurred by parties, other costs related to proceedings. Post-2015: costs follow the event (generally, unsuccessful party bears costs).
Recall Check
- What law does the tribunal apply in domestic arbitration under S.28(1)?
- What are the formal requirements of an award under S.31?
- What is an "award on agreed terms" under S.30?
Key Cases
ONGC v Saw Pipes (2003) ONGC-v-Saw-Pipes-2003 Issue: Whether an award can be set aside for being contrary to Indian law. Rule: "Public policy of India" includes being contrary to the fundamental policy of Indian law, interests of India, and justice or morality. Additionally includes "patent illegality." Held: Expanded the scope of S.34 review. An award violating the substantive law of India is against public policy. Later narrowed by the 2015 Amendment (Explanation to S.34).
Associate Builders v DDA (2015) Associate-Builders-v-DDA-2015 Issue: When can an award be said to be in conflict with the public policy of India? Rule: Public policy ground covers:
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(a) fundamental policy of Indian law
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(b) interest of India
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(c) justice or morality
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(d) patent illegality (domestic only).
Does not cover mere errors of law or fact. Held: Courts cannot act as appellate courts on facts. Even if the court disagrees with the tribunal's factual findings, it cannot set aside the award unless the approach is perverse or without basis.
Distinctions
| Basis | Final Award | Interim Award |
|---|---|---|
| Scope | Decides all remaining issues | Decides specific issues only |
| Effect on proceedings | Terminates proceedings (S.32(1)) | Proceedings continue |
| Challenge | Under S.34 (3-month limitation from receipt) | Under S.34 (separately challengeable) |
| Enforcement | Under S.36 after challenge period | Under S.36 (independently enforceable) |
| Example | Award on all claims and counterclaims | Award on jurisdiction; award on liability alone |
Flashcards
Q: What substantive law does the tribunal apply in domestic arbitration? A: Under S.28(1), the tribunal shall decide in accordance with the substantive law for the time being in force in India.
Q: Can the tribunal decide based on equity (ex aequo et bono)? A: Only if parties expressly authorise it under S.28(2). The tribunal does not have inherent equity jurisdiction.
Q: Must the award state reasons? A: Yes (S.31(2)), unless parties agreed that no reasons are to be given, or it is an award on agreed terms under S.30.
Q: What is the time limit for making an award under S.29A? A: 12 months from completion of pleadings (S.23(4)), extendable by 6 months with party consent.
Q: What is the rate of post-award interest under S.31(7)? A: 2% above the current rate of interest (post-2015 Amendment), unless parties agree otherwise.
Q: What is an additional award under S.33(4)? A: If the tribunal omitted a claim that was presented during proceedings, a party may request an additional award within 30 days of receipt. The tribunal makes it within 60 days.
Q: How is decision-making done in a three-member tribunal? A: By majority under S.29. If no majority on a specific issue, the presiding arbitrator decides (if authorised for procedural matters).
Exam Scenario
A sole arbitrator makes a final award granting Rs. 2 crores to the claimant with interest at 18% per annum from the date of filing the claim until realisation. The respondent objects that 18% is excessive and unreasonable. Advise.
Approach: Under S.31(7)(a) (pre-2015 provision), the tribunal may award a "reasonable" rate of interest. Post-2015 Amendment, S.31(7)(b) prescribes post-award interest at 2% above the "current rate of interest" (typically SBI lending rate, around 8-9%). 18% may be considered unreasonable unless the contract specifically provides for it or trade usage supports it. Under S.28(3), the tribunal must decide in accordance with contract terms and trade usages. If the contract stipulates 18%, the award is valid. If not, 18% may constitute "patent illegality" under S.34 (post-2015 Explanation) as it violates the statutory provision (S.31(7)). However, courts generally do not interfere with tribunal discretion on quantum. Cite Associate Builders v DDA (2015): courts cannot substitute their view on quantification. The respondent's S.34 challenge on interest rate alone is unlikely to succeed unless the rate is demonstrably perverse or without basis.