An arbitral award is final and binding (S.35) on the parties and persons claiming under them. Upon the expiry of the S.34 challenge period (or rejection of the S.34 application), the award is enforceable as a decree of court (S.36). Appeals are permitted only in limited circumstances under S.37.
Why: Finality is the core advantage of arbitration. If awards could be endlessly challenged or appealed, arbitration would offer no advantage over litigation. The scheme ensures: one shot at challenge (S.34), limited appeal (S.37), and prompt enforcement (S.36).
Legal Framework
| Section | Content |
|---|---|
| S.35 | Award is final and binding on parties and persons claiming under them |
| S.36(1) | Award enforceable as decree once S.34 period expires or S.34 application refused |
| S.36(2) | Filing of S.34 application does NOT automatically stay enforcement (post-2015) |
| S.36(3) | Court may grant stay of enforcement pending S.34 (on separate application; conditions may be imposed) |
| S.36(3) proviso (2021) | Unconditional stay if prima facie finding of fraud/corruption in making of award |
| S.37(1)(a) | Appeal against: (i) granting/refusing interim measure (S.9); (ii) setting aside/refusing to set aside award (S.34) |
| S.37(1)(b) | Appeal against acceptance/refusal of plea of lack of jurisdiction (S.16) |
| S.37(2) | Appeal under S.37 does not lie to Supreme Court; only to court authorised by law |
| S.37(3) | No second appeal |
Finality (S.35)
| Aspect | Position |
|---|---|
| Binding on | Parties to the arbitration agreement and persons claiming under them |
| When final | Upon making; not dependent on expiry of challenge period |
| Effect | Res judicata; same dispute cannot be re-litigated |
| Exception | Subject only to S.34 (setting aside) |
| Persons claiming under | Successors, assignees, legal heirs |
Enforcement (S.36)
| Stage | Pre-2015 | Post-2015 |
|---|---|---|
| No S.34 filed | Award enforceable as decree after limitation period (3 months + 30 days) | Same |
| S.34 filed | Automatic stay of enforcement | NO automatic stay |
| Stay of enforcement | Automatic upon filing | Separate application needed; court may impose conditions (deposit, bank guarantee) |
| Unconditional stay | Not available | Available only if prima facie finding of fraud/corruption (S.36(3) proviso, 2021 Amendment) |
| Execution procedure | Under CPC Order XXI (as if the award were a decree) | Same |
Enforcement Procedure
- Award becomes enforceable (S.34 period expires or S.34 rejected)
- Award-holder files execution petition under CPC Order XXI before competent court
- Court treats award as a decree and proceeds to execute
- All remedies available to a decree-holder apply (attachment, arrest, sale of property)
Appeals (S.37)
| Appealable Order | Section | Court |
|---|---|---|
| Order granting/refusing interim measures | S.37(1)(a)(i), from S.9 | Court authorised to hear appeals from original court |
| Order setting aside award | S.37(1)(a)(ii), from S.34 | Same |
| Order refusing to set aside award | S.37(1)(a)(ii), from S.34 | Same |
| Acceptance of S.16 plea (lack of jurisdiction) | S.37(2)(a) | Court authorised by law |
| Rejection of S.16 plea | S.37(2)(a) | Same |
Limitations on Appeals
| Restriction | Provision |
|---|---|
| No appeal to Supreme Court directly | S.37(2): appeal lies only to court authorised by law (High Court) |
| No second appeal | S.37(3): explicitly bars second appeal |
| SLP to Supreme Court | Available under Art. 136 (special leave); discretionary |
| Scope of appellate review | Same restricted scope as S.34; appellate court does not re-hear on merits |
Recall Check
- When does an arbitral award become enforceable as a decree?
- What changed regarding automatic stay under S.36 after the 2015 Amendment?
- Against which orders does an appeal lie under S.37?
Key Cases
Sundaram Finance v Abdul Samad (2018) Sundaram-Finance-v-Abdul-Samad-2018 Issue: Whether a court granting stay under S.36(3) must impose conditions. Rule: While granting stay of enforcement, the court should ordinarily impose conditions (security deposit, bank guarantee) to protect the award-holder. Held: Courts should not grant unconditional stay as a matter of course. Conditions ensure that the award-holder is not prejudiced by the delay in enforcement.
BCCI v Kochi Cricket (2018) BCCI-v-Kochi-Cricket-2018 Issue: Whether the removal of automatic stay (2015 Amendment to S.36) applies to pending S.34 applications filed before 23.10.2015. Rule: The removal of automatic stay applies to all S.34 applications pending as on 23.10.2015. Held: Retrospective application upheld. Later overruled prospectively by S.87 (2019 Amendment): 2015 amendments apply only to arbitrations commenced after 23.10.2015.
Distinctions
| Basis | S.34 (Setting Aside) | S.37 (Appeal) |
|---|---|---|
| Nature | First and only recourse against the award | Appeal against S.34/S.9/S.16 orders |
| Filed before | Court of original jurisdiction (principal civil court/High Court) | Appellate court |
| Time limit | 3 months + 30 days | As per limitation for appeals (90 days under Limitation Act) |
| Scope | Limited grounds (S.34(2)) | Same limited grounds; no fresh evidence |
| Against | The award itself | Court's order on S.34/S.9/S.16 |
| Further remedy | Appeal under S.37 | SLP to Supreme Court (Art. 136) only |
| Second appeal | N/A | Expressly barred (S.37(3)) |
Flashcards
Q: Under which section is an arbitral award final and binding? A: Section 35. The award is final and binding on the parties and persons claiming under them.
Q: How is an arbitral award enforced? A: Under S.36, it is enforced as a decree of court through execution proceedings under CPC Order XXI.
Q: Does filing a S.34 application automatically stay enforcement of the award? A: No (post-2015 Amendment). The party must separately apply for stay under S.36(3), and the court may impose conditions.
Q: When is unconditional stay granted under S.36(3)? A: Only when the court prima facie finds that the arbitral award was induced or affected by fraud or corruption (S.36(3) proviso, 2021 Amendment).
Q: Is a second appeal available against a S.37 order? A: No. S.37(3) expressly bars second appeals. Only remedy is SLP to Supreme Court under Art. 136.
Q: Against what orders can an appeal be filed under S.37? A:
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(1) Orders granting/refusing interim measures (S.9)
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(2) Orders setting aside or refusing to set aside the award (S.34)
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(3) Orders accepting/rejecting S.16 plea (jurisdiction).
Exam Scenario
An arbitral award is made in favour of X for Rs. 5 crores. Y files a S.34 application to set aside the award. Simultaneously, X files an execution petition to enforce the award. Y argues that enforcement should be stayed because the S.34 application is pending. Advise the court.
Approach: Post-2015 Amendment, S.36(2) expressly provides that filing a S.34 application does NOT automatically stay enforcement. X is entitled to proceed with enforcement unless Y obtains a separate stay order. Y must file an application under S.36(3) for stay, demonstrating grounds and agreeing to conditions. The court should:
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(1) allow X's execution to proceed unless stay is granted
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(2) consider Y's stay application separately
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(3) if granting stay, impose conditions (deposit of awarded amount or bank guarantee per Sundaram Finance v Abdul Samad (2018))
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(4) unconditional stay only if prima facie fraud/corruption is established (2021 Amendment proviso).
If Y cannot secure the awarded amount or furnish adequate security, the court may refuse stay and allow execution.