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Demystifying Arbitral Awards

Alternative dispute settlement mechanisms often require assistance of the legal system in order to be effective. Arbitration is also one of them.
 
 The Indian arbitration space warranted efficient method of enforcement of the consequent award determining rights and liabilities of the parties; as obtaining an award may only be half the battle won in some cases. The procedure of enforcement and execution of the award is governed by the Arbitration and Conciliation Act, 1996 (“the Act”) and Code of Civil Procedure, 1908.
 
 Arbitral award is the decision of the arbitral tribunal on merits and includes both final as well as interim award. It must be in writing and signed by all the members of the tribunal and reasons for the award have to be specified unless agreed otherwise.
 
 The mandate of the Act is that the award is final and binding on the parties. This finality of arbitral awards is often touted as one of the advantages of arbitration saving both time and money to the parties.
 
 There is no provision for appeal against an arbitral award as to its merits. However, parties are not without a remedy, the aggrieved party may apply to the court for setting aside of the award on grounds provided under the Act.
 
 These, inter-alia, include capacity of a party, invalidity of arbitration agreement, violation of principles of natural justice, the exceeding of terms of reference by arbitrator, non-arbitrability of the subject matter of the dispute or that the award is in conflict with public policy of India.
 
 If there is no merit in the application for challenge, the award is enforceable as a decree of the court. Besides, a right to appeal against the order of the court setting aside or refusing to set aside the award is available to the parties. Whilst no second appeal lies, the constitutional right to file a special leave petition is unaffected.
 
 The provisions of enforcement of domestic and foreign awards are dealt with separately under Part I and Part II of the Act, respectively. A domestic award does not require a separate enforcement proceeding, it becomes enforceable only 90 days after the receipt of the award.
 
 During the intervening period, the opposite party may apply for setting aside of the award. By virtue of a recent amendment, a party challenging an award is obliged to move a separate application seeking a stay on the execution of an award.
 
 With respect to foreign awards, India is a signatory to the New York Convention and the Geneva Convention. The enforceability of the award in India primarily depends on whether the award is received from a country which is a signatory to either of the two conventions.

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