An arbitral award is the final determination of the rights and obligations of the parties by an arbitral tribunal. It is the arbitration equivalent of a court judgment, bringing a conclusive end to the dispute or a specific part of it.
Under Section 2(1)(c) of the Arbitration and Conciliation Act, 1996, the term "arbitral award" is defined to include an interim award. This means that any decision made by the tribunal that finally decides a particular issue—even if other issues remain pending—carries the same legal weight as the final award.
Contents of an Arbitral Award
For an award to be legally valid and enforceable, it must comply with the formal requirements set out in Section 31 of the Act. The following are the essential contents:
1. Writing and Signature
The award must be in writing and signed by the members of the arbitral tribunal. In cases where there is more than one arbitrator, the signatures of the majority of the members are sufficient, provided that the reason for any omitted signature (such as a dissenting opinion) is stated.
2. Reasoned Award
Unless the parties have specifically agreed that no reasons are to be given, or the award is a "settlement award" on agreed terms under Section 30, the award must state the reasons upon which it is based. A "speaking order" (one that explains the logic behind the decision) is a fundamental requirement to ensure transparency and prevent arbitrariness.
3. Date and Place
The award must state the date on which it was made and the place (seat) of arbitration as determined under Section 20. This is crucial because the "seat" determines the jurisdiction of the court that will handle any subsequent challenges or enforcement proceedings.
4. Delivered to Parties
After the award is made, a signed copy must be delivered to each party. This delivery is significant because it triggers the limitation period for challenging the award under Section 34 (which is three months).
5. Costs and Interest
The award typically includes directions regarding the costs of the arbitration (fees, expenses, and legal costs). Additionally, under Section 31(7), the tribunal has the power to include interest in the award. Unless otherwise directed, the award carries interest at a rate of 2% higher than the current rate of interest prevalent on the date of the award, calculated from the date of the award to the date of payment.
Kinds of Arbitral Awards
While the final award settles the entire dispute, the Act recognizes different types:
Final Award: Settles all claims submitted to arbitration and terminates the mandate of the tribunal.
Interim Award: Decides a specific issue (e.g., liability or a portion of the claim) before the final award is issued, as permitted under Section 31(6).
Settlement Award: Also known as a "Consent Award," this records a voluntary compromise reached by the parties during the proceedings under Section 30.
Additional Award: If the tribunal accidentally omitted a claim that was presented during the proceedings, a party can request an additional award within 30 days of receiving the final award, as per Section 33.
Legal Effect
Once an award is made, it is final and binding on the parties under Section 35. If it is not challenged within the prescribed time limit, it becomes enforceable as a decree of a civil court under Section 36.
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