Enforcement of Arbitral Award is fundamentally governed by Arbitration and Conciliation Act, 1996, and Code of Civil Procedure,1908 as mentioned under Chapter- VIII of the same act (amended by the 2015 amendment). With an increase in International Trade and Commerce related activities, a need was felt to set up or to have an alternative measure for resolving the disputes which may arise out of such activities. Arbitral Award is the final decision of an Arbitral Tribunal which is granted just like a judgment passed by the court of law. In case, where the time for setting aside an arbitral award has expired then the award will be enforced through the provisions of Code of Civil Procedure just like a decree granted by the court of law.
The article contemplates, the meaning of arbitration, a brief history of enforcement of foreign arbitral awards, provisions for the enforcement of an arbitral award under Arbitration Act, the enforceability of arbitral award in India, Territorial jurisdiction for the execution of arbitral award, advantages and the challenges or grounds for setting aside an arbitral award and case laws.
The large-scale growth in International Trade and Commerce has made it important to adopt an alternative measure for the settlement of the dispute which may arise out of such international trade-related activities. According to Halsbury’s Laws of England, “Arbitration” means a process through which a dispute between two or more parties is settled with the help of a third person known as “An Arbitrator”, which is decided by an Arbitral Tribunal. Arbitration is said to be a private approach in providing speedy justice. Arbitration clauses generally deal in international commercial contracts and agreements, where the parties to the dispute agree to a private agreement for its settlement.
Enforcement of an Arbitral Award refers to a process of implementation of the decisions of the arbitral tribunal in the form of arbitral awards just like a normal court of law passes its judgment.
The first act which earlier used to govern and settle the disputes arising out of any international trade and commerce was Arbitration and Conciliation Act of 1940 which got amended several times and finally got repealed by the Act of 1996 which brought in the major changes in the previous existing act.
To enforce the foreign arbitral awards, there were primarily two major conventions namely Geneva Convention (it was basically for executing the foreign arbitral awards) and the other one was the New York Convention (basically it was for the recognition and enforcement of foreign awards).
It came into the picture as a multilateral treaty after the first world war. It comprised of the protocols regarding the arbitral clauses 1923 and the execution of the foreign awards. The main feature of the convention was that the parties to the dispute must be a signatory to the Geneva convention then only the dispute between the two can be solved and its biggest drawback or its biggest disadvantage was that this convention was unable to provide speedy justice.
New York Convention:
To overcome the drawback of the Geneva Convention, New York Convention came into the picture. It also gave light to the recognition and enforcement of the foreign arbitral award. Other advantages of this convention were that it even helped in solving the dispute between the contracting states or the parties to the dispute can be resolved even if the parties are not signatory to the convention.
UNCITRAL Model of Law:
The UNCITRAL Model of Law amended and consolidated the laws relating to the arbitration laws in the world. This model provides for a peaceful and harmonized way of dealings with the international commercial agreements between the contracting states.
Provisions for the enforcement of Arbitral Award under the Act of 1996:
Chapter-VIII of Arbitration and Conciliation Act,1996 deals with the provisions for the enforcement of an arbitral award.
- Section-35 talks about when an arbitral award is said to be finalized, an arbitral award is said to be final and binding upon only those parties who are in dispute with each other and are claiming for the same.
- Section-36 deals with the enforcement of an arbitral award and in a case where an application is been made by the parties for setting aside of the award and the time has been expired then it will be decided according to the provisions of the Code of Civil Procedure,1908 and will be decided as per the decree which is granted in the other cases tried by the court of law.
Enforceability of Arbitral Award in India:
Arbitral Proceedings in India are governed by the Arbitration and Conciliation Act of 1996(as amended in the year 2015). It provides that when the time for setting aside an arbitral award has expired then it will be decided as per the provisions of Code of Civil Procedure,1908 of the form of decrees of the court.
The awards get implemented or will be enforced only when the time for making an application for setting aside an arbitral award has expired or rejected by the court of law.
Section-34 of the act provides a time of 30 days for making an application for the purpose of setting aside an arbitral award and an application can only be made in case either of the parties furnishes the proof of all the grounds mention under 34(2) of the acts.
Territorial Jurisdiction for the execution of an arbitral award:
As per Section-42 of Arbitration and Conciliation Act,1996, where an application for the arbitration agreement is made in the court of law, then that court alone has the jurisdiction over the arbitral proceedings and all the applications arising out of the agreement shall be made in the same court.
In the case of I.C.D.S. Ltd v Mangala Builders Pvt. Ltd 
Karnataka High Court held that court also under section-34 of the act has the power to exercise jurisdiction in the cases alone to entertain the cases where there is a need for the enforcement of arbitral award which got upheld.
In another case of the Sundaram Finance Limited v Abdul Samad and Anr
Supreme Court held that and resolved the issue in which an arbitral award can be enforced by its holder. It further held that there cannot be a deeming fiction in decided that earlier where the arbitral award was passed then the same court should pass the decree for the same and it is impossible to follow the word by word provisions of section 37 to 39 of the act which talks about the jurisdiction.
Arbitration is an alternative dispute resolution mechanism which helps in solving majorly the disputes about international trade and commerce. Following are some of its advantages:
Arbitration helps in disposing of the cases quickly and efficiently and it is also cheaper then other dispute resolving mechanisms.
Information of parties remains confidential:
Arbitration proceedings take place in a private space decided by the parties and not at any public place like the courts.
Neutral third party:
The third-party who has been appointed as an arbitrator remains a neutral head which helps in resolving the dispute between the parties without being biased.
Grounds for setting aside an arbitral award:
Following are some of the instances where an arbitral award can be set aside:
- If either of the party was having some of kind incapacity.
- If the arbitration agreement was invalid.
- If either of the parties to the dispute were not given proper notice for the appointment of an arbitrator.
- If the arbitral award was granted according to the terms which were not mentioned in the application.
- If the composition of an arbitral tribunal was not as per the arbitration agreement.
National Aluminium Co. Ltd v Pressteel & Fabrications (p.) Ltd
Supreme Court, in this case, held that when an application under section-34 is been made for setting aside an arbitral award then the award will not be executed under Section-36 of the same act.
Union of India v Kamal Construction
Patna High Court, in this case, held that, if an award is not changed within the 90 days of it got published then it can be enforced just like a decree getting implemented after the expiration of 90 days.
Ravi Prakash Goel v Chandra Prakash Goel
The apex court, in this case, held that the time for setting aside an arbitral award under Section-34 gets expired then such award will be enforced according to the provisions of The Code of Civil Procedure Act,1908 just like a decree been passed by the court of law.
Damodar Valley Corporation v Calcutta Electric Supply Co.Ltd
The Calcutta High Court in this case held that when the award is pending for getting executed then during it pendency period it is not permitted to set aside the arbitral award as per section-34 of the act.
The Arbitration and Conciliation Act got enacted for providing speedy justice and with an increase in international trade and commerce related-activities a need was felt by the government for enacting a law that will help in disposing of cases quickly and efficiently. This method of resolving the disputes between the party is not only quick in providing decision but it is also cost-effective and it provide confidentiality as no one from outside can hear or see the arbitral proceedings. From the above discussion we can see that still there are many loopholes in the act that needs to be taken care of by our government.
- AIR 2001 Kant 364, ILR 2001 Kar 1860
- (2018) 3 SCC 622
- (2004) 1 SCC 540
- AIR 2011 Pat.38
- AIR 2007 SC 1517
- AIR 2005 Cal.67
Question and Answers:
Q-1: In which year the first Arbitration and Conciliation Act was passed?
The first Arbitration and Conciliation Act was passed in the year 1940.
Q-2 Under which chapter and section do enforcement of the arbitral award is mentioned?
Chapter-VIII and Section-35 of Arbitration and Conciliation Act,1996.
Q-3 What are the two conventions which deals with the recognition and enforcement of the foreign arbitral award?
The two conventions which deal with the recognition and enforcement of the arbitral award are:
- Geneva Convention
- New York Convention
Q-4 Through which acts provisions the decree is been passed after the time for setting aside an arbitral award has expired?
According to the provisions of The Code of Civil Procedure.
Q-5 What are the advantages of arbitral proceedings?
The advantages of arbitral proceedings are as follows:
- It provides speedy and effective justice.
- It keeps the information of the parties to the dispute as confidential.
- It is the cheapest method for the settlement of disputes.
 AIR 2001 Kant 364, ILR 2001 Kar 1860
 (2018) 3 SCC 622
 (2004) 1 SCC 540
 AIR 2011 Pat.38
 AIR 2007 SC 1517
 AIR 2005 Cal.67