How to set aside an arbitral award
What are the components of a legally valid arbitral award?
The end of an arbitration process is signaled by an arbitral award. An arbitral award, in simpler parlance, can be compared to a judgment passed by a court. The Act lays down certain parameters that are to be followed while passing an arbitral award.
A legally valid arbitral award should contain the following components:
- The award must be in writing and be signed by all members of the tribunal or signed by the majority with reasons for any omitted signatures.
- The Act requires the award to set out the reasons on which it is based unless the parties have agreed that no reasons are to be given.
iii. The award should state the date and place of the arbitration, and a signed copy must be delivered to each party.
- The award must be produced within 12 (twelve) months from the reference to arbitration. However, this period can be extended by up to 6 (six) months if all of the parties agree. If the award is not made within 12 (twelve) months or within the mutually extended period, the tribunal’s mandate would be terminated, unless the period has been extended by the court.
On what grounds can validity or enforcement of an arbitral award (domestic or foreign) be set aside?
The grounds for challenging an arbitral award are highlighted in section 34 of the Act. The same being as under:
- the party was under some form of incapacity;
- the arbitration agreement is not valid under the law to which the parties have
subjected it, or under the law for the time being in force;
- the party was not given proper notice of the appointment of the arbitrator or the arbitral proceedings;
- the award deals with a dispute not falling within the terms of the submissions to arbitration or is beyond the scope of the submission to arbitration;
- the arbitral tribunal has not been constituted as per the agreed terms of the agreement;
- the subject matter of the dispute is not capable of being settled by Arbitration for the time being in force;
- the award is in violation of the public policy of India.
For the purposes of this section, it is necessary to highlight that certain classes of disputes are not arbitrable in India. These are disputes relating to rights and liabilities which give rise to or arise out of criminal offenses; matrimonial issues such as divorce, judicial separation, restitution of conjugal rights, child custody; guardianship matters; insolvency and winding-up matters; testamentary matters; matters relating to eviction of tenants; and trust-related matters. The main rationale for characterizing these disputes as non-arbitrable is that they involve rights in rem. All disputes relating to rights in personam1 are generally capable of being resolved by arbitration under Indian law.
What are the timelines, grounds, and appropriate forum for a challenge or setting aside of arbitral awards?
Under section 34 of the Act, the application for setting aside the award is to be filed within three months of making the award.
The duration of the enforcement proceedings depends on the court within whose jurisdiction the enforcement proceedings are initiated. Some courts in India (such as the Delhi High Court) are relatively quicker in disposing applications for enforcement of awards. No expedited procedure is available.
Any challenge to the award is required to be disposed of by the court within a period of one year from the date on which the party intends to challenge the award notifies the other party of its intention. An application to challenge the award normally has to be made within a period of three months from the date of receipt of the award. The enforcement proceedings can continue in parallel with the proceedings relating to the challenge of the award unless the court issues an order to stay the enforcement proceedings.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.