Arbitral Award- Finality [Section 35]
It is provided under section 35 of the Arbitration and Conciliation Act, 1996 that the award after an arbitration proceeding shall be binding on the parties to the proceedings.
When an arbitral award is made it is in totality concerning all the dimensions and implies that no more steps can be further taken by the arbitral tribunal. The award has a binding effect on the parties.
An award by an arbitral tribunal is final when:
- The Period that is provided to make an appeal challenging the award in the court expires;
- And in circumstances when a party has filed an application in the court challenging the award and the same gets rejected.
Arbitral Award- Enforcement [section 36]
Section 36 of the Arbitration and Conciliation Act, 1996 after the 2015 Amendment Act, provides that when the time period that is provided for making an application in the court for setting aside an arbitral award has expired the award of the arbitral tribunal will have an effect of a decree of a court and shall be enforced in the same way. (As per the provisions of Code of Civil Procedure of 1908).
If a party challenges the award of an arbitral tribunal (under section 34 of the Arbitration Act) by filing an application for the same in the court, just because he has applied would not set aside the arbitral award. The award will be set aside only when the court orders so.
The court may put a stay on the arbitral award if it is satisfied that the award is against the principles of justice. The court shall record its reason for doing so.
EFFECT OF THE 2015 AMENDMENT
Before the amendment of 2015 to section 36, if an award is challenged in the court, it would imply an automatic stay on the arbitral award. But now the position has been changed and the provision of the automatic stay on the award by just by applying has been scraped out. This was important as the party aggrieved by the award would use the filing of an application challenging the award as an unjust instrument to put a stay on the arbitral award.
Now, for putting a stay on an arbitral award there shall be a specific order from the court.
LIMITATION OF SECTION 36
Section 36 of the Arbitration Act is applicable only in matters inside India. The provisions relating to Foreign Awards and its enforcement are governed by Section 48 of the Arbitration Act.