Award of arbitrator enforceable in a court of law: An arbitration comes into being as a result of an enforceable agreement.  An agreement enforceable under law is called a contract.  To be enforceable the agreement must be made by free consent of the parties.  Parties are said to consent when they agree upon the same thing in the same sense.  A consent can be said to be free when it is not induced by coercion, undue influence, fraud, mis-representation or mistake as to matter of fact essential to the agreement.  The onus of proving that free consent was not given is upon the party asserting it.  An arbitration agreement is void if a party is a minor or is not of sound mind or is disqualified  from contracting by any law to which he is subject.  When both the parties to the agreement are under a mutual mistake as to a matter of fact essential to the agreement, the agreement is void.  An arbitration agreement of which the object or consideration is unlawful is void.  The consideration or object is unlawful if it is forbidden by law or is of such a nature that if permitted it would defeat the provisions of any law or is fraudulent or involves or implies injury to the person or property of another or the courts regard it as immoral or opposed to public policy.

The Arbitration Act provides that an arbitration agreement should be in writing.  Hence, no oral arbitration is possible in India.  It is not necessary to constitute the agreement in any single document.  It can spread over so many documents.  A contract may by express language incorporate the provisions of another contract containing an arbitration clause.  If so, the arbitration clause will be deemed to have been incorporated in the contract.

If a contract is illegal and void an arbitration clause which is one of its terms is also rendered illegal.  The taint of illegality attaches to every part of the contract.  Thus an arbitration clause for stifling prosecution or involving criminal proceedings is of no effect.

It was mentioned earlier that an arbitration agreement is an agreement to submit present and/or future disputes to arbitration.  The existence of a dispute is one of the essential elements for invoking an arbitration.  A dispute implies assertion of a right by one party and the refutation thereof by another.  The refutation may be express or implied and may be by words or conduct.  Failure to pay under a claim or right is a dispute.  Failure to perform the contract in time may lead to an inference of refutation and denial of  the right by the other  party.  Such conduct and such silence may be more eloquent than words and  will show that the party is disputing liability.  There can be no dispute unless there is a denial of a claim.  There is a dispute whenever there is a matter capable of being agitated in a civil court.  It is not exactly necessary that the claim should be valid or sustainable in a court of law.

The decision of an arbitrator is called an award.  Our law does not impose any legal requirement as to the form of a valid award.  The only requirement is that it should be in writing, signed by the arbitrator.  But, if the agreement contains requirements as to the form of the award then those requirements should be met.  For example, if the agreement says that the arbitrator need not give a speaking award, the award need not contain reasons to support his conclusions.  Otherwise in all cases an arbitrator is obliged to give a speaking award.  As a matter of fact there are certain basic

requirements for an award.  The award should identify the parties by name.  The date of the award should be shown at some place of the award.  If there are more than one arbitrator all should sign the award.  But if there is omission of any signature the reasons should be stated.  There is no requirement of witnesses attesting the award.  The award should be certain, i.e, one should be able to clearly understand the arbitrator’s decision by reading the award.  The Arbitration Act defines an award as including an interim award.  This is a formal definition.  In essence an award is the judgement of the arbitrator on the merits of the case.  The Arbitration Act confers on the arbitrators the right to conduct the proceedings in the manner they consider appropriate.  It has been held that parties by consent can also agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.  Arbitrators are not at liberty to make an award without giving reasons unless it  is so stipulated in the agreement.  The powers of   the Court to interfere with the awards are now very limited.  Section 34  of the Arbitration Act provides for an application to the Court for setting aside an award under the following circumstances:-

 a)  Incapacity of party

 b)  Invalidity of the agreement

 c)  Want of proper notice

 d)  Award deals with disputes not referred to arbitration

 e)  Arbitral Tribunal was defective in composition

 f)   Subject matter not capable of arbitration

 g)  Award is in conflict with public policy.

An award can be enforced as such because it  is now equated with a decree of the Court.  A party who wishes to enforce the award can file it before the Court and it will be treated as a decree unless set aside in an application under section 34.  An application for setting aside shall not be made after three months of  the receipt of the award or after three months of an application under section 33 to the arbitration for any correction of the award.  An arbitrator has got the power to file the award and

the connected papers in Court ‘suo-motu’ at any time.  There is no period of limitation fixed for it.  The arbitrator has to give a signed copy of the award to the parties.  After receiving the award the concerned party has to apply to the Court to execute the award and obtain reliefs.  The court will issue notice to the judgement debtor.  After receipt of notice if the judgement debtor does not appear before Court, exparte execution may be ordered granting the relief prayed for in the Petition.  If the

judgement debtor appears and files objection, the objection will be heard and disposed of and only thereafter necessary relief will be granted by the Court.  Under Order XXI of the Code of Civil Procedure a judgement debtor can be proceeded against either in person or against his property.  Personal execution is by arresting the judgement debtor.  A judgement debtor can be imprisoned for a period of three months.  The expenses for this have to be met by the decree holder.  Execution against property is by attaching and selling through Court the saleable interest of the judgement debtor in the property.  If a judgement debtor has no assets, he is safe in spite of a decree against him as he cannot even be imprisoned for the decree debt.

The procedure for enforcing foreign awards is as per Part II of the present Act and incorporates the Geneva Convention of 1927 and the New York Convention of 1958.  Pursuant to this any person interested in enforcing a foreign award shall apply to a Court having jurisdiction over the subject matter of the award.

The parties seeking to enforce a foreign award must produce:

 a)  The original award or a duly authenticated copy thereof.

 b)  Evidence proving that the award  has become final and

 c)  Such evidence as is necessary to prove that the award  is a foreign
award.

Even though arbitration is a more efficacious, equitable and quick remedy, it is often misused to make unlawful gains.  One of our judges remarked:

“The malady of the racket of arbitration is rampant in our country.  Arbitration of late is being considered as a sure way to overnight riches and affluence.  It has become a big business.  A judge can no longer be impervious to the winds that blow outside leaving the seclusion of his ivory tower, he  should come to the streets to feel the total push and pressure of the cosmos.  In a social welfare

state the need is social justice.  It is true that today in every department the social value of the rule of law becomes a test of growing power and importance.”

Instances of arbitrators awarding huge amounts by way of non-speaking awards was prevalent in many departments, such as PWD, Irrigation and Electricity Boards and the Kerala Government was forced to take away the Arbitration clause forcing the contractors to seek remedy through court.  If a suit is to be filed, Court fee has to be paid and the case has to be established through incontrovertible evidence.  If one court goes wrong there is an appellate court.  Details and reasons are to be given by the Court for its findings.  Because of these only genuine claims will be brought by the parties in a court of law.  Avaricious contractors and dishonest arbitrators have given a bad name for the process of arbitration.  Hence an honest man dreads arbitration even more than the dreaded law suits.

The general rule in matters of arbitration awards is that where parties have agreed upon an arbitration thereby displacing a Court of law, they must accept the award for good or worse.  In such cases, the discretion of the Court will not be readily exercised  and will be strictly confined to the specific grounds set out under section 34.

The arbitrator is the final judge on fact.  Adequacy of evidence is not to be examined.  The arbitrator is not bound by technical rules of evidence.  The Court cannot look into the reasonableness of the arbitrator’s reasons.  In deciding a controversy, the arbitrator works in an environment which is different from that of the judge.  The ropes and pulleys that he uses in the arbitral process are different from the foot-rules and set-squares that the judge uses in the judicial process.

Please note that you will be called for discussion in 2 to 3 days time. It does not matter if you do not have any “Arbitration Agreement” with the other party. Our experts and counsel will take care of that part, if you agree to go through our system..

Further, your case will be taken up regardless of the position of the case, i.e. whether it is fresh or already before any court.

The Award is normally made in 3 to 4 months time . Fast Track Arbitration takes approx. 3 to 4 days for the Award. The Award shall be enforceable as Court Decree.

Arbitral Institution has been authorised to determine any issue which the parties have the freedom to decide themselves. The power of judicial authority to intervene save and except as provided in the said law has been taken away by prohibiting the same by express enactment. Arbitral Tribunal has been vested with the competence to rule on its own jurisdiction including ruling on any objection with respect to the existence and validity of the Arbitration Agreement.

Arbitration Tribunal has been authorised to grant interim measures like injunction, attachment, receiver, security etc. Arbitral Award includes Interim Award and is executable as Court Decree. Arbitration proceedings have been accorded precedence over Legal Proceedings and stay of Arbitral Proceedings have gone beyond the scope of law.  All persons guilty of contempt of tribunal are liable to disadvantages, penalties and punishments, as they would incur for like offences in suits before the court. An Award is ordinarily not liable to be set-aside on the ground either in fact or in law that it is erroneous.

THE AWARD, whether Interim or Final  IS ENFORCEABLE

JUST LIKE A COURT DECREE

 

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1 Comment

  • BN Midha says:

    I made an agreement with my partner to sell the business shop on our joint names jointly. Agreement was signed by a notary also. My friend want to take out his share of 25Lac assessed by him. Who can decide the cost and divide the share without going to court ??

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