Arbitration Award

Arbitration Award is a determination on the merits by an arbitration tribunal in

arbitration, and is analogous to the judgment in the Court of Law. Arbitration is
particularly a means of dispute resolution in the commercial sphere. One of the reasons
for doing so is that in international trade it is often easier to enforce a foreign arbitral
award than to enforce a judgment of the Court. The closing decades of the twentieth
century saw arbitration gain worldwide acceptance as the normal means of resolving
commercial disputes. National laws on arbitration have been modernized on all
continents. The Arbitration & Conciliation Act, 1996 is one such step by India to make
the arbitration law more responsive to contemporary requirements, taking into account
the Model law and Rules adopted by the United Nations Commission on International
Trade Law (UNCITRAL). International treaties on arbitration have been signed or
adhered to with impressive success. With the gradual removal of political and trade
barriers and the rapid globalization of the world economy, new challenges have been
created for arbitration institutions in response to the growing demand of parties for
certainty and predictability, greater rapidity and flexibility as well as neutrality and
efficacy
in
the
resolution
of
disputes.
Arbitration is a legal process, which takes place outside the courts, but still results in a
final and legally binding decision similar to a court judgment. Arbitration is a flexible
method of dispute resolution, which can give a quick, inexpensive, confidential, fair and
final solution to a dispute. It involves the determination of the dispute by one or more
independent third parties rather than by a court. The third parties, called arbitrators,
are appointed by or on behalf of the parties in dispute[1]. The arbitration is conducted
in accordance with the terms of the parties' arbitration agreement, which is usually
found in the provisions of a commercial contract between the parties.
For an arbitration to take place, the disputing parties must agree to take their dispute to
arbitration. In practice, this agreement is often made before the dispute arises and is
included as a clause in their commercial contract. In signing a contract with an
arbitration clause, the parties are agreeing that their dispute will not be heard by a
court but by a private individual or a panel of several private individuals. If parties have
agreed to arbitration, they will generally have to go to arbitration rather than court as
the courts will normally refuse to hear their case by staying it to force the reluctant
party
to
honour
their
agreement
to
arbitrate.
Advantages
Among the available dispute resolution alternatives to the courts, arbitration is by far
the most commonly used internationally. The reasons for this are clear i.e final, binding
decisions[2]. While several mechanisms can help parties reach an amicable settlement
- for example through mediation or conciliation - all of them depend, ultimately, on the
goodwill and cooperation of the parties. A final and enforceable decision can generally
be obtained only by recourse to the courts or by arbitration. Because arbitral awards
are not subject to appeal, they are much more likely to be final than the judgments of
courts of first instance. Although arbitral awards may be subject to being challenged,
the grounds of challenge available against arbitral awards are limited. The award given
by the arbitrator is equivalent to a decree of a court of law and the same can be
executed
directly,
without
making
it
a
decree
of
the
court.
International

recognition

of

arbitral

awards

Arbitral awards enjoy much greater international recognition than judgments of national
courts. About 120 countries have signed the 1958 United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, known as the "New York
Convention". The Convention facilitates enforcement of awards in all contracting states.
There are several other multilateral and bilateral arbitration conventions that may also
help enforcement.
Neutrality
In arbitral proceedings, parties can place themselves on an equal footing in five key
respects:
Place of arbitration, Language used, Procedures or rules of law applied, Nationality and
Legal representation. Arbitration may take place in any country, in any language and
with arbitrators of any nationality. With this flexibility, it is generally possible to
structure a neutral procedure offering no undue advantage to any party.
Specialized
competence
of
arbitrators
Judicial systems do not allow the parties to a dispute to choose their own judges[3]. In
contrast, arbitration offers the parties the unique opportunity to designate persons of
their choice as arbitrators, provided they are independent. This enables the parties to
have their disputes resolved by people who have specialized competence in the
relevant
field.
Speed
and
economy
Arbitration is faster and less expensive than litigation in the courts. Although a complex
international dispute may sometimes take a great deal of time and money to resolve,
even by arbitration, the limited scope for challenge against arbitral awards, as
compared with court judgments, offers a clear advantage. Above all, it helps to ensure
that the parties will not subsequently be entangled in a prolonged and costly series of
appeals. Furthermore, arbitration offers the parties the flexibility to set up proceedings
that can be conducted as quickly and economically as the circumstances allow.
Confidentiality
Arbitration hearings are not public, and only the parties themselves receive copies of
the
awards.
In January 1996, India enacted a new Arbitration Act.[4] This Act repealed all the three
previous statutes (the 1937 Act, the 1961 Act and the 1940 Act).[5] The new Act has
two significant parts. Part I provides for any arbitration conducted in India and
enforcement of awards there under. Part II provides for enforcement of foreign awards.
Any arbitration conducted in India or enforcement of award there under (whether
domestic or international) is governed by Part I, while enforcement of any foreign award
to which the New York Convention or the Geneva Convention applies, is governed by
Part
II
of
the
Act.
Challenge
To
Awards
Or
Grounds
For
Setting
Aside
Awards.
Domestic
arbitral
award
Part I of the 1996 Act is modelled on the UNCITRAL Model Law[6] and the UNCITRAL
Arbitration Rules[7] with few departures. The relevant provisions are briefly outlined
below. Section 13 of the 1996 Act, corresponding to Art 13 of the Model Law, provides
for challenge to an arbitrator on the ground of lack of independence or impartiality or
lack of qualification. In the first instance, a challenge is to be made before the arbitral

tribunal itself.[8] If the challenge is rejected, the tribunal shall continue with the arbitral
proceedings and make an award.[9] Section 13(5) of the 1996 Act provides that where
the tribunal overrules a challenge and proceeds with the arbitration, the party
challenging the arbitrator may make an application for setting aside the arbitral award
under s 34 of the 1996 Act (corresponding to Art 34 of the Model Law). Hence, approach
to a court is only at the post-award stage. This is a departure from the Model Law which
provides for an approach to the court within 30 days of the arbitral tribunal rejecting the
challenge.[10] The second departure from the Model Law (relevant to enforcement) is
to be found in S. 16 of the 1996 Act (corresponding to Art 16 of the Model Law). Section
16 incorporates the competence-competence principle and enables the arbitral tribunal
to rule on its jurisdiction, including with respect to the existence or validity of the
arbitration agreement. If the arbitral tribunal rejects any objection to its jurisdiction, or
to the existence or validity of the arbitration agreement, it shall continue with the
arbitral proceedings and make an award.[11] Section 16(6) of the 1996 Act provides
that a party aggrieved by such award may make an application for setting aside the
same in accordance with S.34. Article 16 of the Model Law, in contrast, provides that
where the arbitral tribunal overrules any objection to its jurisdiction, the party
aggrieved with such decision may approach the court for resolution within 30 days. The
Indian Act permits approach to the court only at the award stage (and not during the
pendency of the arbitration proceedings). Hence, Section 13(5) and 16(6) of the 1996
Act furnish two additional grounds for challenge of an arbitral award (over and above
the ones stipulated in s 34 of the 1996 Act referred to below). Section 34 of the 1996
Act contains the main grounds for setting aside the award. It is based on Art 34 of the
Model Law and, like Art 34, states that the grounds contained therein are the only
grounds on which an award may be set aside. However, in the Indian context the word
only prefixing the grounds is a bit of a misnomer as two additional grounds have been
created by the Act itself as mentioned above. Besides, another ground is to be found in
an Explanation to the public policy ground in s 34. The same reads as follows:
It is hereby declared, for the avoidance of any doubt, that an award is in conflict with
the public policy of India if the making of the award is induced or affected by fraud or
corruption
or
was
in
violation
of
Section
75
or
Section
81.
Section 75 referred to above is part of the conciliation scheme under the Act and states
that the conciliator and parties shall keep confidential all matters relating to the
conciliation proceedings. Section 81 prohibits any reference in arbitral or judicial
proceedings to views, suggestions, admissions or proposals, etc. made by parties
during
conciliation
proceedings.
Save for the exception, referred to above, s 34 of the 1996 Act is a faithful reproduction
of
Art
34
of
the
Model
Law.
Public
policy
It is clear that, The Arbitration and Conciliation Act, 1996 was conceived by the
compulsions of globalisation leading to adoption of the United Nations Commission on
International Trade Law (UNCITRAL) Model Law. This Act is by and large an integrated
version of the 1940 Act which governed the domestic arbitration, the Arbitration
(Protocol and Convention) Act, 1937 and the Foreign Award (Recognition and
Enforcement) Act, 1961, which governed international arbitral awards. Apparently,
Chapter I to VIII of the UNCITRAL are replicas of Chapters I to VII of the Part-I of the
1996 Act, with the difference that in the UNCITRAL the provisions are called Article

whereas under the Act they are called Section.[12] The main objectives set out in the
Statement of Objects and Reasons of the 1996 Act are to minimise the supervisory role
of courts in the arbitral process and to provide that every final arbitral award is
enforced in the same manner as if it were a decree of the Court. [13]
Public policy is that principle of law which holds that no subject can lawfully do, which
has a tendency to be injurious to the public or against the public good, which may be
termed, as it sometimes has been, the policy of the law or public policy in relation to
the administration of the law. Public policy connotes some matter which concerns public
good and public interest. The concept of public policy varies from time to time.[14]
The UNCITRAL Model Law Commission stated in its report[15] that the term public
policy comprises fundamental principles of justice. It was understood that the term
public policy which was used in the 1958 New York Convention and many other treaties,
covered fundamental principles of law and justice in substantive as well as procedural
respects. Thus, instances such as corruption, bribery, or fraud and similar serious cases
would
constitute
a
ground
for
setting
aside
an
award.
In the case of Renusagar Power Plant Co. Ltd. Vs. General Electric Co.,[16] the court in
view of the absence of a workable definition of international public policy found it
difficult to construe the expression public policy in Article V(2)(b) of the New York
Convention to mean international public policy as it could be, construed both in narrow
or wide sense. In the Renusagar case, it has been observed: It is obvious that since the
Act is calculated and designed to subserve the cause of facilitating international trade
and promotion thereof by providing for speedy settlement of disputes arising in such
trade through arbitration, any expression or phrase occurring therein should receive,
consisting with its literal and grammatical sense, a liberal construction.
The Supreme Court, while construing the term public policy in Section 7(1)(b)(ii) of
Foreign Awards (Recognition and Enforcement) Act, applied the principles of private
international law and held that an award would be contrary to public policy if such
enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the
interests
of
India;
or
(iii)
justice
or
morality.
The trend in India is similar to that in England i.e. public policy could be interpreted in a
narrow
sense
and
a
broad
sense.
ONGC
Vs.
Saw
Pipes[17]
case
The limited grounds of challenge provided under Section 34[18] are universally
recognised. It is well accepted that the courts have no power to get into the merits of
the dispute. However, this basic proposition was put to test and suffered a setback in
the case of ONGC Vs. Saw Pipes Ltd. In this case, an award was challenged on the
ground that the arbitral tribunal had incorrectly applied the law of the land in rejecting a
claim
for
liquidated
damages.
Two errors of great magnitude that have been committed in this case are:
While reviewing the merits of the ONGC case,[19] the court failed to consider the
labour strike in entire European continent, something which was neither under the
control nor could be predicted by SAW Pipes. This particular aspect has been completely
overlooked
by
the
court.
The decision of the two judges Bench in ONGC has bypassed the ruling of the three

judges

Bench

of

Supreme

Court

in

the

Renusagar

case.

That shows both judicial indiscipline and violation of the binding precedent of a larger
Bench. While the Bench in Renusagar case held that the term public policy of India
was to be interpreted in a narrow sense, the Division Bench went ahead unmindful of
the prior precedent and expanded the same to such an extent that arbitral awards
could now be reviewed on their merits. This is a huge step backwards in laws relating to
alternate dispute resolution in the era of globalisation. This is a reason that ONGC case
is considered to be a villain in this regard giving an open opportunity other than the
limited grounds of challenge provided under Section 34[20]
The Supreme Courts judgment in this case expanded the concept of public policy to
add that the award would be contrary to public policy if it was patently illegal. The
Supreme Court distinguished SAW Pipes case[21] from that of Renusagar on the ground
that the Renusagar judgment12 was in context of a foreign award, while the ratio of
SAW Pipes[22] would be confined to domestic awards only. And in the name of public
policy, the court went on to re-appreciate the question of facts, mixed question of fact
and law and pure question of law, which is most undesirable in international commercial
arbitration, as it would lead to uncertainty, a factor which no businessman in
international
business
transaction
would
like
to
have.
It may be correctly stated that the ratio set in ONGC Vs. Saw Pipes[23] makes a
significant dent in the jurisprudence of arbitration in India and has come in for some
sharp nonetheless deserving criticism. Mr. Fali S. Nariman, one of the greatest lawyers
of our generation, remarks on the judgment as having virtually set at naught the entire
Arbitration and Conciliation Act of 1996To have introducedby judicial innovationa
fresh ground of challenge and placed it under the head of public policy was first
contrary to the established doctrine of precedentthe decision of three judges being
binding on a bench of two judges. It was also contrary to the plain intent of the new
1996 law, namely the need of finality in alternative methods of dispute resolution
without
court
interference.
If courts continue to hold that they have the last word on facts and on law
notwithstanding consensual agreements to refer matters necessarily involving facts and
law to adjudication by arbitrationthe 1996 Act might as well be scrapped.
The Division Bench of two judges of the court has altered the entire road-map of
arbitration law and put the clock back to where we started under the old 1940 Act.[24]
Foreign
arbitral
awards
Post
ONGC
approach
:
The Act of 1996 does not provide for challenge for foreign arbitral award specifically.
Although Section 48 and more particularly Section 48(1)(e) read with other substantive
provisions makes it abundantly clear that although it is not permissible to challenge a
foreign award, it could be resisted in its enforcement on the same grounds as are
available while challenging a domestic award. While a bare reading of Section 48(1)(e)
would demonstrate that a foreign award can be challenged in a country in which it was
made
or
the
country
under
law
of
which
it
was
made.
The most recent decision of the Supreme Court on the subject of setting aside an award
on the ground of public policy under Section 34 is Venture Global Engineering Vs.

Satyam Computer Services Ltd.[25] Based on the earlier judgment in Bhatia

International,[26] the Supreme Court held that it is open to the parties to exclude the
application of the provisions of part I by express and implied agreement, failing which
the whole of part I would apply. Further, it held that to apply Section 34 to a foreign
award would not be inconsistent with Section 48 of the 1996 Act, or any other provision
of part II and that the judgment-debtor cannot be deprived of his right under Section 34
to evoke the public policy of India, to set aside the award. Thus, the extended definition
of public policy cannot be bypassed by taking the award to foreign country for
enforcement.
On 10-1-2008 the Supreme Court rendered its decision in Satyam Computer Services
Ltd. case[27] and held that even a foreign award can be challenged in India on the
ground of public policy. The decision was passed basically relying on the decision of the
Court in Bhatia International v. Bulk Trading S.A[28]in which it was held that Part I of the
1996 Act will also apply to Part II unless expressly or impliedly excluded by the parties
through agreement. The Supreme Court upheld a challenge in India to a foreign
arbitration award on the grounds that the relief contained in the award violated certain
Indian statutes and was therefore contrary to Indian public policy pursuant to Part I of
the
Indian
Arbitration
and
Conciliation
Act,
1996.
The case arose from a challenge in India by a US company, Venture Global Engineering
(VGE), to set aside an award rendered against it in an arbitration proceeding in London
under the rules of the LCIA. The relief in the award implicated VGEs interests in India
and called for the transfer of certain shares that VGE owned in an Indian joint venture.
VGEs challenge asserted that the relief in the award violated certain Indian corporate
and foreign investment statutes, specifically the Foreign Exchange Management Act,
1999, and therefore constituted a "conflict with the public policy of India" pursuant to
the general provisions contained in Section 34 of Part I of the Arbitration Act. The court
held
that:
The provisions of Part I of the Act (Arbitration and Conciliation Act, 1996) would apply
to all arbitrations including international commercial arbitrations and to all proceedings
relating thereto. We further hold that where such arbitration is held in India, the
provisions of Part-I would compulsorily apply and parties are free to deviate to the
extent permitted by the provisions of Part-I. It is also clear that even in the case of
international commercial arbitrations held out of India provisions of Part-I would apply
unless the parties by agreement, express or implied, exclude all or any of its
provisions.
The decision has important implications both for companies doing business involving
India and for companies with substantial assets located in India and for companies
required to enforce foreign arbitration awards in India. This decision has made the
foreign awards open to challenge under the grounds listed in section 34 of Part I of the
Act, which includes the ground that the award is against Indian public policy. Public
policy in this sense is stated to encompass the illegality and fundamental policy,
interests, justice and morality of India. If an arbitration agreement does not specifically
exclude the application of this part of the Act, the award is open to a challenge under
the
Act.
Although, scope of Part I can be avoided by the parties by accepting to the same under
their contract. However, this shall not help to as the grounds for opposing enforcement

are found in Part II of the Act. These grounds are, for the most part, the same as the
grounds for challenging the award set out in Part I. The Part II grounds are set out in
section 48 of the Act and, as in section 34, cover an award which is considered to be
against Indian public policy. There is no case law on the point, but it is generally
accepted that any attempt to exclude the effect of Part II of the Act would fail.
Following the judgment in Venture Global Engineering, if the arbitration agreement does
not specifically exclude the application of Part I of the Act, foreign awards are open to
challenge by the losing party under the grounds listed in section 34 of Part I. However,
the grounds for opposing enforcement under Part II of the Act mirror those in Part I.
Therefore an exclusion of Part I will be ineffective where Part II applies. Part II of the Act
will always apply to foreign awards when they are enforced in India.
Therefore, although technically the judgment has not made any material changes to
the status quo in relation to enforcing foreign awards in India, it appears to have had
significant
practical
effects:
The decision is likely to result in an increase in challenges to foreign arbitral awards in
India;
and
It has set alarm bells ringing over the extent to which India is willing to comply with its
New
York
Convention
obligations.
This judgment of the Supreme Court is contrary to the object and scheme of the New
York Convention and also in violation of Article III of the Convention, in as much as it
introduces an additional ground for challenging a foreign award. The decision is
contrary
to
the
intention
of
the
Indian
legislature,
since
it:
Exposes a foreign award to an additional ground of challenge, (introduced by way of
judicial
legislation)
meant
for
domestic
awards
only.
Makes provision of Section 48 of 1996 Act of enforcement of foreign award redundant,
as every time an enforcement application is filed before Indian courts under Section 48,
the opposite party would file objection under Section 34, availing the benefit of
challenging
the
foreign
award
on
merits.
Seeks to introduce a procedure to challenge a foreign award through judicial
legislation in the absence of such a procedure under the 1996 Act.
The decision is also contrary to the precedent laid in ONGC Vs. Saw Pipes,[29] wherein
the court had accepted that the scope of Section.34 and Section.48 are not identical
and hence the assumption of the court that the effort of the respondent was to avoid
enforcement of the award under Section 48 of 1996 Act, thereby depriving the
appellant the benefit of the rule of public policy of India, is not correct.
The Supreme Courts intervention in the Satyam case[30] on grounds of public policy is
most unfortunate, as it does not take into account the decision of the three judges
Bench in Renusagar case.[31] The present decision, thus exposes foreign awards to
challenge on merits on the ground that it is patently illegal, notwithstanding the
enforcement proceedings in any other jurisdiction. In effect, the decision treats a
foreign award as a domestic award, if the execution of the award is to be done as per
the
laws
of
India.

Thus, it is easily inferred that the direction these decisions have taken the law on the
subject and in all such cases, the judgments depart from the spirit through judicial
lawmaking and they disclose a lack of trust in the arbitral process.
Steps
For
Enforcement
Of
Arbitral
Award.
Domestic
One of the declared objectives of the 1996 Act is that every final award: is enforced in
the same manner as if it were a decree of the Court[32]. Hence, the scheme of the Act
is that it is up to the losing party to object to the award and petition the court for
setting it aside. The winning party has to make no procedural move. If the objections to
the award are not sustained (or if there are no objections within the time allowed) the
award itself becomes enforceable as if it were a decree of the court[33]. It would be
noticed that the Indian law has thus fundamentally departed from the Model Law in this
regard. The Model Law requires an application for enforcement (Art 35) and the grounds
on which enforcement of an award may be refused are as set forth in Art 36 thereof.
This has been departed from under the Indian regime as stated above with the result,
that in so far as domestic awards are concerned, if there is no application to set aside
an award under s 34 (or if the objections if made have been rejected), the award can
straightaway be executed as a decree of the court. Thus, when the period for filing
objections has expired or objections have been rejected, the award can be enforced
under the Civil Procedure Code (CPC) in the same manner as if it were a decree passed
by a court of law. Section 36 declares that an arbitral award has the force of the decree,
though in fact it is not a decree. An ex parte Award passed by an Arbitral Tribunal under
Section 28 of the Act is also enforceable under Sec. 36. Even a settlement reached by
the parties under Section 30 of the Act can be enforceable under Sec. 36 of the Act as if
it
is
a
Decree
of
the
Court.
Foreign
arbitral
award
India's Arbitration and Conciliation Act, 1996 provides a statutory framework for the
enforcement of foreign arbitral awards given in countries which are signatories to either
the 1927 Convention on the Execution of Foreign Arbitral Awards (Geneva Convention)
or the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(New
York
Convention).
One of the prerequisites for the enforcement of a foreign arbitral award in India's courts
is that it should be a foreign award under the Geneva Convention or the New York
Convention.
In the case of Bhatia International vs Bulk Trading, AIR 2002 SC 1432, the Supreme
Court held that an arbitration award not made in a convention country will not be
considered a foreign award and, as such, a separate action will have to be filed on the
basis
of
the
award.
Enforceable
awards
There are several requirements for a foreign arbitral award to be enforceable under the
AC
Act.
(i) Commercial transaction: The award must be given in a convention country to resolve
commercial disputes arising out of a legal relationship. In the case of RM Investment &
Trading vs Boeing, AIR 1994 SC 1136, the Supreme Court observed that the term

"commercial" should be liberally construed as having regard to manifold activities which

are
an
integral
part
of
international
trade.
(ii) Written agreement: The Geneva Convention and the New York Convention provide
that a foreign arbitral agreement must be made in writing, although it need not be
worded
formally
or
be
in
accordance
with
a
particular
format.
(iii) Agreement must be valid: The foreign award must be valid and arise from an
enforceable commercial agreement. In the case of Khardah Company vs Raymon & Co
(India), AIR 1962 SC 1810, the Supreme Court held that an arbitration clause cannot be
enforceable when the agreement of which it forms an integral part is declared illegal.
(iv) Award must be unambiguous: In the case of Koch Navigation vs Hindustan
Petroleum Corp, AIR 1989 SC 2198, the Supreme Court held that courts must give effect
to an award that is clear, unambiguous and capable of resolution under Indian law.
Unenforceable
awards
Under sections 48 and 57 of the AC Act, an Indian court can refuse to enforce a foreign
arbitral award if it falls within the scope of the following statutory defenses:
(i)
the
parties
to
the
agreement
are
under
some
incapacity;
(ii)

the

agreement

is

void;

(iii) the award contains decisions on matters beyond the scope of the arbitration
agreement;
(iv) the composition of the arbitral authority or the arbitral procedure was not in
accordance
with
the
arbitration
agreement;
(v) the award has been set aside or suspended by a competent authority of the country
in
which
it
was
made;
(vi) the subject matter of dispute cannot be settled by arbitration under Indian law, or
(vii) the enforcement of the award would be contrary to Indian public policy.
Enforcement
and
execution
The party seeking enforcement of a foreign award under the provisions of the Act must
make an application to the court of competent jurisdiction with the following
documents:
(i)
(ii)

the
the

original/duly
original/duly

authenticated
authenticated

copy

copy
of

of
the

the
agreement,

award;
and

(iii) such evidence as may be necessary to prove that the award is a foreign award.
In the case of Fuerst Day Lawson vs Jindal Exports[34], the Supreme Court held that a
single application will hold good to decide the question of the execution of the foreign
arbitral
award
as
well
as
the
decree
of
the
award.

A
binding
agreement
On fulfilling the statutory conditions mentioned above, a foreign award will be deemed
a decree of the Indian court enforcing the award and thereafter will be binding for all
purposes
on
the
parties
subject
to
the
award.
Difficulties
Experienced
In
Enforcement
Main difficulties which a party experiences while seeking enforcement of an
Arbitral
Award
are
:
An Arbitral Award under the 1996 Act cannot be enforced as a Decree till the period of
challenge under Sec.34 (3) is over or the objections filed have been dismissed. It is a
common practice that whenever an Arbitral Award is made, the party adversely
affected by it files a petition u/s 34 of the Act in the Court and the Court issues notice.
Then, till the time this objection petition is dismissed the said award cannot be
enforced. Given the delays in our judicial system, it almost takes years for the Objection
Petition to be disposed off and till such time the party having the arbitral award in its
favour remains in limbo. Thus, the laudable objective behind doing away of legal
proceedings to make the arbitral award a Rule of Court under the 1940 Act by
introducing Sec.36 in the 1996 Act has been diluted to a great extent.
It is proposed to provide for, inter alia, that mere filing objection petition under Sec.34
will not operate as stay of the award and the court may grant stay of the operation of
the award subject to imposition of such conditions as it may deem fit to impose and the
power to impose conditions include the power to grant interim measures not only
against the parties to the award but also against the third parties in order to protect the
interest
of
the
party
in
whose
favour
the
award
is
passed.
The Execution procedure laid down in Order XXI of CPC is lengthy, complex and time
consuming
and
almost
a
never
ending
story.
By the time the stage of filing execution comes, the party against whom the award
had come, cleverly disposes off its assets so as to defeat the execution proceedings.
Unless a party has taken interim orders u/s 9 of the Act against disposal of assets etc.
there are good chances that by the time execution application is filed, the judgment
debtor
would
have
practically
spirited
away
all
its
assets.
In
conclusion
The Parliament has enacted the Arbitration and Conciliation Act with a view to provide
speedy remedy by arbitration and to achieve this objective, section 5 of the Act puts a
complete bar on the intervention of the courts in matters where there exists an
arbitration clause. The law of arbitration in India is very much at its crossroads. As
things stand today, arbitration is poised to effect great changes to the ways in which
dispute resolution is conducted. It brings with it the solemnity and finality of the judicial
process and couples it with the procedural flexibilities of non-conventional dispute
resolution methods. There is, however, an equally pressing need to recognize that much
more can and should be done to improve the conduct of arbitral proceedings in India
but most importantly, we feel that there is a need to effect a change in perceptions. As
our nation moves towards increasing litigiousness, alternative methods of dispute
resolution might just provide the key to resolving the problems of overburdened case
loads, long pendency of cases and an all too frequent case of justice being delayed. For
long, the problem plaguing the effective implementation of ADR methods has been their
perception as being subordinate to the court process- a perception shared and fostered

by lawyers and people alike. It is imperative, that this be changed and this can only be
achieved if there is active engagement from all the stakeholders in this process.
Certainly, there are some disputes inherently unsuited for alternative channels but
there are so many more which fit perfectly within the vision envisaged for a system of
rendering justice that runs concurrent to the Courts. It is necessary for the Courts
themselves to mandate recourse to ADR methods in inter alia international commercial
disputes, employment disputes, matrimonial cases, compoundable criminal offences, to
name just a few.. Saw Pipe cases expanded judicial review is especially unsuitable in
the Indian context where courts are overwhelmed with backlog. In such scenario to
permit a challenge on merits would considerably delay the enforcement proceedings. A
majority of parties opting for arbitrations do so to avoid court delays and legal niceties.
An unfortunate side effect of this decision is that it has become a ground for parties to
shift the venue of arbitration outside India. The Supreme Courts decision (Venture
Global Engineering case) flies in the face of modern commercial practice. At the end of
the day, what should take precedence is the provision of justice, in substance more
than in form. As our country grows and flowers, taking wing on issues unimagined
before, it is time also for our dispute resolution systems, the undisputed backbone of
our nation, to follow suit. At the end of the day arbitration would see the day light of
reality and true success when people would start accepting the arbitral award and its
finality as that of a judgment by the Supreme Court not because it is justice always but
because
it
is
final
always,
having
no
further
appeal.
-------------------------------------------------------------------------------[1] I.e. the Arbitration & Conciliation Act 1996 (No 26 of 1996) (the 1996 Act).
[2] I.e. the Arbitration & Conciliation Act 1996 (No 26 of 1996) (the 1996 Act).
[3] I.e. the Arbitration & Conciliation Act 1996 (No 26 of 1996) (the 1996 Act).
[4]
Ibid.
[5] I.e. the Arbitration & Conciliation Act 1996 (No 26 of 1996) (the 1996 Act),S. 85
[6] I.e. the United Nations Commission on International Trade Law Model Law on
International Commercial Arbitration, General Assembly Resolution 40/72, adopted on
11
December
1985
(the
Model
Law).
[7] Arbitration Rules of the United Nations Commission on International Trade Law
(UNCITRAL), General Assembly Resolution 31/98, adopted on 15 December 1976 (the
UNCITRAL
Arbitration
Rules).
[8]
The
1996
Act,
s
13(2).
[9]
The
1996
Act,
s
13(4)
[10]
The
Model
Law,
Art
13(3).
[11]
The
1996
Act,
s
16(5).
[12] Vikrant Tyres Ltd. v. Export Foreign Trade Co. Ltd., 2005(3) RAJ 612 (Ker)
[13] Para 4 (v) and (vii) of the Statement of Objects and Reasons of the Arbitration and
Conciliation
Act,
1996
[14] Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, AIR 1986 SC
1571. For a very fine and detailed statement of Sir William Holdsworth on public policy
please
refer
History
of
English
Law,
Vol.
III,
p.55
[15] UNCITRAL Report on the work of its 18th session, June 3-21, 1985, para.296
[16] Renusagar Power Plant Co. Ltd v. General Electric Co., AIR 1994 SC 860
[17]
ONGC
v.
SAW
Pipes
Ltd.,
AIR
2003
SC
262
[18]
Arbitration
and
Conciliation
Act,
1996.
[19]
ONGC
v.
SAW
Pipes
Ltd.,
AIR
2003
SC
26299.
[20]
Ibid.
[21]
Ibid.
[22]
ONGC
v.
SAW
Pipes
Ltd.,
AIR
2003
SC
2629

[23]
Ibid.
[24] From transcript of speech delivered by Mr. F. S. Nariman at the inaugural session of
Legal Reforms in Infrastructure, New Delhi, 2 May, 2003 quoted in Kachwaha,
Sumeet, The Indian Arbitration Law : Towards a New Jurisprudence, Int. A.L.R. 2007,
10(1),
13-17
[25]
Ibid.
[26]
Bhatia
International
v.
Bulk
Trading
SA,
(2003)5
SCC
105
[27]
Venture
Global
Engg.
V.
Satyam
Services
Ltd.(2008)
[28]
Bhatia
International
v.
Bulk
Trading
S.A.&
Anr(2002)
[29]
ONGC
v.
SAW
Pipes
Ltd.,
AIR
2003
SC
2629
[30] Venture Global Engineering v. Satyam Computer Services Ltd., AIR 2008 SC 1061
(April)
[31] Renusagar Power Plant Co. v. General Electric Co., AIR 1994 SC 860
[32] Statement of Objects and Reasons to the 1996 Act, para 4(vii).
[33]
The
1996
Act,
s
36.
[34] , AIR 2001 SC 2293.