CHAPTER VI

MAKING OF ARBITRAL AWARD AND

TERMINATION OF PROCEEDINGS
Section: 28-34
• SECTION 28: RULES APPLICABLE TO SUBSTANCE OF DISPUTE
(1) Where the place of arbitration is situate in India:
(a) in a domestic arbitration, arbitral tribunal shall decide the dispute
submitted to arbitration in accordance with the substantive law in
force in India; (b) in international commercial arbitration, arbitral
tribunal shall decide the dispute in accordance with the rules of law
designated by the parties as applicable to substance of the dispute;
(b) failing any designation of the law by the parties, the tribunal shall
apply the rules of law it considers to be appropriate given all the
circumstances surrounding the dispute.
(2) Tribunal, while deciding and making an award shall, in all cases, take
into account the terms of the contract and trade usages applicable to the
transaction.
• SECTION 29: DECISION MAKING BY PANEL OF ARBITRATORS
(1) In arbitral proceedings with more than one arbitrator, any decision of the arbitral
tribunal shall be made by a majority of all its members. (2) If authorised by the
parties or all the members of arbitral tribunal, questions of procedure may be
decided by the presiding arbitrator.
• SECTION 29A: TIME LIMIT FOR ARBITRAL AWARD (Inserted by 2016 act)
(1)The award in domestic matters shall be made by arbitral tribunal within a period of
twelve months .
Provided that the award in international commercial arbitration may be made as
expeditiously as possible and endeavor may be made to dispose of the matter within a
period of twelve months.
(2) If the award is made within a period of six months from the date the arbitral
tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such
amount of additional fees as the parties may agree. (3) The parties may, by consent,
extend the period specified in sub-section (1) for making award for a further period not
exceeding six months.
(4) If the award is not made within the period specified or the extended
period, the mandate of the arbitrator(s) shall terminate unless the
Court has extended the period.
Provided that while extending the period under this sub-section, if the
Court finds that the proceedings have been delayed for the reasons
attributable to the arbitral tribunal, then, it may order reduction of fees
of arbitrator(s) by not exceeding 5% for each month of such delay.
Provided further that where an application is pending, the mandate of
the arbitrator shall continue till the disposal of the said application:
Provided also that the arbitrator shall be given an opportunity of being
heard before the fees is reduced.
(5) The extension of period may be on the application of any of the parties
and may be granted only for sufficient cause and on such terms and
conditions as may be imposed by the Court.
(6) While extending time period, it shall be open to the Court to substitute
arbitrators and if one or all of the arbitrators are substituted, the arbitral
proceedings shall continue from the stage already reached and on the basis
of evidence and material already on record.
(7) In the event of arbitrators being appointed, reconstituted arbitral
tribunal shall be deemed to be in continuation of previous arbitral tribunal.
(8) An application filed (for extension of time period) shall be disposed of
by the Court as expeditiously as possible and endeavour shall be made to
dispose of the matter within a period of sixty days from the date of service
of notice on the opposite party.
• SECTION 29B: FAST TRACK PROCEDURE
(1) Parties to an arbitration agreement, may, at any stage either before or at the time of
appointment of the arbitral tribunal, agree in writing to have their dispute resolved by
fast track procedure.
(2) Parties to the arbitration agreement, while agreeing for resolution of dispute by fast
track procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator
who shall be chosen by the parties.
(3) Arbitral tribunal shall follow the following procedure while conducting arbitration
proceedings under sub-section (1):
(a) Tribunal shall decide the dispute on the basis of written pleadings, documents and
submissions filed by the parties without any oral hearing;
(b) Tribunal shall have power to call for any further information or clarification from the
parties in addition to the pleadings and documents filed by them;
(c) An oral hearing may be held only, if, all the parties make a request or if the arbitral
tribunal considers it necessary to have oral hearing for clarifying certain issues;
(d) Tribunal may dispense with any technical formalities, if an oral hearing is held, and
adopt such procedure as deemed appropriate for expeditious disposal of the case.
(4) The award shall be made within a period of six months from the
date the arbitral tribunal enters upon the reference.
(5) If the award is not made within the period specified in sub-section
(4), the provisions of section 29A shall apply to the proceedings.
(6) The fees payable to the arbitrator and the manner of payment of
the fees shall be such as may be agreed between arbitrator and parties.
• SECTION 30: SETTLEMENT
(1) It is not incompatible with an arbitration agreement for an arbitral
tribunal to encourage settlement of the dispute and tribunal may
use mediation, conciliation or other procedures at any time during
the proceedings to encourage settlement.
(2) If, during arbitral proceedings, the parties settle the dispute, the
arbitral tribunal shall terminate the proceedings and, if requested
by the parties and not objected to by the arbitral tribunal, record
the settlement in the form of an arbitral award on agreed terms.
(3) An arbitral award shall be made in accordance with section 31 and
shall state that it is an arbitral award.
(4) An arbitral award on agreed terms shall have the same status and
effect as any other arbitral award on the substance of the dispute.
• SECTION 31: FORM AND CONTENTS OF ARBITRAL AWARD
(1) An arbitral award shall be made in writing and shall be signed by the members of
the arbitral tribunal.
(2) In arbitral proceedings with more than one arbitrator, signatures of the majority of
all the members of the arbitral tribunal shall be sufficient so long as the reason for
any omitted signature is stated.
(3) Arbitral award shall state reasons upon which it is based, unless parties have agreed
that no reasons are to be given, or
(4) The arbitral award shall state its date and the place of arbitration as determined in
accordance with section 20 and the award shall be deemed to have been made at that
place.
(5) After the award is made, a signed copy shall be delivered to each party.
(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an
interim arbitral award on any matter with respect to which it may make a final arbitral
award.
(7) where an arbitral award is for the payment of money, the arbitral
tribunal may include interest, at such rate as it deems reasonable. A
sum directed to be paid by an arbitral award shall, unless the award
otherwise directs, carry interest at the rate of two percent higher than
the current rate of interest prevalent on the date of award, from the
date of award to the date of payment.
(8) The costs of an arbitration shall be fixed by the arbitral tribunal in
accordance with section 31A.
Explanation.—For the purpose of clause (a), “costs” means reasonable
costs relating to— (i) the fees and expenses of the arbitrators and
witnesses, (ii) legal fees and expenses, (iii) any administration fees of the
institution supervising the arbitration, and (iv) any other expenses
incurred in connection with the arbitral proceedings and the arbitral
award.
• SECTION 31A: REGIME FOR COSTS
(1) In relation to any arbitration proceeding; Court or arbitral tribunal,
shall have the discretion to determine:
(a) whether costs are payable by one party to another;
(b) the amount of such costs; and
(c) when such costs are to be paid.
Explanation.—For the purpose of this sub-section, “costs” means
reasonable costs relating to— (i) the fees and expenses of the
arbitrators, Courts and witnesses; (ii) legal fees and expenses; (iii) any
administration fees of the institution supervising the arbitration; and
(iv) any other expenses incurred in connection with the arbitral or
Court proceedings and the arbitral award
• SECTION 32: TERMINATION OF PROCEEDINGS
(1) The arbitral proceedings shall be terminated by the final arbitral award
or by an order of the arbitral tribunal under sub-section (2).
(2) The arbitral tribunal shall issue an order for the termination of the
arbitral proceedings where:
(a) the claimant withdraws his claim, unless the respondent objects to the
order and the arbitral tribunal recognises a legitimate interest on his
part in obtaining a final settlement of the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the proceedings has
for any other reason become unnecessary or impossible.
(d) The mandate of the arbitral tribunal shall terminate with the
termination of the arbitral proceedings
• SECTION 33: CORRECTION & INTERPRETATION OF AWARD; ADDITIONAL AWARD
(1) Within 30 days from the receipt of arbitral award, unless another period of time has
been agreed upon by the parties:
(a) a party, with notice to the other party, may request the arbitral tribunal to correct any
computation, clerical or typographical errors or any other errors of a similar nature
occurring in the award, to give an interpretation of a specific point or part of award.
(2) If the arbitral tribunal considers request to be justified, it shall make the correction or
give interpretation within thirty days from the receipt of the request and interpretation
shall form part of the arbitral award.
(3) Tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on
its own initiative, within thirty days from the date of the arbitral award.
(4) Unless otherwise agreed, a party with notice to other party, may request, within thirty
days from the receipt of the arbitral award, the arbitral tribunal to make an additional
arbitral award as to claims presented in the arbitral proceedings but omitted from the
arbitral award.
• SECTION 34: APPLICATION FOR SETTING ASIDE ARBITRAL AWARD
(1) Recourse to a Court against an arbitral award may be made only by an application for
setting aside such award.
(2) An arbitral award may be set aside by the Court only if:
(a) the party making the application establishes that:
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have
subjected it; or
(iii) party making the application was not given proper notice of appointment of an
arbitrator or proceedings or was otherwise unable to present his case; or
(iv) arbitral award deals with a dispute not falling within the terms of submission to
arbitration, or it contains decisions on matters beyond the scope of the submission to
arbitration.
(v) The composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties, or
(b) The Court finds that: (i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in force, or (ii) the award is
in conflict with the public policy of India.
(2A) Domestic arbitral award may also be set aside by Court, if it finds that award is
vitiated by patent illegality appearing on face of award.
(3) An application for setting aside may not be made after three months have elapsed
from the date on which the party making that application had received the arbitral
award.
Provided that if the Court is satisfied that the applicant was prevented by sufficient
cause from making the application within the said period of three months it may
entertain the application within a further period of thirty days, but not thereafter.
(5) An application under this section shall be filed by a party only after issuing a prior
notice to the other party and such application shall be accompanied by an affidavit by
the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any
event, within a period of one year from the date on which the notice referred to in sub-
section (5) is served upon the other party.