The Arbitral Award redefines the process of dispute resolution in the commercial sphere. It is a great resolution-oriented mechanism that is created after analysing the leakages of mediation and conciliation processes. It is preferred by most people because of its potential to solve problems without any inappropriate delays. In this mechanism, a more formal trial proceeding takes place before the courts, where parties submit their dispute to a third party (an arbitral panel), who determines the decision as private judges.
It is more formal and once the decision is out, it leaves very limited grounds for appeal. The nature of this process is adversarial, it aims to determine the rights, provide resolution after analysing all the evidence, and do justice to the right party. In this blog, we will explore the Arbitral Award more closely.
Understanding Arbitral Awards
Arbitral award is governed by the Arbitration and Conciliation Act 1996 which was enacted by the Indian Parliament. It effectively came into effect on August 22, 1996. Distinguished by court rulings, an Arbitral Award is a formal way of resolution passed as an order by the Arbitral tribunal. It is legally binding, often confidential, faster, and autonomous. This award can be provided in two ways:
- Monetary Form: The amount that a party has to pay to another party according to the case.
- Non-Monetary Form: Like restraining any party from undertaking any action according to the situation.
This Award can also be interim and consent based. According to section 2 (1)(C) of the Act, it incorporates interim awards. In this process, the Arbitral panel goes through the statements, evidence, and announces the final decision as an arbitration award. This mechanism is popular due to its potential of solving the cases. Unlike the other two ways, the outcome of this traditional method is legally binding and enforceable in courts.
Government’s Approach to Arbitral Award System
Pertaining to the increasing burden on the Indian Judiciary system, the government took an effective step by emphasising the Arbitration process. It is evident by the fact that over the years, the government introduced various amendments to make attribution more efficient and effective.
2015 Amendment
This amendment introduced a 12-month time limit to complete the proceedings that were extendable by six months with party consent. It also stated that the third party should remain neutral throughout the legal proceedings.
Courts were allowed to interfere in this resolution process only in special cases like violation of public policies and fraud done by someone. These changes helped to make the overall process:
- Impartial
- Faster
- Efficient
2019 Amendment
The Arbitration Council of India (ACI) was established under this amendment as an independent body. ACI is responsible for accrediting and regulating arbitrators by ensuring professionalism and quality. After this amendment, parties felt encouraged to choose arbitration centres instead of ad hoc tribunals for dispute resolution.
Appointment procedures were also redefined after this amendment. The reform established under it promoted a structured and competitive arbitration ecosystem in India.
2021 Amendment
It played a great role in removing the automatic stay. Before this amendment, mere filing of an appeal used to halt execution, eventually leading to extended disputes. It aims to stabilise the legal binding of this award. It played an essential role in boosting this award’s strength and credibility, reducing unnecessary litigation.
Challenges to an Arbitral Award
The arbitral award is popular because of its enforceability. However, this overall dispute resolution involves legalities and international agreements. According to the New York Convention, any award should have procedural fairness and valid arbitration agreements. Here are some of the challenges to this effective award:
Go Beyond Jurisdiction
In some cases, arbitral tribunals take the decision that is beyond the scope of the arbitration agreement. If parties do not follow the rules and dodge submitting the required details, courts may reduce the enforcement of the Arbitral Awards.
Corruption
Those who obtain awards through wrong and illegal means, dishonest conduct, and bribery struggle in the long run. Such awards are kept aside. To uphold the legitimacy of the Arbitration process, courts take strict actions in such cases.
Violating Public Policy
In case the enforcement of the award leads to the violation of some fundamental laws, interests or morals, then courts may reject the recognition. In some exceptional cases, public policies prevent such awards that eventually contradict the Nation’s ethical standards.
Contravention of Natural Justice
An award can be challenged by any party in case there was a denied fair hearing, unequal opportunities of presentation, or there was any bias shown by the arbitrator. Securing procedural fairness and credibility is one of the important fundamentals of this process.
Future Scope
According to the history and need of the arbitration process, evolution is possible. Nowadays, it is the era of innovation and technology that can play a major role in accelerating the efficiency and legal harmonisation in the future. Future evolutions of this act may focus on the following:
- Maximised transparency
- Global enforceability
- Speed and reduction in delays
Here’s a detailed look at the future scope of this dispute resolution mechanism:
Digital Arbitration
By incorporating advanced technology like Online Dispute Resolution, Blockchains and Artificial Intelligence; the government can transform the scope and status of arbitration. If officials get access to Artificial Intelligence powered legal research and predictive analytical data, the process of analysing cases can be highly efficient.
Blockchains can enhance transparency by inculcating immutable records of the proceedings. Whereas ODR platforms have the potential to facilitate cross-border arbitration without requiring any physical presence. To utilise the power of video conferencing and cloud-based document sharing, ODRs can be very helpful.
Institutional Growth of Arbitration
Here are three leading arbitration bodies who are actively working on this resolution methodology:
- Singapore International Arbitration Centre (SIAC)
- London Court of International Arbitration (LCIA)
- International Chamber of Commerce (ICC)
These powerful bodies consistently work to refine certain essentials to ensure the effectiveness, legality and credibility of the process. Officials focus on upgrading and highlighting:
- Rules & Regulations
- Management Techniques
- Recruitment & Appointment Process
Harmony of Law
From previous years efforts are actively made by the officials to speed up the momentum and escalate the power of Arbitral Award.
Organisations will consistently work on the following:
- Budding Initiatives
- Uniform Guidelines
- Model Laws
- Harmony in Procedure
- Efficiency
- Predictability
Wrap Up
Arbitral Award is one of the most preferred processes by parties because of its extraordinary features. It turned out to be one of the best dispute resolution processes that is backed by additional credibility, legality, fairness, efficiency and effectiveness. This award is a result of the overall Arbitral process that is formulated after analysing the previous processes: Mediation and Conciliation process. Arbitral award is legally binding, credible and more formal to ensure the provision of justice to the deserving party. According to the track of activities undertaken by the government, it is evident that there is potential to amplify this process eventually leading to a great future.
Disclaimer
The advocatehub.com is not responsible for the accuracy of the content.
