Introduction
“An award without enforcement is just words.”
Due to its speed and anonymity, arbitration has emerged as one of the most popular methods of settling business disputes in India. But winning an arbitral ruling is just half the fight; the true victory is in making sure the losing party complies with the award.
The procedure for enforcement is outlined in Sections 36 to 38 of the Arbitration and Conciliation Act, 1996. In practical terms, enforcement is similar to carrying out a civil court order.
Below mentioned steps are a detailed guide on the arbitration legal provisions its application in India.
Step 1: Obtain a Certified Copy of the Award
The arbitral tribunal must provide each party with a signed copy of the award in accordance with Section 31(5) of the Arbitration Act.
Getting a certified copy is the first step once the award is announced. This turns into the main document used to start enforcement actions. Your enforcement petition won’t be accepted by any court without it.
Step 2: Filing an Application for Enforcement
Under section 36 of The Arbitration Act, an award is enforceable when the period for raising objections under Section 34 has passed, which is three months plus a potential 30 days extension.
The procedure..
- Draft a petition, add supporting documents, including the arbitration agreement, a certified copy of the award, and evidence of service of notice on the other party, must be added.
- Submit an enforcement petition to the appropriate court (civil or commercial court with pecuniary and territorial jurisdiction).
- The arbitral award is then regarded by the court as a court decree.
Step 3: Court’s Scrutiny Before Enforcement
Under Section 34, the award-debtor (person against whom award has been passed) may object. Enforcement will be stayed until the court resolves any challenges, if any are submitted. Pursuant to the 2015 and 2019 amendments, filing a challenge under Section 34 does not automatically stay enforcement. The court may grant a stay only upon conditions, including deposit of awarded amounts or furnishing security.
Reasons/Grounds for refusal of enforcement:
The court can only deny enforcement in extremely specific circumstances, like:
- The award is against Indian public policy.
- Awards are made in areas that cannot be arbitrated, such as criminal or marital cases.
- There were significant flaws in the process (e.g., party not given adequate notice).
Step 4: Execution of the Award
Order XXI CPC applies, and specify that the executing court depends on territorial and pecuniary jurisdiction where debtor’s assets are located. The award holder must provide details of the debtor’s assets to the court. Courts can then issue attachment orders, prohibitory orders, and warrants to secure compliance.
Modes of Execution:
- Attachment of movable/immovable property.
- Freezing and attaching bank accounts.
- Sale of attached assets through court auction.
- Garnishee proceedings (directing third parties to pay amounts owed to the debtor).
Step 5: Enforcement of Foreign Awards
The Arbitration Act’s Part II, Chapter I covers New York Convention Awards, whereas Chapter II covers Geneva Convention Awards. Sections 31(5), 34, 36–38 Arbitration Act, Order XXI CPC and Section 48 cover foreign awards.
In order to have the foreign award recognised and enforced, the party must petition to a High Court. Once acknowledged, it is considered a High Court decree. Indian courts often take a pro-enforcement stance, only refusing enforcement if the judgement contravenes Section 48 (for example, by being against public policy, an unlawful arbitration agreement, improper notification, etc.).
Practical Aspects of Enforcement
1. Timeframe: While timelines depend on court workload and objections, enforcement proceedings without challenges are usually concluded within 6–12 months. Contested awards may take longer.
2. Costs: Although court fees and execution costs must be paid, enforcement is quicker than in a new lawsuit.
3. Early asset identification of the debtor can facilitate enforcement.
Conclusion
In India, upholding an arbitral award requires a clear legal process that guarantees the ruling will be regarded as a court order. A precise road map for parties is provided by the Code of Civil Procedure, 1908, in conjunction with the Arbitration and Conciliation Act, 1996.
Although courts have little authority to get involved, filing objections might cause delays in execution. However, arbitration is progressively becoming a more dependable dispute settlement method in India because to recent court trends and reforms that discourage baseless challenges.
In summary, an arbitration ruling in India is more than simply a symbolic win; it may be successfully implemented to obtain the relief that was awarded with the right legal framework in place.
FAQs
Q1. Can a losing party avoid enforcement of an arbitration award?
No, avoidance is not possible unless the award is challenged under Section 34 of the Arbitration Act. Even then, courts now require security deposits to discourage frivolous objections.
Q2. What is the time limit to challenge an arbitral award?
A party has 3 months (extendable by 30 days) from the date of receiving the award to file objections under Section 34. After this period, the award becomes final and enforceable.
Q3. Which court has jurisdiction to enforce an arbitral award?
The civil court or commercial court with territorial and pecuniary jurisdiction where the assets of the awarddebtor are located has jurisdiction.
Q4. How is a foreign arbitration award enforced in India?
Foreign awards under the New York Convention or Geneva Convention can be enforced by filing an application before a High Court. Once recognized, it is treated as a decree of that court.
Q5. How long does enforcement usually take?
If uncontested, enforcement may conclude within 6–12 months. If the award is challenged, proceedings may take longer, depending on the complexity of objections.
Q6. What happens if the award-debtor refuses to pay?
The award-holder can seek execution by attachment and sale of property, freezing bank accounts, or garnishee orders under Order XXI CPC.
Q7. Can interim measures be sought during enforcement?
Yes, parties can seek interim relief under Section 9 of the Arbitration Act or CPC to secure assets before the final enforcement.