Effect of an Award
Effect of an Award
1. What is an Award?
An award is the decision or determination made by an arbitral tribunal or arbitrator at the conclusion of arbitration proceedings.
It is the final determination of the rights and liabilities of the parties in the arbitration dispute.
The award can be on merits (final award) or interim in nature.
2. Legal Status of an Award
Under the Arbitration and Conciliation Act, 1996 (India), an award has the same status as a decree of a civil court.
Once an award is made, it is binding on the parties.
The award is final and conclusive unless set aside by a competent court under specific grounds.
3. Effects of an Award
A. Binding and Final
The award is binding on the parties and must be honored and complied with.
Parties cannot re-litigate the matters decided by the award.
It is conclusive evidence of the rights determined.
B. Decree of Civil Court
The award can be enforced as a decree under the Civil Procedure Code (CPC).
If a party fails to comply voluntarily, the other party can file an application for execution of the award like a court decree.
C. Bar on Litigation
The award bars the parties from pursuing the same dispute in a court of law.
It upholds the principle of finality and efficiency in dispute resolution.
D. Res Judicata
The doctrine of res judicata applies to arbitration awards, preventing re-opening of decided issues.
Once the award is made, it is considered as a final adjudication.
E. Appeal and Setting Aside
While the award is final, under Sections 34 and 37 of the Arbitration and Conciliation Act:
A party may challenge the award on limited grounds such as fraud, bias, violation of natural justice, or public policy.
Appeals against the order refusing to set aside an award can be made to the High Court or Supreme Court.
4. Important Case Laws on Effect of an Award
A. Sundaram Finance Ltd. v. NEPC India Ltd. AIR 1999 SC 626
The Supreme Court held that the arbitration award is final and binding, and courts should not interfere except on very limited grounds.
Emphasized the public policy ground for setting aside an award.
B. ONGC Ltd. v. Saw Pipes Ltd. AIR 2003 SC 2629
This landmark judgment limited the scope of judicial interference in arbitration awards.
Held that the award has the same finality as a decree of the court.
Courts must respect the autonomy of the arbitration process and not re-appraise evidence.
C. Renusagar Power Co. Ltd. v. General Electric Co. AIR 1994 SC 860
The Supreme Court elaborated on the scope of public policy in setting aside an award.
Reinforced that the award is binding unless it violates fundamental policy of Indian law.
5. Summary of Effects
| Effect | Explanation |
|---|---|
| Binding on parties | Parties must comply with the award |
| Final and conclusive | Bar on re-litigation of the same dispute |
| Enforceable as decree | Award can be executed like a court decree |
| Limited judicial review | Courts interfere only on narrow grounds |
| Res judicata principle | Award acts as final adjudication |
6. Conclusion
The effect of an award is that it conclusively determines the rights and obligations of parties in an arbitration dispute. It is final, binding, and enforceable like a court decree, thus providing an effective alternative to traditional litigation. Judicial intervention is limited to preserving the fairness and legality of the arbitration process.
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