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Introduction
The term ‘arbitral award’ lacks a precise definition but is typically understood through its defining characteristics: serving as a final and binding resolution of claims presented before an arbitral tribunal.
Furthermore, for an award to be enforceable, it must meet specific form requirements, a critical consideration in practice. While most international instruments do not prescribe exhaustive form requirements, arbitral rules often allude to such criteria.
Section 31 of the 1996 Arbitration Act delineates the requisite formalities, complemented by the roles played by the Indian Stamp Act and the Registration Act. In practice, adherence to the following checklist is essential: the award must be in writing, signed and dated at the arbitration venue, reasoned (often referred to as ‘motivated’), include a reference to interest, timely, sent to all parties, stamped, and registered.
Subsequently, this discussion aligns with the Act’s structure to explore the form and content of arbitral awards, addressing interest inclusion, time constraints, and a significant consideration for Indian awards: stamp duties and registration.
Form and Contents of Arbitral Award
The pivotal provision governing the formal requirements of arbitral awards under the 1996 Arbitration Act is Section 31, titled ‘Form and Contents of Arbitral Award’. As per this provision, the arbitral award must be documented in writing and endorsed by the majority of the arbitral tribunal, with an explanation provided if any signature is omitted.
Moreover, arbitrators are obligated to articulate the rationale underlying their decision, unless the parties have explicitly waived the requirement for reasons or the award stems from a mutually agreed settlement.
Additionally, the arbitral award must specify the date and venue of arbitration as determined in accordance with Section 20, with the award being deemed to have been rendered at that location. This terminology might present confusion for international arbitration practitioners, as the Act employs the term "place of arbitration" instead of "seat".
Following the issuance of the arbitral award, a duly signed copy must be furnished to each involved party. This necessitates the arbitral tribunal, potentially with assistance from the administering institution, to dispatch hard copies to the disputing parties. Should they consent, their legal representatives may also receive the copy, serving as points of contact in this regard.
Interest
In cases where the arbitral tribunal's decision entails a monetary payment, the tribunal reserves the discretion to incorporate an interest component into the sum awarded.
This interest, determined by the arbitral tribunal as reasonable, may apply to the entirety or any portion of the awarded amount, spanning the entire or partial duration between the emergence of the cause of action and the issuance of the award.
A significant legal precedent elucidating this matter is the case of Chittaranjan Maity v. Union of India, where the Supreme Court ruled that pre-award interest could not be granted by the arbitral tribunal due to an explicit agreement between the parties prohibiting such payments under the contract.
Consequently, parties are advised to expressly stipulate within the contract their intent to waive interest payments on any monetary sums due under the contract, thereby preempting disputes over pre-award or post-award interest entitlements.
Time Limits
Section 29A of the 1996 Arbitration Act, a provision introduced through the 2015 Amendment and extensively deliberated upon, imposes stringent deadlines on arbitral tribunals. Notably, the Act delineates between time frames applicable to international awards and those pertinent to matters other than international commercial arbitrations.
Specifically, Section 29A(1), incorporated by the Arbitration and Conciliation (Amendment) Act, 2019 (2019 Amendments), stipulates that in domestic arbitrations (referred to as matters other than international commercial arbitrations), the arbitral tribunal must deliver the award within 12 months from the completion of pleadings as per subsection (4) of Section 23.
However, this time frame is not absolute, as Section 29A(3) permits parties to mutually extend the period by six months. Upon such agreement, the arbitral tribunal is granted an additional six months to issue the award. Subsequent extensions require application to the courts.
Failure to issue the award within the stipulated or extended timeframe results in termination of the arbitrator(s)' mandate, unless the competent court, before or after the deadline, extends the period.
Furthermore, if the court attributes delay to the arbitral tribunal, it retains the authority to reduce arbitrator fees, serving as an incentive for timely award issuance.
Conversely, tribunals presiding over international commercial arbitrations enjoy more flexibility, being unrestricted by the 12-month timeline.
Consequently, there is no risk of mandate termination due to elapsed time. These tribunals strive to expedite proceedings and endeavour to render awards within twelve months from the conclusion of pleadings (statement of claim and defence).
Stamp Duty and Registration
To ensure enforceability within India, an arbitral award must fulfil an additional formality not expressly outlined in the 1996 Arbitration Act. According to the Indian Stamp Act, 1899 (1899 Indian Stamp Act), arbitral awards must be stamped.
Furthermore, if the award pertains to immovable property, Section 17 of the Registration Act (1908 Registration Act) mandates registration. Adherence to these additional formalities is imperative to preempt challenges during the enforcement phase.
The Arbitration Act's silence on whether the "signed copy" of the arbitral award should be stamped or registered, a common practice in India, has led to ambiguity regarding the applicability of the provisions of the 1899 Indian Stamp Act to arbitral awards.
In practice, this requirement entails printing the arbitral award on non-judicial stamp paper, guided by Schedule I of the 1899 Indian Stamp Act.
Additionally, Section 35 of the 1996 Arbitration Act stipulates that an unstamped or inadequately stamped award is inadmissible unless the requisite stamp duty and penalties are paid for validation.
Moreover, as per Section 17 of the 1908 Registration Act, an award impacting immovable property must be compulsorily registered; failure to do so renders it invalid. The Supreme Court, in M. Anasuya Devi v. Manik Reddy, clarified that stamping and registration issues can be raised during the enforcement stage under Section 36 of the Act.
Furthermore, the Supreme Court asserted that the stamping and registration requirements fall within the purview of Section 47 of the 1908 Civil Procedure Code (CPC), rather than Section 34 of the Arbitration Act governing applications to set aside arbitral awards.
While the 1899 Stamp Act applies universally, some states have enacted separate Stamp Acts, leading to variations in stamp duty across states.
For instance, in Delhi, stamp duty is approximately 0.1% of the property value related to the award, whereas in Mumbai under the Maharashtra Stamp Act, it stands at INR 500. It's prudent to verify the prevailing stamp duty charges in the respective state before finalising the arbitral award.
Notably, the stamping and registration requirements discussed apply solely to domestic awards. The Supreme Court, in M/S. Shri Ram EPC Limited v. Rioglass Solar SA, ruled that foreign awards are exempt from stamping.
High Courts have echoed this stance, emphasising that stamp duty issues do not impede the enforceability of foreign awards, which do not require registration and can be enforced as decrees.
The COVID-19 pandemic has accelerated digitalization trends, prompting debate on whether digitally signed awards in PDF format can satisfy Section 31(4) of the 1996 Arbitration Act.
While current Indian practice doesn't envision such digitalization, recent developments in e-stamping services by entities like the Stockholding Corporation of India Ltd. in some states, including Maharashtra, hint at a potential shift towards electronic stamping.
However, electronic registration of arbitral awards remains unavailable across Indian states. The pandemic has expedited digitization efforts, with the Supreme Court directing courts to adopt videoconferencing technology, indicating the likelihood of virtual arbitrations shaping the future of international arbitration.
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