This article is written by Bhanvi Juvekar, from Unitedworld School of Law (UWSL, Karnavati University) pursuing B.B.A.L.L.B.(Hons.) course. This article explains what an arbitral award is. Further, it explains Section 33 of the Arbitration and Conciliation Act, 1996, which plays an important part in the post-arbitration proceedings (after granting of an award).
Arbitration is an alternate dispute resolution. It is especially relevant and feasible in case of commercial matters. The current statute that governs the arbitration regime in India is the Arbitration and Conciliation Act, 1996, which was amended in the year 2015.
Arbitration is a favourable option for parties who are looking to settle the matter mutually. It is a framework apart from the ordinary judicial framework of courts. Arbitration is a way to make dispute resolution non-aggressive and amicable. The parties can make a mutual choice of the place of arbitration and the arbitrators.
Arbitration can be court-ordered if the judge believes that the matter can be resolved without the court’s intervention. But, in many cases, arbitration occurs because at the time of signing of contracts there was an arbitration clause inserted by mutual agreement.
Benefits of opting for arbitration
Many parties choose arbitration because of its many benefits:
- It is a quicker process in comparison to litigation as there is a time-cap for the completion of the arbitration process.
- It is a cheap process because of the reduction in the cost of litigation. There is a reduction in cost as a matter in the court of law can drag on for years which cost both time and money.
- The parties have the liberty to choose the place and arbitrators according to their convenience.
- The arbitral award (the final decision of the arbitrator(s)) is final and cannot be appealed. This ensures the finality of the award.
This article deals with the situation of the above-mentioned award being wrong. There is a special provision in the Arbitration and Conciliation Act for the correction and interpretation of the arbitral award as discussed below.
Before we get into that, we will understand the meaning of an arbitral award.
The arbitrator(s) decide on a matter and deliver their decision. This decision is known as an arbitral award. An arbitral award is analogous to a court decision and is equally enforceable. However, it is important to note that arbitral awards are final and are not appealable. There is only one option that a party has which is to set aside the award and it can be done under Section 34 of the given Act.
For an arbitral award to be valid, there are certain essential elements that have to be fulfilled.
An arbitral award can be of a non-monetary nature where the claimant’s entire claim fails and no money needs to be paid by either party.
An arbitration award can be made:
- For payment of a sum of money;
- For a declaration upon any matter to be determined in the arbitration proceedings;
- injunctive relief;
- Specific performance of a contract and for rectification; or for
- Setting aside or cancellation of a deed or other document etc.
Essentials of an arbitral award
For an arbitral award to be valid it must contain the following essential elements:
- The award shall be in writing.
- The award shall be signed by all the members of the arbitral tribunal.
- The award shall state the reasoning on which it is based.
- Date and place of arbitration should be mentioned on the award.
- A signed copy of the award should be sent to both the parties. It should be signed by the arbitrator or the majority of the arbitrators of the tribunal.
There are cases where an interim award is necessary and can be provided. Section 33 plays an important role to ensure that the parties do not suffer due to the mistakes of the arbitration tribunal. This section is divided into two parts-
- The first part from sub-section 1 to 3, provides from the correction and interpretation of an arbitral award.
- The second part from sub-section 4 to 7, provides for the granting of an additional award.
Correction and Interpretation of arbitral award
Correction and interpretation of an arbitral award is a post-award process. The arbitration law is based on the UNCITRAL model law (The United Nations Commission on International Trade Law).
Section 33 of the Arbitration and Conciliation Act, 1996 is the statutory provision that allows for correction and interpretation of an award.
The important reason here is that human errors can occur. This means that there are situations when there are errors in an arbitral award. These errors could be simply typing errors or something major such as a decision missing from the proceedings in the final award. These kinds of errors put one party at a disadvantage. These errors are unacceptable as the award, once granted, is not up for appeal.
After paying for arbitral proceedings and investing time in it both the parties would expect a well-drafted and considered arbitral award to be granted. A mistake in the award is disappointing; it creates problems during the enforcement of the award.
The above-mentioned points indicate the importance of Section 33. Many other countries have a similar provision to aid parties and to rectify any mistakes that might have occurred. For example, English Arbitration Act 1996, Section 57, provides that a tribunal may, on its own initiative or on the application of a party, correct an award to “remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award”.
However, it is pertinent to note that the request for correction or interpretation of an award does not reopen the proceedings. The evidence and arguments have already been verified, interpreted and understood. No proceedings are repeated. Only the examination of the arbitral award takes place. No rehearing will take place.
Section 33(1) of the Arbitration and Conciliation Act
This sub-section states that:
(1) Within thirty days from the receipt of the arbitral award, unless another time period 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 errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.
A limitation period of 30 days is put on the application submitted. After the completion of 30 days, no party can request correction or interpretation.
It is also important to notice that one party who wants to move under Section 33 does not need the consent of the other party. It is only important that the other party is notified if any such proceeding is being applied for by the other party.
Clause (a): This clause includes any basic human error that might occur during the drafting of the award. Drafting errors can be corrected easily. This is an important provision because if such errors are ignored then they can lead to a change in the meaning of the ruling and can stir trouble during enforcement.
The language of the statutes uses the word ‘computational errors’. On the face of it, it can mean that errors related to calculation and arithmetic are being considered. However, the language is such that its meaning can be extended to include the methods that are used to carry out calculations.
This way, the scope of the statute can be expanded because calculation would be restricted to include only numbers but computation can comprise of the methods and steps/procedure used to arrive at those numbers.
Clause (b): This clause mentions interpretation of an arbitral award. The only problem that is faced by parties is that there are very few situations when both parties have an issue with the meaning conveyed by the arbitral award. It creates problems if one party agrees and the other party does not.
In cases where both the parties agree, it can be used for an interpretation conveying the clear meaning of the arbitral award for better enforcement of the same.
Section 33(2) of the Arbitration and Conciliation Act
This sub-section puts a time cap on the passing of the interpretation by the arbitral tribunal if the request under section 33(1) is accepted. The arbitration tribunal has to provide the interpretation within 30 days of receiving the receipt of the request. The interpretation becomes part of the arbitral award. An additional award is not passed in this case.
Section 33(3) of the Arbitration and Conciliation Act
This sub-section clarifies that correction and interpretation can take place if:
- It is requested by the parties; or
- The arbitral tribunal themselves correct the mistakes related to the categories mentioned under sub-clause 1 of Section 33.
Section 33(4) of the Arbitration and Conciliation Act
This sub-section states that:
Unless otherwise agreed by the parties, a party with notice to the 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.
In situations where a part of the proceedings has been left out, an additional award is given by the arbitration tribunal to make up for that loss. The additional award is supposed to have corrected the mistake by including the missed out part of the award.
The main difference to be noted in a correction/interpretation given and an additional award given is that:
- The correction and interpretation made, merges with the original award. This is because there are only calculative or clerical changes to be made.
- An additional award by its name itself implies that another award is granted. This award does not merge with the original award.
The ambit and scope of sub-section (4) of Section 33 of the Arbitration and Conciliation Act, 1996 was considered by the Supreme Court in Mcdermott International Inc. v. Burn Standard Co. Ltd., (2006), and it was held as follows:
Sub-section (4) empowers the Arbitral Tribunal to make additional arbitral award in respect of claims already presented to the Tribunal in the arbitral proceedings but omitted by the Arbitral Tribunal provided:
- There is no contrary agreement between parties to the reference;
- A party to the reference, with notice to the other party to the reference, requests the arbitral tribunal to make the additional award;
- Such request is made within 30 days from the receipt of the arbitral award;
- The arbitral tribunal considers the request so made justifies; and
- Additional arbitral award is made within sixty days from the receipt of such request by the arbitral tribunal (sub-section 5).
It is also possible for the tribunal to extend this time cap if it deems necessary on the basis of reasonable grounds (sub-section 6).
Relation between Section 33 and 34
Section 34 of the Arbitration and Conciliation Act, 1996 provides for setting aside of the arbitral award.
On careful reading of both the sections together, one can say that when a party is not satisfied with the arbitral award granted then they move to correct and interpret the award or try to acquire an additional award. However, the party may find these means to be insufficient. In such cases, the parties move to set aside the award- which means, to invalidate the granted award.
Under Section 34(3)- a party cannot file for setting aside of the award after 3 months have passed from the day that a request under Section 33 was disposed of. This is subject to the satisfaction of the court- the court should be convinced that such an application was disposed of on the basis of reasonable grounds.
After careful reading of the article, it is safe to conclude that Section 33 is a very important part of the Arbitration and Conciliation Act, 1996. This is because it plays a major role in protecting the interests of the parties and in preventing the arbitral tribunal from making mistakes. It ensures transparency in the process and ensures that no party suffers harm due to the mistakes of the arbitration tribunal.
To further ensure that the parties are not taken advantage of, a time-cap is placed upon the proceedings so that there is no wastage of time and money. This way the objective of choosing arbitration over traditional methods of dispute resolution is protected.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: