Avoiding Serious Defects in Arbitral Awards: Updation of Checklist on drafting Arbitral Awards

Recently, the Delhi High Court in Eco Green Buildtech Pvt. Ltd. Vs. Vikartan Infrastructure Pvt. Ltd. set aside an arbitral award on two grounds.

• One, the arbitrator used his personal knowledge in deciding on a particular claim. This use of personal knowledge denied full opportunity to the petitioner to deal with the same. 
• The second ground was the use of the Hudson formula to decide on a claim for loss of profit without any evidence having been adduced by the Respondent Claimant.

In a recent paper published by the India International Arbitration Centre, I came up with a checklist of about 70 items that arbitrators should take care of while writing arbitral awards. Item 32 of the Checklist states: "Whether analysis proceeds in the following manner: facts, law/ contract, application of law to facts, and conclusion?" Item 33 of the checklist states: "Whether the award deals with any argument or judgment which has not been raised or cited by the parties?"

If the arbitrator who wrote the award in the matter had taken care of these two items in the checklist, perhaps the defects which led the award to be set aside could have been avoided.

Given the number of awards set aside on the ground of lack of evidence in support of an awarded claim, a separate entry in the checklist is perhaps warranted. This separate entry will also act as a caution to arbitrators not to decide individual claims without evidence even if they rely on a formula.

I have updated the checklist by adding an Item after Item 32 and renumbering the checklist. The renumbered Item 33 reads: "Whether the arbitral awards decides on each claim/ counter-claim based on evidence and whether the evidence is clearly identified and evaluated?"

Now there are now 71 Items in the Checklist for Arbitral Awards, which can be downloaded from here. It would do well for arbitrators and arbitral institutions to use such a checklist for ensuring that arbitral awards are of the highest quality.

Reciprocal Provisions under S 44 of the Arbitration & Conciliation Act, 1996

Over the last decade, we have been receiving queries regarding jurisdictions which are declared under Section 44(b) of the Arbitration and Conciliation Act, 1996. Readers have also sought copy of the notifications. This post seeks to put an end to all the queries. Available notifications can be accessed from here and here. The list of jurisdictions which are recognised through gazette notifications is given below. Rarely, awards/ arbitrations in some jurisdictions were indirectly recognised by courts even though the point regarding notification may not have been raised is also given. 

S. No.	Country/ Jurisdiction	Gazette Notification Ref.	Judgment Reference
1	Australia	Ministry of Law & Justice Notification No. SO 2252(E) dt. 12.09.2008
2	Austria	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972
3	Belgium	Ministry of Commerce & Supplies Notification No. S.O. 290 (E) dt. 28.04.1980
4	Botswana	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
5	Bulgaria	Ministry of Foreign Trade Notification No. S.O. 428 (E) dt. 14.06.1972
6	Canada	Ministry of Law & Justice Notification No. SO 327(E) dt. 26.03.2003
7	Central African Republic	Ministry of Commerce No. S.O. 85 (E) dt. 03.02.1983
8	Cuba	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
9	Denmark	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
10	Dubai		Mulheim Pipecoatings GmbH. vs. Welspun Fintrade Limited and Ors. (16.08.2013 - BOMHC) : MANU/MH/1285/2013
11	Ecuador	Ministry of Foreign Trade Notification No. S.O. 428 (E) dt. 14.06.1972
12	Egypt	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
13	Finland		Finnish Fund for Industrial Corporation Ltd. vs. VME Precast Pvt. Ltd. and Ors. (14.10.2020 - MADHC) : MANU/TN/5710/2020
14	France (Paris)		W.P.I.L. vs. NTPC Ltd. and Ors. (16.01.2009 - DELHC) : MANU/DE/0078/2009
15	German Democratic Republic	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
16	Ghana	Ministry of Commerce No. S.O. 282 (E) dt. 16.05.1973
17	Greece	Ministry of Foreign Trade Notification No. S.O. 428 (E) dt. 14.06.1972
18	Japan	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972	Aksh Optifibre Ltd. vs. Shin Etsu Chemical Co., Ltd. and Ors. (12.01.2005 - RAJHC) : MANU/RH/0032/2005
19	Kuwait	Ministry of Commerce No. S.O. 86 (E) dt. 03.02.1983 & Ministry of Law & Justice Notification No. GSR894(E) dt. 06.12.2022 (published on 22.12.2022), MANU/LAFF/0034/2022
20	Malagasy Republic	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
21	Malaysia	Ministry of Law & Justice Notification No. SO 754(E) dt. 11.08.2000
22	Mauritius	Ministry of Law & Justice Notification No. SO 1881(E) dt. 13.07.2015
23	Mexico	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
24	Morrocco	Ministry of Commerce No. S.O. 282 (E) dt. 16.05.1973
25	Nigeria	Ministry of Commerce No. S.O. 282 (E) dt. 16.05.1973
26	Norway	Ministry of Foreign Trade Notification No. S.O. 428 (E) dt. 14.06.1972
27	People's Republic of China (including Hongkong SAR &  Macao SAR	Ministry of Law & Justice Notification No. SO 580(E) dt. 19.03.2012
28	Philippines	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972
29	Poland	Ministry of Commerce Notification No. S.O. 1238 dt. 29.02.1968
30	Rumania	Ministry of Foreign Trade Notification No. S.O. 428 (E) dt. 14.06.1972
31	San Marino	Ministry of Commerce Notification No. S.O. 84 (E) dt. 03.02.1983
32	Singapore	Ministry of Law & Justice Notification No. SO 542(E) dt. 06.07.1999
33	Sweden	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972
34	Switzerland		Pasl Wind Solutions Private Limited vs. GE Power Conversion India Private Limited, [2021] 4 S.C.R. 532 : MANU/SC/0295/2021(strictly, not a decision enforcing a foreign award)
35	Syria	Ministry of Commerce, Supplies & Co-operation Notification No. S.O. 2920 dt. 25.09.1978
36	Tanzania	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972
37	Thailand	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972
38	The Netherlands	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972
39	Trinidad & Tobago	Ministry of Commerce No. S.O. 42(E) dt. 07.01.1978
40	Tunisia	Ministry of Commerce No. S.O. 282 (E) dt. 16.05.1973
41	United Kingdom	Ministry of Commerce No. S.O. 4302 dt. 25.10.1976
42	United States of America	Ministry of Foreign Trade Notification No. S.O. 732 (E) dt. 24.11.1972	International Nut Alliance LLC vs. Johns Cashew Company (09.12.2021 - KERHC) : MANU/KE/3139/2021; Integrated Sales Services Limited  vs.  DMC Management Consultants Ltd. and Ors. (18.04.2016 - BOMHC) : MANU/MH/0557/2016

 In case readers come across other jurisdictions relating to this, please let us know.

Defective Petitions to Challenge Arbitral Awards: Delhi High Court Settles the Law

 There have been numerous judgments on whether particular classes of defects in petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (1996 Act) for challenging arbitral awards make the petitions "non-est" in the eyes of law. Consequence of holding a petition invalid in the eyes of law means that time specified for filing challenge petitions in S. 34 would continue to run, notwithstanding filing of such incurably defective petitions. 

A Full Bench of the Delhi High Court has, on 07.02.2025, settled the law in Pragati Construction Consultants v UoI, 2025:DHC:717-FB. Para 97 of the judgment summarises the decision of the Full Bench on points of law and is quoted below:

"97. We summarise our answer to the Reference, as under:

a) Non-filing of the Arbitral Award alongwith an application under the Section 34 of the A&C Act would make the said application liable to be treated and declared as non-est, and the limitation prescribed under Section 34(3) of the A&C Act shall continue to run in spite of such filing;

b) Mere non-filing of the Statement of Truth or a defect in Statement of Truth being filed, that is, including with blanks or without attestation, would not ipso facto, make the filing to be non-est. However, if accompanied with other defects, the Court may form an opinion, based on a cumulative list of such defects, that the filing was nonest;

c) Similarly, non-filing or filing of a defective Vakalatnama; the petition not being signed or properly verified; changes in the content of petition being made in form of addition/deletion of facts, grounds, or filing of additional documents from arbitral record, or filing with deficient court fee, each of these defects, individually would not render to filing of an application under Section 34 of the A&C Act to be treated and declared as non-est. However, presence of more than one of such defects may, in the given set of facts involved in a case, justify the conclusion of the Court that filing of the application was never intended to be final and therefore, is liable to be declared non-est."   

Stereotyping & Setting Aside Arbitral Awards: Why East Asia was Correctly Decided

Why are cliches a problem? They are an issue because they amount to stereotyping. What is a stereotype? It is regarded as an over-generalised belief about something. In India, there is an over-generalised beliefs that arbitral awards should not be set aside at all. That is not correct. 

"Nonsense" A decision with scant regard for contract or law cannot pass off as an arbitral award. [Note that the word "nonsense" is being used here to signify how rude and bad it looks. A pleading drafted by a foreign law firm used the term "nonsense" on a contention by the other side. What happened to courtesy? But then, for some, whatever foreign law firms, especially of the first world, do is gospel truth and good to emulate!- another stereotype. Litigation or arbitration is not a fish market with disputing parties hurling choicest of abuses against each other. One has to show grace and courtesy in submissions.]

Almost a decade back, while discussing the case of Sumitomo Heavy Industries v ONGC, we had argued in this blog as follows:

"Though the SC's decision seems to be reasonable, it is sad that the court did not consider the law on the liability of a contractual party to bear increase in costs due to change of law during the currency of the contract. This is the problem with arbitration. The courts are forced to rule on whether the award was perverse or not rather than consider what should actually be the law on the issue. The main issue is taken outside the realm of the court. Essentially what the court has stated here is that Article 17.3 could either be narrowly construed like the Division Bench wanted it to be or broadly constructed as was done by the arbitrator. But what is the true law?" (emphasised)

In the same year, we did another post titled "Norm Creation (ADR) and Arbitration" (2010). A summary of the post is important to understand the context of this post and is as under:

• The judiciary performs the important function of amplificiation of law. Amplification of law refers to the judiciary’s functions of filling the gaps that the statute leaves, making law in the absence of a statute, resolving contradictions in statutes and updating the law after taking into consideration the latest developments (such as those of technology, etc).
• This function of amplification of law does not take place in private arbitration for a few reasons. One reason is that there are no incentives for the arbitral tribunal to produce precedents as there exists difficulty in establishing property rights over them.
• The second problem with private arbitration is that the absence of review on merits of the award may lead to the production of inconsistent decisions on the same question of law leading to uncertainty of law. This would mean that parties would never predict outcomes of disputes and this would discourage settlement of disputes. The law in such a situation will be indeterminate and inaccurate.

Interestingly, many reputed commentators on arbitration law have highlighted the above aspects. In a lecture titled "Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration", Right Hon. The Lord Thomas of Cwmgiedd, Lord Chief Justice of England and Wales (2016)  highlighted how arbitration had the potential in bring about uncertainty in commercial law by taking away cases from national courts. The lecture merits reading.

In short, arbitration law's limited error correction function creates a potentially uncertain position in law. An award would not be set aside if two plausible views in the case as to contract interpretation are possible. But what is the correct interpretation? In a jurisdiction like India where law as applied to facts is nascent, especially in the context of contract law, courts perform an important function of amplification of law and making the law more certain. This is the reason why a sort of balance is maintained in purely domestic arbitrations by retaining the ground of patent illegality in Section 34(2A). This function is important. In the past, the Supreme Court has donned the role of error corrector and decided on the correctness of arbitral awards. See, for instance, National Highways Authority of India v. Progressive-MVT (JV) 2018(2) Arb LR 111 (SC). (see this post)

Image from here

The decision in SEAMEC v OIL (2020) has to be seen in the same light. A contention similar to the one made in the arbitral award and upheld: that increase in diesel prices is a change in law is most common in construction arbitrations. Those practising on that side of commercial law would vouch that a Contractor- Claimant is sure to bring a claim on this count if there is an escalation or a change of law or a force majeure clause. Although not a construction arbitration, in this case, the Claimant brought about a similar contention. There seems to be no Supreme Court decision directly on whether such increases in diesel prices amount to force majeure or change of law or entitle the Contractor for escalation. See, for instance, Lift and Shift India Pvt. Ltd. vs. Central Warehousing Corporation (06.03.2017 - DELHC) : MANU/DE/0543/2017. [See also, The State of Bihar vs. Hardeo Singh (11.02.2019 - PATNAHC) : MANU/BH/0174/2019, Atlanta Limited and Ors. vs. Executive Engineer, Road Development and Ors. (04.05.2018 - BOMHC) : MANU/MH/1148/2018.]

Given the importance of the issue, the Supreme Court took the correct approach in settling the law once and for all. [Note that the law applied by the Supreme Court was the one prior to the 2015 amendments]. Although the court did not expressly state so, the effect of the court's judgment settles this vexatious issue. That the SC decided on an area which was uncertain is clear from the outcomes of the proceedings before the tribunal (which held that increase in price of diesel amounted to change of law for which the Contractor could claim compensation) and the High Court (where it was held otherwise). The High Court had also committed the error of conflating the basis of change of law clause with the force majeure clause, which the Supreme Court corrected.

The SC held that fluctuations in price of certain items which a prudent contractor would have to take into consideration while bidding cannot be brought within the scope of the change of law clause unless specific language pointed out to such an inclusion (Para 30) and that the "liberal" construction afforded by the Tribunal to Clause 23 to hold that change in the price of diesel was a change in law was incorrect.

The law is now certain. No more can unscrupulous persons bring about a claim for increase in diesel prices under the change of law clause. Had this clarity not been there, what would have happened? In almost every dispute under works contracts with a change of law or a general escalation clause (which does not encompass increase in diesel prices), Contractors would have brought about a claim on account of increase in diesel prices. The marginal cost of defending an additional claim and of deciding an additional claim would be incurred by the parties. Imagine if such costs are incurred in several arbitrations arising out of works contracts all over India. It could potentially run to crores of rupees. Now, because to the clarity afforded by the Supreme Court, an unscrupulous Contractor or an advocate would think twice before making a claim on account of change in diesel prices. Even if made, the Tribunal would (and is obligated to) award costs on the other side for such bogus claims.

Thus, it is submitted that the SC had rightly set aside the arbitral award. We found many write-ups on the decision, especially from law firms, simply parroting that the SC was not correct in setting aside the arbitral award or similar cliches. There should be deference to the arbitral process but that deference is only for the purpose of facilitating commercial dispute resolution. Such deference cannot be at the cost of certainty in law. Legal certainty affords clear direction to future course of conduct. 

Parties should expend their money on value creation rather than bickering on such issues merely because one party wants to "take a chance" to see if the tribunal can award the claim and because the (uncertain) law allows her to do so. 

What Qualifies as an Interim Award? Guest Post

[In this interesting guest post, Mr. Sameer Sharma and Mr. Rajat Sharma criticise the decision of a Supreme Court rendered more than two decades back relating to Interim awards. Both Mr. Sameer Sharma and Mr. Rajat Sharma are final year students at NLU Jodhpur. Happy reading!]

REVISITING SATWANT SINGH SODHI v. STATE OF PUNJAB & ORS.: AN INHERENT CONTRADICTION IN THE UNDERSTADING ACCORDED TO AN “INTERIM AWARD”.

-          Sameer Sharma and Rajat Sharma[1] 

In Satwant Singh Sodhi v. State of Punjab and Ors. (“Satwant Singh Sodhi”),[2] the Supreme Court (“SC”) addressed as to what would be the effect, purport and validity of an interim arbitral award after a final arbitral award is rendered in an arbitral proceeding. As a matter of context, it would be sufficient to note that the arbitrator in the facts of the said case had rendered an interim award dated 26.11.1992 relating to a particular issue (addressed as Item No. 1 in the said proceeding) in favour of the Appellant (rank of parties as before the SC). In relation to such issue, the arbitrator had awarded a sum of Rs. 7.45 lacs with interest at 18% compounded yearly from 01.02.1981 to 15.03.1992. Subsequent to the rendering of this interim award, the arbitrator rendered a second award dated 28.01.1994, by which Rs. 3.75 lacs with an interest of 12% per annuum with effect from 01.02.1981 to 15.03.1992 was awarded. It is important to bear in mind that this second award was regarding the subject-matter which was inclusive of the first award.

With this being the factual composition, the issue before the SC was as to what would govern the field – whether it would be the first of the two awards or would it be the second award. The SC’s observations on this issue are required to be noted, which are as follows: -[3]

“6. The question whether interim award is final to the extent it goes or has effect till the final award is delivered will depend upon the form of the award. If the interim award is intended to have effect only so long as the final award is not delivered it will have the force of the interim award and it will cease to have effect after the final award is made. If, on the other hand, the interim award is intended to finally determine the rights of the parties it will have the force of a complete award and will have affect even after the final award is delivered. The terms of the award dated November 26, 1992 do not indicate that the same is of interim nature.”

Therefore, the SC ruled that the real effect and purport of an interim award would depend on the contents and wording of the interim award itself. Whether an interim award would be an independent award, being absolute and completely final in its determination of the rights and liabilities of parties, would be a question to be answered by perusing the award itself. As a corollary, it could also be the case that an interim award would be operative and effective only until the final award is rendered. Both the said eventualities would be the result of the wording of the interim award in question. On the facts of the case, the SC ruled that the interim award was absolute and final in nature regarding the issue it dealt with, owing to which it continued to have effect despite the passage of the final award.

A look at the prevailing jurisprudence and case-law reveals that the dictum in Satwant Singh Sodhi has become a qualitative main-stay in assessing as to what decisions qualify as interim awards.[4]. This is notwithstanding the fact that the said judgement was rendered under the Arbitration Act, 1940. The latest instance of validation of and deference to the dictum in Satwant Singh Sodhi appears in the Bombay High Court decision in Aero Club v. Solar Creations Pvt. Ltd.[5]. However, despite such continued judicial deference to and reliance upon Satwant Singh Sodhi, the authors opine that the dictum contained in the said decision is fundamentally contradictory to the notion of an interim award. Hence, the purpose of this write-up is to demonstrate as to how a judgement rendered in 1999, which has become the locus classicus on the temporal effectiveness of an interim award, is intrinsically antithetical to the concept of such award. This inherent contradiction stems from three reasons, which are explained hereinbelow.

 A.    The nature of and consequences ensuing from an “interim award”.

Section 2(1)(c) of the Arbitration and Conciliation Act, 1996 (“A&C Act”), defines an “arbitral award” to “include an interim award”. Unlike the Arbitration Act, 1940, the A&C Act in its definitional provision equates an interim award to an arbitral award. Further, if reference is made to Section 31(6) of the A&C Act, it may be seen that an arbitral tribunal may make “an interim award on any matter with respect to which it may make a final arbitral award”. Thus, the nature of issues and matters upon which an interim award may be made is the same as those on which a final award may be made. Textually, the scope and purport of an interim award is sought to be brought on par with that of a final award. In fact, this parity between an interim award and a final award may be discerned by referring to the SC’s decision in McDermott International Inc. v. Burn Standard Co. Ltd. & Ors.[6] The SC in the said decision states as follows: “An interim award in terms of the said provision is not one in respect of which a final award can be made, but it may be a final award on the matters covered thereby, but made at an interim stage”.[7] Therefore, it would not be incorrect to state that an interim award has the same effects and consequences that a final award would have.[8] In relation to such effects, the SC in Satish Kumar & Ors. v. Surinder Kumar & Ors.[9] relied on an unreported decision of the same Court in Uttam Singh Dugal & Co. v. Union of India,[10] to state that an award inherently possesses certain legal value and identity.[11] The Court stated that all claims between parties which are the subject-matter of a reference to arbitration, merge in the award which is rendered.[12] The effect of this is such that rights and liabilities of parties in respect of such claims can be determined only on the basis of such award.[13] No action may be started on the original claims which were the subject-matter of such arbitration.[14] Such award may be relied upon in a subsequent litigation between the parties relating to the same subject-matter.[15] Thus, an arbitral award possesses certain preclusive effects. If an “arbitral award” were to possess these effects, it stands to reason that an “interim award” would also possess the said effects. However, the notion of an interim award and the idea of transient finality attached to such award, as propounded in Satwant Singh Sodhi, appear to denude the legal identity and significance of such award. The preclusive and res judicata effects of an interim award are rendered illusory and toothless, depending solely on the whim of the arbitrator and the wording of the interim award. By stating that an interim award may be superseded by a later (final) award, due importance and recognition has not been accorded to the notion of an interim award. Such proposition of law is emblematic of a “form-over-substance” approach. This legal position relating to interim awards is such that it breeds uncertainty and lacks predictability. An illustration may be provided in this regard – suppose an interim award were to be rendered, the wording of which is such that the said award would be effective till the rendering of the final award. The party aggrieved of such award would be in two minds whether to have such award set-aside or to wait till the final award to discover the fate of the interim award. If the aggrieved party were to bite the bullet and prefer an application to set-aside the interim award, the very efficacy and validity of such setting-aside proceeding could come into question later on when the final award were to materially alter the interim award. Additionally, because of the aforesaid exposition in Satwant Singh Sodhi, there has been unnecessary litigation regarding the scope and validity of an interim award when a final award purporting to affect such interim award is rendered.[16] This fosters uncertainty.

In fact, by characterising an interim award in the way the SC has done in Satwant Singh Sodhi, the parity between such award and a final award as sought to be established under the A&C Act, is rendered futile.

While the foregoing analysis pertains to the critique of Satwant Singh Sodhi in relation to the A&C Act, the authors contend that the said dictum is violative of the notion of an interim award even under the Arbitration Act, 1940. As has been noted earlier, the definitional provision in the Arbitration Act, 1940 [Section 2(b)], merely defines an “award” to “mean an arbitral award”. This is unlike Section 2(1)(c) of the A&C Act, which defines an “arbitral award” to “include an interim award”. Furthermore, the Arbitration Act, 1940, lacks a provision akin to Section 31(6) of the A&C Act, which states that an arbitral tribunal may make “an interim award on any matter with respect to which it may make a final arbitral award”. Therefore, considering the absence of relevant provisions in the Arbitration Act, 1940, to adequately recognise and equate an interim award with a final award, it could be argued that the rationale in Satwant Singh Sodhi is tenable and warranted. To put it differently, it could be argued that there was enough legislative legroom for the SC in the said case to conceptualise the effects of an interim award in the way that it did; that because there was a lack of concrete legislative recognition of an interim award under the 1940 Act, the SC could bestow the element of transient finality to an interim award. However, that would be a legally incorrect assessment of the legislative framework under the Arbitration Act, 1940. Even though the Arbitration Act, 1940, might be devoid of provisions such as Sections 31(6) and 2(1)(c) of the A&C Act, Section 27 of the 1940 Act adequately makes up for such absence.[17] Section 27 of the 1940 Act is entitled, “Power of arbitrators to make an interim award”. Section 27(1) provides arbitrators with the power to make an interim award. More crucially, however, Section 27(2) states that, “All references in this Act to an award shall include references to an interim award made under sub-section (1)”. Thus, there was sufficient legislative recognition given to an interim award under the 1940 Act.[18] The said Act, in fact, went a step further and established parity between an interim award and a final award as well. Therefore, due to reasons as are applicable under the A&C Act, the dictum in Satwant Singh Sodhi cannot co-exist even under the 1940 Act.

 B.     The elements of “Finality” and “Conclusiveness” attached to an “Interim Award”.

It is now settled law that an interim award is a decision or a determination which conclusively and finally settles an issue or a matter with respect to which the parties were at dispute.[19] While different judgements characterise an interim award differently,[20] in essence, such award may be described to be as follows: -

(i)                 It is a decision or a determination by an arbitral tribunal;

(ii)               rendered in accordance with the form and content requirements under Section 31 of the A&C Act;

(iii)             which “conclusively” and “finally” decides or disposes of;

(iv)             any issue(s) or matter(s) at which parties to the arbitration are at dispute, or which is/are the subject-matter of adjudication between the parties (for example, claims and counterclaims).

Thus, decisions dealing, inter alia, with claims and counterclaims raised by parties forming the fulcrum of the subject-matter of an arbitration, with the issue of whether a claim is time-barred,[21] with questions of liability and damages, typically qualify as interim awards. Decisions on questions relating to the jurisdiction of the arbitral tribunal do not qualify as interim awards as they are covered under Section 16 of the Act. Further, orders having a bearing on the procedure of an arbitration, or even procedural orders purporting to determine certain valuable rights of parties, albeit final, do not qualify as interim awards.[22] For example, an order either accepting or rejecting a party’s request to place on record additional documents does not amount to an interim award.[23]

From the above delineated characteristics, it can be seen that the “finality” and the “conclusiveness” of a decision form two important elements of an interim award. Given the significance attached to these two components, it is difficult to reconcile the same with the transient notion of an interim award, as contained in Satwant Singh Sodhi. If a decision is such that it finally and conclusively determines certain issues forming the subject-matter of an arbitration, how is it that by mere playful wording of the arbitrators such decision would lose its essence of finality and conclusiveness? The issue as to whether a decision amounts to an interim award is, though by its nature fact-based,[24] a binary enquiry – either it is, or it is not an interim award. It would be of grave contradiction and bewilderment to state that a decision is an interim award, but would be final, conclusive and possess preclusive effects only until a final award is passed. If such were to be the case, then such decision should never qualify to be an “award” in the first place – its ephemeral nature is such that it must rather qualify to be an order.

However, despite such inherent contradictions, the dictum in Satwant Singh Sodhi continues to form part of the jurisprudence relating to the qualitative constituents of an interim award. The authors opine that such contradiction is in no way reconcilable with the ethos and nature of what truly constitutes an interim award. Therefore, in their respectful submission, the authors opine that the decision of the SC in Satwant Singh Sodhi requires a thorough relook and a serious reconsideration.

 C.    The Arbitral Tribunal becomes functus officio in relation to the “Interim Award”.

As stated in the previous part of this write-up, a decision to qualify as an interim award must necessarily comprise certain requisite characteristics. One such characteristic feature which is closely related to the “finality” and “conclusiveness” of interim awards is the fact that upon the rendering of such award, the arbitral tribunal becomes functus officio in relation to such award.[25] In fact, the SC in Satwant Singh Sodhi also states that, “once an award has been given by the arbitrator he becomes functus officio”.[26] The effect of the application of this doctrine is such that once an “award” has been rendered, the arbitrator cannot revisit and reconsider his/her findings and determinations under such award.[27] The utility of this doctrine can be seen in the fact that it ensures that the determination of rights and liabilities between parties is given finality and is respected. If such determinations were to remain inherently temporary, then parties’ interests would be jeopardised owing to uncertainty and lack of clarity. Furthermore, the aforesaid doctrine ensures that rules and laws relating to limitation are applied and followed in a certain and systematic manner.

However, despite the recognition of the doctrine of functus officio within the conception of an interim award, the dictum enunciated in Satwant Singh Sodhi still persists. It is perplexing to comprehend as to how the doctrine of functus officio can co-exist with the transient nature of an interim award as laid down in Satwant Singh Sodhi. The ramifications ensuing from the said doctrine are by no means trivial. They are substantive in nature as they pertain to rights and liabilities of parties,[28] and they fundamentally affect the remit of an arbitrator’s functions and responsibilities. That being the case, the dictum in Satwant Singh Sodhi is such that it renders the effects flowing out of an interim award completely malleable. Therefore, the authors are of the view that once an arbitrator renders an interim award, he/she must be precluded from revisiting the determinations and decisions which are the subject-matter of such award. Unless this were to be the understanding accorded to an interim award, the very existence of the notion of such award under the A&C Act would be defeated.

In light of the foregoing, the authors argue that the law laid down in Satwant Singh Sodhi is fundamentally antithetical to the concept of an “interim award”, both under the 1940 and 1996 arbitration legislations. Owing to this, the said judgement must be either judicially or legislatively overruled. 

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[1] Fifth-year students at National Law University, Jodhpur, India.

[2] Satwant Singh Sodhi v. State of Punjab and Ors, MANU/SC/0212/1999.  

[3] Id., para 6.

[4] Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products, (2018) 2 SCC 534; Aero Club v. Solar Creations Pvt. Ltd., 2020 SCC OnLine Bom 472; NTPC v. Siemens Atiengesellschaft, MANU/DE/0765/2005; RK Industries v. Maximus International General Trading LLC, Dubai, MANU/RH/1064/2018; Surjit Singh & Ors. v. Tarlok Singh & Ors., MANU/PH/0674/2013; Damani Construction Company v. State of Arunachal Pradesh and Ors., MANU/GH/0670/2005; he Union of India v. Best Cast Construction Pvt. Ltd., MANU/KA/2940/2014; Harinarayan G. Bajaj v. Sharedeal Financial Consultants Pvt. Ltd. & Ors., MANU/MH/0864/2002; Gammon India Ltd. v. Sankaranarayana Construction (Bangalore) Pvt. Ltd., MANU/TN/3737/2009

[5] Aero Club v. Solar Creations Pvt. Ltd., 2020 SCC OnLine Bom 472.

[6] McDermott International Inc. v. Burn Standard Co. Ltd. & Ors., (2006) 11 SCC 181.

[7] Id., para 68.

[8] The Delhi High Court in NTPC v. Siemens Atiengesellschaft [MANU/DE/0765/2005], stated that, “there is no comprehensive definition of ‘award’ in the Act, except that contained in Section 2 despite consequences of great importance resulting from an arbitral award”.

[9] Satish Kumar & Ors. v. Surinder Kumar & Ors., (1969) 2 SCR 244.

[10] Uttam Singh Dugal & Co. v. Union of India, Civil Appeal No. 162 of 1962, judgement delivered on 11.10.1962.

[11] Satish Kumar & Ors. v. Surinder Kumar & Ors., (1969) 2 SCR 244, para 9. The Court stated that – “…an award has some legal force and is not a mere wastepaper”.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] See for instance Damani Construction Company v. State of Arunachal Pradesh and Ors., MANU/GH/0670/2005; The Union of India v. Best Cast Construction Pvt. Ltd., MANU/KA/2940/2014, para 19 – “Though point No. 1 has been answered in the affirmative i.e. in favour of revision petitioner, point No. 2 becoming academic, same is also answered since it is found that said issue is coming up before trial courts quite often”.

[17] Gammon India Ltd. v. Sankaranarayana Construction (Bangalore) Pvt. Ltd., MANU/TN/3737/2009, para 15.

[18] Id.

[19] Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products, (2018) 2 SCC 534; ONGC Petro Additions Limited v. Tecnimont S.P.A. & Anr., O.M.P. (Comm) 196/2019, judgement on 01.07.2019; McDermott International Inc. v. Burn Standard Co. Ltd. & Ors., (2006) 11 SCC 181; Aero Club v. Solar Creations Pvt. Ltd., 2020 SCC OnLine Bom 472; NTPC v. Siemens Atiengesellschaft, MANU/DE/0765/2005; J.P. Glass Industries v. Pramode Kumar Nathani, MANU/WB/0856/2014; Karam Chand Thapar and Bros (CS) Ltd. v. National Hydroelectric Power Corp. and Ors., MANU/DE/2685/2009; The Union of India v. Best Cast Construction Pvt. Ltd., MANU/KA/2940/2014; Tamil Nadu Water Supply and Drainage Board v. Aban Constructions & Ors., MANU/TN/0914/2001; Liberty Shoes Limited v. Harish Kumar Gupta & Ors., MANU/PH/1043/2006; Harinarayan G. Bajaj v. Sharedeal Financial Consultants Pvt. Ltd. & Ors., MANU/MH/0864/2002.

[20] Id.

[21] Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products, (2018) 2 SCC 534.

[22] ONGC Petro Additions Limited v. Tecnimont S.P.A. & Anr., O.M.P. (Comm) 196/2019, judgement on 01.07.2019.

[23] Id.

[24] Aero Club v. Solar Creations Pvt. Ltd., 2020 SCC OnLine Bom 472.

[25] NTPC v. Siemens Atiengesellschaft, MANU/DE/0765/2005; Harinarayan G. Bajaj v. Sharedeal Financial Consultants Pvt. Ltd. & Ors., MANU/MH/0864/2002; Aero Club v. Solar Creations Pvt. Ltd., 2020 SCC OnLine Bom 472.

[26] Satwant Singh Sodhi, para 7.

[27] U.P. Power Corporation Ltd., Lucknow v. Universal Insulators of Ceramics Ltd., Rae Bareli, (2006) 3 All LJ 10 (DB).

[28] Thirumalai Chemicals Ltd. v. Union of India, (2011) 6 SCC 739.