Arbitral Awards: Supreme Court Asks Law Commission to Fix Delays

The Supreme Court on Wednesday asked the Law Commission of India to study why arbitral awards take years to enforce and to recommend fixes. The request came in a judgment by Justices Vikram Nath, Sandeep Mehta and Aparesh Kumar Singh in a dispute between Iraq-based Royal Construction Company and National Projects Construction Corporation, where an award passed in 2002 was still being fought over more than 24 years later, LiveLaw reported. The Registry has been told to send a copy of the judgment to the Commission’s chairman.

Winning an Award Is Not the Same as Being Paid

Nothing changes in the law today; the Court has only referred the question to the Commission. But the order points at a problem businesses know well: a party that wins in arbitration can still face another round of litigation before it sees any money. The Court said “the promise of arbitration remains unfulfilled” in that situation.

It named four areas for the Commission to examine: finding and disclosing the award-debtor’s assets, coordinating the different modes of execution, handling repeated or delaying objections, and the time taken to finish execution.

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How a 2002 Award Got Stuck in Execution

Under Section 36 of the Arbitration and Conciliation Act, 1996, an award is enforced like a court decree, using the procedure of the Code of Civil Procedure, 1908. The Court said arbitration should be judged by whether the winning side can realise its award within a reasonable time, and not only by how fast awards are made or how narrow the grounds to challenge them are.

It also asked the Commission to consider whether domestic and foreign awards need separate enforcement procedures or one common framework with safeguards.

No Deadline Set for the Law Commission Yet

LiveLaw’s report does not mention a deadline for the Commission’s recommendations, and it does not give a next hearing date. Any change to the enforcement rules would need an amendment by Parliament. The earlier posts in our Daily Updates section track other recent Supreme Court directions to the Centre.

Source: Based on reporting by LiveLaw. No public link to the judgment text was available when this story was written.

Image: Supreme Court of India building, Wikimedia Commons.