The Significance of Form and Content in Arbitration Awards

When two parties agree to resolve their dispute through arbitration instead of going to court, the final outcome of that process is an arbitral award. But here’s what many people don’t realise – the way this award is written, structured, and documented matters just as much as the decision itself. If an arbitral award lacks proper form or content, it risks being challenged, set aside, or rendered unenforceable. That’s why the law lays down specific requirements about how an award must be drafted. In India, Section 31 of the Arbitration and Conciliation Act, 1996 governs these requirements in detail, ensuring that every award is transparent, well-reasoned, and capable of enforcement.

What does “form and content” of an arbitral award mean? 🔗

At its core, the form of an arbitral award refers to the structural and procedural requirements it must satisfy – such as being in writing, carrying the signatures of the arbitrators, and stating the date and place of arbitration. The content, on the other hand, refers to the substantive elements – primarily the reasoning behind the tribunal’s decision, the monetary relief (if any), interest calculations, and cost allocation.

Together, these elements ensure that an award is not just a final decision, but a well-documented legal instrument that both parties (and courts, if needed) can rely on. Without these safeguards, arbitration would lose its credibility as a reliable alternative to litigation.

The legal framework: Section 31 of the Arbitration and Conciliation Act, 1996 🔗

Section 31 is the primary provision governing the form and content of arbitral awards in India. It was modelled after Article 31 of the UNCITRAL Model Law on International Commercial Arbitration, 1985, which was the first international instrument to expressly lay down what an arbitral award must contain. Let’s break down the key requirements.

The award must be in writing 🔗

Section 31(1) mandates that every arbitral award shall be made in writing. This is a non-negotiable requirement. A written award creates a tangible, verifiable record of the tribunal’s decision, which is essential for enforcement, judicial review, and archival purposes. Oral awards have no legal recognition under the Indian arbitration framework.

Signatures of the arbitral tribunal 🔗

The award must be signed by the members of the arbitral tribunal. In cases where three arbitrators constitute the tribunal, Section 31(2) provides a practical safeguard – the signatures of the majority of all members are sufficient, as long as the reason for the omitted signature is stated in the award. This prevents a dissenting arbitrator from blocking the entire process by simply refusing to sign.

Date and place of arbitration 🔗

Under Section 31(4), the award must state both the date on which it is made and the place of arbitration as determined under Section 20 of the Act. The date is critical because it triggers statutory time limits – for instance, a party has only three months from the date of receiving the award to file a challenge under Section 34. The place of arbitration (also known as the “seat”) determines which country’s courts have supervisory jurisdiction over the proceedings.

Delivery of the award 🔗

Section 31(5) requires that a signed copy of the arbitral award be delivered to each party after it is made. This formal notification ensures that parties are aware of the decision and can take subsequent steps – whether enforcement or challenge – within the legally prescribed timeframes.

The requirement of a reasoned award 🔗

Perhaps the most important substantive requirement under Section 31 is found in sub-section (3): the arbitral award must state the reasons on which it is based. This is not a mere formality – it goes to the very heart of procedural fairness in arbitration.

Why reasoning matters 🔗

The requirement of providing reasons serves multiple purposes. It ensures that the arbitral tribunal has actually applied its mind to the issues at hand. It promotes transparency and accountability. And it gives the losing party a meaningful basis on which to assess whether the award can be challenged. As the Delhi High Court has observed, providing reasons for a decision is an essential attribute of any judicial or quasi-judicial process, because without reasoning, an order becomes indefensible.

Indian courts have consistently held that while an arbitrator is not expected to write a judgment as elaborate as a court’s, the award must at least contain short and intelligible explanations that connect the evidence to the conclusions. In the landmark case of Som Datt Builders Ltd. v. State of Kerala, the Supreme Court clarified that Section 31(3) is not an empty formality – the tribunal must, however briefly, explain the process leading to its conclusion.

The three-part test from Dyna Technologies 🔗

The Supreme Court’s decision in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. further refined the standard for a reasoned award. The Court held that for an award to qualify as “reasoned,” it must be proper, intelligible, and adequate. An award that merely restates the facts and claims without demonstrating any application of mind would fall short of this standard. If the award lacks these qualities, the matter may be remanded to the tribunal under Section 34(4) to cure the defects.

When reasons can be dispensed with 🔗

Section 31(3) provides two exceptions where an award need not state its reasons. First, the parties themselves may agree that no reasons are to be given. Second, when the award is made on agreed terms – meaning the parties have reached a settlement and simply want the tribunal to formalise it as an award under Section 30. In the case of Mutta International v. Nandnandan Silk Mills Pvt. Ltd., the Bombay High Court dismissed a challenge to an unreasoned award because the parties had expressly agreed to waive the requirement of providing reasons.

However, legal experts caution that waiving the right to a reasoned award can significantly limit a party’s ability to challenge the award later. Without reasons on record, courts cannot assess whether the tribunal’s decision was patently illegal or arbitrary.

Interest on the awarded amount 🔗

Section 31(7) deals with the tribunal’s power to award interest, and it operates in two parts.

Pre-award interest 🔗

Under Section 31(7)(a), unless the parties have agreed otherwise, the tribunal may include interest on the awarded sum at a rate it considers reasonable. This interest can cover the entire period from when the cause of action arose to the date of the award. The tribunal has discretion over both the rate and the period for which interest is granted. In Hyder Consulting (UK) Ltd. v. Governor of Orissa, the Supreme Court upheld the tribunal’s discretion in awarding pre-award interest, noting that it should be exercised judiciously based on the facts of each case.

Post-award interest 🔗

Section 31(7)(b) – as amended by the 2015 Amendment Act – provides that any sum directed to be paid by an arbitral award shall carry interest at 2% higher than the prevailing current rate from the date of the award until the date of actual payment, unless the award specifies otherwise. This provision is designed to compensate the successful party for delays in compliance and to incentivise prompt payment.

Costs of arbitration 🔗

Section 31(8), read with Section 31A (introduced by the 2015 Amendment), empowers the tribunal to fix the costs of arbitration. These costs may include arbitrator fees and expenses, fees of witnesses, legal representation costs, and administrative fees of the arbitral institution (if applicable). The tribunal has the discretion to decide how these costs should be allocated between the parties. This power serves an important function – it discourages frivolous claims and delays, and it incentivises parties to conduct themselves fairly throughout the proceedings.

Interim awards 🔗

Section 31(6) gives the tribunal the power to make an interim arbitral award at any time during the proceedings on any matter with respect to which it could make a final award. This means that if certain issues can be decided early – such as liability – the tribunal can issue a binding interim award on those issues without waiting for the entire dispute to be resolved. Interim awards carry the same legal weight and enforceability as final awards.

Alignment with international standards 🔗

One of the reasons Section 31 matters beyond India’s borders is its alignment with the UNCITRAL Model Law. India adopted its arbitration framework in 1996 precisely to bring its laws in line with international best practices. The requirements of a written, signed, dated, and reasoned award mirror what is expected under most international arbitration rules – including the ICC, SIAC, and LCIA rules.

This alignment also facilitates the enforcement of Indian arbitral awards in foreign jurisdictions under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. Under this Convention, signatory countries (including India) are obligated to recognise and enforce arbitral awards made in other member states, subject to limited grounds for refusal. An award that complies with the formal requirements of Section 31 is far more likely to pass muster during enforcement proceedings abroad.

Consequences of non-compliance 🔗

What happens if an arbitral award fails to meet the requirements of Section 31? The consequences can be significant.

Challenge under Section 34 🔗

An award that lacks adequate reasoning can be challenged before the courts under Section 34 of the Act. The Supreme Court in Delhi Airport Metro Express (P) Ltd. v. DMRC held that an unreasoned award could be considered “patently illegal” under Section 34(2-A). The logic is straightforward: if an award provides no reasons, the court has no way to assess whether the tribunal’s decision is legally sound. This position builds on the earlier ruling in Associate Builders v. DDA, which established that patent illegality includes violations of the Arbitration Act itself.

Remand to the tribunal 🔗

In some cases, instead of setting aside the award entirely, courts may remand the matter to the tribunal under Section 34(4) to rectify deficiencies – such as incomplete reasoning or procedural errors. The Supreme Court’s recent decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025) reaffirmed this power, holding that courts can remand awards to cure defects like incomplete reasoning or jurisdictional ambiguities without resorting to complete annulment.

Difficulty in enforcement 🔗

An award that does not comply with the formal requirements of Section 31 may face hurdles during enforcement – both domestically under Section 36 and internationally under the New York Convention. Courts in the enforcing jurisdiction may refuse to recognise an award if it does not meet the procedural standards expected of a valid arbitral decision.

The bigger picture: why form and content protect the integrity of arbitration 🔗

At first glance, requirements like “the award must be in writing” or “it must state its date” might seem routine and administrative. But these are not technicalities for the sake of technicalities. Each requirement serves a specific purpose – whether it’s enabling judicial review, triggering limitation periods, establishing jurisdiction, or ensuring that parties receive a fair and transparent outcome.

When arbitrators follow these requirements diligently, it reinforces the legitimacy of arbitration as a dispute resolution mechanism. Parties feel confident that the process is fair, courts are assured that minimal supervision is needed, and the broader legal community – both in India and internationally – can trust Indian arbitral awards as credible and enforceable instruments.

The evolution of Indian arbitration law, from the old 1940 Act (which required a formal court decree for enforcement) to the modern 1996 framework (which treats arbitral awards on par with court decrees), reflects a deliberate shift toward making arbitration faster, more autonomous, and more reliable. Section 31 is a key pillar of that shift.

What do you think? Should Indian courts adopt a more uniform standard for assessing the adequacy of reasoning in arbitral awards, or does the current case-by-case approach better serve the diverse needs of arbitration? And when parties agree to waive the requirement for a reasoned award, are they giving up too much of their ability to seek meaningful judicial review?

References

1. https://www.indiacode.nic.in/handle/123456789/1978
2. https://legalblogs.wolterskluwer.com/arbitration-blog/a-reasoned-dilemma-unraveling-the-knots-of-section-313-of-indias-arbitration-act-1996/
3. https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration
4. https://acuitylaw.co.in/reasoning-the-award/
5. https://www.scconline.com/blog/post/2024/04/02/enforcement-of-arbitral-awards-india-analysis-potential-issues-strategies-for-success/
6. https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards