Photo of Palak Nagar

Senior Associate in the Dispute Resolution Practice at the Noida office of Cyril Amarchand Mangaldas, Palak focuses on and specializes in disputes emanating from infrastructure and engineering contracts, insolvency litigations, white collar crimes as well as other corporate and commercial litigation. She advises and represents a wide range of domestic and international clients across numerous sectors including FMCG, Manufacturing, Infrastructure and Construction, Oil and Gas, Technology, Media and Telecommunication (TMT). She can be reached at palak.nagar@cyrilshroff.com

CAN A CHALLENGE TO AN ARBITRAL AWARD BE DISMISSED FOR NON-COMPLIANCE WITH CONDITIONS FOR STAY ON ENFORCEMENT?

An arbitral award can be challenged by filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”). Ordinarily, along with the application to set aside an arbitral award, another application is filed under Section 36(2) of the Act seeking a stay on the operation of the award. Prior to the amendment to the Act in the year 2015, mere filing of an application under Section 34 of the Act would lead to an automatic stay on the enforcement of the award. However, pursuant to the Arbitration and Conciliation (Amendment) Act, 2015, Section 36(2) was amended to state that filing of an application to set aside an arbitral award shall not by itself render the award unenforceable and a specific order of stay of operation of the award shall have to be granted on a separate application being made for that purpose. Upon the filing of a separate application, seeking a stay on the operation of the arbitral award, the court may grant the stay, while imposing certain conditions, as it may deem fit. These conditions could entail either furnishing a bank guarantee or depositing cash with the court, to secure the arbitral award. The form and quantum of the security depends on the facts and circumstances of each case and is typically driven by the financial wherewithal and the conduct of the judgment debtor.Continue Reading Can a Challenge to an Arbitral Award be Dismissed for Non-Compliance with Conditions for Stay on Enforcement?