Section 31 of the Arbitration and Conciliation Act, 1996: Form and Contents of Arbitral Award

Section 31 prescribes the essential form and contents of an arbitral award. It deals with writing and signatures, reasons for the award, the date and place of arbitration, delivery of a signed copy, interim arbitral awards, interest on monetary awards and the fixing of arbitration costs under Section 31A.

Current legal position: Section 31 continues to govern the formal requirements of arbitral awards. Clause (b) of Section 31(7) and Section 31(8) were substituted with effect from 23 October 2015 by the Arbitration and Conciliation (Amendment) Act, 2015, enacted as Act 3 of 2016.

Text of Section 31 - Form and Contents of Arbitral Award

(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.

(2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.

(3) The arbitral award shall state the reasons upon which it is based, unless--

the parties have agreed that no reasons are to be given; or
the award is an arbitral award on agreed terms under Section 30.

(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place.

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award.

(7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

(7)(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.

Explanation. The expression "current rate of interest" shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978 (14 of 1978).

(8) The costs of an arbitration shall be fixed by the arbitral tribunal in accordance with Section 31A.

What Section 31 Means

1. Award must be in writing and signed

Section 31(1) requires every arbitral award to be in writing and signed by the members of the arbitral tribunal. In a tribunal consisting of more than one arbitrator, the signatures of the majority are sufficient if the reason for any omitted signature is stated.

2. Reasons are normally mandatory

Under Section 31(3), an arbitral award should ordinarily contain the reasons on which it is based. Reasons are not required where the parties have agreed that none need be given or where the award records agreed terms following settlement under Section 30.

3. Date and place of arbitration must be stated

Section 31(4) requires the award to state its date and the place of arbitration determined under Section 20. The award is deemed to have been made at that place.

4. Signed copy must be delivered to each party

Section 31(5) expressly requires delivery of a signed copy of the award to each party after the award is made. This is an important statutory step in the arbitral process.

5. Tribunal may make an interim arbitral award

Section 31(6) permits an arbitral tribunal to make an interim arbitral award at any time during the proceedings on a matter that could also be determined in a final arbitral award.

6. Interest before the award

Section 31(7)(a) deals with interest for the period up to the date of the award. Unless the parties have agreed otherwise, the tribunal may award interest at a rate it considers reasonable on all or part of a monetary claim for all or part of the period between accrual of the cause of action and the date of the award.

7. Interest after the award

Section 31(7)(b) provides the statutory default for post-award interest. Unless the award directs otherwise, the sum directed to be paid carries interest at two per cent above the "current rate of interest" prevalent on the date of the award, from the date of the award until payment.

Definition of "current rate of interest": For Section 31(7)(b), the expression has the same meaning as in Section 2(b) of the Interest Act, 1978. In substance, that provision refers to the highest of the maximum rates at which interest may be paid on specified classes of deposits by different classes of scheduled banks in accordance with Reserve Bank of India directions.

8. Costs are governed by Section 31A

Section 31(8) now requires arbitration costs to be fixed by the arbitral tribunal in accordance with Section 31A. Section 31A contains the detailed statutory regime for reasonable costs and costs orders.

Important Requirements at a Glance

The arbitral award must be in writing.
It must be signed by the tribunal members, subject to the majority-signature rule in Section 31(2).
Reasons must normally be stated.
The award must state its date and place of arbitration.
A signed copy must be delivered to each party.
An interim arbitral award may be made during the proceedings.
The tribunal may award pre-award interest on monetary claims.
Post-award interest applies under Section 31(7)(b) unless the award directs otherwise.
Arbitration costs are fixed in accordance with Section 31A.

Official Legal Sources

For the authoritative statutory text, see the Arbitration and Conciliation Act, 1996 on India Code. The amendment to Section 31(7)(b) and Section 31(8) was made by the Arbitration and Conciliation (Amendment) Act, 2015.