Section 35 of the Arbitration and Conciliation Act, 1996: Finality of Arbitral Awards

Section 35 declares the legal finality and binding effect of an arbitral award. Subject to the provisions of Part I of the Arbitration and Conciliation Act, 1996, the award binds the parties to the arbitration and persons claiming under them respectively.

Current legal position: Section 35 continues to state that an arbitral award is final and binding on the parties and persons claiming under them, subject to Part I of the Act. Its operation therefore has to be read together with provisions such as Section 33 on correction and additional awards, Section 34 on setting aside an award and Section 36 on enforcement.

Text of Section 35 - Finality of Arbitral Awards

Section 35. Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.

What Section 35 Means

1. Arbitral award is final between the parties

Section 35 gives an arbitral award finality as between the parties to the arbitration. Once the tribunal has made its award, the matters decided by the award are not ordinarily open for a fresh merits determination merely because one party disagrees with the outcome.

2. The award is binding, not merely persuasive

The statutory words "final and binding" mean that the award determines the rights and obligations covered by it, subject to the remedies and procedures available under Part I of the Act. The award therefore has binding legal effect between the relevant parties.

3. Persons claiming under the parties are also covered

Section 35 extends the binding effect beyond the named parties to persons claiming under them respectively. This language is important where rights or interests are derived through a party to the arbitration.

4. Finality is expressly subject to Part I

Section 35 begins with the words "Subject to this Part." Finality is therefore not absolute in the sense of excluding every statutory remedy. Part I itself provides limited mechanisms that may affect an award after it is made.

Important distinction: Finality under Section 35 does not mean that every award becomes immediately executable without regard to the rest of the Act. A party may seek correction or an additional award under Section 33, may apply to set aside an award under Section 34, and enforcement is governed by Section 36.

Relationship with Section 34

Section 34 provides the statutory procedure for applying to set aside an arbitral award on the limited grounds specified in that provision. Section 35 must therefore be read subject to that challenge mechanism.

Relationship with Section 36

Section 36 deals with enforcement. Once the time for making a Section 34 application has expired, the award is enforceable in accordance with the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the Court, subject to Section 36. Filing a Section 34 application does not by itself make the award unenforceable; a stay must be obtained in accordance with Section 36.

Relationship with Section 33

Section 33 permits limited post-award correction, interpretation where agreed, and an additional award on claims presented but omitted. These limited statutory powers operate consistently with Section 35 because Section 35 is expressly subject to Part I.

Key Points at a Glance

An arbitral award is final and binding on the parties.
Persons claiming under the parties are also bound respectively.
The finality declared by Section 35 is expressly subject to Part I of the Act.
Section 33 permits limited correction, interpretation and additional awards.
Section 34 provides the statutory remedy for setting aside an award.
Section 36 governs enforcement of the award.
A Section 34 challenge does not automatically stay enforcement under the current Section 36 framework.

Official Legal Source

For the authoritative and updated statutory text, see the Arbitration and Conciliation Act, 1996 on India Code.