Section 36 of the Arbitration and Conciliation Act, 1996: Enforcement and Stay of Arbitral Award

Section 36 governs enforcement of arbitral awards made under Part I of the Arbitration and Conciliation Act, 1996. It explains when an award may be enforced like a decree of the Court, clarifies that filing a Section 34 challenge does not automatically stay enforcement, and sets out the Court's power to grant a stay on a separate application.

Current legal position: An arbitral award becomes enforceable under Section 36 when the time for making a Section 34 application has expired, subject to the statutory stay provisions. A pending Section 34 challenge does not, by itself, make the award unenforceable.

Text of Section 36 - Enforcement

(1) Where the time for making an application to set aside the arbitral award under Section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the Court.

(2) Where an application to set aside the arbitral award has been filed in the Court under Section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.

(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing.

First proviso. The Court shall, while considering an application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the Code of Civil Procedure, 1908 (5 of 1908).

Second proviso. Where the Court is satisfied that a prima facie case is made out that--

the arbitration agreement or contract which is the basis of the award; or
the making of the award,

was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under Section 34 to the award.

Explanation. For the removal of doubts, the second proviso applies to all Court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or Court proceedings were commenced before or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.

What Section 36 Means

1. Award is enforced like a Court decree

Under Section 36(1), once the statutory period for filing a Section 34 challenge has expired, the arbitral award is enforceable under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court, subject to Section 36(2).

2. Section 34 challenge does not create an automatic stay

Section 36(2) expressly removes the concept of an automatic stay merely because a party has filed an application under Section 34. The award remains enforceable unless the Court grants a stay on a separate application made for that purpose.

3. Separate stay application is required

A party seeking to suspend enforcement must file a separate stay application. Under Section 36(3), the Court may impose conditions and must record its reasons in writing when granting a stay.

4. Money awards are considered with CPC principles in mind

Where the award directs payment of money, the first proviso to Section 36(3) requires the Court to have due regard to the provisions governing stay of a money decree under the Code of Civil Procedure, 1908.

5. Fraud or corruption can require unconditional stay

Mandatory unconditional stay: If the Court is satisfied that a prima facie case is made out that the arbitration agreement or contract forming the basis of the award, or the making of the award itself, was induced or effected by fraud or corruption, the Court shall stay the award unconditionally while the Section 34 challenge remains pending.

6. The fraud/corruption proviso has retrospective reach

The statutory Explanation clarifies that the second proviso applies to all Court cases arising out of or in relation to arbitral proceedings, regardless of whether the arbitration or Court proceedings commenced before or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.

Amendment History of Section 36

Section 36 was substituted by the Arbitration and Conciliation (Amendment) Act, 2015 with effect from 23 October 2015. The Arbitration and Conciliation (Amendment) Act, 2021 inserted the second proviso to Section 36(3), dealing with unconditional stay in cases involving a prima facie case of fraud or corruption, and the amendment was given effect from 23 October 2015.

Practical point: A Section 34 petition and a Section 36 stay application perform different functions. Filing the challenge attacks the award; filing the separate stay application seeks to suspend its enforceability while that challenge is pending.

Key Points at a Glance

An award is enforceable like a decree after the Section 34 limitation period expires, subject to Section 36.
Filing a Section 34 application does not automatically stay enforcement.
A separate application for stay is required.
The Court may impose conditions while granting stay and must record reasons in writing.
For money awards, the Court must have due regard to CPC provisions governing stay of money decrees.
A prima facie case of fraud or corruption in the underlying agreement, contract or making of the award requires unconditional stay.
The fraud/corruption proviso applies to Court cases regardless of whether the underlying arbitration or Court proceedings began before or after the 2015 amendment.

Official Legal Sources

For the authoritative and updated statutory text, see the Arbitration and Conciliation Act, 1996 on India Code. The fraud and corruption proviso was inserted by the Arbitration and Conciliation (Amendment) Act, 2021.