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CMA Foundation · Fundamentals of Business Laws and Business Communication · Legal Methods and Court System in India

Under the Arbitration and Conciliation Act, 1996, a dispute between two companies is referred to a sole arbitrator, who gives a written award. What is the legal effect of the award once the time for challenging it has expired without any challenge?

Once the period for challenge has lapsed without any application, the arbitral award is enforceable as if it were a court decree. The parties need not file a fresh suit or re-sign it, and it binds both sides, not just the party who appointed the arbitrator.

  1. AIt remains only a recommendation until both parties sign it again
  2. BIt can be enforced in the same manner as if it were a decree of a courtCorrect
  3. CIt can be enforced only after a fresh suit is filed on the same claim
  4. DIt becomes binding only on the party that appointed the arbitrator

Explanation

The Act provides that an unchallenged final award is enforceable as a court decree under the Code of Civil Procedure. No fresh suit or re-signing is needed, and the award binds both parties, not only the appointing one.

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