Objection to an Arbitral Award
In most cases, after a dispute arises, individuals file a claim before the competent court so that the court may adjudicate the matter and issue a judgment. Under the applicable laws, there is another mechanism for dispute resolution that has historically received less public attention. However, due to its advantages, this mechanism has increasingly gained acceptance.
In commercial and civil contracts, parties often seek to include provisions that reduce the need to resort to courts.
High litigation costs, congested courts, complex procedural formalities, lengthy proceedings, and the lack of specialized adjudication have led parties to prefer referring their disputes to private decision makers.
As a result, arbitration has become a favored method for resolving disputes promptly. Nevertheless, in some cases, the arbitral award may not satisfy one of the parties, who may then seek to challenge the award without having sufficient knowledge of the applicable procedures.
Conditions and Time Limit for Objecting to an Arbitral Award
Arbitration Agreements
If the parties intend to refer their dispute to arbitration, it is essential to understand that arbitration may be governed by either an arbitration agreement or an arbitration clause.
Arbitration Agreement
An arbitration agreement is a contract under which the parties, after a dispute arises from an underlying contract, agree to submit the dispute to arbitration. Even if a dispute is pending at the trial stage, the appellate stage, or before the Supreme Judicial Court, the parties may, by mutual consent, refer the dispute to arbitration.
Arbitration Clause
In the second form, the parties include an arbitration clause in their contract at the time of its conclusion and before any dispute arises. Under this clause, the parties agree that any future disputes shall be referred to arbitration. An arbitration clause may be included in the main contract or set forth in a separate agreement. This clause is intended to ensure that, in the event of a future dispute, the matter is resolved through arbitration rather than litigation.
Enforceability of Arbitral Awards
As explained above, arbitration constitutes a private adjudicatory mechanism, and the arbitrator acts as a private judge. Although arbitral proceedings lack the complex formalities of court litigation, arbitral awards share several characteristics with judicial judgments.
Enforceable Nature of Arbitral Awards
An arbitral award is enforceable. Once the arbitrator issues the award, it must be executed, and the parties may not refuse compliance. If the losing party fails to comply with the award, the prevailing party may apply to the competent court for enforcement. Article 488 of the Code of Civil Procedure explicitly addresses this matter.
Under Article 488 of the Code of Civil Procedure, if the losing party fails to comply with the arbitral award within twenty days from the date of notification, the competent court or the court that referred the dispute to arbitration is required, upon request of the interested party, to issue an enforcement order in accordance with the arbitral award.
Right to Object to an Arbitral Award
Arbitral awards, like judicial judgments, may be subject to objection. Articles 490 to 493 of the Code of Civil Procedure govern this issue. Pursuant to Article 493, filing an objection to an arbitral award does not suspend its enforcement unless the grounds for objection are deemed strong. In such cases, the court may order suspension of enforcement until the objection is fully examined and a final decision is issued.
An arbitral award may be challenged on grounds relating to the arbitration agreement itself or to the subject matter referred to arbitration.
Objection Based on the Arbitration Agreement
An arbitral award is valid only if the arbitration agreement under which the arbitrator was appointed is valid.
According to Article 461 of the Code of Civil Procedure, if a dispute arises regarding the validity of the underlying transaction or the arbitration agreement, the court must first examine and rule on that issue.
If the court determines that the arbitration agreement is invalid, the arbitrator lacks jurisdiction to hear the dispute and issue an award, and any award rendered on that basis shall be without legal effect.
Frequently Asked Questions About Objection to an Arbitral Award
It refers to a situation where one party is dissatisfied with the arbitrator’s decision and seeks judicial review of the award. This right is recognized under Articles 490 to 493 of the Code of Civil Procedure.
Under Article 490 of the Code of Civil Procedure, the objection must be filed within twenty days from the date of notification of the arbitral award.
No. Filing an objection does not automatically suspend enforcement. Enforcement may be suspended only if the court finds that the objection is supported by strong grounds.
An arbitration agreement is concluded after a dispute has arisen, while an arbitration clause is included in the main contract at the time of its execution to cover potential future disputes.
If the arbitration agreement is invalid or if the arbitrator exceeds the scope of authority granted by the parties, the court may declare the arbitral award invalid. What does an objection to an arbitral award mean?
What is the time limit for objecting to an arbitral award?
Does objecting to an arbitral award prevent its enforcement?
What is the difference between an arbitration agreement and an arbitration clause?
Under what circumstances may an arbitral award be annulled?
