Arbitration awards that are in favour of the Petitioner company are invariably challenged under Sections 34 and 37 of the Arbitration Act, 1996, and on average, more than 6 years are spent in defending these challenges. The major problem in the way of the Petitioners is that the moment a challenge is made under Section 34, there is an ‘automatic-stay’ of such awards under the Arbitration Act, 1996
Para 33 : (2) Where an application to set aside the arbitral award has been 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.
The SC after considering both sides, struck down the introduction of section 87 of the Act as unconstitutional and also struck down the deletion of section 26 of the 2015 Amendment Act. The SC clarified that its own decision in BCCI v. Kochi Cricket Pvt. Ltd. continues to be the correct position, and further that no automatic stay was available against the enforcement of any award.