- 15-Oct-2025
- public international law
An award on agreed terms (also called a consent award) is an arbitral award issued by the tribunal based on a settlement or agreement reached between the parties involved in the arbitration. Instead of making a decision on the merits of the dispute, the tribunal formalizes the agreement of the parties into an award. This type of award reflects the parties’ mutual consent to resolve the dispute, typically after negotiations, mediation, or settlement discussions.
An award on agreed terms is a decision issued by an arbitral tribunal that formalizes a settlement or agreement reached between the parties. It is not based on the tribunal’s judgment regarding the merits of the case, but instead reflects the mutual understanding of the parties on how to resolve the dispute.
It is often issued when the parties have settled the dispute amicably during the course of the arbitration process, and they request the tribunal to make their settlement into a binding award.
A final award resolves the entire dispute on its merits after hearing evidence and arguments from both parties. It is a decision made by the tribunal based on its analysis of the legal and factual issues in dispute.
A partial award addresses certain aspects of the dispute but leaves others unresolved, such as liability but not the amount of damages.
An interim award is a temporary decision issued before the final award, dealing with provisional matters like the preservation of assets or providing temporary relief.
Unlike the above types of awards, an award on agreed terms is based on a voluntary settlement between the parties. The tribunal does not resolve the dispute based on evidence and legal arguments; rather, it gives effect to the parties’ agreement.
The most common scenario is when the parties, during the arbitration process or prior to the tribunal’s final award, reach a settlement or agreement to resolve the dispute. The parties then ask the tribunal to convert their agreement into an official arbitral award.
If the parties engage in successful mediation or negotiation and agree on a resolution, they can request the tribunal to issue an award based on that settlement.
An award on agreed terms can be a quicker and more cost-effective way of resolving a dispute without the need for a lengthy evidentiary hearing and final ruling on the merits.
The parties will present the terms of their settlement to the tribunal, often in the form of a written agreement or draft settlement.
The tribunal reviews the settlement and ensures it complies with legal standards, does not violate public policy, and does not exceed the tribunal's jurisdiction.
Once the tribunal is satisfied, it formalizes the agreement into an arbitral award, which has the same binding and enforceable legal status as a decision made after a full hearing.
Once the tribunal issues an award on agreed terms, it is legally binding on the parties, just like any other arbitral award. The parties are required to comply with the terms of the agreement that has been formalized into the award.
The award can be enforced in courts, particularly under frameworks like the New York Convention (for international arbitration) or national laws in various jurisdictions (e.g., the Indian Arbitration and Conciliation Act, 1996).
This type of award can significantly reduce the time and cost involved in arbitration because it resolves the dispute without the need for a full hearing.
The parties have the flexibility to design their own resolution. The tribunal simply gives effect to their mutually agreed terms, allowing the parties to have control over the resolution of their dispute.
While it is a settlement, once the tribunal issues the award on agreed terms, it has the force of a final arbitral award. This provides certainty and finality to the parties, as they no longer have the option to continue litigating the dispute.
The tribunal does not decide on the merits of the case but rather enforces the parties’ settlement, so the award does not provide a legal judgment on the underlying dispute.
If one party does not comply with the terms of the award, enforcement can be sought in court, but there may be challenges in ensuring compliance if the terms are vague or difficult to enforce.
UNCITRAL Arbitration Rules: Under these rules, the parties can request the tribunal to issue an award on agreed terms if they reach a settlement during the proceedings.
ICC Rules: The International Chamber of Commerce (ICC) rules also allow for the issuance of an award on agreed terms when the parties settle their dispute before a final award is issued.
Indian Arbitration and Conciliation Act, 1996: The Indian Act permits a settlement between the parties during arbitration, and such a settlement can be made into an award by the tribunal.
The rules of other arbitral institutions, such as the LCIA or SIAC, also provide mechanisms for issuing an award on agreed terms.
Construction Co. Ltd. (claimant) and Mega Builders Inc. (respondent) are involved in a dispute regarding the construction of a building. The claimant alleges that the respondent failed to complete the project on time, causing financial loss.
During the arbitration proceedings, the parties negotiate and agree on a settlement that involves a partial payment from Mega Builders to Construction Co. in exchange for the withdrawal of the claims and the continuation of some project obligations.
The parties submit the terms of their settlement to the tribunal and request that the settlement be formalized into an arbitral award.
The tribunal reviews the settlement and, after ensuring that the terms are fair and do not violate public policy, issues an award on agreed terms, making the settlement legally binding and enforceable.
An award on agreed terms (also called a consent award) is a binding decision issued by an arbitral tribunal that formalizes a settlement or agreement between the parties. It is a faster and more efficient way of resolving disputes when the parties have already reached a voluntary settlement. While the tribunal does not adjudicate the merits of the case, the award carries the same legal weight as any other arbitral award, providing finality and enforceability to the parties' agreement.
Answer By Law4u Team
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