Grounds for the challenge of arbitral awards
The grounds for challenging an arbitral award are highlighted in section 34 of the Arbitration and Conciliation Act, 1996. These are detailed below:
- the party was under some form of incapacity
- the arbitration agreement is not valid under the law to which the parties have
subjected it to, or under the law for the time being in force;
- the party was not given proper notice of the appointment of the arbitrator or the arbitral proceedings
- the award deals with a dispute not falling within the terms of the submissions to arbitration or is beyond the scope of the submission to arbitration;
- the arbitral tribunal has not been constituted as per the agreed terms of the agreement;
- the subject matter of the dispute is not capable of being settled by Arbitration for the time being in force; and
- the award is in violation of the public policy of India.
For the purpose of grounds for challenge of arbitral awards, it is necessary to highlight that certain classes of disputes are not arbitrable in India. The same being disputes relating to rights and liabilities which give rise to or arise out of criminal offenses; matrimonial issues such as divorce, judicial separation, restitution of conjugal rights, child custody; guardianship matters; insolvency and winding-up matters; testamentary matters; matters relating to eviction of tenants; and trust-related matters. The main rationale for characterising these disputes as non-arbitrable is that they involve rights in rem. All disputes relating to rights in personam are generally capable of being resolved by arbitration under Indian law. If a court finds that the subject matter would not be arbitrable in India, it may set aside enforcement of the award.
What is the difference between Section 34 and 45 of the Arbitration and Conciliation Act?
As per Section 34, a domestic award has to meet the standards of the domestic law which are more exacting. An award in an international commercial arbitration, on the other hand, has to satisfy the ‘public policy’ standard, that is, the enforcement of the award would not affect the morality and basic concerns of policy prevalent in India.
Can you challenge the jurisdiction of the tribunal in court, in case of an institutional arbitration?
An agreement to arbitrate is highlighted by the consent given by the parties to resolve their disputes through arbitration either institutional or ad hoc. To invalidate the jurisdiction that has been conferred to an institutional tribunal through the consent of the parties, the tribunal must suffer from some infirmity that would result in the inability to hear the dispute in an unbiased manner. Therefore, to challenge the jurisdiction of the tribunal, one must prove that the tribunal is incompetent to hear the disputes under Section 12(5) read with Schedule VII of the Arbitration and Conciliation Act, 1996.
However, institutional arbitration usually considers such challenges and arbitrators are thereafter suitably appointed. In the event that a challenge to their jurisdiction is raised and there is no violation or relationship under the IBA Guidelines on Conflict in International Arbitration, the manner of challenging the tribunal’s jurisdiction would be to invalidate the agreement to arbitrate, which would highlight that consent was not given as observed in the Indian Contract Act, 1872.
How to appeal/challenge an interim award of arbitration with seat in India / outside India?
Normally, an interim award is given to protect the interests and maintain the status quo between the parties, as a result of which interim awards are not often challenged.
Section 37 of the Arbitration and Conciliation Act, 1996 highlights which orders are appealable in India. If the need for challenge does arise the courts are entitled to hear appeals from interim orders granted or refused by the tribunal under section 37(2)(b).
However, the above answer is applicable to arbitrations seated in India. Thus, for international arbitration, an interim award is not appealable under Indian law.
For the appellate mechanism in arbitrations seated outside India, the concerned applicable law of the arbitration agreement or the law of the seat is applicable.
How to set aside enforcement of an arbitral award of international commercial arbitration?
A foreign award is to be treated as a decree by a court in India. It can be enforced once the period highlighted in Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside an arbitral award is over (in case of a domestic award), and the conditions highlighted in Sections 48 and 57 of the Arbitration and Conciliation Act, 1996 have been satisfied (in case of a foreign award). The conditions for enforcement of an arbitral award have been stated above. An arbitral award can be set aside when the conditions set out in Section 48 and Section 57 of the Arbitration and Conciliation Act, 1996 have not been complied with.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.