Setting Aside Arbitral Award
Arbitration is referred to as a conflict settlement procedure between two parties by an arbitral tribunal appointed by the parties to the dispute or at the request of a party, by the Judge. It is an alternative approach to litigation for dispute settlement.
Currently, there is no provision for appeal against an arbitral award and it is deemed final and binding, but an aggrieved party may take the potential course of action in a court of law for setting aside the arbitration award on various grounds specified in Section 34 of the Arbitration and Conciliation Act, 1996.
The parties were not in a position to appeal against an arbitral award as to its validity and the court was not in a position to intervene with its merits. The Supreme Court ruled that an “arbitrator is a judge appointed by the parties and that it is not to be lightly interfered with as such an award passed by him.” But that does not necessarily mean that the behavior of the arbitrator is not reviewed. The legislation grants such remedies against an arbitral award to ensure the fair operation of the procedure.
Three remedies that were obtainable against an award- alteration, remission and setting aside were included in the repealed 1940 Act. These three solutions have been put into two definite categories under the 1996 Act. Although the rectification of errors was remedied, it was handed over to the parties and to the Tribunal. The remedy for setting aside was shaped by the Tribunal's rectification of the award for the elimination of defects.
Section 34 provides that an arbitral award may be set aside by a court on certain grounds specified therein. These grounds are:
- Incapacity of a party
- Arbitration agreement not being valid
- Party not given proper notice of arbitral proceedings
- Nature of dispute not falling within the terms of submission to arbitration
- Arbitral procedure not being in accordance with the agreement
Section 34(2)(b) mentions two more grounds which are left with the Court itself to decide whether to set aside the arbitral award:
- Dispute is not capable of settlement by arbitral process
- The award is in conflict with the public policy of India
Where a decision on matters referred to arbitration may be set aside from those which have not been referred; only that part of an arbitral award comprising judgments on matters which have not been referred to arbitration may be set aside.
Article 34 of the UNCITRAL Model Law is the basis of Section 34 of the Act and the extent of the rules for setting aside the award is much smaller than that of Sections 30 or 33 of the 1940 Act. The court claimed in Municipal Corp. of Greater Mumbai v. Prestress Products (India) that with the express legislative purpose of curtailing judicial interference, the new Act is being enforced. Section 34 greatly decreases the degree to which an award is contested.
Under Section 34, it is appropriate for the aggrieved party to make an application specifying the grounds for the appeal. An appeal has to be made by a party to the arbitration agreement to set aside the award. But since he is a person arguing under them, a legal representative may apply for it. Under Section 34 of the Act, there is no special form prescribed for making an application, except that it must be a written statement filed within the limitation period.
A conflict emerged between the parties concerning the decision of the Joint Arbitration Committee concerning the venue of arbitration in Sanshin Chemical Industry v. Oriental Carbons & Chemical Ltd. The Apex Court held that either an award or an interim award does not constitute a judgement on the issue of venue in order to be appealable pursuant to Section 34 of that act.
In Brijendra Nath v. Mayank,8 the court held that it would amount to estoppel against attacking the award if the parties acted upon the arbitral award during the pendency of the appeal questioning its validity.
By statute, an award that is set aside is no longer enforceable. As for their arguments in the conflict, the parties are restored to their former position. Setting an award aside means that it is ignored as invalid. The award is stopped and the matter again becomes available for judgement. The parties are entitled to return to arbitration or to have the matter resolved by a court of law.
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.