The arbitration procedure is one where both parties attempt to come to a mutual agreement regarding the dispute in question. However, likely, the decision of an arbitral tribunal is not satisfactory for either party. In such a case, an arbitral award can be challenged in a court of law. The Arbitration and Conciliation Act, 1996, has provisions based on which the same can be done in domestic and international arbitration cases.
Contesting a Domestic Award
Section 34 of the Arbitration and Conciliation Act, 1996, based on Article 34 of the UNCITRAL model, governs the recourse available to any party of an arbitration case in case of any dissatisfaction arising out of the arbitral award ordered after an arbitration case. There are three terms under which the award can be challenged before the court of law, and they are as follows:
- If the procedure of the arbitration sessions was not in compliance with the terms of the agreement between the parties, then the award offered after such resolution stands to be challenged.
- Suppose the composition of the arbitral tribunal is not in compliance with the clauses agreed upon by the parties in their agreement. In that case, such an award is eligible for being challenged in a court of law.
- If the agreement between the parties makes no mention of the choice of dispute resolution through arbitration and in such an absence if the procedure or tribunal has been followed and made without compliance with the Act, it can be challenged in a court of law.
The grounds of declaring an award void are also mentioned in s.34 of the Act, and the scope of the same is not vague by any means owing to its language, which is restrictive. Any default in the neutrality and professionalism of the arbitrator in the passing of an award or during the proceedings of an arbitration session can also make the award eligible for contestation.
Contesting a Foreign Award
Since the qualifications of a foreign award are decided by Part I & II of the Act, the recourse available for a dissatisfactory arbitral award lies in the court's hands where the arbitration was seated. The provisions in s.48 & 57 of the Act provide for the same in detail and, by extension, imply the fact that the primary rationale for approaching the court for an appeal against the arbitral award has to be in direct nexus with improper conduct of the arbitrator/procedure followed, improper exercise of jurisdiction or violation of public policy arising out of the award that the arbitral tribunal in question has given.
Various case laws give clarity on the matters of which grounds can suffice for challenging an arbitral award. The key feature to remember before getting involved in an arbitration procedure is identifying the arbitrability of the dispute. If the court of law observes a lack of the same, in that case, the award can be set aside as per the Court's decision.
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