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Principle of Natural Justice as a ground to challenge arbitral award

Principle of Natural Justice as a ground to challenge an arbitral award

The award by the arbitrator in violation of the principle of natural justice could also be challenged under section 34 of The Arbitration and Conciliation Act, 1996 and can be forgotten by the Court. Where the one party challenges the arbitral award on the due to a breach of natural justice, the party must establish:

• Which principle of natural justice was breached?
• How it was breached;
• In what way was the breach connected to the making of the award; and
• How the breach damaged the rights.

The court should consider the following principles. These principles are as follows.

• Parties have a right to be heard effectively on every issue that may be relevant to resolving the dispute. The arbitrator must treat the parties equally and permit them the prospect to present their cases and to retort. The arbitrator mustn't base his decision on matters not submitted or argued before him.

• The court isn't a vicinity where the losing party includes a second bite at the cherry. therefore the court should entertain no arid or technical challenges.

• Given the character of arbitration, the courts should follow the international practice of minimal curial intervention.
The two principal considerations that support this practice are:
(i) a requirement to acknowledge the autonomy of the arbitral process by encouraging finality, so its advantage as an efficient alternative dispute resolution process isn't undermined; and
(ii) Acknowledge that when the parties choose arbitration, they accepted the minimal right of recourse to the courts. A court mustn't intervene because it might have resolved the various controversies live differently.

• That the arbitrator didn't refer every point for the choice to the parties for submissions isn't invariably a ground for challenge. It's only where the impugned decision reveals a significant shift from the submissions or involves the arbitrator receiving extra evidence, or adopts a thinking opposite with the established evidence or adopts a view wholly at odds with the established evidence adduced by the parties or arrives at a conclusion unequivocally rejected by the parties as being trivial, might it's appropriate for a court to intervene. The party challenging the award must show that a litigant in his shoes couldn't have foreseen the likelihood of reasoning of the kind revealed within the award.

• The parties will urge diametrically opposite solutions to resolve a dispute. The arbitrator isn't required to adopt either/or approach. He may embrace a middle path as long because it is evident by the evidence before him and he is not required to consult the parties on his thinking processes before finalizing his award unless it involves a significant shift from what we have presented to him.

• Each case must be decided within its own factual matrix. The award should be read generously specifying only meaningful breaches of the principles of natural justice that have caused prejudice are ultimately remedied

  • Arbitration
  • Natural Justice
  • Conclusion

BY : Anubhav Verma

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