Can Arbitration Award be challenged in India?
An Arbitration Award is the award granted by the Arbitrators to the parties in their final verdict of any dispute or case. This award can be a financial award or a non-financial award i.e. to say award can be cash or in kind. Arbitration award is similar to court's judgment as it is binding on the parties and is critically material as it helps in settling the dispute between the parties. Example of cash award like one party has to pay certain amount of money to other party as compensation or reimbursement. Non-financial award, halting a specific business practice or including an employment incentive.
The most crucial basis for challenging an arbitration award generally depends upon whether or not the arbitration decision is binding or not. If arbitration is ineffective and non-binding, any party or parties are at liberty to appeal this award without requiring any reasonable ground to appeal. But if the Arbitration is binding, then the party or the parties need a concrete reason to challenge the award in court, just as in the case of jury award.
Jury award is an award basically monetary damages, and is granted by the jury in a civil court following a regular civil trial.
An award permitted in arbitration which takes place in Indua would be domestic award., Additionally an award made in an international commercial arbitration held in non-conventional country is additionally estimated to be a "domestic award".
Section 34 of the Arbitration and Conciliation Act, 1996 provides with certain grounds by which an arbitral award may be set aside or overturn by a court. Therein a party or parties can challenge the arbitral award on the following grounds: Section 34Application for setting aside Arbitral award: -
Section 34(2) (a) and (b) of the Arbitration and Conciliation Act, 1996 mentions certain grounds on account of which the Court can set aside the arbitral award, if the party proves that:-
- A party is under some incapacity.
- The arbitration agreement is not valid i.e. it is void in accordance with the law to which the parties to the agreement are subjected.
- No proper notice of the appointment of the arbitrator or the proceedings had been given to it.
- The award as been suspended or waved by a competent authority of the country in which it was made.
- The main issue of the dispute cannot be resolved by arbitration under Indian law.
- The composition of the tribunal was not in accordance with agreement of the parties.
- The enforcement of award would be in opposition to Indian public policy
However, The Arbitration and Conciliation (Amendment) Act, 2015 brought about some remarkable alteration in the act and especially under section 34 of the Act in the form of an explanation. In the explanation the public policy of India has been clarified to mean only if -
- the creation of the award was actuated or influenced by extortion or debasement or was disregarding Section 75 or 81; or
- it is in contradiction with the fundamental policy of Indian law; or
- it is in contradiction with the most fundamental ideas of morality or justice
The Amendment Act explains that an award won't be put aside by the court simply on mistaken utilization of law or by re-evaluation for proof. A court will not review the benefits of the dispute in deciding whether the award is in negation with the fundamental policy of Indian law.
In addition to section 34, section 13 of the act also provide us that the arbitral award can be set side where an arbitrator can be challenged on the ground of lack of independence or lack of qualification or neutrality. Section 13(5) of the 1996 Act gives that where the tribunal overrules proceeds and challenge with the arbitration, the party requesting the arbitrator may make an application for putting aside the arbitral award under section 34 of the Act.
Therefore, it can be concluded that the arbitral award can be challenged or set aside by the court on certain grounds and can be appealed further.