Grounds or Provisions allied to setting aside of Arbitration Awards
Acc to Sec. 34 of the Arbitration and Conciliation Act 1996 deals with the setting aside of the arbitral award. In order to set aside an arbitral award, individual needs to file an application in the court. Such an application by the party may be acknowledged or discarded by the court. This provision of challenging is diverse than the procedure of appeal. When the arbitral tribunal gives an award, it is diverse from the judgment which a court usually gives. The court in general accepts an application of challenge only if it comes under ambit of Sec. 34 only.
The following grounds are:
- Incapacity of a party.
- Unlawful agreement.
- No notice to the other party.
- Subject matter extent to the scope of the arbitration agreement.
- Formation of Tribunal not as per the agreement.
- Subject matter not under the arbitration law.
- Award in conflict with the public policy of India.
Prior to filing an application in the court to set aside the award, the party filing the application has to hand over a notice of such filing to the opposite party.
- Incapacity of the parties
In case any of the parties is of unsound mind or is minor, then such persons are not bound to act in harmony with any agreement or contract. Therefore, the agreement itself becomes null and void and passing any award in such case can be set aside by the court.
- Unlawful agreement
If the contract is unlawful, then the arbitration agreement will also be held to be invalid. All the essential elements of a contract have to accomplish in order for it to become enforceable.
- No notice to the other party
A prior notice must be sent to the other party regarding the commencement of the proceedings or of invocation of the arbitral clause of the agreement.
- Subject matter extent to the scope of Arbitration Agreement
While formulating an agreement, the parties describe as to what all can be enclosed in the subject matter and what are the disputes that are enclosed under the arbitration agreement. Consequently, only those subject matters can be referred to an arbitral tribunal to resolve the dispute, not any other. If the tribunal acts ultra vires to the agreement, the party affected may file an application in the court and challenge such award.
- Formation of the Tribunal not as per the Agreement
In case the Arbitrator is not appointed as per the agreed terms of the agreement or by the parties which has not been followed or any other bureaucratic aspect that was decided earlier in the agreement by the parties has not been followed all the way through, then such affected party may challenge the award in the court to set aside the award.
- Subject matter not under the ambit of Arbitration law
There are certain types of matters that are not arbitral in nature like criminal, insolvency or any other public matters. These matters have been unambiguously barred under the purview of arbitration.
- Award in conflict with the Public Policy of India
This ground has additional three more explanations, which was added in the 2015 amendment.
- Award through deception or dishonesty.
- In contravention to fundamental policy of India.
- In disagreement with ethics or integrity.