The course of Arbitration is considered to be an alternate mention of dispute resolution, primarily aiming at reducing the burden of pending cases on the courts and providing an effective mechanism of resolution to the aggrieved parties. This structure has proved to be the core of dispute resolution in the last few decades worldwide and has aided the Indian judiciary system to allow for a mechanism that can deal with legal matters outside the courts, without getting into the nitty-gritty of courts.
The legality of challenging an arbitral award
The legislature does not believe in leaving the aggrieved party through the arbitral award without any remedy and has ensured to incorporate a provision that can allow appeals to higher courts in certain cases on valid grounds mentioned thereof, making it in consonance to the principles of natural justice.
In case one of the parties fear or have substance to believe that the arbitrator is prejudiced, biased or does have the jurisdiction on the matter, an application before the arbitrator itself is filed under Section 13 of the Act. In case the arbitrator sets it aside and continues the proceedings, leading the party to find themselves at a loss through the award pronounced; then the arbitral award can be challenged in the Hugh Court under Section 34, stating this prejudice as the preliminary ground. Hence, the legislature seems to have served a dual purpose- a) limiting the interference of the judiciary in arbitration and b) providing the required remedy to the aggrieved parties.
Section 34 provides that an arbitral award may be set aside by a court on certain grounds specified therein, which are as follows:
- the enforcement of the award would be contrary to Indian public policy.
- the parties to the agreement are under some incapacity;
- the subject matter of dispute cannot be settled by arbitration under Indian law; or
- the agreement is void;
- the award contains decisions on matters beyond the scope of the arbitration agreement;
- the award has been set aside or suspended by a competent authority of the country in which it was made;
- the composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitration agreement;
Further, there is an explanation provided on the subject of what constitutes public policy, which essentially substantiates that any award which is induced with fraud or corruption violating section 75 and 81 of the Act or is against the fundamentals of public policy mentioned under the Indian Law or the moral code of conduct laid down in the country; would be considered as against public policy.
It is an established principle that the section intended to achieve the standards of the international arbitral mechanism by lowering the intervention of the judiciary in any form as much as possible, in order to provide for an independent mechanism of dispute resolution. The parliament, as mentioned in the aforementioned analysis, has focused on curating a forum for speedy trial and justice through effective dispute resolution as also reflected under Section 5 of the Act.