Appellate Arbitration not contrary to Indian Laws
- The Supreme Court of India permits two-tier arbitration in the country.
- It provides the party to the dispute autonomy is necessary under the Arbitration and Conciliation Act, 1996.
- No express or implied prohibition is made regarding appellate Arbitration in the statute of Arbitration and Conciliation Act, 1996.
A three-judge bench of the Supreme Court of India in the case, Centrotrade Minerals Vs Hindustan Copper it was held that the parties have a right to appeal under the arbitration clause and are not contrary to the principles of law. The issue was originally heard in 2006 and was referred to a higher judge bench due to the difference of opinion and difficulty in concluding the matter between the two judges hearing the dispute.
Appellate Arbitration permissible in India
It cannot be considered to be appropriate to argue that appellate arbitration is contrary to the Laws in India because the parties to the dispute willing to go for an appeal when not satisfied with the decision of the arbitrator, is permitted under the laws of the country and appellate arbitration does not violate any provision or sections of the statute.
The Supreme Court has made a note on UNICITERAL Law and under Arbitration and Conciliation Act,1940, and also referred some of the commentaries and previous judgments for various cases which held that appellate arbitration is valid in the eyes of law and not violating the existing laws of the country.
It was also observed the right to appeal can only be provided under the statute. After analyzing from the various facts and circumstances it was noticed that the right to appeal is a substantive right and not matter of merely by the procedure. On this ground, there was a distinction made between the appellate arbitration vis-a-vis statutory appeals before the courts or the administrative tribunals, to find that an appeal procedure contained in an arbitration agreement was a substantive right created by the parties to the dispute by mutual consensus
With regard to the implied Prohibition under Arbitration and Conciliation Act read under Section 34 to 36 in order to find the availability of recourse to challenge an award contained the statue and does not ipso facto prohibit a party for mutually agreeing for a second arbitral option. Further, the idea that their arbitration decision is binding does not rule out the possibility in a second appeal. The award that is finally binding indicates that it has a legal effect and will not preclude appellate arbitration.
One cannot ignore the fact that the parties may be concerned with the possibility of error in high stake disputes and appellate arbitration safeguard the interest of the integrity of arbitration process and protect the parties from any such errors. Similarly, the knowledge of having an appeal also encourages the parties to accomplish the arbitral proceedings expeditiously The pros of appeal in arbitration have been noted for the appellate arbitration, and also an optional appeal procedure has been made available to the process a greater and effective legitimacy.