Any Arbitration under the Arbitration and Conciliation Act, 1996 (Hereinafter “the act”) can be challenged after the post-award stage, not before that. Section 34 of the Act provides for the grounds to challenge the arbitration award. Under the UNCITRAL Model Law, 1996 any arbitration can be challenged at a pre-award period.
The following are the grounds of challenge under section 34 of the act:-
The parties to the agreement are under some sort of incapacity;
The arbitration agreement is not valid under the law it falls;
No proper notice was given for the appointment of the arbitrator or for the arbitral proceedings or was unable to present his case;
The award contains a decision on the matter beyond the scope of the arbitration;
The composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitration agreement;
The subject matter of dispute cannot be settled by arbitration under Indian law; or
The enforcement of the award would be contrary to Indian public policy.
The grounds provided under section 34 are exhaustive because of the use of the word “only” at the very beginning of section 34(2). A bare reading to the provision state that the grounds are not exhaustive. The two provisions supporting this proposition are: (1) the section 13 of the act which deals with the challenge procedure and it provides that if the challenge is not successful, then the award may afterward be challenged on the same grounds for setting aside on which arbitrator was challenged. (2) Rejection of the plea regarding his lack of jurisdiction is a ground for making an application of setting aside an award.
The term public policy has not been defined anywhere. Though a wide range of topics come under the general head of public policy, some of the matters have been directly mentioned in the Indian Contract Act 1872 section 24-30, as against the public policy of India in the shape of the void agreement. In the earlier decision, the concept of public policy is very strict and any violation under it will render the contract void
The difference between a foreign award and the domestic award is that the foreign award is regulated by the New York Convention and the later is regulated by the domestic act. Clause (b) of section 48(2) under part II of the inter alia provides that enforcement of an arbitral award may be refused in the case the court finds that the enforcement of the award would be contrary to the public policy here in India. There is a difference between public policy governed by domestic law and public policy in case of involving foreign elements. Although the concept of the public policy is the same it differs in the application.
This article does not intend to hurt the sentiments of any individual, community, sect, or religion, etcetera. This article is based purely on the author’s personal opinion and views in the exercise of the Fundamental Rights guaranteed under Article 19(1)(A) and other related laws being enforced in India for the time being.