Author: Niranjana Visalakshi A, 5th Year B.COM.LL.B(Hons), School of Excellence in Law
INTRODUCTION
The Arbitration and Conciliation Act, 1996, Section 34, lists the reasons a court may reject and dispute an arbitral ruling. It states that a party may file an application with the court within three months after obtaining the award, with a 30-day extension possible under specific circumstances. The section lists a number of reasons that an award may be set aside, including a party’s incapacity, an invalid arbitration agreement, improper notification or the incapacity to submit a case, misconduct on the part of the tribunal, and a decision that deals with subjects unrelated to the arbitration agreement. The award may also be revoked if it is against Indian national policy, which includes situations involving fraud, corruption, or violations of basic legal norms. The goal of the court’s minimum involvement is to maintain arbitration’s efficacy and efficiency as a means of resolving disputes. The scope of public policy has been further defined by amendments in 2015 and 2019, which have also emphasized limited court involvement and provided timetables to speed the arbitration procedure.
APPLICATION TO SET ASIDE THE AWARD:
This application is filed under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside an arbitral award.
The parties involved in the arbitration process are [Name of Applicant], who is the applicant seeking to set aside the award, and [Name of Respondent], who is the opposing party.
The arbitration proceedings were conducted on the basis of an arbitration agreement dated [Date], with the arbitral award being issued on [Date of Award].
The panel of arbitrators comprised [Names of Arbitrators]. The grounds for setting aside the award are detailed below, supported by the relevant documents and an affidavit verifying the facts stated in this application.
GROUNDS FOR SETTING ASIDE ARBITRAL AWARD:
Incapacity of Party :
The party making the application or any party involved in the arbitration agreement was under some incapacity at the time of the arbitration proceedings. This includes situations where a party was legally incapable of entering into the arbitration agreement.
Invalid Arbitration Agreement:
The parties have exposed the arbitration agreement to a statute that renders it void. This may involve cases where the agreement was entered into under duress, fraud, or misrepresentation, or where the terms of the agreement contravene applicable legal statutes.
Improper Notice or Inability to Present Case:
The petitioner did not get the appropriate notice of the arbitrator’s appointment or the arbitral proceedings.
Additionally, if the applicant was otherwise unable to present their case due to procedural issues or lack of opportunity, this ground can be invoked.
Arbitral Tribunal Misconduct:
Unless such agreement conflicted with a provision of the Arbitration and Conciliation Act, 1996, the parties’ agreement was not followed in the composition of the arbitral panel or the arbitral proceedings. This includes instances where the arbitrators acted beyond their mandate or there were procedural irregularities that affected the fairness of the process.
Dispute Not Contemplated by Agreement:
The arbitral award deals with a dispute not falling within the terms of the submission to arbitration. Additionally, if the award contains decisions on matters beyond the scope of the submission to arbitration, it can be set aside to the extent that it contains such decisions.
Conflict with Public Policy of India:
The arbitral award is in conflict with the public policy of India. This includes cases where the award:
Was induced or affected by fraud or corruption.
Is in contravention of the fundamental policy of Indian law.
Is in conflict with the most basic notions of morality or justice.
Violates the provisions of Sections 75 or 81 of the Arbitration and Conciliation Act, 1996, which pertain to the confidentiality of conciliation proceedings and the admissibility of evidence in other proceedings.
Patently Illegal Award (for domestic awards):
If the award is patently illegal and the illegality goes to the root of the matter, the court can set it aside. This ground ensures that awards that fundamentally violate legal principles or statutory provisions do not stand.
By addressing these grounds, Section 34 ensures that arbitral awards are fair, just, and in accordance with the principles of law and public policy, while also maintaining the integrity and efficiency of the arbitration process by limiting judicial interference to specific, well-defined circumstances.
AMENDMENT IN 2015 AND 2019:
The amendments to Section 34 of the Arbitration and Conciliation Act, 1996, particularly those made in 2015 and 2019, have significantly refined the scope and application of this provision. The 2015 amendment clarified the interpretation of “public policy of India,” limiting it to awards induced by fraud or corruption, contraventions of fundamental policy of Indian law, and conflicts with the most basic notions of morality or justice. This aimed to reduce judicial interference in arbitral awards and promote finality. Additionally, the 2019 amendment introduced a strict timeline for filing an application to set aside an award, emphasizing the need for expediency and efficiency in arbitration proceedings. Together, these amendments have strengthened the arbitration framework by ensuring that judicial intervention is minimized and only invoked under clearly defined, exceptional circumstances, thereby bolstering the credibility and effectiveness of arbitration as an alternative dispute resolution mechanism in India.
LANDMARK CASES OF SETTING ASIDE OF ARBITRAL AWARD:
Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd
In the 2003 case of Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd., the Court came to the conclusion that it had extensive jurisdiction as an appellate/revision court in the event of an application under Section 34 to set aside an award. It was also emphasized that anything pertaining to the public interest and benefit is referred to as “public policy.” But since the reward clearly violates legal restrictions, it cannot be said to be in the public interest. Such an award or decision is likely to impair the administration of justice.
AKM Enterprises Pvt. Ltd. v. Ahluwalia Contract (India) Ltd. (2016)
In the case of AKM Enterprises Pvt. Ltd. v. Ahluwalia Contract (India) Ltd. (2016), an arbitral award was overturned on the grounds that the arbitrator would not hear a countercase of the applicant on the merits because no notice had been given prior to the subject assertion, meaning the council was not required to take action. This is contrary to established legal precedent, which states that the purpose of the counter case is to restrict the variety of procedures and that in such cases, the court would have the authority to arbitrate upon them even in the absence of prior notification.
CONCLUSION:
An essential method for preserving the harmony between the finality of arbitral rulings and the ideals of justice and fairness is Section 34 of the Arbitration and Conciliation Act, 1996. It enables parties to request judicial review of arbitral results on certain, clearly stated grounds, guaranteeing that the awards are free from substance and procedural flaws in addition to being legally sound. Section 34 preserves the integrity of the arbitration process while defending the interests of the parties involved by specifying restricted grounds for setting aside an award, such as incapacity, invalid agreement, improper notice, tribunal misconduct, decisions beyond the arbitration agreement, and conflict with public policy. The legal framework inside is further strengthened by the addition of public policy concerns and the safeguards against fraud and corruption.
FAQ:
What is the purpose of Section 34 of the Arbitration and Conciliation Act, 1996?
Section 34 allows parties to apply for setting aside an arbitral award on specific grounds, ensuring that the awards are legally sound and free from procedural and substantive flaws.
What is the time limit for filing an application to set aside an arbitral award?
An application must be filed within three months from the date the party received the award, with a possible extension of 30 days under specific circumstances.
What are the grounds for setting aside an arbitral award under Section 34?
The grounds include the incapacity of a party, an invalid arbitration agreement, improper notice or inability to present a case, arbitral tribunal misconduct, decisions beyond the arbitration agreement, conflict with public policy, and patently illegal awards.
How did the 2015 and 2019 amendment to Section 34 impact the interpretation of public policy?
The 2015 amendment clarified that public policy includes awards affected by fraud, corruption, contravention of Indian law’s fundamental policy, and conflict with basic notions of morality or justice, thereby limiting the scope of judicial interference and The 2019 amendment introduced a strict timeline for filing an application to set aside an award, emphasizing the need for expediency and efficiency in arbitration proceedings.
