Judicial Intervention in The Arbitral Award
Judicial Intervention in The Arbitral Award
ARBITRATION
VIVASVAN GAUTAM
902
C
LLB 3 YEARS COURSE
JUDICIAL INTERFERENCE
IN ARBITRATION
Arbitration Act 1940
The first major consolidated law governing arbitration in
India was the Arbitration Act 1940, which was based on
the English and Welsh Arbitration Act 1934. Section 30
of the 1940 act provided for the setting aside of awards.
(1) More often than not, awards were set aside and
proceedings conducted under the act were subject to
severe criticism. The Supreme Court was among the
critics of the act, as seen in judgments such as Guru Nanak
Foundation v Rattan Singh1 in which it observed that:
the way in which the proceedings under the Act are conducted and without
exception challenged in Courts, has made Lawyers laugh and legal
philosophers weep… Informal Forum chosen by the parties for expeditious
disposal of their disputes has by the decisions of the Court been clothed with
'legalese' of unforeseeable complexity.
1
(1981 4 SCC 634)
Arbitration and Conciliation Act 1996
2
(2000) 4 SCC 539 at p541
Thus, Section 5 of the act provides that no judicial
authority may intervene in arbitration except as provided
for in the act.3
3
Extent of judicial intervention: "Notwithstanding anything contained in
any other law for the time being in force, in matters governed by this
Part, no judicial authority shall intervene except so provided in this
Part".
Section 34 (prior to 2015 amendment)
"very unruly horse and once you get astride it you never know where it will
carry you"6
The Indian courts have also dubbed it an 'unruly horse',
thus giving the impression that it can never be defined.7
4
A contract against public policy under Section 23 of the Contract Act
1872
5
In Holman v Johnson, Lord Mansfield stated that the principle of public
policy is ex dolo malo non oritur actio which means No court of law will lend
its aid to a party which acts immorally or illegally
6
Richardson v Mellish [1824] 2 Bligh 229, 242
7
Oil & Natural Gas Corporation Ltd v Saw Pipes Ltd (2003) 5 SCC 705
However, some judges have attempted to give structure
to the concept of public policy with respect to the setting
aside of awards.
In this regard, it is necessary to analyse the Supreme
Court's landmark decisions in Renusagar 8 and Saw Pipes 9
Renusagar
8
Renusagar Power Co Ltd v General Electric Co (1994) SCC Supl (1)
644.
9
Ibid.
Saw Pipes
On the one hand, the law set out by the Supreme Court in
Saw Pipes led many other courts to include any error of
law within the scope of Section 34, including the
subsequent decisions of the Supreme Court, thus opening
the floodgates.10
On the other hand, some of the subsequent benches
acknowledged the criticism of Saw Pipes but also held
10
ONGC Ltd v Garware Shipping Corporation Ltd, 2007 (13) SCC 434
that they were bound to observe it under the principle of
stare decisis.11
13
Supplementary Report to Report 246, government of India.
14
Special Leave Petition (C) No. 3484-85 of 2020
perverse. The Court observed that the ground of patent
illegality is available for setting aside a domestic award, if
the decision of the arbitrator is found to be perverse, or,
so irrational that no reasonable person would have arrived
at the same; or, the construction of the contract is such
that no fair or reasonable person would take; or, that the
view of the arbitrator is not even a possible view.
15
New No. O.M.P. (COMM)392/2020) & I.A.
basis of subsequent findings which may have been
rendered by a later Arbitral Tribunal.
16
Delhi HC O.M.P. (COMM) 399/2019 & IA No.13333/2019 (stay)
4. Whether the interpretation of the terms of the
contract by the Arbitral Tribunal is erroneous and
against the public policy of India?