Setting Aside The Arbtrial Award In India

KEY TAKEAWAYS

• • The final decision by an arbitral tribunal is stated to be an arbitral award by the tribunal. An arbitral award is conclusive and binding but there are few heads under which such an award could be set aside. Arbitration and Conciliation Act, 1996
• • Section 33 of the Act defines the arbitral award
• • Section 34 of arbitration Act states that, when the award can be set aside and under what circumstances.

INTRODUCTION

There is a mechanism that is built into the arbitration act that can be used when an award is made by the tribunal, which must be done within a year, unless the court grants an extension. The award must be made by writing, signed by the members or members who make up the tribunal, the reasons why it was made and as well as the date and location.

The explanation and amendment of an arbitral award, as defined in Section 33, establishes a procedure whereby, at the tribunal's discretion, it may do so within thirty days of receiving the award if it deems the proposal for the correction to be appropriate. In addition, the tribunal may extend the period of time in which it may undertake the clarification of the award or the understanding of the award. If the tribunal makes a mistake while issuing the award, it may in some circumstances; due to the demand of parties it issues a new award as a result of the proceedings.

It is an established truth that anybody can make a decision that may be overturned; even important rulings by the Supreme Court have been reversed. That is why a tool to aid in reversing an award made by the arbitration panel was required. It should be comprehended that if there is an arbitration agreement or clause in an agreement, a lawsuit is precluded by arbitration. This means that one cannot file a lawsuit until the parties have exhausted their options in arbitration. Arbitration must be completed within a year, unless the Honourable High Court of the Respected Jurisdiction grants an extension; if the extension is denied, the arbitration tribunal's mandate is void.

PROCEDURE

When a decision is made, it has the force of law and must be carried out in accordance with the rules outlined in the Code of Civil Procedure, 1908. The legislation itself establishes a mechanism under section 34 because there may be instances where the parties are not happy with the award.

1. The arbitration agreement was invalid under the applicable law,
2. One of the parties received insufficient notice of the arbitrator's appointment or of the arbitration proceedings.
3. The award dealt with a dispute not covered by the arbitration agreement or not covered by its terms.
4. It contained decisions that went further than the scope of the submissions.
5. The parties' agreement was not followed in terms of the arbitral tribunal's makeup or the arbitral process.
6. The dispute's subject matter could not be resolved by arbitration, or
7. The arbitral ruling was inconsistent with the Indian public policy.

LIMITATION FOR FILING APPLICATION

Each remedy has a time restriction, and section 34(3) of the Civil Practice and Remedies Act specifies that the time limit for putting aside an arbitral award is three months after the day the arbitral decision was rendered. The process for overturning an arbitral ruling has undergone certain changes. The reform was created to incorporate a more friendly method to prevent because it ultimately decreases the number of cases that floods the Indian system and favors alternative dispute resolution processes. The amendments made to the act are substantial in nature as it eventually curtails the ambit of judicial interpretation and it makes the process much easier and quicker, further the act also has the effect of a judicial interference in arbitration.

It is very evident from a simple reading of Section 34(3) which is read with the caveat that the motion for setting aside arbitral award must be submitted within three months. If there is good reason, the time may be extended for thirty days, but not more that. When a special law prescribes a specific period of restriction as well as a provision for extension up to a specified time limit, on the showing of sufficient cause, Section 29 (2) of the Limitation Act states that the limitation period is given a prescription under the special law which shall overcome, to the extent that the regulations of the Limitation Act continue to stand excluded.

Due to the terms of Section 29 (2) of the Limitation Act, the provisions of Section 5 of the Limitation Act would not be applicable.

NOTICE NOT GIVEN TO PARTIES

There are a few other reasons that were added and changed by the amendment act of 2015. Section 34(2)(b) of that act gives the court authority to consider whether to set aside an arbitral judgment. When the issue between the parties cannot be resolved via the complete arbitration procedure, or when the matter is not capable of being arbitrated. The prize as given is in opposition to our country's national policy.

The Arbitral Tribunal must establish the deadline for filing the statements in accordance with Section 23(1). The parties must get a sufficient notice informing them of this decision. According to Section 24(2), the parties must be provided adequate notice prior to any hearing or meeting of the Tribunal that involves the inspection of papers, commodities, or other property.

If a party is barred from coming before the Tribunal and making his case for whatever legitimate reason, the award may be overturned because the party will be considered to have been denied the chance to be heard under the concept of natural justice.

The court noted that "it is a typical situation where the arbitrator relation to the individual the proceedings and also misconducted himself" in Vijay Kumar v. Bathinda Central Co-operative Bank and ors. On May 17, 2010, the arbitrator conducted the inaugural and only hearing. No issues or talking points were framed. Four employee affidavits were submitted by the bank. Appellant was still not given the chance to question them in a cross-examination. He was not allowed to present any supporting documentation. Law, process, and the rules of justice werecompletely ignored. Thus, it would appear that the appellant was unable to make his case.

In the case Municipal Corp. of Greater Mumbai v. Prestress Products, the Bombay high court challenged the purpose of the amendment since, in its view, the statute placed constraints on judicial intervention and created obstacles for contesting awards. As a result, it may be said that even in arbitration, there is a system for reversing an arbitration verdict and that there is also a process for further appeal in higher courts.

INCAPACITY OF PARTIES

The decision will not be enforceable on a party to the arbitration who is incapable of protecting his own interests and who is not supported by a person who can do so, and it may be set aside on that party's application. A party who is a juvenile or an individual of unsound mind must be appropriately represented by a guardian in order for the award to be upheld. A contract's award cannot bind such a person since they are incapable of attaching themselves to it.

He may ask the court to appoint a guardian for a youngster or a person who is mentally ill for the purpose of arbitral proceedings under Section 9 of the 1996 Act. When the incapacitated individual is represented by a guardian, the basis for the ruling would no longer be valid.

NOTICE NOT GIVEN TO PARTIES

In accordance with Section 34(2)(a)(iii), an award may be challenged if a party did not get appropriate notice of the appointment of the arbitrator, the arbitral procedures, or the party's inability to submit his case for any other reason.

The Arbitral Tribunal must establish the deadline for filing the statements in accordance with Section 23(1). The parties must get a sufficient notice informing them of this decision. The parties must be given adequate notice of any hearing or conference of the Tribunal for the purpose of inspecting papers, commodities, or other property, according to Section 24(2).

The award may be overturned if a party is barred for a justifiable reason from coming before the Tribunal and presenting his case, since this violates the concept of natural justice because the party was denied the chance to be heard.

PUBLIC POLICY

The Arbitration and Conciliation Act, 1996 (subsequently referred to as "the Act") provides that if "the arbitral award is in contradiction with the public policy of India," the Court may set aside the judgment. However, the Act doesn't provide a definition for the phrase "public policy." An award is only in violation of India's public policy if, as stated in the interpretation to the aforementioned section, "the preparation of the award was impacted or affected by fraud or corruption or was in contravention of sections 75 or section 81; ii. It is in dispute with the fundamental policy of Indian law;"

An arbitration award can only be revoked if it is contrary to Indian public policy, according to a recent ruling of the Hon'ble Supreme Court of India in the case of Haryana Tourism Limited vs. Kandhari Beverages Limited, dated 11.01.2022. The ruling was made by a bench made up of Hon'ble Justices Mr. M R Shah and B V Nagarathna. An appeal brought by Haryana Tourism Ltd against a decision of the Hon. Punjab and Haryana High Court, which invalidated an award made by the arbitrator in 2005 coupled with an order made by the Additional District Judge, Chandigarh, was being heard by the Hon. Supreme Court

INVALIDITY OF AGREEMENT

An agreement's legality may be contested on any of the grounds that a contract's legality may be contested. When an arbitration clause is part of a contract, the contract's invalidity renders the arbitration clause ineffective.

In State of U.P. v. Allied Constructions, the court determined that an agreement's legality must be determined in accordance with the laws that the parties have submitted it to. If there is no evidence as such, the legality would be assessed in accordance with the applicable legislation.

FOREIGN AWARD

Foreign awards are not subject to grounds for challenging awards listed in Part I (section 34) of the Indian Arbitration Act. In Bharat Aluminum Co. v. Kaiser Aluminum Technical Service Inc. on September 6, 2012, the Supreme Court re-examined its earlier rulings and came to a conclusion that the Indian Arbitration Act should be read so as to carry out the intentions of the Indian Parliament.

Due to errors in these prior judgments, the court in this case overruled its earlier decisions in the instances of Bhatia International v. Bulk Trading S.A. &Anr and Venture Global Eng v. Satyam Computer Services Ltd &Anr.

Whether or whether the parties opted to use the Indian Arbitration Act, Part I of the Indian Arbitration Act is not applicable to arbitrations held outside the India.

Most significantly, these Supreme Court conclusions only apply to arbitration agreements signed after September 6, 2012. Therefore, regardless of the fact that the Supreme Court has ruled that certain judgments were wrong and should have been overturned, any disputes arising under arbitration agreements signed into up until September 6, 2012 will be resolved in accordance with earlier precedents.

REMISSION BY TRIBUNAL

When a request to annual an arbitral award is submitted, the court may choose to postpone the proceedings for a certain amount of time in order to give the tribunal time to address and resolve the basis for the objection.

In T.N. Electricity Board v. Bridge Tunnel Constructions, the court decided that where a jurisdictional mistake taints an award, the court has the authority to remand the award to the arbitrator for correction.

After such an adjournment, the arbitral tribunal will restart the arbitration and take the necessary steps to get rid of the grounds. Only the issues stated in the application under Section 34 may be the subject of the resumed proceedings.

It could be required to update the award and reflect new results. After that, the court would decide if the arguments made in favor of the award have been refuted and whether to set it aside.

CONCLUSION

As a result, we may conclude that since the national law is solemnly based on the UNCITRAL model law, the legislation of India regarding the setting aside of arbitral awards is in accordance with it. However, the Supreme Court's interpretation in numerous cases, such as Bhatia International, has brought up important difficulties that have been partially answered in the BAL Co case. Throughout order for arbitration to be effective, court participation should be minimal, and this practise has to be reinforced in India.

Learn the practical aspects of CrPC HERE, CPC HERE, IPC HERE, Evidence Act HERE, Family Laws HERE, DV Act HERE