Arbitration is a legitimate strategy, which happens outside the courts, yet at the same time results in a last and lawfully restricting decision like a court judgment. Arbitration is an adaptable strategy for dispute goals, which can give a speedy, cheap, secret, reasonable and last solution for a dispute. It includes the assurance of the dispute by at least one free outsider instead of by a court. The outsiders, called arbitrators, are named by or for the benefit of the gatherings in dispute. The arbitration is led as per the terms of the party’s arbitration understanding, which is generally found in the arrangements of a business contract between the parties.
Grounds for setting aside an arbitration award
Domestic Arbitral award-
A “domestic award” would be an award that is accepted in an arbitration hearing held in India. Furthermore, an award rendered in a non-conventional nation during an international commercial arbitration is likewise considered a “domestic award.”
Chapter VII, “Recourse against Arbitral Award,” addresses the challenges to the arbitral awards. Section 34 is the only section in this chapter. The annulment of the arbitral award is covered in this section. With very few exceptions, this section is based on UNCITRAL Model Article 34. Section 34 is only applicable to domestic awards or awards made in India.
The remedy under this section is available only in case of domestic arbitration. Thus, an application filed under this section for setting aside an award made in connection with a contract relating to international commercial arbitration will have no applicability.
An award can be set aside only in the three contingencies;
-The composition of arbitral tribunal was not in accordance with the agreement;
-The arbitral procedure was not in accordance with the agreement between the parties;
-In the absence of such an agreement, the composition of the arbitral tribunal or arbitration procedure was not in accordance with Part I of the Act.
An award will be entirely void if;
- The arbitrator was not validly appointed or lacked necessary qualifications.
- The parties never made any binding arbitration agreement.
- the matters in dispute fell outside the scope of the agreement.
- the whole of the relief granted lay outside the powers of the arbitrator.
Foreign Arbitral award
Part II of the Act of 1996 deals with the Enforcement of Certain Foreign Awards. It has two chapters. Chapter I, section 44 to 50, deals with New York Convention awards; and chapter II, section 53 to 60, deals with Geneva Convention awards. The provisions of Part II of the Act of 1996 give effect to both the New York Convention and the Geneva Convention.
In order to be considered as a foreign award (for the purposes of the Act), the same must fulfill two requirements;
- it must deal with differences arising out of a legal relationship (whether contractual or not) considered as commercial under the laws in force in India.
- the country where the award has been issued must be a convention country. A convention country is a member country of the New York Convention and notified by the Government of India in the Official Gazette It is generally accepted that an international arbitration award is final and binding.
- There are several requirements for a foreign arbitral award to be enforceable under the Act of 1996.
- Commercial transaction: The award must be given in a convention country to resolve commercial disputes arising out of a legal relationship.
- Written agreement: The Geneva Convention and the New York Convention provide that a foreign arbitral agreement must be made in writing, although it needs not to be worded formally or be in accordance with a particular format.
- The agreement must be valid: The foreign award must be valid and should arise from an enforceable commercial agreement.
- The award must be unambiguous: To give effect to an award, it must be clear, unambiguous and capable of resolution under Indian law.
In Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust, (2012) 1 SCC 455, the supreme court of India has dealt the important arrangements under the Code of Civil Procedure, 1908 for the honor of compensatory and correctional expenses for the successful party. The Supreme Court in this landmark judgment has recommended a climb in the quantum of expenses on people enjoying negligible and vexatious cases, which are stopping up the equity conveyance framework in the nation.
The Supreme Court, following its earlier decision, in appeal in Bhatia International vs Bulk Trading S. A. & Anr 2002, Trading held that even though there was no provision in Part-II of the Act providing for the challenge to a foreign award, a petition to set aside the same would lie under Sec. 34- Part I of the Act. The Court held that Indian Law necessarily would need to be followed to execute the award. The Court held that a challenge to a foreign award in India would have to meet the expanded scope of Public Policy as laid down in Saw Pipes Case i.e. to meet a challenge on merits contending that the award is ‘patently illegal’.
The Parliament has ordered the Arbitration and Conciliation Act so as to give expedient cure by arbitration and to accomplish this target, section 5 of the Act puts a complete bar on the mediation of the courts in issues where there exists an arbitration statement. The law of arbitration in India is, particularly at its intersection. As things stand today, arbitration is ready to impact extraordinary changes to the manners by which dispute resolution is conducted. It carries with it the seriousness and irrevocability of the legal procedure and couples it with the procedural adaptabilities of non-traditional dispute goals techniques. There is, however, a similarly pressing need to significantly enhance the arbitral procedures in India.