Introduction to the Arbitral Award:-
Arbitration refers to the process of dispute resolution between parties through an arbitral tribunal which will be appointed by the parties themselves or by the court at the request of the parties. India’s arbitration law follows the law of English Arbitration and based on the United Nations Commission on International Trade Law (UNCITRAL Model Law). The parliament enacts the Arbitration and Conciliatio0n Act, 1996 which removes many serious defects of the earlier arbitration law. And also incorporates modern concepts of arbitration which are internationally accepted.
The arbitral award has been treated at par with the decree of the court. The arbitral award will be treated in the same manner as a decree of a law court. There is no specified provision for appeal against the arbitral award and to get some remedy against it. But what an aggrieved party can do is to recourse the law court for setting aside the arbitration award.
The Supreme Court in a case held that “an arbitrator is a judge, to whom the parties appoint themselves. And, the award passed by the arbitrator judge should not be taken lightly”. But it also doesn’t mean that there will be no check on the arbitrator’s conduct. In order to assure proper conduct of the proceeding, the law provides certain remedies against an arbitral award.
The repealed Act of 1940 provided three types of remedies against an arbitral award:-
- Setting aside
But under the Act of 1996, the remedies are as follows:
- With reference to the remedy for rectification of errors, it has been handed over to the parties and the Tribunal.
- The remedy for setting aside the matter has been constructed by returning back the award to the Tribunal for removal of its defects.
Section 34 of the Act provides grounds for setting aside an arbitral award. These grounds are:
Incapacity of party
As per Section 9 of the 1996 Act, a party may apply to the court for the appointment of a guardian for a minor or a person of unsound mind for the purpose of arbitral proceedings. When the guardian represents the incompetent person, the ground of inability/incapacity will cease to apply.
The invalidity of the arbitration agreement
In-State of U.P. v. Allied Constructions the court held that the validity of an agreement has to be tested on the basis of law to which the parties have subjected it. Where there is no such indication, the validity would be examined according to the law which is in force.
The parties should get the Proper notice regarding arbitral proceedings
In Dulal Podda v. Executive Engineer, Dona Canal Division, the court observed that appointment of an arbitrator on the behalf of the appellant without providing notice to the respondent, ex parte award given by the arbitrator will be treated illegal and can be set aside.
Nature of dispute which is not falling under the terms
In Rajinder Kishan Kumar v. UOI, a matter was referred to arbitration under a writ petition. The writ petition contained no claim of compensation for damage to the potentiality of the land because of the opposing party discharging effluents and slurry on the land. The award of such compensation was held to be outside the scope of reference hence liable to be set aside.
The procedure not being in accordance with the agreement
In-State Trading Corp. v. Molasses Co., a permanent arbitral institution, did not allow a company to be represented by its Law Officer, who was a full-time employee of the company. The Court observed that it was the misconduct of the arbitrator as well as the arbitration proceedings.
Two more grounds are mentioned under Section 34(2) (b), which will be left to the court to decide whether the arbitral award to be set aside or not. These are as follows:
- When a dispute is not capable of settlement by the arbitral process.
- When the disputed conflict is in public policy of India.
If requires and if it is separable, the court can set aside an arbitral award partially.
- We can trace the concept of Section 34 from Section 34 of the UNCITRAL Model Law. And, For setting aside the arbitral award it is necessary for the parties to make an application under Section 34. The application must contain the ground of challenge. Section 34 does not prescribe any special form for making an application. But, the written statement must be filed within the limitation period.
In Brijendra Nath v. Mayank, the court held that where the parties have acted upon the arbitral award during the pendency of the application challenging its validity, it would amount to estoppels against attacking the award.
When an arbitral award is aside by the court then it will no longer remain enforceable by law. The parties will restore their former position. Setting aside an award indicates that it is rejected as invalid. Once again, the matter will be open for decision making and the parties are free to go back, either to arbitration or through Court.
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