Arbitration is a form of dispute settlement system where the parties settle their disputes out of Court through an arbitral tribunal. The purpose of arbitration proceedings is to cut-short delay and to provide speedy and inexpensive Justice.
The earlier arbitration law in India was based on the English Arbitration Law. However, the subsequent advancements in arbitration law on the global scale prompted the substitution of the old Arbitration Act 1940 with the new Arbitration and Conciliation Act 1996. The Arbitration and Conciliation Act, 1996 is based on the UNCITRAL model of arbitration.
There is no provision for appeal against an arbitral award and it is final and binding between the parties to the arbitration proceedings. However, an aggrieved party can move to the court of law enjoying jurisdiction to hear the matter for setting aside the arbitral award on certain grounds specified in Section 34 of the Arbitration and Conciliation Act, 1996.
The present article analyses the rectification of domestic arbitral awards concerning Section 34 of the 1994 Act which lays down the conditions under which an arbitral award may be set aside.
Rectification of Domestic Arbitral Award
The mechanism provided in the 1996 Act aims to limit judicial intervention in arbitral proceedings. There is a substantial departure from the Act of 1940. The Arbitration Act of 1940 provided for three recourse against an arbitral award;
(b) remission and
(c) setting aside.
The recourses as mentioned above are now grouped into two. The Arbitral Tribunal, as well as the parties to the arbitration proceedings, can address the rectification of an award without the intervention of the Court.
As per the Arbitration and Conciliation Act, 1996, there is no provision to review the award passed by the Arbitral Tribunal on its own. There is no scope under the Act to review its award. A party to the proceedings who has suffered as a result of the arbitral award is required to challenge the same in accordance with law. When a party to the arbitration proceedings has not challenged the arbitral award by making an application under Section 34, the question of conducting a de novo inquiry by setting aside the award passed by the Tribunal on its own does not arise at all.
The 1996 Act makes provisions for the supervisory role of Courts, and for the review of the arbitral award only to ensure fairness. The intervention of the Court is envisaged in a handful of circumstances only, like, in the case of fraud or bias by the Arbitrators, violation of natural justice, etc.
The Court cannot correct errors of Arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if so desired. Thus, the scheme of the provision aims at keeping the intervention of the Court to a minimum, and this can be justified as parties to the Arbitration agreement make a conscious decision to exclude the Court’s jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.
The parties cannot appeal against an arbitral award on its merits, and the court cannot interfere in such a situation. The Apex Court has observed that “an arbitrator is a judge appointed by the parties and as such an award passed by him is not to be lightly interfered with.”
But this does not imply that there is no power vested in the court to keep an eye on the arbitrator’s actions. Keeping in mind the end goal, which is to guarantee legitimate action from the arbitrator in the interest of justice, the law permits certain cures against an award.
It is apparent that where a Court or quasi-judicial authority having jurisdiction to adjudicate on merit proceeds to do so, its judgment or order can be reviewed on merit only if the Court or the quasi-judicial authority is vested with the power of review by express provision or by necessary implication. The order passed is liable to be recalled and reviewed not because it is found to be erroneous, but because it was passed in a proceeding which was itself vitiated by an error of procedure or mistake which went to the root of the matter and invalidated the entire proceedings.