Written by - Rithik Aggarwal
Designation – Intern, Mediate Guru
Whenever after the arbitration proceedings an arbitral award is made in which it made in favor of one and against another, one against whom the award has been made tries and find out a way to proceed and he tries to seek some way out for setting aside the award, this can be made under Section 34 of Arbitration and Conciliation Act which lays the ground for setting aside of Arbitral Award.
Features of Section 34 of The Act,
1. Prohibits any recourse against arbitral award rather than the ground under Section 34 sub-section (1).
2. Sub-section 2 of Section 34 restricts the ground on which the award can be challenged
3. In subsection 3, promises a relatively short period in which the application for setting aside may be made.
4. It provides for remission of the award to the arbitral tribunal to correct its flaws.
Grounds for setting aside of Arbitral Award
Section 34 of the Act lays the grounds for setting aside the arbitral award
Parties incapable to enter into a contract
Invalid Agreement
No proper notification of the appointment of Arbitrator
Nature of Dispute
Composition of Arbitral Award not in accordance with the agreement
Arbitral Award in violation of public policy
Restraints
In terms of the limitation period for filing an application, Section 34(3) provides that an aggrieved party must file an appeal to set aside an arbitral order within three months of receiving it. Section 36 establishes the relevance of this by stating that the award becomes enforceable as soon as the limitation period under Section 34 expires. However, under section 33, the court may grant a 30-day postponement on the aggrieved party's request if the court is satisfied that there is sufficient cause based on the facts.
There is a general rule in the Civil procedure Code, 1908, that an executing court can execute the decree if the appellate court does not halt it. Similarly, if an application to set aside an arbitral award is filed under section 34 of the Arbitration Act, the executing court has no power or authority to carry out the award until and unless the application is rejected or refused under section 34.
A party to the arbitration agreement must apply for the award to be set aside under section 34. However, because he is a person claiming under that, a legal agent of any such party can apply for it. By law, an award that has been set aside is no longer valid. Setting it aside denotes that it has been deemed invalid. The parties revert to their previous positions in the dispute over their claims, and the case is once again open for resolution. Following the setting aside of an order, the parties have the choice of going back to arbitration or having the matter determined by a court of law.
In TPI Ltd. V. Union of India, the petitioner argued in a writ petition that there should be an inherent right to set aside an arbitral judgement on the reasons mentioned, and that if there isn't, section 34 should be ruled unconstitutional. The court dismissed the writ petition, holding that arbitration is an alternative forum for resolving a dispute, and that it is up to the parties to opt in on their own free will for their disputes and whether they mutually agree to the arbitral tribunal's conclusion. There is no statutory requirement for the parties to use the arbitration procedure.
The Indian Arbitration Act 1996, Part 1 (Section 34), specifies the grounds for challenging or setting aside an award, but only for awards made inside a state, not for awards made abroad. The Supreme Court held on September 6, 2012, in Bharat Aluminium Company V. Kaiser Aluminium Technical Service, that the Indian Arbitration Act should be read to give effect to the goal or purpose of the Indian parliament who established the statute. The Supreme Court's rulings are only applicable to arbitration agreements signed after September 6, 2012.
As a result, regardless of whether parties choose to apply the Indian Arbitration Act or not, part 1 of the Arbitration and Conciliation Act does not apply to arbitrations taking place outside of India.
Conclusion
India has a modern and efficient Arbitration Act. Section 34 and 37 provides for recourse against an arbitral award which may be set aside by a court on certain specified grounds. All these Grounds are common to both domestic as well as international arbitral awards. The ground of public policy should only be interpreted as far as it aims towards broadening the public interest and not violating the basic notions of Indian laws. The judicial intervention should also be minimal for success and further promotion of Arbitration in India.