Arbitral Award-Recourse to Court

The Act of 1996 makes provisions for the supervisory role of courts, for review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in cases of fraud or bias by the arbitrators, contravention of the rules of natural justice or action in excess of jurisdiction. The court cannot correct errors of the arbitrator. It can only quash the award leaving the parties free to begin the arbitration again, if so desired. The supervisory role of the court has been kept at minimum level and limiting the court's intervention is justified on the ground that the parties to the 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.

Recourse to court is made by an application for setting aside the award, within three months from the date of receipt of the award which period could be extended to further 30 days if the court is satisfied that the applicant was prevented by sufficient cause from making an application.

The arbitral award can be set aside on limited grounds as listed in section 34(2) of the Act of 1996. The grounds can be grouped in two categories: one, when a party makes an application to the court with the proof about procedural infirmity or irregularities and; two, when on an application the court finds that the subject matter is non-arbitral under the prevalent law or that the award is in conflict with the public policy of India.

Thus, the court could intervene where the error, irregularity or illegality of jurisdiction or procedure committed by the arbitral tribunal is so patent that it leaves on its decision an indelible stamp of infirmity or vice which cannot be established or cured on review.

The grounds on which the award, under procedural infirmity can be set aside are-lack of capacity of parties to conclude an arbitration agreement, lack of a valid arbitration agreement, lack of notice of appointment of an arbitrator or of the arbitral procedure or inability of a party to present its case, award dealt with matter not covered by submission to arbitration, composition of arbitral tribunal or conduct of arbitral proceedings contrary to the agreement of parties [section 34(2) of the Act of 1996].

The second category includes grounds for setting aside the arbitral award if it is found that the arbitral tribunal has travelled beyond the terms of reference. The tribunal cannot give an award contrary to the terms of the agreement/contract between the parties. Its jurisdiction flows from the terms of reference and a reference can be made only with regard to such disputes which are contemplated by the agreement.