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VIJAY K. TEOTIA (ADVOCATE)     09 January 2017

Arbitration award

In a matter arbitration award is pronounced. one party challenged the award before civil court. Now both parties wants the dispute to be resolved through mediation in arbitration proceedings. My query is that is it possible at this stage once award is declared? Can the court remand back the matter to the arbitrator for deciding afresh and decide through mediation? if possible kindly share relevant judgement.


 5 Replies

Prina Sharma   12 January 2021

Dear Sir, An arbitral award is the statement that follows after the determination of the issues by the arbitrator and there is no appeal provided under the Act against the arbitration award. It is very important to know that the arbitral award cannot be challenged by the parties as they please and the court cannot interfere with awards on its merits. An arbitrator is a judge who is appointed by the parties and therefore, an award passed by him should not be taken lightly. However, the law allows certain remedies against an award set by an arbitrator, and also to keep a check on his conduct and proceedings. Under the 1996 Arbitration and Conciliation Act, three remedies have been introduced into two groups to challenge and rectify the errors of an award as modification, remission and setting aside. The remedy for setting aside includes returning back the award to the Tribunal so that it can remove the defects of the same. If any one of the party challenges an Arbitration Award then it can consequently be set aside by a petition filed under Section 34 of the Act, and the losing party will hold every right to initiate a fresh Arbitration again. While dealing with the case of Steel Authority of India vs Indian Council of Arbitration (2015) SCC Online Del 13394, following the judgement of the Supreme Court of India in the case of Mcdermott International Inc vs Burn Standard Corporation Limited (2006) 11 scc 181, the Delhi High Court held that the order of High Court setting aside the award does not extend to the determination of the issues between the parties and therefore the principles of res judicata shall not apply Therefore, under the provision of Section 34 of the Act, an arbitral award can be set aside by the Court on the certain following grounds: (a) The party who made the application has the proof that: - a party was under some incapacity -the arbitration agreement is not valid - there was no proper notice of the appointment of the arbitration due to which the party was unable to present his case -contains decisions on matters which is beyond the scope of the submission to arbitration or the arbitration agreement (provided that, if the decision on the matters submitted to arbitration can be separated by the decisions on matters which were not submitted to arbitration, then only the decision on which the matter was not submitted can be considered to be set aside) -composition of the arbitral tribunal was not in accordance with the agreement of the parties (b) the court finds that: -the subject matter of the arbitration is not possible or is capable of settlement by an arbitration -there lies a conflict between the arbitral award with the public policy of India (it can be in conflict with the public policy of India if the making of the award has something to do with fraud or corruption or was in violation of Section 75 or Section 81 of the Act) The concerned Court holds the power to test and examine the award against the grounds that are provided in Section 34, and if the award is in contravention to any one of the grounds provided in the said procedural law then the court can set aside the award, but the concerned courts do not hold the power to remand or modify or alter back the award for reconsideration of the arbitral tribunal, in accordance with the law settled by the supreme court in Mcdermott case. Thus, the duty of the supervising courts can only be to set aside the award if it does not comply with the legal scrutiny. Thank you.

Archana Pandey   10 January 2022

If arbitration is ineffective and non-binding, any party or parties are at liberty to appeal this award without requiring any reasonable ground to appeal. But if the Arbitration is binding, then the party or the parties need a concrete reason to challenge the award in court, just as in the case of jury award.
Going forward, if there are errors in an arbitral award that has been passed and the simpler approach is to modify the arbitral award, the parties would be left with two options. Either they can arbitrate afresh, or they can approach the Court by way of a special leave petition under Article 136 of the Indian Constitution. It is likely that the parties would opt for the second option and start approaching the Court for any kind of modification that has to be made to the arbitral award, be it minor or major.

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