Arbitration Award Can Be Challenged Within 3 Months Of Legal Effect And Finality To The Award; Objections After The Limitation Period Will Be Dismissed


Arbitration Award Can Be Challenged Within 3 Months Of Legal Effect And Finality To The Award; Objections After The Limitation Period Will Be Dismissed

GENERAL OVERVIEW

  • A Bench of Justices Indu Malhotra and Ajay Rastogi held that the limitation period to file a petition under Section 34 of the Arbitration and Conciliation Act will commence as soon as the relevant parties avail their signed copy of the arbitration award.
  • This case that led to this decision was Haryana Bijli Vitran Nigam Ltd v. M/s Navigant Technologies Pvt Ltd.

FURTHER DETAILS

  • The Bench observed that there will be no finality to the award, till the moment it is signed, meaning that as soon as the arbitral tribunal signs it, it has a legal effect.
  • A petition was filed by Bijli Vitran Nigam on 10th September 2018- against the arbitration award passed in favour of Navigant Technologies Pvt Ltd, which was signed by two of the three arbitrators on 27th, April 2018.
  • The three member panel/arbitral tribunal passed the arbitration award, with two of the members in favour of Navigant technologies, and one member announced their dissenting opinion.

FURTHER DETAILS

  • The same petition was dismissed by the Civil Court on the grounds that as per Section 34(3) of the Arbitration and Conciliation Act, any objections must be filed within three months of signing of the arbitration award, and that even if the petitioner has been provided with the benefit of 30 days as mentioned in the Act, he should have filed the petition on 26th August 2018, and not any further, and the High Court upheld this order.
  • The Supreme Court took note of the fact that even though two of the arbitrators had signed the award on 27th April, the parties only availed their copy on 12th May 2018, and the third arbitrator only expressed their dissenting opinion on 19th May. 
  • Therefore, the copies of the signed award along with the dissenting opinion were handed over to the parties and arbitrators only on 19th May 2019.

CURRENT SCENARIO

  • "There is only one date recognised by law i.e. the date on which a signed copy of the final award is received by the parties, from which the period of limitation for filing objections would start ticking. There can be no finality in the award, except after it is signed, because signing of the award gives legal effect and finality to the award." The Apex Court observed.
  • The Court continued to observe that- "the date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Indian Arbitration and Conciliation Act, 1996. It is from this date that: (a) the period of 30 days' for filing an application under Section 33 for correction and interpretation of the award, or additional award may be filed; (b) the arbitral proceedings would terminate as provided by Section 32(1) of the Act; (c) the period of limitation for filing objections to the award under Section 34 commences."
  • Another observation made by the Court was that in a panel of three members of an arbitral tribunal, if a single member has a dissenting opinion, the same must be announced on the same date as the final award, and not at any other further date, as per Section 29A of the Act.
  • In this case, the Bench approved the appeal for setting aside the arbitration award, as the objections were filed as per the regulations under Section 34(3).

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