How do you Challenge an Arbitration Award? - Find Here


Posted On : October 25, 2022
How do you Challenge an Arbitration Award? - Find Here
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Arbitration is a common method of dispute redressal in the commercial, banking, etc. sectors. Since the idea is to resolve the matters, where can a losing party challenge the validity of an arbitral award? Can an arbitral award be challenged in court? The arbitration award can be challenged in district court or higher courts if one of the various grounds to challenge arbitral award is satisfied. Explore such grounds and the time limit to challenge arbitration award in the blog below after having a compact idea of what arbitration is.

 

There are various types of alternative dispute resolution in India which allow parties to resolve their legal disputes without court’s interference. Arbitration is one such method of alternate dispute resolution whereby parties to dispute have an agreement to resolve matters through arbitration. An independent arbitrator is appointed and the process is followed whereby both the parties prove their stance, which is followed by a decision called arbitration award. But how do you challenge an arbitration award? An arbitral award can be challenged if it is in correspondence with one of the grounds to challenge arbitral award. Challenge to jurisdiction of the arbitral award can also be made if facts of the case allow. Explore more on this note to understand what are the grounds on which a challenge may be made to an arbitral award.

 

Grounds to Challenge Arbitral Award

The answer to “can an arbitral award be challenged in court?” depends upon whether the circumstances fall under one of the grounds for challenge of arbitral award in India as provided under Section 34 of the Arbitration and Conciliation Act, 1996.

 

What are the grounds on which a challenge may be made to an arbitral award by a party?

Given below are the circumstances which need to be proven in the court of law by the party seeking challenge to arbitral award:

-         Arbitral proceedings, or

-         Appointment of arbitrator, or

-         Was otherwise unable to present his/ her case before the arbitrator.

 

Setting Aside Arbitral Award by Court Findings

If the validity of an arbitration award is questioned before the district court or higher courts, Section 34 (2)(b) of the Arbitration and Conciliation Act, 1996 provides the following pathways.

  • Subject Matter: If the respected court finds that the subject matter of dispute can not be decided through arbitration as per the applicable law, challenge against arbitral award may be allowed.
  • Against Public Policy: If the court finds that the decision in the arbitration award directly or indirectly goes against the public policy, it may be set aside. The arbitration award can be challenged in district court or higher ones questioning public policy if the arbitration award was:
  • -         Induced or affected by fraud; or

    -         Induced or affected by corruption; or

    -         In violation of confidentiality/ admissibility of evidence; or

    -         An arbitral award can be challenged if it is against fundamental policy of Indian law; or

    -         Against the most basic notions of morality or justice.

  • Patent Illegality: The international commercial arbitration in India being an exception, if court finds some illegality reflecting on the face, i.e. a very obvious illegality, such arbitration award may be set aside by the concerned court.
  •  

    Limitation Period for Challenge Against Arbitral Award

    The time limit to challenge arbitration award is 3 months after parties receive the said arbitral award or a request for correction/ interpretation of such award has been made. The time to challenge arbitral award may be extended for another 30 days if the court is satisfied that the concerned party was prevented from applying for such a set aside. If proceedings are ongoing and the same has been subjected to challenge in the court of law, the court may put the proceedings on hold while the tribunal eliminates such grounds to challenge arbitral award and resolves the dispute. One must also make sure to first serve a legal notice to the other party through arbitration lawyers timely communicating the challenge of arbitral award in India so that the time limit to challenge arbitration award is not missed. Since lack of knowledge of such technicalities may negatively affect the parties, one should timely explore the answer to ‘how do you challenge an arbitration award?’ 

     

    [1] Section 13 (5) of Arbitration and Conciliation Act, 1996.

    [2] Section 34 (2)(a)(i) of Arbitration and Conciliation Act, 1996.

    [3] Section 34 (2)(a)(ii) of Arbitration and Conciliation Act, 1996.

    [4] Section 34 (2)(a)(iii) of Arbitration and Conciliation Act, 1996.

    [5] Section 34 (2)(a)(iv) of Arbitration and Conciliation Act, 1996. 

    Written By:
    Ridhi Khurana

    Ridhi Khurana

    Gurgaon

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