Recently, the Supreme Court of India in Delhi Development Authority v. RS Sharma (available at http://www.judis.nic.in/) has drawn principles from previous cases and has laid down the law regarding setting aside arbitral awards. The following are, according to the Court, the grounds under which an arbitral award could be set aside under the Arbitration and Conciliation Act, 1996, apart from those grounds covered under Section 34(2)(a) & Section 34(2)(b)(i) of the Act:
"12) From the above decisions, the following principles emerge:
(a) An Award, which is
(i) contrary to substantive provisions of law ; or
(ii) the provisions of the Arbitration and Conciliation Act, 1996 ; or
(iii) against the terms of the respective contract ; or
(iv) patently illegal, or
(iv) prejudicial to the rights of the parties, is open to interference by the Court under Section 34(2) of the Act.
(b) Award could be set aside if it is contrary to :
(a) fundamental policy of Indian Law; or
(b) the interest of India; or
(c) justice or morality;
(c) The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.
(d) It is open to the Court to consider whether the Award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India."
The question is whether the Supreme Court has drawn the correct principles from the previous cases? The more important question is whether RS Sharma or SAW Pipes goes over board in trying to balance finality of arbitral awards on the one hand and fair & just arbitral awards on the other?
"12) From the above decisions, the following principles emerge:
(a) An Award, which is
(i) contrary to substantive provisions of law ; or
(ii) the provisions of the Arbitration and Conciliation Act, 1996 ; or
(iii) against the terms of the respective contract ; or
(iv) patently illegal, or
(iv) prejudicial to the rights of the parties, is open to interference by the Court under Section 34(2) of the Act.
(b) Award could be set aside if it is contrary to :
(a) fundamental policy of Indian Law; or
(b) the interest of India; or
(c) justice or morality;
(c) The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.
(d) It is open to the Court to consider whether the Award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India."
The question is whether the Supreme Court has drawn the correct principles from the previous cases? The more important question is whether RS Sharma or SAW Pipes goes over board in trying to balance finality of arbitral awards on the one hand and fair & just arbitral awards on the other?
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