Judicial Intervention in Arbitral Awards under the Arbitration and Conciliation Act, 1996 (Post-2015 Amendment) (CaseLaws)

Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI)
Citation: (2019) 7 S.C.R. 522 / Civil Appeal No. 4779 of 2019 (Supreme Court of India)

Summary of the Case Law
The Supreme Court of India addressed a dispute between Ssangyong and NHAI concerning the unilateral application of a new price adjustment formula via a circular, which altered the contractual terms. The key legal issues involved the grounds for setting aside an arbitral award under the Arbitration and Conciliation Act, 1996, as amended in 2015.

Key Legal Issues Involved Were:
Applicability of the 2015 Amendment – Whether the amended grounds for challenging an arbitral award applied to court proceedings filed after the amendment's effective date.

Scope of "Public Policy of India" – The correct interpretation of the "public policy of India" ground for setting aside an award after its statutory narrowing by the 2015 Amendment.

Violation of Natural Justice – Whether an arbitral tribunal's reliance on documents not presented by the parties violated the principles of natural justice.

Patent Illegality as a Ground for Challenge – The meaning and applicability of the new ground of "patent illegality."

Power under Article 142 of the Constitution – Whether the Supreme Court could enforce a dissenting arbitral award using its extraordinary constitutional powers to ensure complete justice.

The Court Held That:
The amended Section 34 of the Arbitration Act, 2015, applies prospectively only to applications filed in court on or after 23.10.2015.

The majority arbitral award was set aside as it violated natural justice by relying on undisclosed government guidelines.

The "public policy of India" ground is now constricted to only mean a violation of the "fundamental policy of Indian law" or a conflict with the "most basic notions of justice or morality."

The ground of "patent illegality" is available only for challenging domestic awards, not international commercial arbitrations seated in India.

Invoking power under Article 142 of the Constitution, the minority award was upheld to do complete justice and provide a speedy resolution.

Key Legal Principles Established:
Prospective Application of Amendment – Fundamental amendments to the grounds for challenging arbitral awards apply prospectively to court applications filed after the amendment comes into force.

Narrowed Scope of Public Policy – The expansive judicial interpretations of "public policy" have been legislatively overruled; the ground is now narrowly defined to minimize judicial interference.

Expert Adjudication Over General Courts – Matters involving complex tariff fixation and regulatory aspects should be decided by specialized expert bodies like TAMP, not by arbitrators or civil courts.

Natural Justice is a Fundamental Principle – An arbitral tribunal must provide a full opportunity to parties and cannot decide a case based on evidence not disclosed to them.

Article 142 Can Ensure Speedy Justice – The Supreme Court can use its constitutional powers to enforce a minority arbitral award to prevent delay and bring finality to arbitration proceedings.

Relevance:
This judgment is a landmark ruling that definitively settles the law on the limited scope of judicial intervention in arbitral awards post the 2015 Amendment. It reinforces India's pro-arbitration policy by strictly limiting challenges to awards, emphasizing procedural fairness, and providing a mechanism for the Supreme Court to ensure timely dispute resolution.