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Question Bank
Question
Under what grounds can a court set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, and how does the principle of minimal judicial interference apply?
Solution
Under Section 34 of the Arbitration and Conciliation Act, 1996, the grounds for setting aside an arbitral award are extremely narrow and limited. Courts can only interfere if the award is in conflict with the public policy of India, which includes situations involving patent illegality, perversity, or if it violates the fundamental policy of Indian law. The minimal judicial interference principle mandates that courts must not reappraise evidence or re-interpret contractual terms, as arbitrators are the chosen judges of the parties. The court’s role is supervisory, not appellate, and it must uphold an award if the arbitrator’s view is plausible and reasonable, even if another view is possible.
Question
What constitutes patent illegality in the context of arbitral awards, and how does it differ from a mere error in law or fact?
Solution
Patent illegality refers to a violation of the fundamental legal principles or statutory provisions that is so obvious and grave that it goes to the root of the matter. It is not synonymous with a simple error in law or fact, which is within the arbitrator’s jurisdiction to make. For an award to be set aside on this ground, the illegality must be apparent on the face of the award, such as an interpretation of the contract that no reasonable person could adopt, or a decision that is perverse or irrational. The standard is high and is intended to prevent courts from interfering with arbitral decisions on trivial or debatable points of law.
Question
How does the scope of review under Section 37 of the Arbitration and Conciliation Act, 1996 differ from that under Section 34, particularly regarding appellate jurisdiction?
Solution
Section 37 provides for an appeal against orders setting aside or refusing to set aside an arbitral award under Section 34. The scope of review under Section 37 is even narrower than under Section 34. An appellate court cannot undertake a fresh examination of the merits or act as a second appellate authority on facts or law. It can only assess whether the Section 34 court exercised its jurisdiction correctly within the limited grounds permitted. The focus remains on ensuring that the lower court did not exceed its restricted jurisdiction by second-guessing the arbitrator’s plausible interpretation of the contract or evidence.
Question
What is the legal value of a dissenting opinion in an arbitral award, and can it be treated as part of the award?
Solution
A dissenting opinion is a written view of an arbitrator who disagrees with the majority award. It does not form part of the arbitral award itself and is not binding. However, it may be admissible as evidence in challenge proceedings, especially regarding procedural matters or to highlight potential flaws in the majority’s reasoning. The dissenting opinion serves to provide transparency in the tribunal’s deliberative process and ensures the parties understand all perspectives. Courts may refer to it to assess issues like perversity or patent illegality, but they cannot elevate it to the status of an award, even if the majority award is set aside.
Question
Why are technical experts often appointed as arbitrators in complex construction disputes, and what deference do courts give to their interpretations of technical specifications?
Solution
Technical experts are frequently appointed as arbitrators in construction disputes because they possess specialized knowledge of engineering practices, technical specifications, and industry standards. Courts grant significant deference to their interpretations of contractual terms, especially those involving technical specifications, as they are better equipped to understand the practical and factual nuances. Judicial intervention is unwarranted if the expert arbitrator adopts a plausible interpretation of the contract, even if another view exists. This deference aligns with the arbitration ethos of finality and respect for party autonomy in choosing qualified decision-makers.
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