Delhi High Court Panel Discusses Ambiguity in Section 34 of Indian Arbitration Act
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TL;DR
- Justice C Hari Shankar described Section 34 of the Arbitration Act as poorly worded and requiring clarification.
- The meaning of 'fundamental policy of Indian law' remains unclear despite Supreme Court decisions.
- Calls were made for either judicial or legislative explanation to resolve the uncertainty.
- Concerns were raised about overlap between 'fundamental policy' and 'patent illegality' in award challenges.
Overview
At a Delhi High Court event, Justice C Hari Shankar criticized Section 34 of the Arbitration and Conciliation Act 1996 for ambiguous wording, particularly regarding the expression 'fundamental policy of Indian law' as a ground for setting aside arbitral awards. The panel called for clearer definition or explanation, noting the ongoing challenges and uncertainties in courts' interpretation of these provisions.
What Happened
Justice C Hari Shankar stated he found Section 34 of the Arbitration Act to be poorly drafted and lacking clarity, especially concerning what constitutes the 'fundamental policy of Indian law'.
He reported difficulty in finding a satisfactory definition of the term, despite reviewing multiple Supreme Court decisions.
He emphasized the need for judicial or legislative clarification to define core expressions in Section 34.
Justice Hari Shankar also warned that the distinction between 'fundamental policy of Indian law' and 'patent illegality' is often unclear in practice, pointing to overlapping judicial tests.
Justice Ujjal Bhuyan discussed arbitrator appointments under Section 11, suggesting the need for standardized panels and greater institutional autonomy.
Justice Rajiv Shakdher commented on cost responsibility when awards are set aside due to defective arbitrator appointment mechanisms.
The panel noted persistent challenges for arbitration in India, including delays, costs, and excessive judicial intervention.
Context
Section 34 of the Arbitration and Conciliation Act 1996 governs the limited grounds on which Indian courts may set aside arbitral awards.
The 'fundamental policy of Indian law' ground has led to uncertainty due to varied judicial interpretations.
The event was held as part of a panel discussion on arbitration reform at the Delhi High Court.
Why It Matters
- Ambiguity in Section 34 may contribute to unpredictable court decisions and undermine confidence in the arbitration process in India.
- Clarification of these grounds could streamline arbitration proceedings and reduce unnecessary court intervention.