In a majority 4:1 ruling, the Supreme Court of India held that Section 34 of the Arbitration and Conciliation Act, 1996

Context

A three-judge panel in February 2024 addressed a legal question to this ruling in order to clarify whether or not courts have the authority to alter arbitral awards.

Arbitration

According to 1996 law, it is an alternative conflict settlement process that lessens the ability of courts to veto tribunal awards.

Principal Aspects of the Decision

Courts have the authority to amend awards to eliminate erroneous clauses or fix typographical, computational, or administrative mistakes. If needed, courts can also modify the interest after it has been awarded.

Section 34 of the Arbitration and Conciliation Act of 1996 restricts judicial intervention to specific grounds, such as fraud or public policy. Courts are unable to evaluate the merits of the award, assess costs, or amend factual errors.

Article 142 Powers: In situations involving arbitral awards, the Supreme Court may exercise its inherent authority under Article 142 to guarantee full justice.

Nonetheless, this authority needs to be used carefully and in accordance with the 1996 Arbitration Act's tenets.

Are you aware?

A court may set aside an arbitral ruling under Section 34 of the Arbitration and Conciliation Act for a number of reasons, including moral unfairness, fraud, corruption, fundamental legal principles, or violations of public policy.

1. In an arbitral dispute, Section 37 addresses the conditions under which an appeal against the order would be appropriate.

Even while Section 34 does not specifically allow for such a revision, the Supreme Court pointed out in its majority ruling that it had periodically changed arbitral verdicts in the past to prevent drawn-out litigation and guarantee justice.

Justice Viswanathan's Dissent argued that unless the statute expressly permits it, arbitral awards cannot be changed.

Section 34 does not permit altering awards; it simply permits their setting aside. The Center's position, which stressed that the authority to change should be granted by statute, was echoed by the dissent.

Attorneys contended that permitting courts to alter arbitral verdicts might result in their replacement by court orders, which might have ramifications on a global scale. Arbitral awards may become difficult to enforce under international conventions if they are modified.