A Division Bench of the Madras High Court has set out the duties of a Single Judge considering the validity of an unreasoned arbitral award following a challenge to the award under §34 of the Arbitration & Conciliation Act 1996.
§34 Court Decision
The first instance Single Judge upheld an arbitration award containing concise reasons based on an admission made by one of the parties.
Division Bench Decision
31(3) of the Act stipulates that an arbitral award must be reasoned unless the parties have agreed otherwise. If there is no such agreement then the award must provide reasons for the decision under every head of claim in terms of liability and quantum awarded. There were no reasons in the award under consideration, which was a “classic example of what an arbitral award could never be”. The §34 Court should not have ignored the absence of reasoning and cannot rewrite the award by itself providing reasons in support of the findings in it.
34 of the Act sets out the exceptional circumstances when a Court can interfere in an arbitration award. If these circumstances exist, then the Court can interfere to correct manifest errors and to ensure that there is no miscarriage of justice. A Court cannot travel beyond these circumstances because the parties have chosen their dispute resolution forum and must be held to their bargain.
The award and the §34 judgment were set aside, and referred back to the arbitrator.
Footnotes
* O.S.A No. 270 of 2020 and C.M.P No. 13352 of 2020, judgment given on 9 February 2021
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