Courts are not appellate watchdogs of Arbitral Tribunals


While refusing to interfere with an arbitral award, the Supreme Court observed that the Court does not sit in appeal over the findings of the Arbitrator and such an interference would be justified only when the award is in conflict with the public policy of India.

Technical Details:

National Highway Authority of India (“NHAI”) (Government of India) approached the Supreme Court after exhausting its remedies against the findings of the:

(a)  Arbitral Tribunal;

(b)  the Single Judge of the Delhi High Court; and

(c)  Division Bench of the Delhi High Court.

The Supreme Court held that the jurisdiction of the Court under Section 34, Arbitration and Conciliation Act, 1996 (“Arbitration Act”) is relatively narrow and the jurisdiction of the appellate court under Section 37 of the Arbitration Act is all the more circumscribed.

NHAI challenged the interpretation of the contract adopted by the arbitral tribunal and refusal of the appeal courts to interfere with the same. The Supreme Court held that it is for the Arbitral Tribunal to adjudicate upon the construction of the terms of a contract and not the appeal court.

JC Key Takeaways:

In a pro-arbitration decision, the Supreme Court has refused to interfere with the arbitral award and held that the court cannot sit in appeal over the interpretation of the contractual terms. One can only hope that this does not go the Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express Pvt. Ltd. way; after all public money involved here also.

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