Section 34: Setting Aside an Award, and What 'Public Policy' Now Means

In one line

An award can be challenged in court, but only by an application to set it aside, only on a short closed list of grounds, and only within three months.

In exam wording: section 34 of the Arbitration and Conciliation Act 1996 provides that recourse to a Court against an arbitral award may be made only by an application for setting aside the award, on the grounds specified in sub-section (2) and, for domestic awards, sub-section (2A), within the period prescribed by sub-section (3).

The three words that shape the section

"Recourse ... may be made only by an application for setting aside." There is no appeal against an arbitral award. A court cannot vary it, improve it, or substitute its own view. The only thing it can do under this section is set the award aside, wholly or in part.

"May be set aside by the Court only if." The grounds are exhaustive.

And a distinction inside sub-section (2) that decides who has to prove what. Under clause (a) the party making the application must establish the ground, and since the 2019 amendment must do so on the basis of the record of the arbitral tribunal. Under clause (b) it is enough that the Court finds the ground, so the court may act on its own.

Section 34(2)(a): the five grounds a party must establish

The applicant must establish, on the basis of the record of the arbitral tribunal, that:

• (i) a party was under some incapacity;
• (ii) the arbitration agreement is not valid under the law to which the parties subjected it, or, failing any indication, under the law for the time being in force;
• (iii) the applicant was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his case;
• (iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission, with a proviso that where the decisions on matters submitted can be separated from those not submitted, only that part which contains decisions on matters not submitted may be set aside; or
• (v) the composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless that agreement conflicted with a provision of Part I from which the parties cannot derogate, or, failing such agreement, was not in accordance with Part I.

Three of these repay attention.

Ground (iii) is the natural justice ground and it is the commonest genuine complaint. It is section 18 in the form of a remedy, and it has two limbs: no proper notice, or otherwise unable to present his case.