Friday, July 15, 2011

Transformation of Section 34 to a substantive appeal - yet another example

We have discussed in several posts how the Supreme Court of India has carved out for itself and other courts infinite powers of intereference with arbitration. We have also discussed how the definition of public policy under Section 34 and how its expansive interpretation allows courts to review decisions allows courts to revisit questions of substantive law that arbitral tribunals have already decided.

Yesterday (14th July, 2011) the Supreme Court gave its decision in Shipping Corporation Of India ... vs Mare Shipping Inc. This decision is (at least in my opinion) not a significant one for a student of arbitration. But it provides yet another example of reconsideration of substantive questions of law by courts.

The decision quotes the appellant's counsel: "Mr. Gupta submitted that the scope of a petition under Section 34 of the 1996 Act had been considered by this Court in detail in Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd. [(2003) 5 SCC 705], and it was indicated therein that if the Award passed by the Arbitral Tribunal was contrary to any of the provisions of the Act or the substantive law governing the parties or was against the terms of the contract, the same could be set aside". This is the only reference in the decision to Section 34 and the permissibility and scope of intervention under that Section. Having made this passing reference, the Court proceeds directly to re-examine matters of substantive law that had already been decided by the arbitral tribunal.

While the omission of references to or discussion on the line of precedents on Section 34 is commentable on account of much needed brevity of Indian judicial decisions, it also shows how revisiting substantive questions in a Section 34 application (and appeals arising from such applications) has become an everyday affair which does not even merit elaboration upon.

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