September 23, 2023
Mediation is an alternative form of dispute resolution (ADR) that allows parties to resolve their disputes without going to court. Arbitration differs in several ways. First, mediation is based on the agreement of the parties, who can choose the arbitrator(s), rules, procedures, and rules applicable to their disputes. Mediation is confidential, i.e. the proceedings and decision are not public, and cannot be disclosed to third parties without the consent of the parties.
However, there are also challenges in mediation that the parties need to be aware of before choosing this method of dispute resolution. One challenge is the cost of arbitration, which can be high depending on the number and qualifications of the arbitrator(s), the complexity and length of the case, and the involvement of lawyers and experts. The costs may vary depending on the intervention. Another challenge is a finality, which means that the decision is generally not appealed or resolved by the court or other tribunals. The fourth challenge is that it is not persuasive, which means that parties have limited grounds to challenge or set aside an arbitral award before a court.
The main question of discussion in this article is whether an arbitral award can be set aside partially by a court under Indian law. The answer to this question depends on whether the arbitration is domestic or international, and whether the award is rendered in India or abroad.
Domestic arbitration in India is governed by Part I of the Arbitration and Conciliation Act, 1996, which is based on the UNCITRAL Model Law on International Commercial Arbitration. According to Section 34 of the Act, a party can apply to a court to set aside an arbitral award only on limited grounds, such as:
1. The party was under some incapacity or the arbitration agreement was invalid;
2. The party was not given proper notice of the appointment of the arbitrator or the arbitral complaints or was otherwise unable to present its case;
3. The award deals with a dispute not contemplated via or no longer falling within the terms of reference or carries decisions on subjects beyond the scope of reference;
4. The composition of the arbitral tribunal or the arbitral technique is no longer in accordance with the agreement of the parties or with Part I of the Act;
5. The difficulty counting the number of disputes isn't capable of settlement via arbitration beneath Indian law;
6. The award is in warfare with the general public coverage of India.
The Act does not explicitly offer partial setting aside from an arbitral award. However, a few courts have interpreted Section 34(4) of the Act, which allows a courtroom to adjourn a utility for setting apart an award to deliver an opportunity to resume or commence arbitral court cases or take other moves to do away with grounds for setting apart an award, as implying that partial placing apart is feasible.
International arbitration in India can be either inbound or outbound. Inbound international arbitration refers to cases where a foreign party arbitrates with an Indian party in India under Part I of the Act. Outbound international arbitration refers to cases where an Indian party arbitrates with a foreign party outside India under Part II of the Act.
Inbound international arbitration is subject to the same provisions and grounds for setting aside an arbitral award as domestic arbitration under Part I of the Act. Therefore, the possibility of partial setting aside also applies to inbound international arbitration.
Outbound international arbitration is subject to the provisions and grounds for recognition and enforcement of foreign arbitral awards under Part II of the Act, which incorporates the New York Convention. According to Section 48 of the Act, a court can refuse to enforce a foreign arbitral award only on limited grounds, such as:
• The parties to the arbitration agreement were under some incapacity or the arbitration agreement was invalid under the law of the country where the award was made;
• The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or the arbitral proceedings or was otherwise unable to present its case;
• The award deals with a dispute not contemplated by or not falling within the terms of reference or contains decisions on matters beyond the scope of reference;
• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or with the law of the country where the arbitration took place;
• The award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country where, or under the law of which, that award was made;
• The subject matter of the dispute is not capable of settlement by arbitration under Indian law;
• The enforcement of the award would be contrary to the public policy of India.
The Act does not explicitly provide for partial recognition and enforcement of a foreign arbitral award. However, some courts have interpreted Section 48(2) of the Act, which allows a court to adjourn an application for enforcement of an award if an application for setting aside or suspension of the award has been made in the country where, or under the law of which, that award was made, as implying that partial recognition and enforcement is possible. For example, in Cruz City 1 Mauritius Holdings v. Unitech Limited, the Delhi High Court held that if an award contains several claims or issues and only some of them are challenged on grounds under Section 48(1) (a) to (e) of the Act, then only those parts of the award can be refused enforcement by the court and not the entire award.
In conclusion, an arbitral award can be set aside partially by a court under Indian law, depending on whether the arbitration is domestic or international, and whether the award is rendered in India or abroad. However, partial setting aside is not expressly provided for in the Arbitration and Conciliation Act, of 1996, and is subject to the interpretation and discretion of the courts. Therefore, parties should be careful when drafting their arbitration agreements, choosing their arbitrators, and challenging or enforcing their arbitral awards.