Challenging Awards - Section 34 Applications

3.3.1 Section 34 Overview

Section 34 provides the exclusive remedy for challenging domestic arbitral awards. Unlike appeals, Section 34 does not permit review of merits - only specified grounds can lead to setting aside. This reflects the pro-arbitration policy of minimal court interference.

Key Principles

• Exclusive Remedy: Section 34 is the only recourse against a domestic award
• No Appeal on Merits: Courts cannot re-examine evidence or legal conclusions
• Limited Grounds: Only grounds specified in Section 34(2) can be invoked
• Residual Discretion: Even if grounds established, court has discretion to set aside or not

3.3.2 Grounds for Setting Aside

Section 34(2)(a) - Grounds Requiring Proof by Applicant

1. Party Incapacity: A party was under some incapacity
2. Invalid Arbitration Agreement: Agreement not valid under applicable law
3. No Proper Notice: Party not given proper notice of arbitrator appointment or proceedings, or otherwise unable to present case
4. Beyond Scope: Award deals with dispute not falling within arbitration agreement or contains decisions beyond scope of submission
5. Improper Composition: Tribunal composition or procedure not in accordance with agreement or Act

Section 34(2)(b) - Grounds Court May Consider Suo Motu

• Non-Arbitrability: Subject matter not capable of settlement by arbitration
• Public Policy: Award in conflict with public policy of India

3.3.3 Public Policy - The Critical Ground

Public policy is the most frequently invoked and contested ground. The 2015 Amendment significantly narrowed its scope to prevent misuse as a backdoor appeal mechanism.

Section 34 Explanation 1 (Post-2015)

For Section 34(2)(b)(ii), an award is in conflict with public policy of India only if:

• Fraud/Corruption: Making of award induced or affected by fraud or corruption
• Contravention of Fundamental Policy: In contravention of fundamental policy of Indian law
• Basic Notions of Morality/Justice: In conflict with the most basic notions of morality or justice

Section 34 Explanation 2 - What is NOT Public Policy

The test as to whether there is a contravention of fundamental policy shall NOT entail a review on the merits of the dispute.

3.3.4 Limitation Period

Section 34(3) prescribes strict limitation:

• Primary Period: 3 months from date of receipt of award
• Extended Period: Additional 30 days if court is satisfied that applicant was prevented by sufficient cause
• Absolute Bar: No application can be entertained after 3 months + 30 days
• Receipt of Award: Date when signed copy delivered to the party

Section 34(5) & (6) - Pending Challenge

The 2015 Amendment clarified that filing a Section 34 application does not automatically stay enforcement. The court may, upon application, grant stay of enforcement pending disposal of the challenge (subject to conditions).