Judicial Control of Arbitral Awards: Effects on India's Arbitration Scene

Written by Sankalp Mirani, the author is a penultimate year law student at Maharashtra National Law University, Mumbai, and Shreya Boke, a final-year law student at Maharashtra National Law University, Aurangabad.

Introduction

An astonishing legal redress, curative jurisdiction is a principle associated with the Supreme Court of India. It is used in unique circumstances to avert a miscarriage of justice after all judicial remedies have been exhausted. This method has emerged in conversations on arbitration, especially regarding the conclusiveness of arbitral awards. The developing pertinence of curative jurisdiction over arbitral awards has aroused debates on its effect on India’s arbitration status. Its application to arbitral awards in India has significant implications for the country’s arbitration landscape, as it introduces a potential avenue for further scrutiny. This challenges the finality of arbitral awards, raising concerns about delays and judicial intervention potentially impacting India’s arbitration-friendly reputation. This blog explores the nature of curative jurisdiction, its implications on arbitral awards, and its broader effect on India’s standing as an arbitration-friendly jurisdiction.

Curative jurisdiction was brought forward by the Supreme Court in the landmark case of Rupa Ashok Hurra v. Ashok Hurra (2002). It is an operational breakthrough designed to address scenarios where a gross miscarriage of justice takes place, despite the certainty of a judgement. It is summoned after the dismissal of a review petition, proposing a last-resort opportunity to correct errors that are apparent on the face of the record and have resulted in consequential injustice.

Curative Jurisdiction and Arbitral Awards

Arbitral awards in India are regulated by the Arbitration and Conciliation Act, 1996 (hereafter referred to as the Act), which personifies the essence of the UNCITRAL Model Law on International Commercial Arbitration. The Act provides that an arbitral award is final and mandatory on the parties and enforceable as a decree of the court, subject to constrained grounds for challenge under Section 34. These grounds include incapacity of the parties, invalidity of the arbitration agreement, lack of proper notice or the inability of a party to prevent their case, exceeding the scope of arbitration, and illegality or public policy violations. These closely defined grounds echo India’s commitment to curbing judicial intervention in arbitral awards, thereby assisting the autonomy of the arbitration process and elevating the finality of awards. The convergence of curative jurisdiction and arbitral awards raises notable concerns about the resolution and assurance of arbitral decisions. The foundational principles of finality, efficiency, and party autonomy contain the potential of being undermined if curative jurisdiction is extended to arbitral awards. Although curative jurisdiction hasn’t been applied explicitly by the Supreme Court to arbitral awards, there have been occurrences where parties have sought to summon this jurisdiction to challenge arbitral awards post the Section 34 appeal process. The justification behind such attempts lies in the belief that an outrageous error or a considerable miscarriage of justice should not stand, even if it concerns an arbitral award.

Ramifications of Extending Curative Jurisdiction to Arbitral Awards

Eroding Finality of Arbitral Awards

Finality is the pillar of the arbitration process. Arbitration is often chosen by parties to settle disputes with certainty and speed. Curative jurisdiction, if extended to arbitral awards, threatens to undermine this finality by producing a potential avenue for never-ending challenges, thereby postponing the resolution of disputes and increasing costs.

Increased Judicial Intervention

Traditionally, arbitration has struggled with excessive judicial intervention in India. The commencement of curative jurisdiction over arbitral awards could aggravate this issue. Parties like international entities would likely be deterred from selecting India as a seat of arbitration due to increased intervention. Concerns would be raised about the predictability and reliability of the arbitration process in India.

Effect on India’s Arbitration Status

Significant studies in recent years have been made by India to place itself as a global arbitration hub. The establishment of institutions like the Mumbai Centre for International Arbitration (MCIA) and reforms such as the Arbitration and Conciliation (Amendment) Act, of 2015, were steps in this direction. The possibility of invoking curative jurisdiction over arbitral awards might detract from these efforts. The country’s attractiveness as an arbitration destination would be affected as it could signal to the international community that India’s arbitration system is still susceptible to unpredictable judicial intervention.

Potential for Abuse

The availability of curative jurisdiction might urge parties to file frivolous or bothersome petitions as a last resort to overturn adverse arbitral awards. This would defeat the purpose of arbitration as a quicker, cost-effective alternative to litigation and could lead to an increase in the judiciary’s caseload, further pressuring the courts.

Judicial Perspective and Recent Trends

The Indian judiciary, in recent years, has portrayed a more pro-arbitration stance, accentuating minimal judicial intervention. Landmark judgements like Vidya Drolia v. Durga Trading Corporation (2020) reaffirmed the need for courts to respect the certainty of arbitral awards and to abstain from re-examining the merits of the case under the façade of public policy. However, despite this tendency, the mere essence of curative jurisdiction poses a theoretical problem to the finality of arbitral awards. The possible applicability of this jurisdiction to arbitral awards, though not yet embodied, remains a no man’s land that requires careful judicial and legislative attention.

Comparative Analysis: International Arbitration Jurisdictions

In Singapore, Hong Kong, and London some of the leading arbitration jurisdictions—the conclusiveness of arbitral awards is strictly upheld with a very finite scope for judicial intervention. For example, in Singapore, the International Arbitration Act (IAA) and the Arbitration Act (AA) provide a narrow scope for setting aside awards, and there is no equivalent to India’s curative jurisdiction. On the other hand, if India were to allow curative jurisdiction to be implemented for arbitral awards, it would place the country in conflict with these international standards. India’s competitiveness as an arbitration centre could be diminished by this, as parties might prefer jurisdictions that offer more assurance and less judicial intervention.

Balancing Finality and Justice

To maintain India’s status as an arbitration-friendly jurisdiction while ensuring justice, a fragile balance must be struck. The scope of curative jurisdiction concerning arbitral awards must clearly be defined by the Indian judiciary and legislature. Firstly, the application of curative jurisdiction to arbitral awards must strictly take place only in situations where there is proof of gross miscarriage of justice or fraud that was not possible to be addressed through normal appeal. Secondly, similar to the timelines under Section 34 of the Act, strict time frames should be found for filing curative petitions related to arbitral awards so that endless litigation is prevented. Thirdly, the training of judges should take place so that the nuances of arbitration law and the importance of upholding the finality of arbitral awards are understood which will assist in ensuring that curative jurisdiction is exercised judiciously and only in exceptional cases. Lastly, the legislature could contemplate amending the Arbitration and Conciliation Act to explicitly exclude or restrict the application of curative jurisdiction to arbitral awards. This would provide greater clarity and certainty, thereby reassuring both domestic and international parties about the finality of arbitral awards in India.

Conclusion

The dynamics between curative jurisdiction and arbitral awards is an intricate issue that has significant implications for India’s arbitration regime. While the concept of curative jurisdiction is embedded in the noble objective of preventing miscarriage of justice, its implementation in arbitral awards could subvert the very principles that arbitration seeks to maintain finality, efficiency, and party autonomy. India must tread carefully as it continues to aspire to be a global arbitration hub. A clear and consistent legal framework that honors the finality of arbitral awards while providing restricted recourse in cases of gross injustice will be key to maintaining India’s status as an arbitration-friendly jurisdiction. Through meticulous judicial and legislative action, India can continue to augment its reputation on the global arbitration stage, attracting parties who appreciate both fairness and finality in dispute resolution. It becomes quite clear that India’s approach to arbitration reflects a complicated balancing act between ensuring justice and upholding arbitration's efficiency. Emphasizing a judicious strategy that respects both the need for correction and the obligation of finality will be key to maintaining the confidence of international and domestic parties in the arbitration system. Moving ahead, perfecting the balance between oversight and deference to arbitral awards will be crucial in reinforcing India’s devotion to effective and efficient dispute resolution.