Section 34 of Arbitration Act badly worded, some portions need clarity: Justice C Hari Shankar

The Delhi High Court has highlighted concerns regarding the clarity of Section 34 of the Arbitration and Conciliation Act of 1996. Justice C Hari Shankar expressed his difficulty in understanding the meaning of 'fundamental policy of Indian law', a concept used to set aside arbitral awards. The judge noted that Supreme Court judgments have offered varying explanations, leading to confusion over what constitutes this policy. He emphasized the need for judicial or legislative clarification on the matter.

The Arbitration and Conciliation Act of 1996 is a crucial piece of legislation governing arbitration in India. Section 34 of the Act allows courts to set aside arbitral awards under specific grounds, including conflict with the 'fundamental policy of Indian law'. However, the meaning of this expression has been subject to varying interpretations by the Supreme Court. This has led to concerns over clarity and consistency in the application of Section 34.

The Arbitration and Conciliation Act of 1996 was enacted to provide a framework for arbitration in India. Section 34 is a key provision that enables courts to review arbitral awards on limited grounds, including conflict with the fundamental policy of Indian law or patent illegality. The concept of 'fundamental policy of Indian law' has been examined by the Supreme Court in several judgments, but its meaning remains unclear.

Justice Hari Shankar's comments highlight the need for clarity on the meaning of 'fundamental policy of Indian law'. The varying explanations offered by Supreme Court judgments have created confusion over what constitutes this policy. The judge noted that some judgments link it to compliance with natural justice, while others examine whether the tribunal's decision was one that a reasonable person could have reached. However, the meaning of 'reasonable' itself may vary.

The Delhi High Court's concerns regarding Section 34 of the Arbitration and Conciliation Act of 1996 underscore the need for judicial or legislative clarification on the meaning of 'fundamental policy of Indian law'. Practitioners should be aware of this issue and its potential implications for arbitration proceedings in India. As Justice Hari Shankar emphasized, precise clarification is necessary to ensure consistency and clarity in the application of Section 34.