Delhi High Court’s Interpretation Of Partial Setting Aside Of Arbitral Awards

Introduction

The Delhi High Court recently examined the issue of partial setting aside of arbitral awards in the case of National Highway Authority of India v. Trichy Thanjavur Expressway Ltd.[1] This case explores the issue raised regarding courts’ powers under Section 34 of the Indian Arbitration and Conciliation Act, 1996, and the controversies surrounding partial setting aside and modification of arbitral awards. The High Court’s judgment acknowledged the balance between minimal court intervention and the need for corrective measures, while distinguishing between partial setting aside and modification of awards.

Case Timeline

• Delhi High Court heard the Trichy Thanjavur Expressway Matters involving the power to partially set aside arbitral awards.
• The case involved interpretation of Section 34 of the Indian Arbitration and Conciliation Act, 1996.

Issue Raised

The central issue revolved around whether courts have the power to partially set aside arbitral awards under Section 34 of the Act and whether such partial setting aside amounts to modification.

Appellant’s Arguments and Respondent’s Arguments

The appellants argued that Section 34(4) grants court the power to adjourn proceedings and remand the matter to the tribunal to rectify defects in the award.

The respondents contended that courts should not interfere with the merits of the dispute and that partial setting aside should not be equated with modification.

Judgment

The Delhi High Court’s judgment acknowledged the legislative intent for minimal court intervention in arbitration matters. It upheld the power of courts to partially set aside arbitral awards under Section 34(4), recognizing that an award may consist of separate and distinct components. However, it clarified that this power does not extend to modifying the award’s substance.

Analysis

The court’s analysis drew from precedents and legislative intent:

• The court acknowledged the shift in legislative policy towards minimal court intervention in arbitration.
• It highlighted the balance between the need for corrective measures and the restriction on courts’ modification powers under Section 34.
• The court interpreted the Proviso to Section 34(2)(a)(iii), recognizing that an award could be partially set aside when certain claims are distinct and severable.
• The court clarified that Section 34(4) allows courts to invoke curative and remedial measures to rectify defects in the award without modifying its essence.
• It emphasized that Section 34(4) does not empower courts to review findings or reconsider conclusions already recorded in the award.
• The court distinguished between a situation where the Arbitral Tribunal failed to rule on a claim, allowing Section 34(4) to be invoked, and situations involving evident fallacies or errors.

Conclusion

The Delhi High Court’s judgment in the Trichy Thanjavur Expressway Matters clarified the scope of courts’ powers under Section 34 of the Act regarding partial setting aside of arbitral awards. The analysis recognized the balance between limited court intervention and the need for corrective measures, while emphasizing the distinction between partial setting aside and modification of awards.

[1] O.M.P. (COMM) 95/2023 &O.M.P. (COMM) 106/2023