One of the avowed objectives of the 1996 Act is to ensure minimal judicial interference. The power of the courts to modify an award certainly militates against this principle. Another very important aspect is that of finality. As opposed to traditional litigation, arbitration is certainly a faster dispute resolution process which entails a time bound adjudication before the tribunal and limited interference by courts under Section 34 and 37 of the 1996 Act. It is thus felt that granting powers of modification to a court would expand the scope of judicial interference rather than minimise it. This may ultimately erode the efficacy of the arbitral process.
On the other hand, granting the power to modify awards would enable the courts to correct ‘curable’ errors in the award and to ultimately ensure that justice prevails. In terms of the present regime, the only recourse available to the court is to set aside or uphold an arbitral award, and many a times, this leads to gross injustice to parties who are then forced to initiate fresh proceedings for arbitration rather than the proceedings culminating before the court itself. Also, there is no evidence to suggest that granting such powers to courts to modify an award would, in any manner, erode the efficacy or the confidence in the arbitral process. As already highlighted above, in countries like United Kingdom and Singapore, the courts are empowered to modify or vary awards and this ability of the court to do so has not in any manner hampered the status of these countries as being global hubs of arbitration.
The recent decision by the Supreme Court to refer the issue to a larger bench indicates the complexity of the issue and the need for a thorough examination of this issue. Additionally, the Viswanathan Committee has recommended amending the Act to confer on courts the power to partly modify arbitral awards in exceptional circumstances. However, the lack of clarity on what constitutes exceptional circumstances raises concerns about the potential for judicial intervention.
The author strongly feels that the power to modify or vary an award must flow from the statute itself and the courts must not interpret the existing provisions in a manner which enables the courts to modify or vary an award. The legislature in its wisdom has clearly excluded such a power and based our law on the UNCITRAL Model Law, which again does not have such a provision. The 1996 Act clearly mentions the UNCITRAL Model Law in its preamble and the courts must respect the wisdom of the legislature in this regard. The Supreme Court ought to thus not overstep the proverbial “Lakshman Rekha” and read the power of modification into Section 34 of the 1996 Act. At the same time, the amendment to Section 34 of 1996 Act, in line with the recommendations of the Vishwanathan Report should also be expedited by the Parliament to ensure that the Indian arbitration regime is in toe with international best practices.
Only time will tell whether the Supreme Court will read the power of modification into Section 34 of the 1996 Act or whether the same would be left to the wisdom of the legislature to amend the current laws. Ultimately, whether the power of modification is conferred upon courts by statute or left to legislative discretion, the evolution of India’s arbitration regime must align with international best practices to foster confidence and efficacy in the resolution of disputes.
Source: Barandbench
