Monday, March 16, 2015

Arbitrators have to give reasons for arbitral award even if arbitral proceedings are initiated under old Act


Where arbitrator's award was unsupported by any reason, same was to be set aside, even though arbitral proceedings were initiated under old Act, i.e., Arbitration Act, 1940

Facts:


a)A non-speaking arbitral award in favour of the appellant-company was set aside by the High Court on the ground that the arbitrator had not recorded his 'findings' as required under clause 70 of the General Conditions of Contract

b)The High Court held that the expression 'finding' appearing in clause 70 of the general conditions of contract implied something more than the mere recording of a conclusion by the arbitrator. Inasmuch as the arbitrator had failed to do so, the award announced by him was unsustainable.

c)The High Court, accordingly, set aside the award and remitted the matter back to the arbitrator for a fresh determination of the issues between the parties.

On appeal, the Supreme Court held as under:

1)The Arbitration and Conciliation Act, 1996 had repealed the Arbitration Act of 1940 and sought to achieve the twin objectives of obliging the arbitral Tribunal to give reasons for its arbitral award and reducing the supervisory role of courts in arbitration proceedings

2)There was a paradigm shift in legal position under new Act, i.e., 1996 Act, which prescribed a uniform requirement for arbitrators to give reasons for their arbitral award

3)Where arbitrator's award was unsupported by any reason, same was to be set aside, even though arbitral proceedings were initiated under old Act, i.e., Arbitration Act, 1940 - ANAND BROTHERS (P.) LTD. V. UNION OF INDIA [2015] 55 TAXMANN.COM 153 (SC)
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