Supreme Court Upholds Limited Court Interference in Arbitral Awards

The Supreme Court has ruled that appellate courts cannot reappraise evidence to dispute the correctness of arbitral tribunal awards unless they conflict with public policy, fraud, or corruption. This decision emphasizes the Arbitration and Conciliation Act of 1996's goal of minimizing judicial intervention, promoting speedy and cost-effective dispute resolution.

The Supreme Court has ruled that appellate courts are not authorized to reappraise evidence in disputes adjudicated by arbitral tribunals, unless the awards are influenced by public policy issues, fraud, or corruption.

The bench, comprising Justices PS Narasimha and Pankaj Mithal, emphasized that the Arbitration and Conciliation Act of 1996 aims to facilitate swift and economical dispute resolution with minimal court interference. The court highlighted Section 5 of the Act, which restricts judicial authority from interfering in arbitration proceedings, except as explicitly permitted by law.

The ruling came as the Supreme Court annulled a Punjab and Haryana High Court decision that had set aside an arbitral award favoring Punjab State Civil Supplies Corporation in a dispute with a rice mill. Asserting the narrow scope for court intervention, the bench underscored that arbitral awards should generally stand unless they violate Indian public policy or legal principles.

(With inputs from agencies.)