One form of alternative dispute resolution is arbitration, where the parties resolve their conflict without involving the legal system by appointing a third individual, an arbitrator. Reducing court intervention in arbitration was the express intention of the 1996 Arbitration and Conciliation Act. Under Section 5 of the Act, except as otherwise provided in the Act, no court power can intervene in arbitration proceedings.

The only reason why judicial intervention in arbitral processes should take place is for the purpose of ensuring equity and protecting the parties' interests. Despite its autonomy, arbitration cannot function entirely outside the legal framework.
Regardless of whether it's in appointing arbitrators, confirming verdicts, or overruling them in specific instances, courts have a role at numerous stages within the process.

Sections 34 and 37 of the Act lay down the limited grounds on which judicial involvement is permissible, and these grounds are primarily directed towards ensuring arbitral processes stay legitimate and just. Section 37 provides the avenue for appeal against certain arbitral and judicial decisions, while Section 34 allows parties to appeal an arbitral award.

The Role of Judicial Intervention in Arbitration

Judicial intervention in arbitration is necessary mechanism to ensure fairness, uphold procedural integrity, and provide legal recourse in specific circumstances. By promoting arbitration as a successful conflict settlement process, the Arbitration and Conciliation Act, 1996, along with its revisions from 2015 and 2019, was passed with the intention of lessening the load on the courts. Legislators included restrictions restricting court interference in order to accomplish the Act's goal of moving conflict resolution away from traditional litigation.

The act limits the involvement of the judiciary but in some cases, it becomes mandatory (e.g., referring parties to arbitration under Section 8, appointing arbitrators under Section 11).

Furthermore, limited appeals against certain court and arbitral orders are permitted under Section 37. Even though the Act seeks to advance arbitration as a self-contained and effective dispute resolution process, judicial action is necessary when bias, procedural irregularities, or public policy violations occur. Finding a compromise between preserving arbitration's independence and guaranteeing judicial review only when required is the difficult part.

Section 34: Setting Aside an Arbitral Award

There are a few grounds listed in Section 34 of the Arbitration and Conciliation Act of 1996 for overturning an arbitral ruling. Despite the Act's obvious intention to restrict court participation, courts have construed these clauses broadly, which has occasionally resulted in increased judicial action.

To make sure that arbitral awards conform to the law while maintaining the autonomy of arbitration, Section 34 of the Arbitration and Conciliation Act, 1996, is a supervisory mechanism and not an appeal remedy. The clause promotes the concept of judicial restraint by restricting the reasons for which a party can challenge an award.

An arbitral award can be set aside under Section 34(2)(a) when the arbitration agreement is void, a party was not duly notified, the award exceeds the limits of arbitration, or the arbitral tribunal was not legally constituted. The Supreme Court emphasized in Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd. that judges should not modify an award merely because there is a possibility of a different interpretation.

Section 34(2)(b) enumerates public policy as the most contentious grounds for setting aside an arbitral award. The Supreme Court for the first time held in Renusagar Power Co. Ltd. v. General Electric Co. that a judgment would only be against public policy where the judgment was against the very pith and substance of Indian law, equity, and good conscience, or contrary to the justice of India.

Nonetheless, the term "public policy" was expanded to encompass "patent illegality" in ONGC Ltd. v. Saw Pipes Ltd., leading to greater judicial intervention. The public policy exception was restricted in 2015 to cases involving fraud, corruption, or violations of fundamental legal principles in an effort to counterbalance this. These changes demonstrate the changing judicial perspective on arbitration, which seeks to achieve a balance between guaranteeing arbitration's impartiality and limiting the amount of court intervention.

Section 37: Appealable Orders in Arbitration

In an effort to ensure judicial oversight and maintain the efficacy of arbitration, Section 37 of the Arbitration and Conciliation Act, 1996, provides for statutory right of appeal against certain orders made by courts or arbitral tribunals. This section allows appeals against orders on setting aside arbitral awards (Section 34), granting or denial of interim relief (Sections 9 and 17), and refusal orders declining to refer parties to arbitration (Section 8).

The consistency of appeals under Section 37(1)(c) against refusal by a civil court to condone delay in raising objections under Section 34 was reaffirmed by the Supreme Court in the 2021 case of Chintels India Limited v. Bhayana Builders Private Limited. The Court emphasized that judicial review under Section 37 should be in accordance with the objective of the Act to minimize intervention while assuring procedural justice.

The absence of a defined statute of limitation is the big drawback of appeals under Section 37. It has been interpreted differently by various High Courts. But the Supreme Court established in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department (2008) that, except were exempted specifically, proceedings by arbitration are governed by the Limitation Act, 1963. Hence, in terms of Article 116 of the Limitation Act, appeals under Section 37 should ordinarily be made within 90 days; but, according to Section 5 of the Limitation Act, courts can possibly condone delays.

Section 37 provides that arbitral awards are reviewed in a formal legal framework while maintaining the efficacy of alternative dispute resolution processes by providing an appellate mechanism that balances court intervention and autonomy of arbitration.

Conclusion
In order to alleviate the backlog of cases in Indian courts, Alternative Dispute Resolution, a relatively new idea in the Indian legal system, is becoming more and more well-liked every day. The arbitrator is chosen by the parties in accordance with their preferences in order to settle the dispute.

Only within the parameters set forth by the Act may judicial intervention be used with caution. By reducing judicial intervention, the 2015 reforms have streamlined arbitration; yet, sustained judicial discipline is essential to preserving India's standing as an arbitration-friendly country.

India is shifting toward a pro-arbitration stance with changing case law and legislative reforms, guaranteeing that court intervention stays the exception rather than the rule.

Reference:

1. https://www.irccl.in/post/modifying-arbitral-awards-a-dilemma-under-sections-34-and-37-of-the-arbitration-act
2. https://articles.manupatra.com/article-details/Judicial-Intervention-In-Arbitration-A-Comparative-Analysis
3. https://hnluccls.in/2024/08/01/the-boundaries-of-judicial-intervention-in-arbitration-navigating-section-34/
4. https://manupatra.com/roundup/326/articles/arbitration.pdf
5. https://www.cadrnlud.in/post/revisiting-the-norm-of-minimum-judicial-intervention-in-arbitration
6. https://www.scconline.com/blog/post/2023/09/28/sc-discusses-scope-of-judicial-interference-with-arbitral-awards-legal-news/
7. https://www.drishtijudiciary.com/current-affairs/narrow-scope-of-interference-under-section-37-arbitration-act
8. https://www.mcolegals.in/kb/Scope_of_Judicial_Interference_with_Arbitral_Awards_under_Section_34_of_A&C_Act_-_Batliboi_Case.pdf