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CS Professional · Arbitration, Mediation and Conciliation · Conceptual Framework of International Commercial Arbitration

An award in a Hyderabad-seated international commercial arbitration between Sagar Infra Ltd and a Korean firm applied the designated law. Sagar Infra applies under section 34, arguing the award has a patent illegality on its face, namely a wrong application of the contract law. What is the likely outcome?

The patent illegality argument fails. Section 34(2A) makes patent illegality a ground only for awards from arbitrations other than international commercial arbitrations, and the proviso excludes mere erroneous application of law. This award arose from an international commercial arbitration, so the ground is unavailable.

  1. AAward set aside, as patent illegality applies to all awards
  2. BAward set aside, because wrong application of law is always a ground
  3. CApplication cannot succeed on patent illegality, as section 34(2A) covers only arbitrations other than international commercial onesCorrect
  4. DCourt must remand to the tribunal under section 34(4) automatically

Explanation

Section 34(2A) allows setting aside for patent illegality only for awards arising from arbitrations other than international commercial arbitrations, and even then not for mere erroneous application of law. So the ground is unavailable here. Section 34(4) adjournment is discretionary, on request.

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