Andhra Pradesh High Court Upholds Majority Arbitral Award in International Commercial Arbitration
Appeal challenging the arbitral award's validity under Section 31 of the Arbitration and Conciliation Act, 1996 dismissed with costs
In a significant judgment delivered by the Andhra Pradesh High Court, the division bench consisting of Sri Ravi Nath Tilhari and Sri Maheswara Rao Kuncheam dismissed the appeal filed by M/s. Orind Special Refractories Ltd., challenging the validity of an arbitral award dated June 2, 2017. The appeal, made under Section 37 of the Arbitration and Conciliation Act, 1996, contested the award on grounds of non-compliance with Section 31(1) and (2) of the same Act.
The dispute arose between M/s. Orind Special Refractories Ltd., a company incorporated in the Republic of China, and M/s. Rashtriya Ispat Nigam Ltd., an Indian company. The disagreement centered around deductions made by the respondent on account of alleged delayed delivery and penalty for underperformance. The arbitration tribunal, comprising three arbitrators, delivered a majority award which was contested by Orind Special Refractories.
The appellant argued that the majority award was invalid as it was not signed by all arbitrators, and no reasons were provided for the omitted signature of one co-arbitrator. However, the High Court ruled that the signing of the majority award by the presiding arbitrator and a co-arbitrator was sufficient compliance with Section 31(1) and (2), especially when the dissenting opinion was separately signed by the third arbitrator.
The Court emphasized the mandatory nature of Section 31 and clarified that a dissenting opinion fulfills the statutory requirement for omitted signatures in the majority award. The judgment also highlighted that the learned single judge had considered all relevant arguments and precedents, including decisions from the Supreme Court and other High Courts, before upholding the majority award.
Consequently, the appeal was dismissed, and the appellant was directed to pay costs amounting to Rs. 1,00,000 to the Andhra Pradesh High Court Legal Services Committee. The decision reinforces the validity of arbitral awards where a dissenting opinion is separately recorded and signed, providing clarity on procedural compliance under the Arbitration and Conciliation Act, 1996.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Validity of arbitral awards under Section 31(1) and (2) - Compliance with mandatory requirements for signatures of arbitrators and reasons for omitted signatures.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 31, 34, 37
