Arbitration Act, 1940
Grounds for setting aside award
An award shall not be set aside except on one or more of the following grounds, namely:-
(a) that in arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;
(c) that an award has been improperly procured or is otherwise in valid.
Setting aside of award – Breach of contract by short supply of rice – Award – allowing claim of loss suffered by plaintiff – Validity – Rice was a commodity traded internationally— Difference of market price had been brought on record through authority letter attested by Pakistan consul – Finding of arbitrator was supported by sufficient material – Award was made rule of court. 2004 M L D 477
Principles – Arbitrator is the final judge on the law and facts and it is not open to a party to challenge the decision of the arbitrator, if it is otherwise valid – If the arbitrator has given his decision in terms of submission made before him nothing adverse could be attributed to him – Even if there was wrong interpretation of a clause in a contract between the parties, in such a case, arbitrator is not bound to give specific findings on each and every issue nor he is required to state reasons for his conclusion, if the findings are within the parameters of the submissions made before him – Award cannot be set Sadie on the plea that different view was possible if the facts would have been appreciated with different angle by the arbitrator – Court, while examining the validity of award does not act as a court of appeal and cannot undertake reappraisal of evidence recorded by the arbitrator in order to discover the error or infirmity in the award – Error or infirmity in the award which renders the award invalid must appear on the face of the award and should be discoverable by reading the award itself – Where reasons recorded by the arbitrator are challenged as perverse, the perversity in the reasoning has to be established with reference to the material considered by the arbitrator had minutely examined each and every aspect of the case and party objecting to the award was not able to point out any flaw in the award, the award was valid. PLD 2003 SC 301
Allegation of legal misconduct on the part of arbitrator – Record showed that normal procedure was followed by the arbitrator and all the pleas raised by the parties were considered and answered accordingly – Neither there was any violation of any principle of natural justice nor any conclusion was draw in haste, nor the conclusion so drawn shocked the conscience – Arbitrator, in circumstances, had not acted capriciously or arbitrarily. PLD 2003 SC 301
Where no objection was filed :– Court, while considering the question, if the award should be made rule of the court or otherwise was not supposed to remain dormant and to play the role of post office, by affixing the judicial stamp on the award – Court had ample suo motu power and in exercise thereof, was duty bound to see if the award which was to be made rule of the court, did not violate any provision of law; the rules of justice and/ or acquiescence, even if the parties had consented that the award be made rule of the court – Mere fact that the arbitrator, in the present case, himself was a party to the dispute, was inherently incompetent to act as an arbitrator and pronounce the award impinging the fundamental rule that no one shall be a judge of his won cause; such an error was apparent on the surface of the award, rendering the same invalid – Such an award could not have been made the rule of the court. Notwithstanding the fact that objections were not filed, Court should, in the exercise of its suo motu jurisdiction have refused to make the award rule of the court in circumstances. PLD 2003 Lah. 522
Misconduct – Misconduct with reference to arbitration proceedings, is interpreted in the sense in which it is not akin to fraud but it means neglect of a duties and responsibilities of the arbitrator. PLD 2003 SC 301 Term ‘misconduct’ occurring in S.30(a) of Arbitration Act, 1940, does not necessarily mean amounting to moral turpitude and is usually called legal misconduct having very wide meaning. 2002 C LD 61 PLD 1974 Kar. 155; PLD 1977 SC 237 and AIR 1958 All. 692 ref.
Arbitrators personal interest and partisan acts. Arbitration award would be invalid and improperly procured and cannot be sustained on touchstone of S. 30 when arbitrators were motivated by personal interest and acted as partisan. PLJ 20WSC3S2.
Reference to arbitrator without consent of all the parties – Joining of non-consenting party to the proceedings before arbitrator, subsequently – Effect – Where initial reference was illegal, participation in the proceedings could not cure the illegality and the award given by the arbitrator could be set aside by invoking the provisions of S.30(c) of Arbitration Act, 1940, as the same was otherwise invalid. 2001 CLC 613
Pending suit. Reference of dispute to arbitrator. Incase of arbitration In a pending suit, parties may approach court wherein civil suit is pending, for an order of reference to arbitrator. In cases of arbitration without intervention of court, parties may themselves agree to refer matter to an arbitrator. In case of any dispute regarding existence or legality of an arbitration agreement or award, same is to be decided by court under Section 33 of Act and validity of award can be challenged on any ground mentioned in Section 30. Court can make award rule of court under Section 17 of Act after rejecting objections if any, made against award, through decree passed in accordance with award. PLJ 1995 Lah. 407 = PLD 1995 Lah. 205.
Objections to award – Limitation – Delay in filing the objections – No application was filed for condonation of delay – Effect – Objections to award had to be filed within thirty days and if filed beyond statutory period, then the objections could not be taken into consideration especially in absence of any application for condonation of delay and possible justification as to why the objections were not filed within prescribed time – Award was made rule of Court P L D 2001 Kar. 158