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Section 30

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.

Case Law

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

Award originate from an International Arbitration Agreement. Contention that an action can be maintained only when a cause of action wholly or in part arises within jurisdiction of a Municipal Court concerned. Not right to urge that a Municipal Court can entertain an action against a foreigner only when he either permanently or temporarily resides within its limits or submits to its jurisdiction.   PLJ 1998 SC 1808 = 1998 SCMR 1618.

Arbitration award. Court while hearing objections could not undertake reappraisal of evidence to discover error or infirmity therein. Error or infirmity in award which would render the same invalid must appear on the face of award and should be discovered by reading the same. Where reasons recorded by arbitrator were impugned as perverse, such perversity in reasoning must be substantiated with reference to material considered by arbitrator in award. Court while hearing objections against award was not legally competent to reappraise award or to assess and examine evidence to determine whether another possible conclusion could be drawn. Award was not vitiated for having been made long after expiry of four months. Court was empowered to enlarge time for making award irrespective of fact whether time had expired or not and whether award had been made or not. Time for making award could be extended on oral application of parties or on court’s own accord. S. 3, of arbitration Act, 1940, postulates that arbitrator would make award within 4months after entering on reference of after having been called upon to act by notice in writing from any party to arbitration agreement or within such extended time as court might allow. Where after expiry of four months, parties had submitted themselves to jurisdiction of arbitrator and had taken part in proceeding enabling Arbitrator to make award, he cold not be deemed to have acted without jurisdiction. Conduct and participation in proceedings by respondent would clearly reflect that he had consented to continuation of proceedings even after expiry of 4 months’ period which was deemed to have been extended by consent of parties. Award was, thus, not vitiated reason of making it beyond time fixed by law. PLJ 1999 Kar. 4 = 1998 CLC 1671.

Award written on plain paper instead of stamp paper. Held: Court” can impound award and can get stamp duty paid. PLJ 1988 Kar. 135  (DB).

Principles to test validity of Award. Court while examining validity of an award cannot act as a Court- of Appeal. Therefore, a Court hearing objection to award cannot undertake reappraisal of evidence recorded by arbitrator in order to discover error or infirmity in Award. Error or infirmity in award which render it invalid must appear on face of Award and should be discoverable by reading Award itself where reason recorded by arbitrator are challenged as perverse, perversity in reasoning has to be established with reference to material considered by arbitration in award. PLJ 1997 SC 47 = PLD 1996 SC 108.

Whether, award was liable to be set aside under Section 115 C.P.C– Although an award  can be set aside on grounds enumerated in Section 30, but when award is product of an illegal action after stay of proceedings by Court, it can be set aside without adhering to provisions of Section 30 of Act. being void and illegal. While exercising revisional jurisdiction, irregularities and illegalities cannot be allowed to go un-noticed. particularly in view of fact that arbitrator had anxiety to give award despite stay order. Conclusion is that arbitrator misconducted himself as well as proceedings. Arbitration award has been given by arbitrator without lawful authority and jurisdiction. PLJ 1994 Qta. 14 = PLD 1994 Qta. 99.

Examination of award by Court. Fact that parties had agreed to refer disputes relating to immovable properties, subject matter of award, and fact that two arbitrators had given the award supported not only by pleadings of petitioners, but also facts on record. Generally, when award is given and it is disputed by one party, other party approaches Civil Court and prays for award to be made rule of court and once this is done and award having become rule of court, it has effect of decree passed by civil Court. However, decision is different where award is given without intervention by civil court and said award is accepted and acted upon by parties to award. In such case, party by relying upon such award can file suit on basis of such Award. Award, no doubt, related to ancestral properties but it also covered property in dispute and made decision as to whom it should belong. It has been admitted that from 1982, when award was given, till 1989, there was no dispute between parties and in fact, on basis of award, disputes pending between brothers in courts were disposed of. Appellate Courts, judgment which has been confirmed by High Court that award’ was accepted and implemented by parties is supported by evidence on record. There is no ground for interference in judgment PLJ 1998 SC 840 = 1998 SCMR 1304.

Court while examining validity of an award does not act as Court of appeal and, therefore, a Court hearing objections to award cannot undertake re-appraisal of evidence recorded by arbitrator in order to discover error or infirmity in award. It was further held that error or infirmity in the award which rendered it invalid, must float on the surface of award and should be discoverable by reading award itself. Where reasons recorded by arbitrator are challenged as perverse; perversity in reasoning is to be established with reference to material considered by arbitrator in award. PLJ 1999 Kar. 407 = PLD 1999 Kar. 112.

Glaring jurisdictional defects in the agreement and award would render them invalid and void. PLJ 2000 SC 352.

Application for setting aside award of arbitrator in High Court at Karachi, All defendants were neither residents nor working for gain within Province to which jurisdiction of said High Court extended. Addresses of defendants in plaint related to N.W.F.P- Parties in agreement had agreed to refer their dispute to sole arbitrator or to his nominee who also resided outside jurisdiction of High Court at Kar.. Effect. High Court at Kar., thus. Had no jurisdiction to entertain application for setting aside award. Civil Court at Pesh. would be competent to entertain such suit/ application. Provisions of O.VII. R. 11, C.P.C. being not exhaustive, any incompetent suit must be buried at initial stage in order to save defendants from hardship and rigours of protracted trial. High Court at Kar., thus, had no jurisdiction, therefore, provisions of Ss. 31(2) & 32, Arbitration Act, 1940 were fully attracted, whereby plaint was liable to be rejected. PLJ 1999 Kar. 80. = 1998 CLC 1408.

Rules of Conciliation and Arbitration of International Chamber of Commerce, Arbitration venue was England. Leave to appeal was granted by Supreme Court of Pakistan to consider as to what was effect of factuna that petitioners and respondents did not reside and were not located within Pakistan and whether procedural law/curial law as deemed to be ex arbitri or lexfori i.e. law of England, under which English Courts atone had jurisdiction in respect of proceedings for arbitration conducted in that country. PLJ 1998 SC 1808 = 1998 SCMR 1618.      Obtaining of mine for raising coal on royalty basis. Installation of new machinery. Differences arising of between new (partners) owners and respondents. Arbitration agreement thereof. Award entitling respondents to receive Rs. 28 lac from new owner without making it “Rule of Court”. Another Arbitration Agreement between appellant and respondent. Award announced by sole arbitrator behind back of – appellant. Application for making it as “Rule of Court” without mentioning of previous Award. Objections against. Award was made “Rule of Court”. Appeal and Revision against. Whether Revision petition can be filed for setting aside an Award, appeal would be competent u/S. 39(1) (vi) of Arbitration Act, and for purpose of examining validity of a Decree, as no specific provision has been incorporated, therefore, revision would be only remedy available to judgment Debtor. PLJ 1998 Qta. 252 =  1998 CLC 1684.

Scope of said clause was main bone of contention between parties to arbitration. Even if parties had not specifically referred question of interpretation of said clause its interpretation fell within scope of reference, because without interpretation of referred clause, reference Co arbitrator could not be resolved. PLJ 1997 SC 47 = PLD 1996 SC 108.

Proof of Misconduct of arbitrator – Where award is found ‘otherwise invalid’, it is not for a party to establish misconduct on the part of the arbitrator in every case – Court under S.30(c) of Arbitration Act, 1940, is empowered to set aside the same and refuse to make it rule of the Court. 2002 C LD 61

Award on question of damages even if erroneous but cannot be said that an error of law is apparent on face of award. PLJ 1981 Kar. 95.

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