Arbitral Tribunal Has No Inherent Power To Recall & Modify Its Award; It Can Only Correct Or Interpret It: Allahabad HC
The Allahabad High Court observed that an Arbitration Tribunal does not have the inherent power to recall and modify the award
The Court stated that since Arbitral tribunals are not courts of law bestowed with inherent powers, arbitrators are required to act within the confines of the arbitration agreement.
A Single Bench of Justice Shekhar B. Saraf observed, “The arbitral tribunal can only correct and interpret an award. An additional award can be made, only in respect of claims which have been omitted from the arbitral award. Interpretation of the award and additional award can be made only upon a request received by a party. However, correction can be done by the arbitral tribunal on its own within thirty days from the date of the arbitral award. However, none of these provisions, give arbitral tribunal the power to recall and modify its award. "
The Bench clarified that Section 33 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), which deals with the correction and interpretation of an arbitral award, did not give the arbitral tribunal the power to recall and modify its award. “The principle of kompetenz- kompetenz which empowers arbitral tribunals to rule on their own jurisdiction, is not a carte blanche for unlimited authority,” the Court added.
Advocate Divakar Rai Sharma represented the appellant, while Advocate Ashish Kumar Singh appeared for the respondents.
Following a notification issued under Section 3A(1) of the National Highways Act, 1956 for land acquisition for widening a road, an award was passed for valuation of the said land. After the land holders raised an objection to the valuation, the Arbitrator set aside the award and remitted the matter to the Competent Authority for re-valuation of the land. Subsequently, NHAI preferred objecting to the award of land re-valuation under Section 34 of the Arbitration Act.
The Court discussed the provision of Section 33 of the Arbitration Act and stated that the principle of kompetenz underscored the tribunals’ duty to determine its jurisdiction within the confines of the arbitration agreement and applicable law.
“The authority of arbitral tribunals to correct, interpret, or supplement their awards does not extend to revisiting the merits of the dispute or reconsidering substantive issues that have already been decided. Arbitral tribunals are bound by the principle of functus officio, which holds that once an award has been rendered, the tribunal’s jurisdiction over the dispute is terminated, and it lacks authority to revisit or modify its decision in absence of specific statutory provisions to the contrary,” the Court remarked.
Consequently, the Court noted that the arbitrator erred in passing the awards since no statutory authority empowered the arbitral tribunal to review/modify its award. Therefore, in exercise of its power under Section 37 of the Arbitration Act, the said orders were declared void ab initio and were set aside by the High Court.
“This raises important questions regarding the role of judiciary in overseeing arbitral proceedings and ensuring compliance with the principles of arbitration law. While courts generally afford deference to arbitral tribunals and uphold the finality of arbitral awards, they also have a duty to intervene when arbitrators exceed their authority or act improperly. In this case, the Section 34 court’s decision to dismiss the application without addressing the arbitrator’s improper actions may be seen as a missed opportunity to uphold the integrity of the arbitral process,” the Court added further.
Accordingly, the High Court allowed the appeal.
Cause Title: National Highways Authority of India v. Musafir & Ors. (Neutral Citation: 2024:AHC:81638)
Appearance:
Appellant: Advocate Divakar Rai Sharma
Respondents: Advocates Ashish Kumar Singh and Dharamveer Singh