Critical Analysis of Patent Illegality as a Ground for Setting Aside Domestic Awards in India

Arbitration is one of the widely preferred forms of the Alternative Dispute Resolutions (ADRs) in India. Arbitration is predominantly based on party-autonomy, providing a flexible mechanism for an amicable settlement between the parties. The judicial intervention is restricted only to certain grounds ensuring the finality of arbitral awards. The Section 34 of the Arbitration and Conciliation Act, 1996 provides certain grounds for setting aside the arbitral awards passed in domestic arbitration. The concept of patent illegality was recognised as a ground by the Supreme Court in the year 2003 by giving a wider interpretation to the term ‘Public Policy’. Further, the Amendment Act, 2015 provided patent illegality as a separate ground for challenging the arbitral award. This concept of patent illegality is unique to Indian Arbitration Law and sets a departure from international standards. Henceforth, its application is limited to awards passed in domestic arbitrations.