2018 (1) TMI 1137 - SC - Indian Laws

Whether an award delivered by an Arbitrator, which decides the issue of limitation, can be said to be an interim award? - Whether such interim award can then be set aside under Section 34 of the Arbitration and Conciliation Act, 1996? Held that - A reading of the Section 31(6) makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the arbitral tribunal, and that it extends to any matter with respect to which it may make a final arbitral award. The expression matter is wide in nature, and subsumes issues at which the parties are in dispute. It is clear, therefore, that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award - More than one award finally determining any particular issue before the arbitral tribunal can be made on different aspects of the matters to be determined. A preliminary issue affecting the whole claim would expressly be the subject matter of an interim award under the English Act. The English Act advisedly does not use the expression interim or partial , so as to make it clear that the award covered by Section 47 of the English Act would be a final determination of the particular issue that the arbitral tribunal has decided. The award dated 23rd July, 2015 is an interim award, which being an arbitral award, can be challenged separately and independently under Section 34 of the Act. Such an award, which does not relate to the arbitral tribunal s own jurisdiction under Section 16, does not have to follow the drill of Section 16(5) and (6) of the Act. Appeal allowed.

Issues Involved:
1. Whether an award delivered by an Arbitrator deciding the issue of limitation can be considered an interim award.
2. Whether such an interim award can be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
3. The jurisdiction of the arbitral tribunal to rule on its own jurisdiction under Section 16 of the Act.

Issue-wise Detailed Analysis:

1. Interim Award on the Issue of Limitation:
The primary issue was whether an award deciding the issue of limitation is an interim award. The court examined Section 2(c) and Section 31(6) of the Arbitration and Conciliation Act, 1996, which state that an arbitral award includes an interim award. The court noted that the language of Section 31(6) is broad, allowing the arbitral tribunal to make an interim arbitral award on any matter that could be the subject of a final arbitral award. The court concluded that since the issue of limitation was finally decided by the arbitrator, the award dated 23rd July 2015 is an "interim award" within the meaning of Section 2(1)(c) of the Act.

2. Setting Aside Interim Awards under Section 34:
The court analyzed whether an interim award could be challenged under Section 34 of the Act. It was determined that an interim award, being subsumed within the expression "arbitral award," can indeed be challenged under Section 34. The court referenced various judgments, including McDermott International Inc. v. Burn Standard Co. Ltd., to support the view that an interim award is a final award on matters covered therein made at an intermediate stage of the arbitral proceedings. Thus, the award on the issue of limitation can be independently challenged under Section 34.

3. Jurisdiction under Section 16:
The respondent argued that a ruling on the point of limitation is a ruling on "jurisdiction" under Section 16 of the Act, which should follow the drill of Section 16(5) and (6). The court clarified that Section 16 deals with the competence of the arbitral tribunal to rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement. However, the court distinguished between jurisdiction in the narrow sense (as used in Section 16) and broader issues like limitation. It held that the award on limitation does not relate to the arbitral tribunal's jurisdiction under Section 16 and therefore does not need to follow Section 16(5) and (6).

Conclusion:
The Supreme Court concluded that the award dated 23rd July 2015, deciding the issue of limitation, is an interim award that can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996. The court suggested that Parliament might consider amending Section 34 to consolidate all interim awards with the final arbitral award to avoid piecemeal challenges, which lead to unnecessary delays and expenses. The appeal was allowed, and the impugned judgment was set aside, directing that the Section 34 proceedings before the District Judge, Jagatsinghpur, be decided.

← Previous Next →