An Unreasoned Arbitration Award Is Against The Public Policy: Orissa High Court

The High Court of Orissa ruled in the matter of Jayaram Panda v. Project Director, M/s. National Highway Authority of India and others (ARB.A. No. 58 of 2018) that an unreasonable arbitral decision would be against public policy. The Court set aside the award as the arbitrator failed to give any reasons for reaching the conclusion in the award.  The Single Bench of Justice Arindam Sinha has ruled that an award without reasons violates the Act’s purpose and, hence, is against public policy.

Brief Facts Of The Case: The appellant contested the lower court’s decision on the grounds that the ruling should have been overruled because the arbitrator failed to provide sufficient justification for the amount of compensation that should have been paid to his client in connection with the National Highways Authority of India’s (NHAI) acquisition.

The appellant claimed that two technical analyses were conducted in order to assess the compensation due to it, and the second analysis had recommended a higher compensation. The arbitral tribunal has not provided any justifications for its decision to reject the latter evaluation. The general manager/respondent number four, according to the appellant, also signed the technical report with a dissent note and suggested a higher compensation. The respondent claimed that the General Manager’s comments on the Technical Committee’s report were personal and had not been approved by the State. The arbitrator was correct in accepting the reassessed recommendation of the technical committee; therefore, no interference is required.

Judgement: The Court noted that the dispute before the arbitrator did not involve a dispute between the Technical Committee (the State) and the General Manager (NHAI), but rather a decision on the appellant’s request for higher compensation. As a result, the arbitrator erred in focusing on resolving this dispute. The arbitrator’s decision to accept the technical committee’s revised report was found to be without justification by the court, which resulted in an award of the same amount. It was decided that because Section 31’s subsection (3) requires that the arbitral decision include a reason, and because the parties had not consented to an award without one, the arbitrator was required to do so in order to accept the technical committee report. According to the Court, an unreasoned arbitral award would be against public policy. The Court set aside the award as the arbitrator failed to give any reasons for reaching the conclusion in the award.

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