Supreme Court Expands Powers Over Arbitral Awards

The Supreme Court has ruled that courts can modify arbitral awards under specific circumstances, broadening the scope of the Arbitration and Conciliation Act, 1996. This decision, delivered by Chief Justice Sanjiv Khanna in a 4:1 verdict, details conditions where courts can sever invalid award portions while retaining valid sections.

The Supreme Court on Wednesday expanded the judiciary's powers over arbitral awards, allowing courts to modify them under the Arbitration and Conciliation Act, 1996. This pivotal ruling was delivered by Chief Justice Sanjiv Khanna, representing a 4:1 majority stance on the five-judge Constitution bench.

The court's decision emphasizes the broader power to set aside an arbitral award, now encompassing the ability to amend it under certain conditions. Chief Justice Khanna, writing for the majority, argued that such interpretation aligns with the statutory framework, maintaining that valid portions of the awards can be preserved while invalid sections are severed.

The ruling is set to impact commercial disputes significantly, following a reference made to the court by a three-judge Bench earlier this year. While this decision aims to alleviate issues of cost and delay in the arbitration process in India, it also underscores the need for practical interpretation of post-award scenarios.