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  • Anupam Verma

Applications Challenging Arbitral Awards: The Issue of Non-Est Filing

[Anupam is a student at National Law University, Odisha.]


In India, Section 34 of the Arbitration and Conciliation Act 1996 (the A&C Act) confers the right upon a party to file an application before a court for setting aside an arbitral award. While filing such an application, there are certain accepted procedures that need to be followed, but they are not enumerated in the A&C Act or any other statute. There arises the question of what procedures are minor in nature and what are so material and fundamental that, in the absence of their adherence, a filing is rendered non-est. The Delhi High Court (DHC), in recent cases like Oil and Natural Gas Corporation Limited. v. Joint Venture of M/S Sai Rama Engineering Enterprises (ONGC) and Ambrosia Corner House Private Limited v. Hangro S Foods (ACHPL), dealt with this question. In this article, the author delves deeper into the judgements, analyse the conflict that arises from them, and suggests ways to settle them by referring to the best practises of progressive jurisdictions.


ONGC and ACHPL Judgements


In both cases, the judgement debtors (JD) had filed applications impugning the arbitral awards within the prescribed time limit of 3 months plus the further conditional time limit of 30 days (statutory limitation) as enshrined under Section 34 of the A&C Act. But the filing had certain defects, because of which the court registry had marked it defective. The defects were as follows:


ONGC: (a) Some affidavits, which were signed by the deponent and also duly verified, were not attested; (b) the vakalatnama (a memorandum of appearance or any other document by which an advocate is empowered to appear or plead before any court, tribunal, or other authority) was not stamped.


ACHPL: (a) The copy of the impugned award was not filed along with the application; (b) The affidavit in support of the application was not attested.


In ONGC, the JD tried to cure all the defects and was successful in doing so, but not before the expiration of the statutory limitation. On the other hand, in ACHPL, the JD was also successful in weeding out all the defects and claimed to have done so within the statutory limitation, but the decree holder (DH) contested this and contended that the defects were cured after the expiry of the statutory limitation. Furthermore, the DHs in the respective cases argued that since the applications, though filed within the statutory limitation, had procedural deficiencies, they are non-est, and as the rectification was made only after the expiry of the statutory limitation, the application cannot stand. But, in both cases, the DHC decided in favour of the JD and held that the application would not be considered non-est because the defects were not material and fundamental.


The Conflict


On the face of it, the ONGC and the ACHPL judgements seem similar in nature, and indeed they are at least in their final verdict, but on the point of indispensable procedural requirements, without which a filing becomes non-est, they are in contradiction to one another. This contradiction becomes pertinent because the A&C Act does not contain any mandatory procedural requirement except for Section 34(5), which says that "an application under this section shall be filed by a party only after issuing a prior notice to the other party, and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement".


The DHC, in para 41 of the ONGC, has laid down a test to determine whether a filing is non-est. The test has four indispensable components. These are that (a) the application must be intelligible, (b) the filing must be authorised, (c) it must contain contents that are material to the case, such as the names of the parties and the grounds for challenging the award, and, most importantly, (d) it must be accompanied by a copy of the impugned award. When these four requirements are adhered to, an application cannot be declared non-est, no matter what other defects it has. Furthermore, as the DHC has nowhere mentioned the conjunction or while laying down the requirements, it can safely be said that even if one of the four requirements is not adhered to, the application becomes non-est.


In recent judgements like India Tourism Development Corporation v. M/S Bajaj Electricals Limited and Brahmaputra Cracker and Polymer Limited v. Rajshekhar Construction Private Limited, the DHC has reiterated the ONGC judgement and emphasized that a Section 34 application must be accompanied by a copy of the impugned award; otherwise, the application would be non-est.


On the other hand, in the ACHPL, even though the judges refer to the ONGC judgement to support their decision, they fail to follow one of the procedural requirements laid down in the latter, i.e., the application must be accompanied by an award. Here, the JD filed a Section 34 application without a copy of the impugned award, and it was not declared non-est, but it should have been, if one is to go by ONGC. Instead, the judges relied more on the previous decision of the DHC in Oriental Insurance Company Limited v. Air India Limited (Oriental), where it was held that the filing can be held non-est only when the application is filed without the signatures of either the party or its authorised or appointed counsel.


This varying stance taken by the DHC over the course of a few judgements with regard to the importance of the copy of the impugned award is very confusing, to say the least. Moreover, both Oriental and ONGC judgements are given by division benches of the DHC, so a conundrum arises regarding which one to follow. The judges in ACHPL, in order to justify the preference of Oriental over ONGC, gave the rationale that "the court must assess the facts of each case while determining the issue of the filing being considered non-est" (emphasis supplied). The fact in ACHPL that led to the case being decided in favour of the JD was that the conduct of the JD, according to the judges, "clearly evidences its endeavour to file a proper application under Section 34 within the statutory limitation." Going by this, in upcoming cases, it is highly possible that the threshold of procedural requirements while considering the question of an application being non-est may be different for each case.


Therefore, it can be seen that the DHC has failed to provide a clear set of procedural guidelines. Although it is true that the Supreme Court (SC) has yet to deal with this question, it cannot be said with certainty that whenever it does so, it is going to steer away from ACHPL’s case-to-case reasoning. Furthermore, it does not seem feasible to wait for the SC to take up this issue. There is definitely an urgent need for a fixed set of procedural requirements without which a Section 34 application will be non-est, irrespective of the facts of each case. In the absence of such specified requirements, instances of non-est or defective filings will continue, leading to delays in the acceptance of the applications and eventually in the listing of the matters before the courts. All this will lead to delays in deciding the fate of the arbitral awards, an issue that is plaguing the Indian arbitration regime and has also been flagged by a high-level committee headed by former SC Judge Justice BN Srikrishna.


Way Forward


The best possible way to permanently settle the issue of vague procedural requirements is through legislative action. In this regard, one can refer to the clear enunciation of procedural requirements in the statutes of the US and the UK that are needed to be followed while challenging an arbitral award.


The US


Section 10 of Title 9 of the United States Code talks about vacating or challenging an arbitral award. Section 12, inter alia, talks about notice of a motion to vacate an award, and Section 13 provides procedural requirements that need to be followed. The papers that need to be filed along with an application are: (a) the arbitration agreement, details regarding the appointment of additional arbitrators if appointed, and an extended time limit for passing the award, if any, (b) the impugned award, and (c) notices and affidavits.


The UK


Sections 67 and 68 of the Arbitration Act 1996 deal with challenges to arbitral awards in the UK. However, the procedural requirements that are needed to be followed while filing the arbitration claim form (N8 form) are clearly laid down under Rule 62.4 of the Civil Procedure Rules 1998. These are that (a) an arbitration claim form should clearly mention the remedy claimed, any questions on which the claimant seeks the decision of the court, details of the arbitral award, etc., and (b) an arbitration claim form must be served on the defendant within 1 month from the date of issue.


Takeaway for India


India also needs such legislative clarity. The best way to do this is by clearly laying down the procedural requirements in the A&C Act through an amendment. However, the requirements should not be tedious and extensive but minimal and time-efficient. This way, the JDs who decide to challenge an arbitral award will have clear procedures to follow, leading to a reduction in instances of non-est or defective filings, and court registries will have clarity regarding scenarios in which a Section 34 filing has to be marked defective.


Conclusion


The DHC, through its recent judgements like the ONGC and the ACHPL, has strived towards ensuring that the right of a JD to challenge an award is not denied on the basis of certain infirmities in the application. On the flip side, unfortunately, the recent judgements have also shrouded the already unspecified procedural regime in more uncertainty. However, the legislature is best suited to deal with this issue. To do so, the legislature can refer to the arbitration regimes of the US and the UK, which have a fixed set of procedural requirements laid down in their statutes. In India, the average disposal time of Section 34 applications is alarmingly high. Having clear procedural requirements can reduce instances of defective and non-est filings, leading to a reduction in delays that happen at the pre-acceptance stage of Section 34 applications.

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