Judicial Conscience Versus Evidentiary Autonomy in Arbitration

[Mahak and Avani are students at National Law Institute University Bhopal.]

In Aakash Packaging v. Arenel Private Limited (Aakash Packaging), the Bombay High Court addressed the question of whether an arbitral award could be set aside under Section 34(2)(b)(ii) of the Arbitration and Conciliation Act 1996 (A&C Act), on the ground that it conflicted with the public policy of India. The dispute arose from claims that defective packaging material had been supplied, and the arbitral tribunal’s reliance on hearsay evidence of an expert witness after initially rejecting the same report was found to shock the conscience of the court. The judgment reflects the court’s disapproval of arbitral reasoning that discounts admitted documentary evidence, such as the SGS India reports, in favour of uncorroborated expert testimony based on hearsay.

Although the decision reaffirms judicial oversight under the public policy exception, it simultaneously leaves open broader questions about the scope of such interference post-2015 amendments to the A&C Act. The arguments advanced show the continuing tension between the principles of minimal judicial intervention and the need to safeguard fairness and natural justice in arbitral proceedings. This judgment thus raises pressing concerns about how Indian courts balance party autonomy and judicial interference to uphold the integrity of the arbitral process.

This article seeks to evaluate the Bombay High Court’s ruling in Aakash Packaging on two grounds. First, it analyzes the court’s intervention in evidentiary assessment and its impact on party autonomy. Second, it explores how the court’s reasoning broadens the contours of the public policy exception by grounding it in shocking the conscience review. 

Evidentiary Standard in Arbitration

Arbitration is based on procedural flexibility. Section 19 of the A&C Act explicitly excludes the applicability of the Evidence Act 1872, except to the extent agreed upon by the parties. This freedom is meant to preserve the efficiency and party autonomy while at the same time subjecting tribunals to overarching requirements of fairness.

The Supreme Court has repeatedly supported this balanced approach. In Anglo American Metallurgical Coal Pty. Ltd. v. MMTC Ltd., the court observed that “arbitral tribunals are the final judge of the quality, as well as the quantity, of evidence before it.” Similarly, in Reliance Infrastructure Limited v. State of Goa and Haryana Tourism Limited v. Kandhari Beverages Limited, the court cautioned that appellate courts should not unduly dissect evidence or revisit factual findings. Such interference undermines the very purpose of arbitration. This makes the principle clear that arbitral tribunals are the masters of the evidence, and courts should not sit on appeal on the factual findings.

This particular principle is further supported by Article 27(4) of the UNCITRAL Model Law, which states that “the arbitral tribunal shall determine the admissibility, relevance, materiality and weight of the evidence offered.” This suggests that the arbitrator’s discretion regarding evidentiary matters is final. Against this backdrop, the Bombay High Court’s intervention seems to be unfounded. The court criticized the arbitrator for rejecting SGS India's reports and relying on hearsay evidence. By doing this, the court imported the courtroom-style evidentiary standards into arbitration. This move results in two key outcomes. 

First, it blurs the distinction between reasoning errors and natural justice violations. In Associate Builders v. DDA, the Supreme Court held that awards are only deemed perverse when they are based on wholly irrelevant material or no evidence, or when crucial evidence is disregarded. The award is immune from challenge so long as there exists some rational evidentiary basis, even though it is minimal. Similarly, the Orissa High Court in Principal Secretary to Govt. of Odisha v. Jagannath Choudhury held that findings based on “little or marginal evidence” fall within the tribunal’s jurisdiction unless they flagrantly violate logic. The court blurred this line as it extended judicial review into the merits under a different name by defining evidentiary flaws as public policy violations. 

Second, the party autonomy in evidentiary design has been unsettled by this ruling. When parties choose arbitration, they implicitly accept that tribunals have discretion to weigh evidence. In international arbitration, the tribunals are willing to accept hearsay evidence, as found in  EDF v. Romania and Methanex v. USA. The court has enforced a norm that the A&C Act had intentionally avoided by setting aside the ruling for relying on hearsay. This method undermines predictability and pressures arbitrators to adopt judicial formality.

The underlying risk is systemic. Section 34 will transform into an appellate jurisdiction if courts keep elevating flawed evidentiary appreciation into matters of public policy. This approach will nullify the 2015 amendment, which aims to limit judicial intervention. And also discourage foreign parties from choosing India as an arbitral seat. In this way, the high court’s approach deviates from settled precedent and legislative policy. Further, it runs the risk of undermining arbitral autonomy by equating evidentiary errors with injustice. Thus, this judgment serves as a warning; the courts must avoid reinstating the evidentiary rigidity that arbitration was intended to avoid.

The Judicial Application of the “Shock to the Conscience” Test

The Bombay High Court’s ruling in this case reaffirms the judiciary's important role in safeguarding fundamental principles of fairness and justice in arbitration under Section 34(2)(b)(ii) of the A&C Act. This section permits courts to set aside an award if it is found to be in conflict with the public policy of India. In ONGC v. Saw Pipes, the Supreme Court interpreted the phrase public policy expansively to include awards contrary to the fundamental policy of Indian law, the interests of India, or notions of justice and morality. This scope was further expanded in Associate Builders v. DDA, where the court introduced the formulation that an award so perverse or irrational as to shock the conscience of the court could be struck down.

In this case, the Bombay High Court invoked this reasoning to annul a foreign award on the basis that the tribunal had preferred oral testimony over admitted documentary evidence. With respect, such an application misapprehends the limits of judicial review under Section 34. The object of Section 34(2)(b)(ii) is altogether different. The 2015 amendment to the A&C Act expressly restricted the public policy ground for setting aside international awards under three narrow grounds: fraud or corruption, contravention of the fundamental policy of Indian law, and conflict with morality or justice. The introduction of Section 34(2A), limited to domestic awards, makes clear that errors of law or fact cannot justify interference with international awards. This finds support in Ssangyong Engineering v. NHAI,  where the Supreme Court clarified that public policy in the context of foreign awards must be construed narrowly in line with international best practice and that reappreciation of evidence is impermissible.

It is argued by the authors that the reliance on the shock to the conscience standard disregards this legislative intent. The phrase has no statutory basis and originates in constitutional jurisprudence, where it was used to test violations of fundamental rights. Its migration into arbitration is unwarranted. By invoking it in Aakash Packaging, the court has effectively enlarged the scope of public policy beyond the confines of Section 34(2)(b)(ii). This not only undermines arbitral finality under Section 35 but also risks conflating mere evidentiary disagreement with substantive violations of law.

Further, the standard is inherently vague. What shocks the conscience of one judge may not shock another. This subjectivity allows for unpredictable outcomes and inconsistent application across courts. For international arbitration, predictability and uniformity are essential as foreign parties select India as a seat with the expectation of minimal judicial interference. By allowing conscience-based intervention, Indian courts risk sending a signal that awards are vulnerable to judicial second-guessing, deterring international investors from choosing India as an arbitral jurisdiction.

Moreover, comparative jurisdiction shows a clear departure from such open-ended tests. Section 68 of the English Arbitration Act 1996 provides a ground of “serious irregularity,” defined exhaustively to prevent courts from reviewing factual or legal findings. Similarly, Singaporean courts restrict interference on three grounds; fraud, bias, or denial of natural justice. These jurisdictions avoid moral formulations like shock to the conscience precisely because of their indeterminacy. Therefore, the use of the shock to the conscience test to set aside a foreign award is legally unsustainable. The authors argue that the shock to the conscience standard should be discarded as inconsistent with both the legislative intent of the A&C Act as well as international arbitral practice.

Implications and Takeaways 

The Aakash Packaging judgment highlights the tension between judicial oversight and arbitral autonomy in India. By intervening in the tribunal’s assessment of evidence and invoking the shock to the conscience standard, the court risks treating ordinary evidentiary errors as violations of public policy. Considering India’s efforts to become a leading seat for international arbitration, the Bombay High Court’s use of the shock to the conscience standard departs from the legislative intent of the A&C Act, modelled after the UNCITRAL. While the court’s concern over the tribunal dismissing documentary evidence is understandable, applying conscience-based review broadly undermines arbitration’s core objectives: finality, efficiency, and party autonomy. It is therefore imperative that Indian courts exercise restraint, confining intervention to the narrow statutory grounds under Section 34(2)(b)(ii) and aligning with international best practices.