Varying Awards: Also, a Question of When and How, Not Just Whether?

[Dhruv is a student at Jindal Global Law School.]

In view of the recent judgment in Gayatri Balaswamy v. Novack Technologies, the existence of the power to modify or vary arbitral awards under Section 34 of the Arbitration and Conciliation Act 1996 (Act) is now settled law. The court read this power within the scope of Section 34, limiting it only by a substantive review of the merits. However, while affirming the existence of the power, the judgment has been widely criticized for failing to lay down any clear guidelines or contours for its exercise (here and here). The uncertainty now lies in identifying the circumstances in which it should be invoked and the manner in which it should be applied. These questions were left unanswered by the Supreme Court while settling the presence of the power to modify. 

This post explores these unresolved issues through three lenses, first, by analyzing the aftermath of Gayatri Balaswamy across various High Courts; second, by examining how jurisdictions such as the UK and Singapore have addressed the when and how of exercising the power of modification; and finally, by proposing a set of solutions aimed at providing clarity to Indian arbitration jurisprudence.

Aftermath of the Constitutional Bench 

In the aftermath of this decision several high courts have used this authority to modify awards on differing footings of substantive and procedural merits with both restrictive and antithetical interpretations. For instance the Orissa High Court and the Chhattisgarh High Court have  narrowly read and applied only the restrictive part restraining court interference without considering the distinction between procedural review and substantive review, only considering the dual approach of remittal or setting aside. 

On the other hand most jurisdictions, similar to Calcutta High Court and Gujarat High Court have uniformly accepted the power to partially set aside an award if the vitiated part is separable and independent from the whole award in line with the Delhi High Court’s interpretation in NHAI v. Trichy Thanjavur Expressway. Consequently, while the legal position on partially setting aside an award is now settled, the permissible scope of intervention and the contours of the power of modification remain unresolved in Indian jurisprudence. As the Delhi High Court has noted, these areas require clearer guidelines and clarification.

The Singaporean Regime 

In 2024, SIAC handled 625 new cases, with 91% being international. Parties came from 72 jurisdictions, up from 66 in 2023, marking a new record. In Singapore, the power to vary an arbitral award is expressly provided under Section 49(8)(b) of the Arbitration Act 2001. Herein, a party may invoke this route either with the agreement of all other parties or with the court’s permission, which is granted only the issue is of public importance or the tribunal’s decision being "obviously wrong".

Importantly, Section 47 of the Act imposes a strict bar on judicial interference with arbitral awards, prohibiting courts from confirming, varying, setting aside, or remitting an award except where expressly authorized by the Act. This implies that variance is not available as a general review power, but only within the narrow statutory gateway of Section 49.

However, this is a narrow and exceptional remedy. The Singapore courts generally prefer to remit matters back to the tribunal for correction unless, doing so would be inappropriate. In such cases, the threshold established for judicial intervention is beyond mere procedural irregularities; in Soh Beng Tee & Co Pte Ltd v. Fairmount Development Pte Ltd (2007), it was held that a mere disagreement with an arbitral award is not sufficient to warrant an interference such as variance. A party must show actual prejudice to its legal position arising from a substantial and meaningful breach of natural justice. Second, raising this threshold of judicial intervention, the Singaporean Court in TMM Division Maritima SA de CV v. Pacific Richfield Marine Pte Ltd (2013), narrowed down the setting aside of awards to only those cases where the breach is sufficiently serious and not a mere technicality. In Singapore, the breach should be such which can change the end outcome of the case altogether in order to warrant an interference with the award. 

The English Regime

The prevailing English approach in Section 68 of the English Arbitration Act 1996 is informed by the principle of minimal curial intervention which is similar, if not equally forceful as the Singaporean regime (Departmental Advisory Committee Report, and Lesotho Highlands Development Authority v Impregilo SpA). Here, the statutory requirement is of serious irregularity, with a substantial breach of natural justice, with a much higher threshold than the Indian regime. It does not permit mere technical breaches of natural justice and unmeritorious challenges. Notably, the scope of application of natural justice is much narrower than the Indian regime (as consolidated in ONGC v. Saw Pipes (2003)). The Indian interpretation has wholly applied the principles of natural justice with judicial discretion while invoking Section 34(2)(b)(ii) of the Act. Therefore, it can be determined that India’s reputation as an arbitration-unfriendly jurisdiction stems from the manner in which courts have interpreted and expanded the scope of judicial interference under Section 34.  

A Way Forward for India 

In effect, the English and Singaporean approaches mandate a high threshold for any form of interference. They reflect the application of the doctrine of futile exercise in Indian law. The doctrine is usually applied in administrative matters, and it holds that a mere technical procedural breach does not warrant interference unless it affects the final outcome of the case. It requires a substantial breach of natural justice, and not an interference for a mere trifle. However, despite its practical value, this reasoning has not been extended to arbitration jurisprudence in India. Procedural irregularities often invite judicial intervention regardless of their impact on the substantive fairness, final outcome or enforceability of the award. In Singapore and UK, a violation is recognized within arbitration proceedings if it has a substantial impact upon the end outcome of the case. This substantial impact has been interpreted in a manner which alters the finality and outcome of the award. Thus, it is suggested that this reasoning can be extended to arbitration jurisprudence as well to increase the finality that an arbitral award seeks to achieve. 

Conclusion 

Arbitration is often misconceived as a means of securing ‘justice’ whereas in theory it is intended to provide an expeditious and private means of dispute resolution, requiring minimal interventions from the judiciary. However, arbitration and the due process paranoia coupled with the court’s interventionist tendencies, has hindered India from becoming a global hub of international commercial arbitration. Courts must refrain from intervening under such circumstances unless substantial and demonstrable violations have occurred. Mere theoretical or speculative reasoning is not sufficient. While the judiciary’s inclination to grant relief to aggrieved parties is appreciated and valued in other areas of practice, it runs counter to the very ethos of arbitral process. 

The Indian arbitral regime is at a decisive crossroads. On one hand, with the draft Delhi High Court Arbitration Rules coming in, the judiciary attempts to tackle the procedural and empirical problems that chronically exist within the system. On the other, with the upcoming Arbitration Amendment Bill 2025, there is some hope for these substantive changes within the arbitral framework.