In Ors. Vs. Union of India” it was

In respecting the principle of Party
Autonomy the process of Arbitration and Arbitral Tribunal stands free from
Court interference. However it is observed that this veil is removed in few circumstances,
where courts intervene to the matter in assisting the process. This may include
deciding the validity of the agreement, appointing and removal of arbitrators etc.
The court holds the supreme authority determine the validity of the agreement. Either
a party or the Arbitrator may refer the matter to the courts. In situations
where the parties fail to agree upon the composition of arbitrators nor their
appointment, the matter shall be referred to the courts. On the other hand it
the parties are not satisfied with the arbitrator nor if a party with reasonable
grounds believes that the Arbitrator has caused prejudice, may seek the
assistance of the court. In the Supreme Court case “Reliance Industries Ltd.
& Ors. Vs. Union of India” it was held that independence and impartiality are
important factors in appointing arbitrators1.

 

Though the Arbitration tribunal may have
exclusive powers to impose awards in accordance with the terms and conditions
of the agreement, it lacks the power to grand orders to the parties compelling
to perform the award. In a scenario where a party refuses to accept the award,
the party itself or the other shall seek the assistance of the Courts, where
with reasonable grounds courts may either issue an order compelling the parties
to act in accordance with the award of the tribunal or review the award. The
Arbitration Tribunal has no power over third parties who are outside of the
contract. For instance the tribunal cannot compel third parties to attend
hearing. Only the parties to the contract are binding, as a result they cannot
agree upon terms which directly affect third parties.  Sec.332 of
the Sri Lankan act states that, it is mandatory to file a petition in High
Court in order to enforce a foreign arbitral award. This might not be
applicable in other jurisdictions, but it up holds the doctrine of public
policy.

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The principle of Public Policy ois the far
framed limitation to the principle of Party autonomy. In different
jurisdictions, there may be different policies establish in order to secure the
smooth run of the society. These policies are to be adhered by all components
the society with no exception to the foreign bodies. There may be instances
where either the issue or the award of the arbitration is contrary to public
policy, which may cause injury to the public good. Public policy in commonly
connected with the culture, moral values and beliefs of the society. As a result
of this importance where any violation to the public policy principles may lead
the award null and void. The term “public policy” has been generally accepted
as any conduct, which violates fundamental conceptions of legal order in the
country concerned. The Supreme Court of India in the case of “Bharat Heavy
Electricals Vs. C.N. Garg”3,
has interpreted the term contrary to public policy to mean any agreement that
is against the fundamental policy of the country, interest of the country, morality,
justice and legal norms. Thus, the term “public policy” has been generally
accepted as any conduct, which violates fundamental conceptions of legal order
in the country concerned.

 

As the basis for public policy are
sociological factors courts from different jurisdictions have interpreted the
term public policy in different ways. This has left a vague nature to the
concept of public policy. Though it provides a limitation to the principle of
party autonomy it prevents the execution of illegal or immoral contracts and
awards.

 

Apart from public policy National laws
of many of jurisdictions provide that certain categories of disputes are not being
capable settled by arbitration. These disputes are viewed as non-arbitrable
disputes which to referred to litigation or other legal body as prescribed by
the domestic laws.  Article V(ii)(a) of
New York Convention4
provides that a state can refuse enforcement and recognition of an arbitral
award if it finds that “the subject matter of the difference is not capable of
settlement by arbitration under the law of that country.” here, the Convention
only refers lex arbitri where the award
is sought to be enforced. This doctrine rests on the idea that certain public
rights and interests of third parties require extensive protection that can
only be produced by governmental authorities. As a result, agreements to solve
disputes on these rights and interests cannot be given effect. In other words with
regard to those specific disputes, the arbitrator has no competence whatsoever
to deliver a verdict. As a result the parties do not retain their given freedom
to exclude the jurisdiction of national courts. In most jurisdiction disputes
relating to intellectual property, public relations, labor relations are viewed
as non-arbitrable disputes.

1 AIR 2014 SC 2342

2 Arbitration Act
No 11 1995

3

4 The United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards of 1958