Justice RV Raveendran disagrees with Justice Nariman on full appeal against arbitral awards

In a significant critique of the current arbitration landscape in India, former Supreme Court judge Justice RV Raveendran has expressed strong disagreement with his former colleague Justice Rohinton Fali Nariman on the scope of appeals against arbitral awards. Speaking at a legal forum, Justice Raveendran warned that the Supreme Court's inconsistent rulings and the expanding interpretation of "patent illegality" as a ground for interference are creating chaos, confusion, and uncertainty for litigants and arbitral tribunals alike. His remarks come at a time when the judiciary is grappling with the delicate balance between finality of arbitration and the need for judicial oversight.

Background: The Evolution of Arbitral Award Challenges

The Arbitration and Conciliation Act, 1996, was enacted to provide a speedy and efficient alternative dispute resolution mechanism with minimal court intervention. Section 34 of the Act allows a party to challenge an arbitral award only on limited grounds, such as incapacity, invalidity of the arbitration agreement, lack of proper notice, or contravention of public policy. Section 37 provides for appeals from orders setting aside or refusing to set aside an award. Over the years, the Supreme Court has shaped the contours of these provisions, notably through the landmark judgment in ONGC v. Saw Pipes (2003), which expanded the "public policy" ground to include "patent illegality" appearing on the face of the award.

However, the 2015 amendment to the Act sought to narrow this ground by adding an explanation that an award is not in conflict with public policy merely because of an erroneous application of law or reappreciation of evidence. The amendment also introduced a specific definition for domestic awards, limiting "patent illegality" to illegality going to the root of the matter. Yet, post-amendment decisions have varied, leading to what many experts call a state of flux.

The Dissent on Full Appeal

Justice Raveendran's disagreement with Justice Nariman centers on the latter's view that appeals against arbitral awards should be as full as possible, akin to a first appeal on facts and law. Justice Nariman, in several judgments, including Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (2019), advocated for a broad interpretation of the grounds for setting aside an award, particularly in the context of public policy and patent illegality. Justice Raveendran, however, believes that such an approach defeats the very purpose of arbitration—finality.

"I was shocked," Justice Raveendran said, referring to the trend of treating arbitration as merely another tier of litigation. He emphasized that the legislative intent was to limit court interference to exceptional cases, not to convert the arbitration process into a full-blown court proceeding. His remarks highlight a fundamental schism within the higher judiciary on the role of courts in arbitration.

A Crisis of Consistency

Justice Raveendran did not mince words when addressing the problem of conflicting decisions from different benches of the Supreme Court . "We have 37 judges. We have 17 benches. We do not have one single Supreme Court . We have 17 Supreme Courts," he observed. This fragmentation, he argued, means that the outcome of a case often depends on which bench it is assigned to, rather than on a uniform interpretation of the law. Such inconsistency undermines the predictability and reliability that arbitration is supposed to offer.

The former judge pointed out that the Supreme Court has repeatedly shifted the limits of permissible intervention in arbitral awards. This volatility directly affects lower courts, which look to the apex court for guidance, and also leaves arbitral tribunals and parties uncertain about the enforceability of their awards. "It causes chaos and confusion and uncertainty," he stated, warning that the very credibility of arbitration as an alternative dispute resolution mechanism is at stake.

The Patent Illegality Conundrum

One of the most contentious issues flagged by Justice Raveendran is the widening use of "patent illegality" as a ground to interfere with awards. Under a strict approach, interference should be rare—limited to cases where the award is fundamentally illegal, such as contravention of a substantive law or a breach of natural justice. However, the courts have gradually expanded this ground to include errors of law, misapplication of contract terms, and even procedural irregularities.

Justice Raveendran argued that this expansion is contrary to the 2015 amendment and the principle of minimal judicial intervention. He noted that if every arguable legal error becomes a ground for setting aside an award, arbitration loses its advantage over litigation. The trend also encourages losing parties to challenge awards as a matter of routine, clogging the courts and defeating the efficiency that arbitration promises.

Call for Arbitrator Accountability

While Justice Raveendran placed much of the blame on the judiciary for excessive interference, he also held arbitral tribunals to account. "If we want courts to exercise restraint, we must also ask the arbitral tribunals to act with more responsibility," he said. He called on arbitrators to follow the contractual terms scrupulously, consider all material evidence, address important submissions, and provide proper reasons for their decisions. Poorly reasoned or arbitrary awards invite judicial scrutiny, he argued.

This dual responsibility—courts exercising self-restraint and tribunals improving quality—is essential for the health of the arbitration ecosystem. Justice Raveendran's comments echo a growing sentiment among legal experts that both sides must play their part to preserve the sanctity of arbitration.

Impact on Legal Practice

For legal practitioners, the current state of affairs presents both challenges and opportunities. On one hand, the uncertainty surrounding the scope of challenges makes it difficult to advise clients on the likelihood of an award being enforced. On the other hand, the expanding grounds for challenge have led to a surge in litigation under Sections 34 and 37, creating a lucrative area of practice.

Lower courts, particularly high courts, are now flooded with arbitration petitions, many of which verge on being appeals on merits rather than limited challenges. The Supreme Court's inconsistent pronouncements leave trial judges with little clarity, leading to divergent outcomes across jurisdictions. This is precisely the "chaos" Justice Raveendran warned about.

Arbitral institutions and law firms are increasingly including clauses that require parties to waive or limit challenges to awards, though the enforceability of such clauses remains uncertain. The debate over full appeals versus limited interference is far from settled, and Justice Raveendran's intervention adds weight to the argument for a return to the legislative intent of minimal court intervention.

Conclusion

Justice RV Raveendran's critique serves as a timely reminder that the arbitration framework in India is at a crossroads. The tension between ensuring fairness through judicial oversight and preserving finality through limited challenges must be resolved through clear, consistent jurisprudence. His call for arbitrator accountability and judicial restraint resonates with the original vision of the Arbitration Act. As the Supreme Court continues to hear cases on this issue, the legal community will be watching closely to see whether the pendulum swings back toward non-intervention or continues its drift toward full appeals. For now, the "17 Supreme Courts" remain a reality, and arbitration's promise of certainty remains elusive.