Grounds to Set Aside an Arbitral Award

Parties choose arbitration for finality. The Arbitration and Conciliation Act, 1996 gives effect to that choice by keeping the grounds to set aside an arbitral award narrow and excluding, in express terms, a review of the merits of the dispute.

An application under Section 34 of the Arbitration Act is not an appeal. It is a limited challenge to an arbitral award based on specific statutory grounds, including public policy and patent illegality in applicable domestic arbitrations. Understanding these grounds is essential to assessing whether a Section 34 challenge can be entertained or is likely to be dismissed with costs.

The Exclusive Route

Section 34(1) provides that recourse to a court against an arbitral award may be made only by an application for setting aside the award in accordance with sub-sections (2) and (3).

There is no other route, and the court’s power is to set aside, wholly or in part. It has no power to modify the award or to substitute its own conclusion.

The Grounds in Section 34(2)(a)

These must be established by the party making the application, on the basis of proof.

Incapacity of a party.

The arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication, under the law for the time being in force.

Want of proper notice of the appointment of an arbitrator or of the arbitral proceedings, or that the party was otherwise unable to present his case. This is the natural justice ground, and it is the most frequently successful of the procedural grounds — but it requires a real deprivation, not a complaint that the tribunal preferred the other side’s evidence.

The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission. The proviso permits severance: if decisions on matters submitted to arbitration can be separated from those not submitted, only the latter part may be set aside.

The composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless that agreement was in conflict with a provision of the Act from which the parties cannot derogate — or, failing such agreement, was not in accordance with the Act.

The Grounds in Section 34(2)(b)

These are grounds that the court may find on its own while considering an application under Section 34.

The subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force. This may provide a ground for setting aside the arbitral award where the dispute is legally non-arbitrable.

The award is in conflict with the public policy of India. This is a recognised ground for challenging an arbitral award, subject to the limited scope of the public policy test under Section 34.

Public Policy: Narrowed in 2015

“Public policy” had been read expansively, and the 2015 amendment confined it.

Explanation 1 to Section 34(2) provides that an award is in conflict with the public policy of India only if:

• the making of the award was induced or affected by fraud or corruption, or was in violation of Section 75 or Section 81;
• it is in contravention with the fundamental policy of Indian law; or
• it is in conflict with the most basic notions of morality or justice.

Explanation 2 provides that the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

That second Explanation is the operative constraint. It closes the route by which public policy had previously been used to reopen the substance of an award.

Patent Illegality: Section 34(2A)

Inserted in 2015, this ground is available only in arbitrations other than international commercial arbitrations.

It provides that an award may be set aside if the court finds that it is vitiated by patent illegality appearing on the face of the award.

The proviso is as important as the ground: an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.

So patent illegality means a defect that is apparent on the face of the award — a decision contrary to the substantive law of India, or contrary to the terms of the contract, or an award that discloses no reasons where reasons are required under Section 31(3). It does not mean a debatable error of law, and it does not open the evidence.

What is not a Ground

This list is worth as much as the list of grounds for setting aside an arbitral award.

That the tribunal reached the wrong conclusion on the facts. The tribunal is the final judge of the quality and quantity of the evidence. Mere disagreement with the tribunal’s factual findings is not, by itself, a ground for a Section 34 challenge.

That the tribunal’s interpretation of the contract was, in the court’s view, incorrect. Where the tribunal’s construction is a possible one, it stands. Interference is confined to a construction no fair-minded person could reach.

That the court would have awarded a different sum.

That the award is erroneous in law, unless the error rises to patent illegality on the face of the award in a domestic arbitration.

That the tribunal admitted or rejected evidence in a way the party disagrees with, absent a denial of the opportunity to present its case.

Related Provisions Worth Knowing

Section 31(3) requires an arbitral award to state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is on agreed terms under Section 30. An unreasoned award, where reasons were required, is a recognised basis of challenge.

Section 34(4) permits the court, on a party’s request, to adjourn the proceedings for a period it determines, to give the tribunal an opportunity to resume the arbitral proceedings or to take such other action as will eliminate the grounds for setting aside. This is a remedial route that is under-used — where the defect is curable, such as inadequate reasons, it can be more effective than seeking to set the award aside.

Section 33 provides for correction, interpretation and additional awards by the tribunal itself, within the periods it prescribes. Where the complaint is a computational or clerical error, that is the appropriate route.

Procedure and Consequences

The application must be made within three months of receipt of the award, extendable by thirty days on sufficient cause but not thereafter — Section 34(3).

Sections 34(5) and (6) require prior notice to the other party, an affidavit endorsing compliance, and disposal within one year of service of that notice.

Filing does not stay enforcement. Under Section 36 as substituted in 2015, a separate application for stay is required, and the court may impose conditions. In Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd., (2018) 6 SCC 287, decided on 15 March 2018, the Supreme Court held that the substituted Section 36 applies to pending Section 34 applications, so the rule of automatic stay no longer operates.

An order under Section 34 is appealable under Section 37, but the appellate court exercises the same confined jurisdiction — it does not review the merits either.

Practical Guidance

Identify the specific limb relied upon, and plead it as such. A Section 34 challenge that recites the whole of Section 34 signals that none of it fits.

Build procedural grounds on the record — the notices, the procedural orders, the requests refused — rather than on characterisation.

Where the defect is curable, consider Section 34(4) or a Section 33 request instead of, or alongside, the challenge.

And be realistic. The Act was amended in 2015 precisely to reduce judicial interference with arbitral awards, and the Explanations to Section 34(2) and the proviso to Section 34(2A) say so in terms. A challenge that depends simply on the court disagreeing with the tribunal is unlikely to succeed.

Frequently Asked Questions

What are the grounds to set aside an arbitral award?

An arbitral award may be set aside on specified grounds under Section 34, including incapacity, invalid arbitration agreement, procedural unfairness, excess of jurisdiction, public policy and, in domestic arbitrations, patent illegality.

Can a court review the merits of an arbitral award?

Generally, no. Section 34 does not permit a merits-based review or re-appreciation of evidence merely because the court may have reached a different conclusion.

What is patent illegality under Section 34?

Patent illegality refers to an illegality appearing on the face of the award in a domestic arbitration. It does not include merely an erroneous application of law or re-appreciation of evidence.

What is the limitation period for a Section 34 application?

A Section 34 application must generally be filed within three months from receipt of the award. The court may allow a further period of up to thirty days on sufficient cause, but not thereafter.

Does filing a Section 34 application automatically stay the award?

No. Filing the application does not by itself stay enforcement. A separate stay application is required under Section 36.

Legal Information Disclaimer

This article is published for general legal information and educational purposes only. It reflects the position of Indian law as researched up to 10 August 2026 and may not account for subsequent amendments, notifications or judicial developments. The application of the 2015, 2019 and 2021 amendments depends on when the arbitral proceedings and the related court proceedings commenced, and should be checked for a particular case. It is not legal advice, does not take into account any individual’s particular facts or circumstances, and no advocate-client relationship arises from reading it. Readers dealing with an actual matter should obtain independent professional advice from a qualified advocate of their own choosing before acting on any information contained here. Statutory provisions, notified figures, rules and case citations referred to in this article have been compiled from published legal materials and may contain errors or omissions, and may have changed since the date stated; no representation or warranty, express or implied, is given as to their accuracy, completeness or currency, and each should be independently verified against the official text or the official record before being relied upon. No liability is accepted for any loss arising from reliance on this article.

Sources / Authorities

• Arbitration and Conciliation Act, 1996 — Sections 28, 30, 31(3), 33, 34 (including sub-sections (1), (2), (2A), (3), (4), (5) and (6) and Explanations 1 and 2), 36, 37, 75 and 81 — India Code, https://www.indiacode.nic.in
• Arbitration and Conciliation (Amendment) Act, 2015 — insertion of Section 34(2A) and the Explanations to Section 34(2); substitution of Section 36
• Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd., (2018) 6 SCC 287, decided 15 March 2018 — https://indiankanoon.org/doc/64244161/