Natural justice challenges to an arbitration award of the infra petita variety, i.e. that the tribunal had not carried out its mandate by considering all the material issues that were raised in the arbitral proceedings, have become increasingly common in recent years. Parties dissatisfied with the outcome of an arbitration award mount such challenges to bring themselves within the ambit of the limited grounds that exist to set aside an arbitral award. However, often such challenges are no more than a collateral attack on the reasoning of the tribunal on the merits of its decision. The Court of Appeal, in a decision authored by the Chief Justice Sundaresh Menon, has laid down the framework for dealing with such infra petita challenges to deter unmeritorious challenges.
A successful infra petita challenge requires 4 conditions to be satisfied:
(a) First, the point must have been properly brought before the tribunal for its determination. It is not open to a party to raise an infra petita challenge where it elected not to participate in the arbitration or for some other reason failed to raise the point in question. It is similarly not open to a party to bring such a challenge on account of the tribunal’s failure to consider a case which that party wished it had made before the tribunal, rather than the case which it had actually run. A complaint of a breach of natural justice will not be admitted absent fair intimation to the tribunal of the alleged failure in the arbitral process, and a tribunal cannot be criticised for failing to consider points not put to it or alleged procedural defects which a party, by their conduct, had intimated their satisfaction with.
(b) Second, the point must have been essential to the resolution of the dispute. A tribunal does not have the duty to deal with every issue raised and need only deal with the essential ones. The arbitral tribunal is not obliged to pursue moot issues.
(c) Third, the tribunal must have completely failed to consider the point. Assessing whether the tribunal completely overlooked an essential point will typically be a matter of inference, and if such an inference is to be drawn at all, it must be shown to be clear and virtually inescapable. In making such inferences, the courts adopt a “generous approach”, avoiding a hypercritical or excessively syntactical analysis of the award. Any doubt in this regard will be resolved in favour of upholding the award in accordance with the principle of minimal curial intervention. The focus is not on how well or accurately the tribunal understood, analysed and dealt with the point; but with whether it did in fact consider the point at all (however incompetently or incorrectly it may be said to have done so). A tribunal’s failure to comprehend an argument and so to appreciate its merits is not a breach of natural justice. It is not enough for the applicant to demonstrate that the tribunal’s consideration of the matter was somehow lacking; it will have to show that the tribunal completely failed to even consider an essential issue. The inquiry is not directed at the adequacy of the tribunal’s analysis, but with the existence and fact of such analysis.
(d) Fourthly, even if the tribunal failed to consider an essential point placed before it, there must have been real or actual prejudice occasioned by this breach of natural justice. For example, if the overlooked argument was flawed, the tribunal’s failure to address it caused no prejudice to the applicant.
The full report of this decision is available online here.
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