Majority Arbitral Award Where Concurring & Dissenting Opinions Are Separately Signed Is Valid U/S 31 A&C Act: Andhra Pradesh High Court

The Andhra Pradesh High Court has held that a majority arbitral award would be deemed valid under Section 31(1) and (2) of the Arbitration and Conciliation Act, 1996 (the 1996 Act), if the separate concurring and dissenting awards are each duly signed by their respective Arbitrators.For reference– Section 31(1) of the 1996 Act provides that the arbitral award shall be made in writing and shall be signed by the Members of the Arbitral Tribunal; and Section 31(2) provides that in arbitral proceedings consisting of more than one arbitrator, signatures of the majority of all the Members of the Arbitral Tribunal shall be sufficient so long as the reason for any omitted signatures is stated.In the present case, the Arbitral Tribunal comprised three Arbitrators where— the Presiding Arbitrator passed his award duly signed, and Co-Arbitrator-2, vide a separate award, had concurred with the award of the Presiding Arbitrator, and passed his separate signed award. Co-Arbitrator-1 passed a separate dissenting minority award. All three awards were compiled by the Presiding Arbitrator in a booklet which contained the signatures of the Arbitrators on their respective awards, and sent to the Registrar of the Indian Council of Arbitration.Upholding the legality of the majority award, which was contested on the ground that the it was not signed by all the arbitrators, and that the reason for such omission was not provided, a Division Bench of Justice Ravi Nath Tilhari and Justice Maheswara Rao Kuncheam observed,“The award would be operative and valid being an award by majority and the majority (Presiding Arbitrator and Co-Arbitrator-2) signing the award and the Co-Arbitrator-1 signing his dissent/opinion. Consequently, there would be no requirement to record the reasons for the omission, in terms of Sub-Section (2) of Section 31, as there is no such omission.”The Division Bench reasoned,“…that the award signed by majority or consented to or agreed upon by the majority and there being a separate opinion signed by other Co- Arbitrator(s), would be in compliance with the statutory provisions of Section 31 (1) & (2) of the Act 1996, even if the reason for omission of the Co-Arbitrator, not signing the majority award, is not recorded as in such a case the opinion by itself would be the reason for omission to sign the majority award.”Facts:The appellant— M/s. Orind Special Refractories Ltd., was a Chinese company engaged in manufacturing refractories and had agreed to supply 260 sets of ladles to the respondent, M/s. Rashtriya Ispat Nigam Ltd.— an Indian steel manufacturing company. However, when disputes arose as a result of interpretation of the delivery schedule, the respondents deducted USD 159,638.50 and Rs.15,72,960.52 as liquidated damages for alleged delayed delivery, Rs. 12,75,651.13 towards foreign exchange fluctuation, and Rs. 4,18,00,355.13 as penalty for underperformance of ladles.Consequently, the appellant invoked the arbitration clause and claimed recovery of the deducted amounts with 20% interest before the three-Member Arbitral Tribunal. The Tribunal, in its majority award, allowed only USD 21,837 and ₹2,12,268 with 12% interest for part of the first supply and rejected the other claims with respect to exchange fluctuations and penalties. On the contrary, Arbitrator-1 allowed the appellant's claim in full.When the appellant approached the High Court under Section 34 of the 1996 Act, for setting aside the majority award, a Single Judge Bench of Justice B.S. Bhanumathi upheld the majority award. Aggrieved, the appellant filed an appeal against the Single Judge order under Section 37 of the 1996 Act.Submissions of Parties:It was the case of the appellant that while the majority award was stated to be passed by both— the Presiding Arbitrator and Co-Arbitrator-2, it was only the Presiding Arbitrator who signed his award. In the absence of the signature from all arbitrators, along with an absence of explanation specifying why the signature of the arbitrator was missing, the award was argued to be in contravention to Section 31(1) and (2) of 1996 Act.On the contrary, the Respondent argued that the Presiding Arbitrator has signed his award, and Co-Arbitrator-2 agreed with the said award vide his separate award and signed the same, whereafter, all three awards were combined and sent to the Registrar of the Indian Council of Arbitration. It was argued that the said procedure was in compliance with the 1996 Act and the Rules of International Commercial Arbitration. It was further submitted that there is no prescribed procedure mandating signing of award by all arbitrators and that an arbitrator, in agreement with the award of a co-Arbitrator, can concur with the award of such other Arbitrator by a separate award under his signature.Thus, the Court had to determine whether the award deserved to be set aside under Section 34 of 1996 Act on the grounds that it was not signed by all Arbitrators and for the omission of the...

Majority Arbitral Award Where Concurring & Dissenting Opinions Are Separately Signed Is Valid U/S 31 A&C Act: Andhra Pradesh High Court

Saahas Arora

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