How is the jurisprudence of arbitration with public policy?
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Answer:
The basic purpose of arbitration is to bring about cost-effective and expeditious resolution of disputes and further preventing multiplicity of litigation by giving finality to an arbitral award. The article ambidextrously and comprehensively analyzes India’s Commitment and challenge to the International Arbitration in the era of globalization when the investment by the foreign entities is at the peak.
Public Policy of India has most important role in the whole process of enforcement of an arbitral awards particularly the foreign awards because it involves parties, lawyers and arbitrators form diverse legal &cultural traditions. Most often the arbitral tribunal consists of arbitrators from multiple jurisdictions & legal traditions different from those of parties and of their council. It is thus desirable that the International Companies/firms working in India as Joint venture or otherwise should be fully aware for the law on public policy of India and its impact on arbitration awards.
Arbitration continues to grow at a rapid pace, antitrust cases in particular are increasingly being arbitrated; and the law is still evolving in relation to the tension between the domestic legitimate claims of a nation and the arbitral finality given to an International arbitral award. Further when the arbitration proceedings are in themselves requiring a judicial process by producing the evidence and giving the parties opportunity of hearing, why should the court at this level interfere with the decision frustrating the very purpose of arbitration? If disputes are going to end up in courts anyway, there is scant incentive for parties to bother to arbitrate in the first instance. What should be the realm of judicial interference in such arbitral awards and where should it meet the barricades. A supportive yet non-interventionist approach without undue interference should be adopted by the courts to facilitate an efficient arbitral process within the permissible or jurisdictional limits.
Public policy imposes certain restrictions upon the freedom of persons to contract. An ostensibly
valid contract may be tainted by illegality. The source of the illegality may arise by statute or by virtue of the principles of general law. In some instances, the law prohibits the agreement itself, and the contract is then by its very nature illegal but in the majority of cases the illegality lies in the object which one or both parties have in mind or in the method of performance. As a general rule, although all the other requirements for the formation of an agreement are complied with, an agreement that is illegal will not be enforceable.The issue is sufficiently related to fundamental concepts of morality and fair dealing that a court should not, as litigants have sometimes urged, ignore it merely because the claimant can plead its case without disclosing any contravention of public policy. Indeed, even if neither party raises the issue, the court will do so on its own initiative and refuse enforcement if justified by the record, at least if the contravention is serious.