The Public Policy Doctrine in Arbitration : A Primer on its Effect on Challenges & Enforcement of Awards.

Alabh Anant Lal & Soham Banerjee

The full chapter may be found by clicking on the PDF link to the left.

Arbitration law in India is principally governed under the Arbitration and Conciliation Act, 1996 (the “Act”) (as amended in 2015). The aim and object of the Statute is to foster an environment wherein alternative modes of dispute settlement, such as arbitration, negotiation and mediation are given full effect to and judicial intervention in such modes of dispute resolution are kept at a bare minimum. The Act therefore delineates permissible instances wherein the intervention of the Courts would be warranted. This paper aims to analyse one such permissible instance under the Act – that of setting aside and challenge to an arbitral award on the ground of Public Policy. The interpretation of the term Public Policy has come under severe judicial scrutiny, often resulting in contradictory and ambiguous interpretations being applied to the doctrine by the Courts. Part I of this paper traces the development of the doctrine under the pre-1996 regime and its peripheral, yet gradual intrusion under the Act. Part II analyses the ‘broad’ and ‘narrow’ view of Public Policy, as given effect to by the Courts and traces its impact on the enforcement of domestic awards and the challenge to foreign arbitral awards. Part III interprets a host of judicial decisions starting from Saw Pipes and Renusagar to Associate Builders and Shri Lal Mahal. Part IV captures the amendments brought in the 1996 Act by the 2015 Amendments introduced by the Parliament. Part V concludes by positing that the recent judicial trends suggest that the narrow view of Public Policy is being favoured by the Courts which in essence will allow India to market and develop itself as a global hub of arbitration, for prospective investors and litigants alike.