Waiving the right to set aside an award

Preena Salgia & Samhith Malladi

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The need for disputing parties to waive their right to set aside an arbitral award primarily arises out of the necessity to achieve commercial certainty, especially in cases where the judicial system at the seat of arbitration is inefficient and inconsistent. However, various jurisdictions have taken differing positions on whether to allow parties to contractually waive their right to challenge an award, based on a need to either protect rights of disputing parties by providing for judicial review or allow disputing parties the autonomy to make an informed choice to waive their right to set aside an award. This paper discusses the reasons and motivations of parties in choosing to exercise such waiver and the differing issues of enforceability that arise in various jurisdictions. Further, the paper analyses the pitfalls of agreeing to such waivers from a policy perspective. The paper also briefly discusses the viability of a two-tier / appellate arbitration clause as an alternative to a waiving the right to set aside an award.