Section 34 of the Act deals with the application made to the court for setting aside an arbitral award. This section is based on Article 34 of the UNCITRAL Model with a few deviations. The applicability of section 34 is limited to domestic awards. Thus, an application filed under this section for setting aside an award passed in an international commercial arbitration will have no applicability, unless it was seated in India. The award can be set aside if any of the grounds as contained in section 34(2) is met. These grounds are:
- Incapacity of a party
- Arbitration agreement not being valid
- Party not given proper notice of arbitral proceedings
- Nature of dispute not falling within the terms of submission to arbitration
- Arbitral procedure not being in accordance with the agreement
- Dispute is not capable of settlement by arbitral process
- The award is in conflict with the public policy of India. An award is in conflict with public policy of India, only if – (a) award was induced by fraud or corruption or in violation of Section 75 of 81; (b) the award is in contravention with fundamental policy of Indian law; (c) it is in conflict with the most basic notions of orality and justice.
Prior to the 2015 Amendment, an application for setting aside an award would result in an automatic stay on proceedings for execution of the award. However, by virtue of 2015 Amendment, a party challenging an award would have to move a separate application in order to seek a stay on the execution of an award.