Question: Is it possible to challenge an interlocutory order passed by an arbitrator (i.e., an order passed during the arbitration proceedings) in the High Court by filing a writ petition, if no other appeal is available against such order under the provisions of the Arbitration and Conciliation Act, 1996?
Answer: It is not possible to challenge an interlocutory order of an arbitrator or of an arbitral tribunal in the High Court by filing a writ petition under Article 226 or 227 of the Constitution.
Arbitration is an alternative dispute resolution mechanism. The object of arbitration is to obtain a fair resolution of disputes by an impartial third party without unnecessary expense or delay. If an aggrieved party has right to move the court (for example, high court, under writ jurisdiction) for every interlocutory order passed by an arbitrator, the court may then have power to grant stay or interim relief, which would bring the arbitration proceedings to a grinding halt. This would defeat the very purpose of having arbitration to resolve dispute without unnecessary expenses or delay.
Under the Arbitration and Conciliation Act, 1996, only some orders of the arbitral tribunal are made appealable under Section 37. Of course, Section 34 of the Act allows an application for setting aside of the award passed by the arbitral tribunal in certain situations. Other than these, orders passed by the arbitral tribunal may not be subject to challenge even under writ jurisdiction of the high court. However, after an award has been passed by the arbitral tribunal, while filing an application for setting aside of the award under Section 34, the aggrieved party has an avenue for ventilating its grievances against any in-between orders too that might have been passed by the Arbitral Tribunal.
In this regard, in the case of SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618, a 7-judge bench of the Supreme Court has, by majority, held as under:
“45. It is seen that some High Courts have proceeded on the basis that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution. We see no warrant for such an approach. Section 37 makes certain orders of the Arbitral Tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in-between orders that might have been passed by the Arbitral Tribunal acting under Section 16 of the Act. The party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible.
46. The object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.”
In view of the aforesaid judgment of the Supreme Court, it may not be possible to challenge the interlocutory order of an arbitrator in the High Court by way of a writ petition under Articles 226 or 227 of the Constitution. But, on the conclusion of the arbitration proceedings, while filing an application for setting aside of the award under Section 34, the aggrieved party has an avenue for ventilating its grievances against any in-between orders too that might have been passed by the Arbitral Tribunal.
