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    Question

    Under Section 34(2)(b)(ii), when is an arbitral award

    deemed to be "in conflict with the public policy of India"?
    A Whenever the award is unpopular or controversial Correct Answer Incorrect Answer
    B Whenever the award deviates from one party's preferred outcome Correct Answer Incorrect Answer
    C When the making of the award was induced by fraud, corruption, or when it violates fundamental policy governing India's administration of justice (e.g., award procured through bribery, or contradicting constitutional principles) Correct Answer Incorrect Answer
    D When the award contradicts any law enacted by Parliament Correct Answer Incorrect Answer
    E When either party disagrees with the tribunal's interpretation of law Correct Answer Incorrect Answer

    Solution

    Explanation: Explanation 1 to Section 34(2)(b) clarifies: "an award is in conflict with the public policy of India, only if—(i) the making of the award was induced by fraud, corruption, or other coercive means; or (ii) the award is in breach of the sovereignty of India, the security of the State or morality; or (iii) the award is against the fundamental policy of Indian law." Critically, mere legal error or disagreement with the award does not constitute public policy violation. The Supreme Court has narrowly construed "public policy" to prevent awards from being easily overturned, maintaining arbitration's finality. Challenges based on public policy are rarely successful.

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