Question
Under Section 34(2)(b)(ii), when is an arbitral award
deemed to be "in conflict with the public policy of India"?Solution
Explanation: Explanation 1 to Section 34(2)(b) clarifies: "an award is in conflict with the public policy of India, only ifā(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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