Appeal under Arbitration and Conciliation Act, 1996

Introduction 

Section 37 of the Arbitration and Conciliation Act, 1996, is an important provision that determines which arbitration orders can be appealed. It balances two competing interests: allowing parties to challenge wrong decisions while keeping court interference in arbitration to a minimum. The section creates a specific list of orders that can be appealed, ensuring that parties have a remedy against unfair orders without slowing down the arbitration process unnecessarily. 

Legislative Framework and Scope 

• Section 37(1) begins with the emphatic phrase "notwithstanding anything contained in any other law for the time being in force," establishing its overriding effect over conflicting provisions in other statutes. This section creates an exhaustive list of appealable orders, clearly stating that appeals shall lie "from the following orders (and from no others)," thereby closing the door to appeals against any orders not specifically mentioned. 
• The Supreme Court in MMTC Ltd. v. Vedanta Ltd. (2019) clarified that jurisdiction under Section 37 is confined to grounds permissible under Section 34. Courts cannot re-assess merits or conduct fresh evaluation of arbitral awards. The appellate court's role is limited to ensuring the decision remained within legal boundaries, not to act as a court of first instance reviewing factual findings. 

Appeals Under Section 37(1): Court Orders 

• Section 37(1)(a) permits appeals against orders refusing to refer parties to arbitration under Section 8. When a court declines to refer parties to arbitration despite existence of an arbitration agreement, the aggrieved party can challenge this refusal.  
  • The appellant must demonstrate that a valid arbitration agreement existed, the dispute falls within its scope, and the court erred in its refusal. 
  • Section 8 mandates referral to arbitration unless the agreement is null, void, inoperative, or incapable of performance. 
• Section 37(1)(b) covers orders granting or refusing interim measures under Section 9. These orders, passed during pendency of arbitration proceedings, are appealable when the court improperly considers the balance of convenience, irreparable harm, or prima facie case.  
  • Appeals can also challenge excessive or disproportionate interim relief causing undue hardship, or interference with the arbitration process without justification. 
• Section 37(1)(c) addresses the most significant category: orders setting aside or refusing to set aside arbitral awards under Section 34. This provision recognizes that challenging arbitral awards represents the culmination of the arbitration process and deserves appellate scrutiny.  
  • As established in Haryana Tourism Limited v. Kandhari Beverages Limited, (2022) awards can be set aside if they contradict fundamental policy of Indian law, India's interests, justice or morality, or are patently illegal due to statutory violations. 

Appeals Under Section 37(2): Tribunal Orders 

• Section 37(2)(a) creates an unusual provision allowing appeals directly from arbitral tribunal orders accepting pleas under Section 16(2) or Section 16(3). 
• Section 16 empowers tribunals to rule on their own jurisdiction. When a tribunal accepts a plea that it lacks jurisdiction and terminates proceedings, the aggrieved party can immediately appeal under Section 37(2)(a). 
• However, when the tribunal rejects such jurisdictional challenges and continues proceedings, Section 16(5) mandates that the tribunal proceed to award, with the remedy lying in challenging the final award under Section 34. 
• Section 37(2)(b) permits appeals against tribunal orders granting or refusing interim measures under Section 17. These appeals can be grounded on several principles: only parties to the arbitration agreement can seek such measures (though exceptions exist for third-party beneficiaries under the doctrine of implied consent, as seen in Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.(2012); the order must not be arbitrary, capricious, or perverse under the Wander v. Antox principle; and challenges can arise if the arbitrator was unilaterally appointed, violating principles established in Perkins Eastman Architects DPC v. HSCC (India) Ltd. 

Limitation Period for Appeals 

• Section 37 appeals filed under the Commercial Courts Act, 2015, must be filed within 60 days from the order date as per Section 13(1A). However, when the specified value falls below INR 3,00,000, Articles 116 and 117 of the Limitation Act apply, providing a 90-day period, as confirmed in National Highway Authority of India v. Smt. Sampata Devi. 
• In Government of Maharashtra v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd.,(2021) the Supreme Court held that delays beyond prescribed periods should be condoned by exception, not by rule. Only short delays in fit cases where parties acted bona fide and without negligence can be condoned. 
• The Court in National Highway Authority of India v. Smt. Sampata Devi (2023) emphasized that Section 5 of the Limitation Act applies, but "sufficient cause" does not cover long delays—only short delays caused by genuine, bona fide reasons merit condonation. 

The Finality Principle 

• Section 37(3) establishes a crucial limitation: "No second appeal shall lie from an order passed in appeal under this section." This prevents cascading appeals that would undermine arbitration's efficiency. However, the section preserves the constitutional right to approach the Supreme Court, typically through Special Leave Petitions under Article 136 of the Constitution. 
• The Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. NHAI,(2024) emphasized that mere errors in fact-finding or alternative interpretations of contracts do not justify interference. When both Section 34 courts and Section 37 appellate courts uphold awards, higher courts must be extremely cautious before disturbing such concurrent findings. 

Conclusion 

Section 37 represents a carefully calibrated legislative attempt to maintain the delicate balance between party autonomy in arbitration and necessary judicial oversight. By creating an exhaustive list of appealable orders and prohibiting second appeals, it promotes finality while ensuring fundamental fairness in the arbitration process.