The term “arbitral award” has been defined in Section 2(1)(c) of the Arbitration and Conciliation Act, 1996 (Act). However, nowhere in the Act, the term “minority award” has been used or defined. Section 29(1) of the Act clearly states that in arbitral proceedings where the number of arbitrators is more than one, any decision shall be made by majority of the Arbitral Tribunal members. Similarly, Section 31 of the Act deals with the forms and contents of arbitral award and states that an arbitral award shall be signed by the majority of all the members of the Arbitral Tribunal. A bare perusal of the foregoing provisions makes it clear that the Act recognises only those decisions which are made by the majority and a decision by the minority arbitrator does not satisfy the pre-requisites of Section 31 and hence, do not qualify to be an “arbitral award”.
Undoubtedly, each arbitrator is free to express his/her view in an arbitration but in an ideal situation, all the members of the Arbitral Tribunal should strive to pass a unanimous award. Unanimity in the decision strengthens the award and the dissenting opinion reflects starch disagreement between the members of the Arbitral Tribunal. This does not mean that the dissenting opinions must be discouraged or prohibited. Where the decision of the majority is not based on any evidence or is against the settled position of law, in such cases a dissenting opinion is necessary. The question that often arises is what weightage can be given to the decision of the minority member of the Arbitral Tribunal? Whether such a decision can be enforced?
In Axios Navigation Co. Ltd. v. Indian Oil Corpn. Ltd., the Bombay High Court in clear terms held that “the dissenting view, if any, cannot be treated as an award”[1]. Despite such clear observations, it is not uncommon to see that parties and stakeholders refer to the decision of the dissenting arbitrator as “minority award”. It then becomes essential to clarify whether the same can be considered as a minority award or is it even correct to refer to a dissenting opinion as a minority award?
In Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd[2] , it was noted that “the statute makes it obligatory for each of the members of the tribunal to sign the award, to make it a valid award. The usage of the term ‘shall’ makes it a mandatory requirement, it is not merely a ministerial act, or an empty formality which can be dispensed with.”
Interestingly, various courts have set aside the award passed by the majority and upheld the so-called “minority award”. This begs the question that if it is not signed by the majority, does it even qualify to be termed as an award? Does the court under Section 34 have the power to uphold a dissenting opinion?
Minority Award or Dissenting Opinion
Much ambiguity surrounds the terminology that is often used interchangeably. In Ssangyong Engg. & Construction Co. Ltd. v. National Highways Authority of India[3], the minority award was upheld, and the majority award was set aside. The Court used the term “minority award” while also referring to a judgment that used the term “minority view” for the decision of the minority member of the Arbitral Tribunal.
On the other hand, in BSNL v. Acome[4] the Delhi High Court referred to the opinion of the third arbitrator as the “dissenting opinion” and supported a reference by a counsel that referred to the opinion of any member of the Tribunal who does not assent to an award as a “dissenting opinion”.
Cases in which Minority Opinion was upheld
Even though Section 31 states that in proceedings with more than one arbitrator, the signatures of the majority of all the members of the Arbitral Tribunal shall be sufficient to make an arbitral award, in some cases where an arbitration award was challenged, courts have set aside the majority award and upheld the dissenting opinion.
In ONGC v. Interocean Shipping (India) (P) Ltd.[5], the Bombay High Court upheld the “minority award” and the impugned award rendered by the majority arbitrators was set aside on the ground that the court under Section 34 has ample power to set aside the arbitral award if it is perverse and contrary to provisions of Section 34. Similarly, in Modi Entertainment (P) Ltd. v. Prasar Bharati[6], the Delhi High Court upheld the “minority award” and set aside the majority award on the grounds that it is opposed to the fundamental policy of India to some extent.
Relevance of Dissenting Opinion
In domestic and international courts, dissenting opinions may contribute immensely to the development of the law as these opinions are often an outcome of complex debate and different perspective of law. However, due to the confidential nature of arbitration, dissenting opinions are not of much significance in arbitrations. A party challenging an arbitral award under Section 34 of the Act often relies on the dissenting opinion of a minority arbitrator. In fact, in some cases, courts have given weightage to the dissenting opinion expressed by a minority arbitrator and as a result, the decision of the majority arbitrators was set aside, and the dissenting opinion was upheld.
While dealing with an application under Section 34 of the Act, there is no prohibition on the court to delve into the findings expressed in the dissenting opinion however, in cases where there is an element of bias and dissenting opinion is given by the minority arbitrator in favour of the appointing party, such dissenting opinion is disregarded by the court.
The Delhi High Court, in its judgment of BSNL[7], relied on the 176th Report of the Law Commission to state explicitly that a minority decision of an Arbitral Tribunal, because it is in the nature of an opinion, has no effect as an award and cannot be enforced. According to the Court, the minority member of an Arbitral Tribunal’s findings have no influence on the parties’ rights and responsibilities as defined by the majority of arbitrators. As a result, it is incapable of being contested or objected to as an award under Section 34 of the Act, and it is not obliged to be.
However, in ONGC[8] and Modi Entertainment (P) Ltd.[9], the courts unexpectedly upheld the findings of the minority member of the Arbitral Tribunal while deciding on application for setting aside arbitral award under Section 34 of the Act and while setting aside the respective arbitral awards under challenge.
International Perspective
The international stance on the matter seems to be favouring the use of the term dissenting opinion and not minority award. The term “minority award” seems to be limited to judgments delivered in India and internationally, terms like “partial arbitration award”, “separate opinion”, “dissenting opinion”, “minority”, and “minority arbitrator” are used[10]. Alan Redfern,[11] has also observed that “it is not an award, it is a minority opinion”. Therefore, the accepted position is that the decision passed by the majority of the Arbitral Tribunal is treated as an “arbitral award” and the decision of a minority member of the Arbitral Tribunal is merely a “dissenting opinion”.
Whether the Court under Section 34 can uphold the decision of the minority member of the Arbitral Tribunal
Section 34 of the 1996 Act specifically lays down the conditions under which a court can set aside an arbitral award. In National Highways Authority of India v. M. Hakeem,[12] the Supreme Court held that the court under Section 34 must not cross the Lakshmana rekha and that modifying an award would be crossing that line, as the courts do not have the power to modify an arbitral award. In Ssangyong Engg.[13], the Supreme Court invoked Article 142 of the Constitution of India to uphold the minority award. Interestingly, in Vijay Karia v. Prysmian Cavi E Sistemi SRL[14] the Supreme Court observed that power under Article 142 ought not to be used to circumvent the legislative policy contained in Section 48 of the Arbitration Act.
Conclusion
Therefore, it is now clear that the court while dealing with an application under Section 34 of the Act can only set aside the award and not modify it. Upholding the dissenting opinion may result in modification of an award which is beyond the powers conferred under Section 34 of the Act.
Insofar the controversy surrounding the dissenting opinions is concerned, the author is of the view that well-reasoned and honest dissenting opinions must be encouraged and given weightage by the courts while dealing with an application under Section 34 of the Act. Interestingly, in some jurisdictions, dissenting opinions are either discouraged or not permitted. The reason for the same is that dissenting opinions have the tendency to cause turbulence in the enforcement of the award. On the other hand, it can be argued that dissenting opinion in fact improves the quality of the majority award as the majority would be compelled to address the issues carefully and give an in-depth analysis in the award. But this can happen only in cases where the dissenting opinion is provided to the majority arbitrators before the finalisation of the majority award.
On a separate note, while giving a dissenting opinion, the arbitrator must remember that a dissenting opinion can support or encourage a challenge to the award. Also, even if the disagreement is extreme, the language towards the majority arbitrators should not be disheartening as the impolite dissenting opinion can only harm the dissenter.
† Tariq Khan, Registrar, International Arbitration and Mediation Centre; Former Partner, Advani & Co. He can be reached at advocate.tariqkhan@gmail.com.
He was assisted by Hemangi Gurjar, 2nd year student NMIMS Kirit P Mehta School of Law, Mumbai.
[1]2012 SCC OnLine Bom 4 : (2012) 114 (1) Bom LR 392.
[2](2021) 7 SCC 657
[4] 2007 SCC OnLine Del 226 : (2007) 95 DRJ 466.
[6] 2017 SCC OnLine Del 7509 : (2017) 163 DRJ 291.
[7] 2007 SCC OnLine Del 226 : (2007) 95 DRJ 466.
[8] 2017 SCC OnLine Bom 10032 : (2017) 5 Arb LR 402.
[9] 2017 SCC OnLine Del 7509 : (2017) 163 DRJ 291.
[10] Jan van den Berg, A. (2011), “Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration” in Looking to the Future, Leiden, The Netherlands: Brill | Nijhoff. Available from: Brill HERE
[11] Alan Redfern, Dissenting Opinions in International Commercial Arbitration: The Good, the Bad and the Ugly, 20 Arb. Int’l 223, 242 (2004).
[12](2021) 9 SCC 1: 2021 SCC OnLine SC 473 : AIR 2021 SC 3471.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Further, the views in this article are the personal views of the author.