Section 34 of the Indian Arbitration and Conciliation Act, 1996 (the “Act”) empowers the court to set aside an India-seated arbitral award. Section 34(4) adds a distinctive twist: once a Section 34 petition is filed, the Court may, if a party so requests and the court considers it appropriate, adjourn the proceedings for a period it deems fit, thereby giving the arbitral tribunal an opportunity either to resume the arbitration or to take any other steps as in the opinion of arbitral tribunal will “eliminate the grounds” for setting aside the award.
This article discusses the various practical challenges posed by this seemingly simple provision, once the tribunal, which is normally functus officio upon delivering its award, is asked to spring back to life.
Under Section 32(3) of the Act, the tribunal’s mandate survives termination of the proceedings only in two situations: (i) when a party invokes Section 33 for correction or interpretation of the award, and (ii) when the Court orders a remit under Section 34(4). The contrast between these routes is significant.
A Section 33 application is tightly confined to rectifying computational, clerical or typographical slips or clarifying a specific portion of the award, and it must be filed within thirty days and disposed of within the next thirty. Section 34(4), by contrast, authorises a far broader and potentially open-ended exercise: the tribunal may take whatever additional steps it considers necessary to cure any infirmity that could prompt the Court to set the award aside. This clock starts only after a Section 34 petition has been lodged and the Court has deliberated on the request for remit.
The recent decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. discusses the scope and ambit of Section 34(4):
(i) Section 34(4) provides a second opportunity for a party to seek recourse through arbitral channel;
(ii) the power of remand permits the Court only to send the award to the tribunal for reconsideration of specific aspects. It is not an open-ended process; rather, it is a limited power, confined to limited circumstances and issues identified by the court;
(iii) upon remand, the arbitral tribunal may proceed in a manner warranted by the situation, including recording additional evidence, affording a party an opportunity to present its case if previously denied, or taking any other corrective measures necessary to cure the defect;
(iv) Section 34(4) does not authorise the arbitral tribunal to rewrite the award on merits or to set it aside. Rather, it serves as a curative mechanism available to the tribunal when permitted by the court. A court may not grant a remand when the defect in the award is inherently irreparable; and
(v) if the award suffers from serious acts of omission, commission, substantial injustice, or patent illegality, the same may not be remedied through an order of remand.
Furthermore, the judgment categorically records that there cannot be a lack of confidence in the tribunal’s ability to come to a fair and balanced decision when an order of remit is passed [Paragraph 59 of Gayatri Balasamy]. In theory, that may be correct. However, in practice, parties often harbour doubts about a tribunal that has already reached final conclusions. Expecting the same panel to revisit its award with a wholly open mind can be commercially unsettling and, at times, unrealistic.
This concern is more pronounced when compared with the narrow review jurisdiction of civil courts under Section 114 read with Order XLVII of the Code of Civil Procedure, 1908. This power of review is confined to the following circumstances: discovery of new evidence, apparent error on the face of the record or any other sufficient reason. Section 34(4) eclipses that modest remit. It invites the tribunal to undertake any measure it deems fit to remove all potential grounds for judicial interference, which is a much wider mandate.
Even the tribunal’s independence and impartiality may be compromised by post-award developments. For instance, Ground 30 of the Fifth Schedule treats an arbitrator’s law firm acting “adverse to one of the parties” as a potential conflict. Consider an arbitrator who was unaffiliated when the original award was issued but subsequently joins a firm that is litigating against one of the parties. No issue existed at the time of making of the award, yet a remittal may resurrect the conflict and trigger a challenge under Section 13 of the Act. Navigating these evolving relationships, while preserving the integrity of the process, adds another layer of cost and uncertainty for all stakeholders
Timing compounds the problem. Domestic arbitrations must ordinarily conclude within twelve months of completion of pleadings, extendable by a further six months with the parties’ consent under Section 29A of the Act. Beyond that, only the Court can enlarge time. When proceedings are revived under Section 34(4), a disgruntled and recalcitrant award-debtor may refuse consent for extension, thereby weaponising the timetable to frustrate the process. The Act offers no explicit mechanism to curb such strategic obstruction.
The decision to remit an award to the tribunal under Section 34(4) of the Act can materially escalate costs for both sides. Although the Fourth Schedule pegs tribunal fees to the quantum in dispute, most institutional rules impose additional cost layers whenever proceedings resume. By way of example, the International Chamber of Commerce (“ICC”) fixes arbitrators’ fees by reference to such factors as diligence, efficiency, time spent, complexity and the speed with which the draft award is delivered. All of these variables are likely to shift, typically upward, once the tribunal is reconvened. Likewise, the London Court of International Arbitration currently permits hourly rates of £250–£650; fresh hearings and further deliberations will almost inevitably push the final fee tally higher.
Section 29A(2) provides that if the award is made within six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of “additional fees” as the parties may agree. Yet if that same award is later remanded, the tribunal may exceed the six-month window while discharging its mandate under Section 34(4). The statute is silent on whether the earlier bonus must be refunded, left untouched or supplemented by a new fee arrangement. This is an ambiguity that can quickly become contentious.
Section 29A(4) introduces a further wrinkle. It contemplates that while extending the period therein, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then it may order a reduction of the fees of arbitrator(s) by not exceeding 5% for each month of such delay. If the tribunal’s post-award efforts to cure defects are characterised as “delay” within the meaning of Section 34(4), the arbitrators face a real risk of fee reduction even while performing a task ordered by the court.
Additional complexity arises where an award debtor has already deposited monies under Section 36(3) to secure a stay on the operation of the award. Once the matter is remitted, the stay effectively evaporates. The award stands suspended by operation of law because it is again under the tribunal’s consideration. This raises the practical question of whether the funds deposited should remain with the court, be returned, or be otherwise dealt with pending the fresh award.
Finally, confidentiality presents another friction point. Section 42A obliges the arbitrators, the administering institution and the parties to preserve the confidentiality of “all arbitral proceedings” except where disclosure of the award is necessary for enforcement. That obligation sits comfortably while arbitration is ongoing. Once a Section 34 petition is on file, however, the pleadings, award and correspondence typically form part of the Court record. If the Court then orders a remit, confidentiality is theoretically resuscitated even though much of the material is already in the public domain. Reconciling these competing demands is a challenging feat.
In conclusion, Section 34(4) should neither be dismissed as a mere procedural footnote nor condemned as an unqualified hazard. Properly navigated, the provision can operate as a calibrated mechanism, allowing tribunals to cure curable defects and thereby preserve the finality of the arbitral process. Admittedly, an adjournment order issued under Section 34(4) may introduce incremental cost and time, and businesses would be well-advised to anticipate that possibility by undertaking thorough pre-dispute diligence, negotiating clear contractual language on remand parameters, and scrutinising institutional rules on supplemental fees. Yet these same preparatory steps can convert the provision from a destabilising “wild card” into a strategic tool that salvages awards, limits full‐blown set-aside proceedings, and promotes party autonomy.
In an era in which India is keen to consolidate its reputation as an arbitration-friendly seat, parties that appreciate both the risks and the remedial promise of Section 34(4) will be positioned to leverage its flexibilities for competitive gain.
About the authors: Ajoy Roy is a Partner, Avlokita Rajvi is a Counsel, Lakshya Khanna is a Senior Associate and Shradha Sriram is an Associate at Shardul Amarchand Mangaldas & Co.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
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