Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI)
Post-2015, the expanded Western Geco/Wednesbury view of public policy is gone; patent illegality (per Associate Builders) survives only for domestic non-ICA awards, not as a backdoor merits review.
Facts
Ssangyong challenged a majority arbitral award in a road-construction price-adjustment dispute with NHAI, where the majority applied a circular/formula unilaterally introduced and not part of the contract, while the minority dissented. The case required the Court to determine the scope of S. 34 after the 2015 Amendment.
Issues
- What is the effect of the 2015 Amendment on the public policy ground and on Western Geco's expanded 'fundamental policy of Indian law'?
- Does patent illegality survive, and against what standard may a domestic award now be set aside?
Arguments
Ssangyong argued the majority award relied on extraneous material outside the contract, breaching natural justice and the contract. NHAI defended the award as a plausible interpretation immune from interference.
Held
The Court held the 2015 Amendment did away with the expanded 'fundamental policy of Indian law' of Western Geco; courts can no longer interfere on the merits under the judicial-approach exception, and Wednesbury grounds do not survive. 'Public policy of India' now reverts to Renusagar as explained in Associate Builders — fundamental policy of Indian law and the most basic notions of morality or justice — the 'interests of India' head having been deleted. Patent illegality survives as a distinct ground (S. 34(2A)) only for domestic awards not arising from international commercial arbitration, but cannot be used to smuggle in a merits review or be found by reinterpreting the law. On the facts, the award was set aside for relying on material behind the parties' back in breach of natural justice.
Ratio decidendi
After the 2015 Amendment, S. 34 public policy review is confined to the narrow Renusagar/Associate Builders heads; patent illegality applies only to domestic non-ICA awards and excludes merits review or re-appreciation of evidence; an award based on material not put to a party violates natural justice and is liable to be set aside.
Significance
The authoritative post-2015 restatement of S. 34, definitively curtailing the Saw Pipes/Western Geco expansion and aligning Indian law with the minimal-intervention philosophy of the Model Law. It is now the leading reference point for the scope of setting-aside and public policy under the amended Act.
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