The Delhi High Court in ISC Projects Private Limited v. Steel Authority of India Limited ruled that an arbitral award must be signed by all members of the tribunal, or a valid reason must be provided for any missing signature. The Court held that a dissenting arbitrator, though not part of the majority ruling, still has a crucial role in ensuring procedural fairness. Since one arbitrator was excluded from final deliberations and not given time to submit a dissenting opinion, the award was set aside for violating fundamental principles of arbitration law.
ISC Projects Private Limited had entered into a contract with Steel Authority of India Limited (SAIL) for railway track work at Bhilai Steel Plant. Disputes arose over the execution of work, prompting arbitration proceedings under the dispute resolution clause of the contract. A three-member tribunal was constituted, with one arbitrator nominated by each party and a presiding arbitrator appointed by the Standing Conference of Public Enterprises Forum for Conciliation and Arbitration (SCOPE). The tribunal rendered an award on March 12, 2020, dismissing ISC’s claims and allowing SAIL’s counterclaims. However, the award was signed only by two arbitrators. The third arbitrator was excluded from the final deliberations and was not given an opportunity to submit a dissenting opinion. Aggrieved by this procedural lapse, ISC challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, seeking its annulment.
- Whether an arbitral award is valid if one of the arbitrators does not sign it and no explanation is provided for the missing signature.
- Whether the exclusion of an arbitrator from final deliberations affects the validity of the arbitral award.
- Whether a dissenting arbitrator’s opinion must be recorded and issued contemporaneously with the majority award.
- Substantive Requirement of Signatures on the Arbitral Award: The Delhi High Court emphasized that the signature of all members of an arbitral tribunal is not a mere procedural formality but a substantive requirement under Section 31 of the Arbitration and Conciliation Act, 1996. The absence of a signature from one of the arbitrators without any explanation raised serious doubts regarding the fairness and procedural integrity of the arbitration process. The Court relying on Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd. (2021), reiterated that arbitral awards must be signed by all members of the tribunal unless there is a legitimate reason for any missing signature. Further, the Court observed: "Signing of an award is not a ministerial act but a substantive requirement. If the signature of any member is omitted, the reasons must be explicitly stated to uphold the procedural fairness of arbitration." Since the impugned award lacked the signature of one arbitrator without any explanation, the Court held that the omission vitiated the award and violated fundamental principles of fairness in arbitration.
- Exclusion of Arbitrator from Final Deliberations: The Court found that Arbitrator A had been excluded from the final deliberations, which undermined the procedural legitimacy of the award. The record indicated that Arbitrator A received the proposed award only one day before the tribunal's mandate expired, making it impossible for him to formulate a dissenting opinion. The Court held that this exclusion denied the arbitrator an opportunity to participate in the decision-making process, which is a fundamental requirement in arbitral proceedings. By citing Ssangyong Engg. & Construction Co. Ltd. v. NHAI (2019), the Court reaffirmed that dissenting arbitrators must be given a fair opportunity to express their views, and a dissenting opinion can only be formulated after reviewing the majority's reasoning. The Court stated: "A dissenting opinion has no direct legal effect, but it serves as a safeguard against arbitrary and unchecked decision-making. The exclusion of Arbitrator A from the deliberations deprived him of the opportunity to record his opinion, which violates the principles of natural justice." Thus, the failure to include Arbitrator A in the final deliberations was held to be a significant procedural flaw that warranted the setting aside of the award.
- Requirement of a Reasoned Dissent: The Respondent argued that Arbitrator A could have prepared a dissenting opinion within the tribunal’s mandate or even after its expiration. The Court rejected this argument, emphasizing that a dissenting opinion is a structured response to the majority award and cannot be formulated in isolation. The Court held that procedural integrity demands that dissenting opinions be prepared contemporaneously with the majority award. Referring to Mahanagar Telephone Nigam Ltd. v. Siemens Public Communication Network Ltd. (2005), the Court reiterated that: "While a dissenting opinion does not form part of the final award, it plays a critical role in ensuring transparency in decision-making. A dissenting arbitrator must be given adequate time and access to the majority's reasoning to prepare a meaningful dissent." Since Arbitrator A was not given the opportunity to prepare a dissent, the Court held that the arbitral process had been compromised, further justifying the annulment of the award.
- Distinguishing from Cases Where Missing Signatures Were Allowed : The Court distinguished this case from precedents where an arbitral award was upheld despite a missing signature. In Government of India v. Acome (2008) and M/s Chandok Machineries v. M/s S.N. Sunderson & Co. (2018), the courts had found that the missing arbitrator had either agreed with the award informally or had been given sufficient opportunity to participate. However, in the present case, the Court found that Arbitrator A was entirely excluded from the final consultation process, making the award procedurally defective. The Court observed: "In all the cited cases where a missing signature did not vitiate the award, the reasons for the omission were satisfactorily explained, or time was given to the dissenting arbitrator to prepare a dissenting opinion. However, in the present case, one arbitrator was excluded from the final consultation process, making the award procedurally unfair."Since there was no explanation for the missing signature, and Arbitrator A was denied an opportunity to contribute, the Court ruled that the award could not be sustained.
- Judicial Intervention to Uphold Fairness in Arbitration: The Court acknowledged that judicial intervention in arbitration should be minimal. However, it clarified that when procedural irregularities undermine the fairness of the arbitral process, courts must step in to rectify the injustice. The Court cautioned against situations where a dissenting arbitrator could deliberately obstruct proceedings by refusing to sign the award, but found no evidence of such conduct in this case. Citing K.K. Modi v. K.N. Modi (1998), the Court observed: "While judicial interference in arbitration should be minimal, courts must ensure that procedural integrity and fundamental fairness are upheld. The exclusion of an arbitrator from deliberations strikes at the very core of arbitral fairness and warrants intervention." Thus, while the Court recognized the importance of upholding arbitral autonomy, it found the present case to be an instance where judicial review was necessary to prevent a miscarriage of justice.
The Delhi High Court held that the arbitral award was invalid due to the missing signature of an arbitrator and the failure to provide an explanation for its omission. The exclusion of the dissenting arbitrator from final deliberations further rendered the award procedurally unfair. Consequently, the Court set aside the award and directed the parties to pursue fresh arbitration in accordance with principles of fairness and procedural integrity.
This post is for educational and informational purposes only. It is not intended to defame, discredit, or tarnish the reputation of any individual, entity, or organization. The opinions expressed are based on publicly available judicial decisions and are aimed at fostering a better understanding of legal principles. For specific legal advice, readers are encouraged to consult a professional.
