ELP Arbitration Weekly Update

This week, we examine the decision of the Supreme Court in M.P. Power Generation Co. Ltd & Anr. v. Ansaldo Energia Spa & Anr.[1] The issue which arose before the Supreme Court was whether the arbitral award could be set aside on the grounds of patent illegality and conflict with public policy.

The Supreme Court reiterated the settled position of law that the court under Section 34(2) of the Arbitration and Conciliation Act, 1996 (“the Act”) does not act as a court of appeal while applying the ground of ‘public policy’ to an award and consequently errors of fact cannot be corrected under Section 34(2) of the Act.

While the Supreme Court upheld the findings of fact made in the Award, the Supreme Court examined the conditional bank guarantees and determined whether the invocation was premature, wrongful, and illegal.