I.

Introduction

The Supreme Court (“SC”) has recently taken up a challenge to lay rest to the age-old debate
on the power of the courts to modify an arbitral award under section 34 of the Arbitration and
Conciliation Act 1996 (“ACA”) in Gayatri Balaswamy v. M/S ISG Novasoft Technologies
Limited (“Gayatri Balaswamy”).1 Modification of an arbitral award is the power of the court
to modify or “correct” an award in case the award is “imperfect in form, or contains any
obvious error”, or there is a clerical error in the award. 2 It empowers the domestic courts to
intervene in the independent, autonomous arbitration institution. 3 If a party to a commercial
dispute in arbitration appeals to the domestic court for its enforcement or otherwise, the
courts, by modifying the award, may change certain parts of the award while keeping the rest
enforceable.4 This is in contrast to the power of setting aside an arbitral award, which
nullifies the award, causing the dispute to be re-arbitrated to be resolved. 5 This power was
inherent in the erstwhile Arbitration Act of 1940. However, it was repealed when the ACA
came into place. However, despite its statutory repeal, courts continue to modify arbitral
awards.6 Several judgements are opposing this motion as well. 7 The debate, therefore, lies on
whether by modifying arbitral awards, the domestic courts would intervene in the autonomy
of an arbitration regime in India or rather uphold principles of justice and equity reasonable
limits. This paper argues that in this discourse on the power of modifying an arbitral award, it
remains pertinent to consider its effect on international commercial arbitration in India. This
discussion concerns the interpretation of section 34 of part I of the ACA for enforcing solely
domestic arbitral awards. Enforcement of foreign awards is under section 48 of the ACA;
however, the paper proves that there is a trickle-down effect, wherein judicial intervention in
domestic arbitration influences the broader arbitration framework, potentially affecting the
enforcement and perception of foreign awards in India. Additionally, the discussion of
modification of arbitral awards in India, an emerging arbitration hub, will be widely different
from the other arbitration-friendly jurisdictions. The paper shall prove how arbitration-
friendly jurisdictions must at least either have a monist regime of arbitration, i.e., the same

1
Gayatri Balaswamy v. M/S ISG Novasoft technologies Limited
2
Section 15 of the Arbitration Act 1940.
3
Id.
4
Id.
5
Section 34 of the ACA.
6
Vedanta Limited v Shenzden Shandong Nuclear Power Construction Company Limited, (2018), Oriental
Structural Engineers Pvt. Ltd. v State of Kerala (2011) Tata Hydroelectric Power Supply Co. Ltd. v Union of
India
7
McDermott International Inc. v Burn Standard Co. Ltd. (2006), Project Director, NHAI v M
Hakeem (2019), MMTC Ltd. Sangyoung Construction Ltd. v NHAI,
statute governing enforcement of both domestic and foreign arbitral awards, or an
interventionist policy, not both, as is in the case of India. Therefore, discussing the power of
modifying an arbitral award in certain arbitration-friendly jurisdictions is much simpler. The
frequent conflation between India's domestic and foreign commercial arbitration regime
carries a greater risk of its interventionist attitude being adopted in enforcing foreign arbitral
awards. The paper, therefore, raises concerns about appreciating India's unique arbitration
regime. It argues for addressing the effect that the international commercial arbitration
framework would have while discussing the power of modification of a domestic arbitral
award. The paper is divided into 6 parts. Part II discusses how the enforcement standard
varies between a domestic arbitral award and a foreign arbitral award. Part III discusses the
trickle-down effect that the domestic arbitration regime in India has on international
commercial arbitration. Part IV delves into the discussion of the modification of awards in
arbitration-friendly jurisdictions around the world and how it varies from India. Part V of the
paper finally analyses the unique challenge that India’s arbitration regime faces and possible
solutions. Part VI finally concludes the paper.

II. How enforcement of foreign arbitral awards are seen differently and leniently than
domestic awards

The UNCITRAL Model Law and the New York Convention is meant for international
commercial arbitration.8 It provides for grounds to set aside these awards under section 34. 9
However, several jurisdictions allow for a greater ambit for setting aside arbitral awards
under domestic arbitration.10 It is seen that legislatures allow for greater court intervention in
domestic arbitration.11 Jurisdictions are empowered to set aside a domestic arbitral award on
grounds in addition to the ones specified under section 34 of the UNCITRAL. It stems from
experience that jurisdictions with the power to appeal against arbitral awards serve as the
most vulnerable and unlikely jurisdiction to host international arbitration cases. 12 Obviously,
finality of arbitral awards comes at a price, but most jurisdictions are willing to pay the price
when it comes to international commercial arbitration. This can be attributed to the causation
between finality of award and arbitration friendliness. The users of international arbitration

8
UNCITRAL Model Law
9
§34 of UNCITRAL Model Law
10
11
https://dougjones.info/content/uploads/2023/03/Doug-Jones-International-and-Domestic-Arbitration-Regimes-
Should-They-be-Combined-or-Separated.pdf
12
Finality of awards: Is it the key feature of the new Saudi Arbitration Law that will put the country in the global
map of arbitration? Abdulrahman Mamdoh Saleem
values finality, speed and cost which contributes to its arbitration friendliness. 13 The same is
not seen in the enforcement of domestic arbitration because domestic courts prefer an
effective, efficient and a fair decision.14 Therefore, it is seen that the treatment for the
enforcement of foreign arbitral awards is different from domestic arbitral awards. Changing
the framework of an international commercial arbitration has different implications than
changing the domestic arbitration framework, primarily because of the higher stakes involved
in international commercial arbitration.

III. Trickle-down effect of domestic commercial arbitration into international

commercial arbitration in a monist regime

A monist arbitration system signifies a single statute governing the enforcement of domestic
and foreign arbitral awards.15 A monist approach results in a “pure application” of the
principles of the New York Convention and the UNCITRAL Model Law within a single
framework, ensuring a uniform arbitration regime. 16 This opposes a dualist system with
separate statutes governing foreign and domestic arbitral awards. 17 India’s arbitration regime
is governed by ACA, consisting of two parts – Part I provides for any arbitration conducted in
India and enforcement of awards thereunder, and Part II governs the enforcement of any
foreign award to which the New York Convention or the Geneva Convention applies. 18 The
codification of the ACA implemented the UNCITRAL Model Law on International
Commercial Arbitration, designed for only international commercial arbitration. 19 However,
the ACA extends the application of the UNCITRAL Model Law to both international and
domestic arbitrations.20 Additionally, the ACA goes beyond the UNCITRAL Model Law in
the area of minimising judicial intervention equally in both foreign and domestic arbitration. 21
Despite having different parts of the ACA governing domestic and international arbitration,

13
Arbitration International, Volume 23, Issue 3, 1 September 2007, Pages 477–
498, https://doi.org/10.1093/arbitration/23.3.477
14

15
Monism and Dualism in International Commercial Arbitration: Overcoming Barriers to Consistent Application
of Principles of Public International Law
"Basic Concepts of Public International Law: Monism and Dualism," edited by Marko Novakovic, Forthcoming
University of Missouri School of Law Legal Studies Research Paper No. 2012-39
16
Id.
17
Id.
18
ACA 1996
19
S K Dholakia, ‘Analytical Appraisal of the Arbitration and Conciliation (Amendment) Bill, 2003’, ICA’s
Arbitration Quarterly, ICA, New Delhi, 2005 vol. XXXIX/No.4 at page 3.
20
S K Dholakia, ‘Analytical Appraisal of the Arbitration and Conciliation (Amendment) Bill, 2003’, ICA’s
Arbitration Quarterly, ICA, New Delhi, 2005 vol. XXXIX/No.4 at page 3.
21
Id.
India applies a single framework to both, unlike dualist jurisdictions that create separate
regimes. The ACA seems to be dualist in theory; however, the extended application of the
UNCITRAL Model Law suggests otherwise. Due to the rapid development of international
commercial arbitration, certain legal systems, such as India, are overly enthusiastic about
providing favourable legal regimes within which it can flourish. 22 This enthusiasm followed
the principle that what is good for international arbitration is also good for domestic
arbitration – leading to a unified regulation of international and domestic arbitrations. 23
India’s arbitration regime exhibits a monist tendency, further reinforced by the interventionist
attitude of domestic courts, which blurs the distinction between Part I and Part II of ACA.24

Bhatia International v. Bulk Trading (“Bhatia International”), started a judicial trend that
conflated international and foreign arbitration. 25 The SC held in this case that Part I of the
ACA applies to even foreign-seated arbitration unless expressly excluded by the parties. 26 The
court reasoned that if Part I of ACA were not made applicable to international commercial
arbitration outside India, it would render such arbitration meaningless due to the lack of
interim relief provisions available to the parties. 27 Despite having separate provisions for
foreign and domestic arbitration, the judiciary conflated the two and applied the standards of
domestic arbitration in deciding an international commercial arbitration dispute. The case was
restricted to section 9 of the ACA, which deals with interim measures, but subsequent cases
cite Bhartia International, to increase the scope of intervention in foreign arbitration. Venture
Global Engineering v. Satyam Computer Services (“Venture Global”) held that section 34 of
the ACA, which rests in Part I of the ACA and is meant to govern only domestic arbitration,
would apply to international commercial arbitration outside India. 28 This case enhanced the
court’s power to such an extent that courts would even have jurisdiction to set aside an award
rendered outside India under section 34. Bhartia International still acknowledged that Part II
contains provisions exclusively for enforcing foreign awards and that Part I, dealing with

22
SPEECH OF HON'BLE MR. JUSTICE VIJENDER JAIN, CHIEF JUSTICE, PUNJAB & HARYANA HIGH
COURT, CHANDIGARH (INDIA) AT MAURITIUS ON 03.06.2008 ON KEY ISSUES ON
‘INTERNATIONAL ARBITRATION’.
23
Id.
24
Neerav Merchant, Making Arbitration Work in India, February 14, 2010, available at http:/
/www.mydigitalfc.com/opinion/making-arbitration-work-india-786 (Last visited on November 13, 2010); Dipen
Sabbarwal, Another Setback for Indian Arbitration (and Foreign Investors), available at
http://www.whitecase.com/idq/spring 2008_4/ (Last visited on November 13, 2010); Prabhash Dutta,
Consultation Paper Released on Amendment to Arbitration Act, April 9, 2010, available at
http://www.lawetalnews.com/News Detail.asp?newsid=891 (Last visited on November 13, 2010).
25
Bhatia International v. Bulk Trading
26
Id.
27
Id.
28
Ventura global engineering services
these aspects, will not apply to such foreign awards. 29 However, Venture Global completely
blurred the distinction recognised in Bhatia International, resulting in a situation where Indian
courts have a significant say in international commercial arbitration outside India. 30 This
trend not only enforced an overlapping of Part I and Part II of the ACA but marked an
interventionist attitude of the judiciary in foreign arbitrations. 31 The arbitration unfriendly
precedents set by Bhatia International and Ventura Case was salvaged by Bharat Aluminium
Co. v. Kaiser Aluminium Technical Service (“BALCO”). It relied upon the UNCITRAL
Model Law and held that Indian courts were barred from granting any interim relief in cases
of challenge to foreign awards.32 A clear distinction was made between foreign and domestic
arbitration, but it seemed that this case swung the pendulum to the extreme side – which led
back to the concern raised first in Bhatia International.33 The lacunae presented by BALCO
were fixed by the amendment to the ACA via Arbitration Ordinance in 2015. 34 It further
attempted to distinguish between domestic and international arbitration.35

The BALCO judgement and the amendments to the ACA in 2015 and further in 2019 and
2021 reflect India’s struggle to move towards a non-interventionist policy and a dualist
arbitration regime. While these amendments were a step forward in making India an
arbitration-friendly jurisdiction, overlaps between foreign and domestic arbitration persisted,
along with courts’ interference in arbitration matters. 36 The next part shall discuss how India’s
unique situation is not seen in other arbitration-friendly hubs, proving that the discussion of
modification of arbitral awards is much simpler.

IV. Comparison of other jurisdictions

It becomes pertinent to review the arbitration framework of jurisdictions which allow for a
modification of an arbitral award. The Madras High Court (“HC”) in Gayatri Balaswamy,
had reviewed arbitration friendly jurisdictions who had proposed modification of an arbitral
29
Bharti International ¶26.
30
Vasudha Sharma & Pankhuri Agarwal, Rendering India into an Arbitration Friendly Jurisdiction-Analysis of
the Proposed Amendments to the Arbitration and Conciliation Act, 1996, 3 NUJS L. REV. 529 (October-
December 2010).
31
Citation Infowares Ltd. v. Equinox Corp. (2009) ; ONGC v. Saw Pipes (2003); https://www-livelaw-
in.nujs.remotlog.com/indias-reputation-arbitration-unfriendly-jurisdiction-panel-blames-interventionist-courts-
lack-govt-support-read-report?fromIpLogin=44555.27201596987
32
BALCO
33
Shanivi Singh, Arbitration in Commercial Disputes and Problem of Judicial Interference in India, 14
SUPREMO AMICUS 245 (2019).
34
Arbitration ordinance 2015
35
Id.
36
Analysis of recent amendments in Arbitration and Conciliation Act, 1996 from the perspective of their impact
on access to speedy justice Ushma Nitinkumar Thaker;
https://www.scconline.com/blog/post/2023/09/12/oxford-style-debate-mnlum/
award. The HC reviewed England, Australia, the United States (“U.S.”), Canada and
Singapore – out of which only Canada’s arbitration framework did not allow modification of
arbitral awards. Therefore, the paper shall be restricted to the remaining four jurisdictions.

England

England or London is the most preferred seat for international arbitration worldwide. 37 It is an
attractive destination for international commercial arbitration for many reasons, one of which
is strict non-interventionist policy. It derives from the foundation of the Arbitration Act of
1996.38 England and Wales have not adopted the UNCITRAL Model Law however, the
drafting of the AA was influenced by it. AA governs both domestic and international
arbitrations. It follows a monist regime of arbitration. The judicial trend follows a hands-off
approach, where the domestic courts do not exceed their authority and intervene in
proceedings.39 The domestic courts are very careful to respect the autonomy of the
arbitration.40 The courts have set a higher threshold on parties willing to challenge arbitration
awards.41 The Arbitration Act of 1996 provides for only three grounds to challenge the award,
and it is seen that these grounds are not used unduly: 1-deficiency of substantive jurisdiction
(section 67); 2-serious irregularity affecting the tribunal, proceedings or award (section 68);
and 3-an appeal on a question of law (section 69). The court reserves the right to “vary” or
modify the award under sections 67 and 69. While sections 67 and 68 originate from the
UNCITRAL model law, section 69 does not find a counterpart in the model law. Therefore,
the attractiveness of London as an arbitration hub depends upon section 69. 42 However, it has
given a very restricted right of appeal to awards in a way that does not harm the judicial non-
intervention and party autonomy.43 Therefore, modification of an arbitral award is allowed in
England to some extent in a framework that follows the monist regime and a non-
interventionist policy.

37
2018 Queen Mary University of London, White & Case International Arbitration Survey: The Evolution of
International Arbitration, <http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-
Arbitration-Survey---TheEvolution-of-International-Arbitration-(2).PDF> 9; see also 2021 International
Arbitration Survey: Adapting arbitration to a changing world,
http://www.arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-InternationalArbitration-
Survey-2021_19_WEB.pdf (accessed 15.07.2021).
38
Vial and Blavi (n 7) 290; Julian Lew, ‘London’ in Michael Ostrove, Cladia Salomon, Bette Shifman (eds),
Choice of Venue in International Arbitration (OUP 2014) 242.
39
HC Trading Malta Ltd v Tradeland Commodities SL [2016] EWHC 1279 (Comm)
40
Id.
41
Bandwidth Shipping Corporation Intaari (the ‘Magdelena Oldendorff’) [2007] EWCA Civ 998, [2008] 1 All
ER (Comm) 1015, [2008] 1 Lloyd’s Rep 7.
42
Teomete Yalabık / The Impact of the Seat of Arbitration on Judicial-Interference: Do Sections 67, 68 and 69 of
the English
43
Id.
Australia’s arbitration regime is governed by two separate legislations, one for domestic
arbitration and the other for regulating international arbitration – clearly distinguishing
between domestic and international arbitration. 44 The International Arbitration Act 1974
(“IAA”) is largely modelled by the UNCITRAL Model Law on which the commonwealth
government holds legislative power.45 Whereas, the States and Territories have the legislative
power over domestic arbitrations seated within those individual States and Territories. 46
Therefore, it maintains a dualist regime. Section 34 of the IAA, which provides for the setting
aside of an award, is parallel to section 34 of the UNCITRAL Model Law, but it adds a new
ground for a recourse against the arbitral award. Section 34-A allows courts to modify or vary
an award in an appeal on a question of law. 47 Additionally, Australia has a largely non-
interventionist policy, where the courts practice the least interference. 48 Therefore, the
Australian arbitration regime, which has a dualist system and a non-interventionist policy, has
empowered the courts to modify arbitral awards.

The U.S also follows a monist arbitration regime where the Federal Arbitration Act, 1996
(“FAA”) governs both domestic and international arbitration. 49 Court intervention is limited
to specific grounds such as compelling arbitration, appointing arbitrators, and enforcing or
vacating awards only in certain circumstances. 50 The FAA allows for modification of an
award under section 11 only for procedural errors such as evident miscalculation of figures,
an issue decided outside the scope of arbitration or an award that is imperfect in form but
does not affect the merits.51 The power of modification of an arbitral award exists in the FAA
where the US has a monist arbitration regime along with a non-interventionist policy.

Singapore’s arbitration framework is a strictly dualist regime, maintaining a clear and rigid
distinction between domestic and international arbitration. Singapore ensures that the two
systems remain separate and independent, preventing any overlap or judicial confusion.
International arbitration in Singapore is governed by the International Arbitration Act, 1994
(IAA), which is based on the UNCITRAL Model Law, which ensures minimal court-
intervention.52 International arbitral awards cannot be modified—they may only be set aside
44
International
45
https://acica.org.au/commercial-arbitration-acts/
46
https://acica.org.au/commercial-arbitration-acts/
47
Section 34-A
48
The Judicial Approach to Arbitration: An Asia Pacific Perspective* The Hon. Justice Clyde Croft **
Supreme Court of Victoria, presented at the Arbitrators’ & Mediatos Institute f New Zealand Conference
49
Federal Arbitration Act 1996
50
Federal arbitration
51
§11.
52
International Arbitraiton Act.
on narrowly defined grounds such as procedural irregularity or public policy violations. By
contrast, domestic arbitration is governed by the Arbitration Act, 2001 (AA), which allows a
greater degree of judicial oversight.53 Unlike international arbitration, domestic awards may
be challenged on a question of law under Section 49, and courts have the power to modify or
vary domestic awards under Section 51(2).54 However, this intervention is strictly confined to
domestic arbitration, with no spillover effect on international arbitration. Singapore’s model
thus showcases how courts posses the power of modifying arbitral awards in a dualist and a
non-intervention policy.

It is clear how modification of arbitral awards in arbitration-friendly jurisdictions is allowed

against a set framework which is inherently either monist and non-interventionist or dualist
and non-interventionist. The next part delves into how India’s arbitration framework differs
from other arbitration friendly jurisdictions making the discourse of allowing the
modification of arbitral awards much more complex.

V. The complex case of India

A jurisdiction’s arbitration framework is shaped by two fundamental axes: (i) monism vs.
dualism, and (ii) interventionism vs. non-interventionism. Part IV of the paper demonstrates
how the world’s most arbitration-friendly jurisdictions at a minimum adopt either a monist
framework or an interventionist approach. The ideal arbitration friendly framework is dualist
and non-interventionist, which is exemplified by Singapore and Australia., as it ensures the
court’s strictly minimal role in arbitral proceedings. A jurisdiction can still function as
arbitration friendly if it is either monist but non-interventionist, as seen in England. Such a
framework maintains strict distinction between foreign and domestic jurisdiction, in such a
way that the standards applied to one does not trickle down to the other. Therefore, if the
jurisdiction allows for a modification of arbitral award to the national courts, the jurisdiction
makes sure that either a very high threshold is set for courts to modify or vary the award, as
seen in section 69 of the AA, or, the degree of intervention of the courts through modification
or arbitral awards differs in the enforcement of domestic and foreign awards, as seen in
Singapore.

Part III of the paper demonstrates the unique position that India’s arbitration regime is in. A
monist arbitration framework along with interventionist attitude of the courts as in India, is
not seen in the many of the arbitration-friendly jurisdictions in the world. India’s arbitration
53
Arbitration Act 2001
54
Arbitration Act 2001, §51(2).
framework poses a conducive environment for international commercial arbitration to be
affected by the framework decided for domestic arbitration. The evolution of India's
arbitration framework, particularly through judicial decisions such as Bhatia International and
Venture Global, followed by attempted course corrections in BALCO and the 2015
amendments, demonstrates the judiciary's persistent tendency to conflate foreign and
domestic arbitration. Despite legislative interventions, the Indian arbitration regime continues
to exhibit a monist and interventionist approach, where the treatment of domestic arbitration
inevitably influences international arbitration and vice versa. This interplay creates a trickle-
down effect, reinforcing the notion that developments in one sphere invariably shape the
other. Therefore, if the courts are empowered to modify arbitral awards under section 34 of
the ACA, it poses a risk of whether similar standards will seep into international commercial
arbitration. The judicial trend of interventionist attitude of the courts suggests that a high
threshold for modifying awards is unlikely to be set. Empowering court for modification of
arbitral awards, even if limited to domestic arbitration, risks shaping the perception of the
arbitration regime of India as a whole. Thereby any potential judicial overreach by the courts
while modifying arbitral awards, will deter parties from choosing India as a seat, hence
undermining its arbitration-friendliness. Therefore, any modification in the legal framework
governing the enforcement of domestic arbitral awards risks setting a precedent that could
inadvertently impact India’s approach to international commercial arbitration, thereby
affecting its credibility as an arbitration-friendly jurisdiction.

VI. Conclusion

An inevitable effect on international commercial arbitration will be seen through empowering

the courts to modify an arbitral award under section 34. While inspiration may be taken from
other arbitration friendly jurisdictions regarding the power of modification of an arbitral
award, courts must understand the unique challenge that India’s arbitration landscape poses.
A verbatim application of a provision of a foreign jurisdiction in the ACA will fail to take into
account the broader culture of arbitration that exists in India. Much appreciation should be
given to each facet of the arbitration framework before broadening an interpretation for
progressing towards a much more arbitration friendly jurisdiction .