In the Delhi High Court case of Aptec Advanced Protective Technologies AG v Union of India, the appellant (a Swiss company) filed four applications before the Arbitrator seeking discovery of documents. These applications were dismissed by the Arbitrator. The appellant challenged the Arbitrator’s decision on document discovery as an ‘interim award’ under Section 34 of the Arbitration and Conciliation Act (A&C Act),
The Single Judge dismissed the under Section 34 of the A&C Act. The Judge noted that the Arbitrator had only Section 34 petition, observing that the decision is not an interim award but is an order on the applications that it disposes of, and therefore, not subject to challenge passed orders in relation to the discovery and inspection of documents and had not passed any ‘award’ on the dispute between the parties. It was observed that the characterization of an order as an ‘interim award’ depends on whether it finally decides any substantive rights or obligations of the parties. Procedural orders, even if detailed, do not qualify as ‘awards.’
At the outset, the Hon’ble Delhi High Court noted that the A&C Act does not define ‘interim award’. The court referred to IFFCO Ltd. v. Bhadra Products which held that the Arbitral Tribunal could make an interim arbitral award on any matter with respect to which it may make a final award; and that the term ‘matter’ in Section 31(6) of the A&C Act includes any point of dispute between the parties which must be answered by the Arbitral Tribunal. The Supreme court in this case had held that while the arbitration proceedings can be terminated only by way of a final Award, there can be one or more interim awards before the final award, which conclusively and finally determine some of the issues between the parties, finally leading up to the final Award.
The court further relied upon Cinevistaas Ltd. v. Prasar Bharti which held that while determining whether the order passed by the Arbitral Tribunal can be considered to be an ‘interim award’, regard should be had to whether the order determines substantial rights of the parties. In Rhiti Sports Management Pvt. Ltd. v. Power Play Sports & Events Ltd., it was held that for an order to qualify as an Award, whether final or interim, it must settle a dispute on which the parties are at issue; any procedural order that does not settle a matter on which the parties are at issue, will not qualify to be termed as an Award.
Significantly, the Delhi High Court clarified that the Arbitrator’s decision was not limited to document discovery but also involved substantive findings on the issue of compatibility of crampons with the supplied boots. The court noted that the Arbitrator made final determinations on this aspect, thereby restricting the appellant’s ability to contest this issue later. Since this ruling had a conclusive impact on the parties’ rights, it could not be considered a mere procedural order but had to be classified as an interim award.
The Delhi High Court, thus, found that the Judge erred in holding that the decision was not an Award and therefore, not amenable to a challenge under section 34. The court held that this arbitral decision, insofar as it decided the issue, is substantial and final findings on facts determining a dispute and substantive rights of the parties amounts to an ‘Arbitral Award’ and, therefore, is amenable to a challenge under Section 34 of the A&C Act.