Harmonization or Cosmetic Compliance? Public Policy Exception Under the Arbitration and Conciliation Act vis-à-vis the UNCITRAL Model Law

This paper is a critical analysis of key issues to determine whether India's interpretation of public policy exemption under the Arbitration and Conciliation Act, 1996 is a genuine reflection of harmonization with the international standards of arbitration practice or is cosmetic compliance with the UNCITRAL Model Law on International Commercial Arbitration. Public policy, under global instruments such as the New York Convention, is conceived as being narrow and exceptional ground, confined to serious violations of fundamental legal principles, morality or of justice. However, the Indian jurisprudence in the early 2000s went in a different direction. Landmark judgment like Oil & Natural Gas Corp v Saw Pipes Ltd OR ONGC v Western Geco International Ltd. extended the scope of public policy and made illegality of a patent and reasonableness of standards of public policy topics for exploration by courts of merits-based examination. This development brought back appellate-style review which destroyed the finality and efficiency of arbitration. The paper further analyses the corrective function of the Arbitration and Conciliation (Amendment) Act, 2015 and the related decisions of the Supreme Court that attempt to restore a narrow and pro-enforcement scheme that is in line with international norms. Through doctrinal and comparative analysis, using the above, the present study argues that although India has made much progress towards harmonization, the vestiges of the former expansive approach remain, suggesting that India was in a phase of transition rather than doctrinal convergence.