Supreme Court Upholds Court Intervention To Rectify Erroneous Contractual Interpretation In An Arbitral Awards*

1. INTRODUCTION

A three-judge bench of the Supreme Court in its recent judgment in South East Asia Marine Engineering and Constructions Limited v. Oil India Limited² (the "Judgment") upheld an order passed by the Gauhati High Court under Section 37 of the Arbitration and Conciliation Act, 1996 (the "Arbitration Act") setting aside an arbitral award. The High Court reversed the decision under Section 34 of the Arbitration Act (whereby the challenge to the award was rejected) on the ground that the interpretation of the terms of the contract by the arbitral tribunal is erroneous and is against the public policy of India. The Judgment (upholding the High Court's decision) is an interesting development as it marks an important checkpoint on the principle that an error of interpretation of contract is considered to be an error within the arbitral tribunal's domain and thus not a ground to set aside an award. Before analyzing the Judgment, it is necessary to advert to a