Alternative Dispute Resolution

MMTC Ltd. v. Vedanta Ltd.

(2019) 4 SCC 163

Facts

MMTC and Sterlite Industries, later Vedanta, had a commercial arrangement concerning manufacture and sale of continuous-cast copper rods.
Disputes arose over:
pricing;
treatment and refining charges;
contractual adjustments;
imported copper concentrate;
payment; and
interest.
The tribunal made an award substantially in favour of Vedanta.
A Single Judge of the Bombay High Court set aside important portions of the award.
The Division Bench restored the award.
MMTC appealed to the Supreme Court and argued that:
the tribunal had misinterpreted the commercial arrangement;
the Division Bench gave excessive deference;
and the award violated public policy.

What is the scope of review under Sections 34 and 37?
Whether the appellate court under Section 37 may undertake a wider inquiry than the Section 34 court.
Whether a plausible contractual interpretation can be disturbed.

Section 34 creates an extremely limited supervisory jurisdiction.
Section 37 does not enlarge that jurisdiction.
A Section 37 court applies the same narrow standard and asks whether the Section 34 court:
acted within statutory limits;
correctly identified a recognised ground;
and avoided merits review.
An award cannot be set aside merely because:
the court prefers another interpretation;
the reasoning could be improved;
another factual inference is available; or
the result appears commercially unfavourable.
A possible view of the contract must be respected.

The tribunal had analysed:
the commercial correspondence;
the pricing mechanism;
the conduct of the parties;
industry practice;
and the contractual clauses governing adjustment.
The Single Judge effectively interpreted the transaction afresh and concluded that the tribunal should have reached another result.
The Division Bench corrected that error by restoring the proper Section 34 standard.
The Supreme Court held that the Division Bench was right.
The tribunal’s interpretation was not:
impossible;
irrational;
unsupported by evidence;
or contrary to an express prohibition.
The challenge therefore amounted to an appeal on the merits.
The Court explained that Section 37 is even further removed from the original arbitral decision.
It is not an opportunity to conduct a second merits review after Section 34.
Judicial restraint becomes particularly important at that stage.
The Court also clarified that the “public policy” ground must remain narrow.
An award is not against public policy simply because the court believes:
a different contractual interpretation is more commercially reasonable;
the tribunal made a factual mistake;
or another amount should have been awarded.
The case reinforced the movement away from the expansive approach sometimes associated with Saw Pipes and Western Geco.
Its principle remains fully consistent with Ssangyong:
the arbitrator’s plausible view is final;
and reappreciation is impermissible.

The Supreme Court dismissed MMTC’s appeal and upheld the Division Bench’s restoration of the award.
It held that neither Section 34 nor Section 37 permits a court to substitute its own contractual or evidentiary conclusions.
Use this case for: the equally narrow scope of review under Sections 34 and 37.