Can a party challenge an arbitral award after receiving payment in line with that award?

The Delhi High Court, in a recent judgment, clarified a crucial principle in arbitration disputes.

The court held that a party, having received payment in line with an arbitral award, is barred from challenging the award concerning disallowed claims.

The case involved a construction project where the petitioner received a Letter of Acceptance in 2016.

Disputes arose, leading to arbitration, resulting in partial allowance of claims.

Dissatisfied with a specific quantum, the petitioner challenged the award under Section 34 of the A&C Act.

The court’s analysis emphasized that acceptance of payment under the award estops a party from later disputing it.

Referring to Sporty Solutionz v. Badminton Association of India, the court highlighted that repudiating a part of the award after payment is impermissible.

Furthermore, the court clarified that mere misapplication of contract terms doesn’t constitute patent illegality.

It emphasized the high threshold for determining patent illegality, requiring an egregious and fundamental error.

In dismissing the petition, the court reaffirmed the importance of honoring awards once accepted, ensuring the finality of arbitral decisions.

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