Say the ratio out loud before you open Reasoning — recalling it unprompted is exactly what the exam pays for.
Why it matters
It completes the finality group by dealing with questions of law. Students assume that an error of law is always reviewable; where the question of law has been specifically referred, it is not.
Facts
A question of law was referred to the arbitrator, and he gave his conclusion on it. The award was then challenged on the ground that a different view of the law was possible.
Held
Where a question of law is referred to the arbitrator and he gives a conclusion on it, it is not open to challenge the award on the ground that an alternative view of the law is possible.
Reasoning
Step one — ask what was referred. If the parties referred the legal question itself, they asked the arbitrator, not the court, to answer it.
Step two — the answer is within the mandate. A decision on the very question referred cannot be an excess of jurisdiction, however the court would have decided it.
Step three — distinguish the two situations. A specific reference of a question of law is different from an arbitrator who, in the course of deciding a claim, misapplies a statute or awards what the contract bars. The second is Continental Construction, and it remains open to challenge.
Exam use
It opens: Is an error of law a ground for setting aside an award? — and the answer begins by asking whether the question of law was specifically referred.
Cite it as the third of the finality trio with Sudarshan Trading and M.C.D. v. Jagan Nath Ashok Kumar, which together dispose of complaints about conclusions, evidence and law.
Track the statutory position. The expansion of public policy in ONGC v. Saw Pipes — an award contrary to statutory provisions, or in some cases to the terms of the contract, being patently illegal — is what allowed losing parties to re-agitate the merits. The 2015 amendment confined the public-policy ground to fraud or corruption, contravention of the fundamental policy of Indian law and conflict with the most basic notions of morality or justice, added patent illegality appearing on the face of the award as a separate ground for domestic awards, and provided that an award is not to be set aside merely for an erroneous application of law or by re-appreciation of evidence. Read this case as the older expression of the same restraint.
It does not decide what happens where the arbitrator decides a legal question not referred to him; that falls under excess of jurisdiction.