Arbitration Weekly Round-Up: 8th January-14th January 2024

Arbitral Tribunal Can Award Damages For Delay Attributable To Employer Even When The Agreement Provides For The Extension Of Time As The Only Remedy To The Contractor: Delhi High Court

Case Title: MBL Infrastructure Ltd v. DMRC, OMP(COMM) 311 of 2021.

The High Court of Delhi has held that the Arbitral tribunal can award monetary compensation as damages for the delay attributable to employer even when the agreement provides for the extension of time as the only remedy to the contractor.

The bench of Justice Chandra Dhari Singh held that the tribunal cannot deny damages on the ground that the agreement provides only for extension of time, especially when the agreement has already been terminated by the employer and there is no occasion for the contractor to seek extension. It held that the tribunal, in such a situation, has to necessarily compensate the contractor in terms of unliquidated damages.

A Clause That Restricts The Right Of The Contractor To Seek Damages For Delay Attributable To The Employer Is Against Public Policy: Delhi High Court

Case Title: MBL Infrastructure Ltd v. DMRC, OMP(COMM) 311 of 2021.

The High Court of Delhi has held that a clause that restricts the right of the contractor to seek damages for delay attributable to the employer is against public policy in terms of Section 23 of the Indian Contract Act.

The bench of Justice Chandra Dhari Singh held a clause that restricts the right of the aggrieved party to claim damages is prohibitionary in nature and against the fundamental policy of Indian Law. It held that such a clause is no fetter on the power of the arbitral tribunal to compensate, by way of unliquidated damages, a party that has suffered loss due to the delay attributable to the other party.

The Court held that once the tribunal has ascertained that the employer is responsible for the delays in the execution of the project work, the tribunal must award damages to the contractor and it cannot deny the damages merely because the agreement prohibits or does not contain any provision for damages.

Court Under Section 34 Of The A&C Act Can Partially Set Aside The Award: Delhi High Court Reiterates

Case Title: MBL Infrastructure Ltd v. DMRC, OMP(COMM) 311 of 2021.

The High Court of Delhi has held that a Court exercising powers under Section 34 of the A&C Act can sever an offending portion of the arbitral award. It held that such exercise of power amounts to partial setting aside of the award and not a modification.

The bench of Justice Chandra Dhari Singh explained that modification would be when the court modifies/changes the damages awarded, modifies the interest rate, etc. But mere setting aside of unconnected/independent findings of the tribunal on different claims does not amount to modification of the award.

Kerala High Court

Arbitration Act | Section 9 Order By Subordinate Judge Acting As Commercial Court Appealable Before Commercial Appellate Court, Not HC: Kerala HC

Case Title: Sabu George & Ors. v. James George & Ors.

Citation: 2024 LiveLaw (Ker) 25

The Kerala High Court recently held that an order passed by a Subordinate Judge's Court acting as a Commercial Court under a Government notification, would be appealable only before the concerned Commercial Appellate Court as per Section 13 of the Commercial Courts Act, and not before the High Court, as per the Arbitration & Conciliation Act, 1996 ('Act, 1996).

Patna High Court

Dispute Can't Be Referred To Arbitration In Absence Of An Arbitration Agreement Under Article 226 Of Constitution: Patna High Court

Case Title: State of Bihar v. Bihar Rajya Vikas Bank Samiti, Miscellaneous Appeal No. 238 of 2021

The High Court of Patna has held that no dispute can be referred to arbitration by a Court exercising powers under Article 226 of the Indian Constitution when there is no agreement between the parties.

The bench of Justice Partha Sarthy held that the remedy of arbitration is the creature of a contract and the same cannot be utilised in absence of a written agreement between the parties as provided under Section 7 of the A&C Act.

Telangana High Court

Mere Negotiations Will Not Postpone The Cause Of Action For Appointment Of An Arbitrator: Telangana High Court

Case Title: Atheli Mallikarjun v. S.S.B. Constructions, Arbitration Application No. 169 of 2022

The High Court of Telangana has held that mere negotiations between the parties related to the dispute would not delay the cause of action for the purpose of limitation for the appointment of the arbitrator.

The bench of Justice C.V. Bhaskar Reddy dismissed an application for the appointment of an arbitrator wherein the cause of action accrued more than 7 years before the date of the application.