Arbitral Award Is Void When Specific Dispute Alone Is Referred
The Kerala High Court ruled that an arbitral award is void when one party refers only a specific dispute for arbitration. The Division Bench of Justice Dr. A.K. Jayasankaran Nambiar and Justice Easwaran S. emphasized that the Arbitration and Conciliation Act, 1996 does not allow one party to arbitrate all disputes once the other limits arbitration to a particular issue.
The case arose from a District Court order that set aside the Arbitral Tribunal’s award in favor of the contractor. The appellant-contractor, awarded a Kerala State Transport Project contract, faced disputes during execution. Initially, the contractor referred a matter to an adjudicator. Neither party invoked arbitration within the 28-day limit specified in the contract. Later, the State referred one dispute to arbitration, leading to the Tribunal overturning the adjudicator’s decision and favoring the contractor.
The State challenged the Tribunal’s award under Section 34 of the Arbitration and Conciliation Act, and the District Court restored the adjudicator’s decision. Aggrieved, the contractor approached the High Court.
Conclusion
The High Court noted a clause in the contract stating disputes must be referred within 28 days or the adjudicator’s decision becomes final. The Bench observed that this clause violates the general limitation period under Article 137 of the Limitation Act, 1963.
