A division bench of Bombay High Court recently held that a delay by an arbitrator to pass an award is “a misconduct as contemplated under the act” [Arbitration and Conciliation Act, 1996] and “the delayed award in question, in our view, is bad in law”.
Dismissing an appeal in Bharat Oman Refineries Ltd v M/s Mantech Consultants, the court upheld a September 2011 decision by a single judge to set aside an arbitration award made in August 2006, on the ground that it was made after a delay of two years and four months.
The court held that parties would be “remedy-less” if deprived of their right to apply to the court to set aside such an award under section 34 of the act.
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The contract between Bharat Oman Refineries and Mantech Consultants had stipulated that the arbitration award be made within one year of the conclusion of arguments. Proceedings before the arbitrator had concluded in April 2004.
Pointing out that the jurisdiction of an arbitrator “depends upon the arbitration clause in the agreement itself”, the division bench said that the time limit provided in the arbitration agreement in a given case cannot be said to have been extended by an act or conduct of one side or the other.
The court held that the doctrine of waiver or deemed waiver or estoppel “is always based on facts and circumstances of each case, conduct of the parties in each case and as per the agreement entered into between the parties”.
The permission and or consent to extend the term of the arbitrator, which is required to be in writing according to the agreement, cannot be deemed to have been granted on the basis of alleged unilateral waiver by only one party. The parties and the arbitrator have to stand by the terms of the contract.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
