30 April 2024 Arbitration Law >> Business & Commercial Law  

In a recent development concerning a contract dispute between BHEL (Bharat Heavy Electricals Limited) and CWSPL (formerly Capco Water Solutions Pvt. Ltd.), the court opted for re-arbitration on a specific issue rather than modifying the original arbitration award.

The disagreement stemmed from an arbitration award granting interest (pendente lite) to CWSPL. BHEL contested this, citing a clause in the contract (Clause 8.10) that potentially limited the awarding of interest.

The court noted a recent reference by the Supreme Court to a larger bench, seeking clarification on a court's authority to modify arbitration awards. To avoid potentially overstepping its bounds based on current legal interpretations, both parties agreed to a focused re-arbitration process.

This re-arbitration will solely address the pendente lite interest issue. It will be conducted swiftly using existing records and submissions related solely to interest. The re-arbitration award will replace the original award's section on interest, leaving all other parts unchanged.

Why Re-Arbitration?

The decision to re-arbitrate stems from the ongoing legal uncertainty surrounding a court's power to modify arbitration awards. Modifying the award could be seen as exceeding the court's authority. Re-arbitration provides a clearer path for both parties to address the disputed interest issue.

Conclusion:

The original arbitration award remains largely intact, with only the pendente lite interest portion going through re-arbitration. This case underscores the complexities of contract interpretation and the evolving legal landscape regarding modifications to arbitration awards in India.

  Arbitration and Conciliation Act, 1996