03 January 2024 Arbitration Law >> Business & Commercial Law   |   Contract Law >> Corporate Law  

A recent court hearing addressed a dispute between Simplex Infrastructures Ltd. (Simplex) and the National Highway Authority of India (NHAI) concerning the construction of a highway.

Background:

The case centered on a disagreement about the arbitration clause included in the contract, which referenced the Society for Affordable Redressal of Disputes (SAROD) rules. Following the termination of the contract by NHAI, a dispute arose, prompting Simplex to initiate arbitration proceedings.

Key Dispute: Appointing Arbitrators:

The primary disagreement involved the selection of arbitrators under the SAROD clause. Simplex argued they could appoint their own arbitrator, independent of the SAROD panel. Conversely, NHAI maintained that all arbitrators must be chosen from the SAROD pool.

Court Avoids Clause Interpretation, Focuses on Resolution:

The court opted not to definitively interpret the specific clause regarding arbitrator appointment. Instead, it prioritized resolving the immediate issue by constituting a functional arbitration tribunal.

The court appointed a panel consisting of Mr. Justice (Retd.) Dr. S. Murlidhar as the Petitioner's nominee arbitrator and Mr. Justice (Retd.) Sakha Ram Singh, previously chosen by NHAI, as their nominee. Notably, Ms. Justice (Retd.) Banumathi, a retired judge, was appointed as the presiding arbitrator from the SAROD panel.

This decision ensures the arbitration process can move forward while leaving the legal question surrounding the SAROD clause interpretation open for future cases.

Conclusion:

This case highlights the importance of clearly defined arbitration clauses in contracts. The Society for Affordable Redressal of Disputes (SAROD) offers an alternative dispute resolution mechanism with its own set of rules, which can be helpful in expediting settlements outside of the traditional court system. However, as this case demonstrates, specific details within these clauses, like arbitrator selection procedures, can sometimes lead to disagreements.

  Arbitration and Conciliation Act, 1996