POWERS OF ARBITRAL TRIBUNAL

POWERS OF ARBITRAL TRIBUNAL

Arbitral Tribunals have the power to pass Awards; it also has powers to pass interim award under Sec 31(6) of The Arbitration & Conciliation Act, 1996.

1.                                                           INTERIM AWARD  

Interim Award is different from  Interim measure granted  by the Tribunal; while Interim measure is a measure granted by the Arbitral Tribunal in the aid of the main relief under Sec 17 of the Act, interim Award is an Award passed pending adjudication of the main dispute on the remaining Awards; it is a provisional Award. It can be better understood with examples.

Example: 1

‘L’ is the Landlord and ‘T’ is the tenant under him, on a monthly rental of Rs 25,000.00; the agreement between them provided for enhancement in monthly rent every two years once; T was irregular in payment of rent; he was defaulting  and cheques issued by him were getting dishonoured on several occasion. The lease Deed executed between them, provided for Arbitration clause.

Now, Landlord, L has filed the claim for recovery of arrears of rent from the Tenant, T; the disputants L& T are before the Tribunal; L states that T is liable to Pay Rs 40,000.00 for specific period of tenancy. T while admitting the arrears of rent, he disputes the quantum of rent and the rate of rent. T admits the arrears at Rs 30,000.00 per month and disputes the remaining extent.

This is a case where T while disputing the total liability, admits the liability to a certain extent only; the admitted extent can be moulded by the Tribunal  by way of an Interim Award.

Here the tenant T admits the monthly rent of Rs 30,000.00 but, disputes the amount as claimed by L; then such rent i.e., Rs 30,000.00 which is being the admitted rent by T shall be awarded as arrears of rent, by way of an Interim Award, by the Tribunal; i.e., by directing T to pay arrears at the rate of Rs 30,000.00 per month to L, pending adjudication of the main dispute, between the Parties in the Tribunal.

Later, after full trial, based on the documents, evidence etc, if the Tribunal comes to the conclusion that the rate of rent is Rs 40,000.00/month, then the balance of Rs 10,000.00 could be ordered to be paid by the Tenant to the Landlord. If the Tribunal opines that the monthly rent was only Rs 30,000.00, then the Tribunal need not direct T to pay any additional amount.

Example: 2

A works contract, where C is the Contractor and O is the Owner; contract pertains to construction of multi storied complex. During the progress of contract work, C makes  Running Account bills for construction completed quoting for Iron at Rs.400 per kg; O accepts Rs 300.00 per Kg only as the current rate of Iron and pays C at that rate.

The contract is for Civil works to construct a huge complex; certainly, it’s a long contract and supply of money for the ongoing work is necessary to C; iron  purchase at huge quantity is required for the project; while it is a time bound project, C cannot delay the work under any circumstances; nor C can afford to wait until the completion of the entire project, till the raising of the final bill,  keeping the differences postponing; difference of Rs 100 per Kg results to  huge  amount for C and he cannot afford postponement till the settlement of the final bill by O.

Contract provides for adjudication of the differences by resorting to Arbitration; since there is no understanding with regard to the rate of Iron, between the two, C can file the claim before the Arbitral Tribunal against O, for adjudication of the difference, pending Contract work; Tribunal shall have to determine the rate of material after examining necessary documents/ evidence material made available before the Tribunal.

The Tribunal keeping the interest of both the parties and smooth continuation of  the Contract, may  direct the owner to pay at the rate of Rs 350.00 per kg  as interim award,  subject to adjustment of the same at the end of the dispute.

If the Tribunal after evidence, later  determines the rate of  material at Rs.380.00 per kg and passes the final Award, then the owner is liable to pay only the remaining sum i.e., the difference of Rs.30.00 per kg, as the owner has already paid rate of Rs.350.00 per kg by virtue of an Interim Award passed  earlier.

The purpose of  passing the interim award is to narrow down the scope of the dispute and provide interim final relief to a party; needless to say that such interim award  passed shall be  in the aid of the main relief, which can be granted by the Arbitral Tribunal.

1.                                         Now, we deal with PARTIAL AWARD:

In a dispute with various claims being made, if the respondent admits/concedes a portion of a claim, such claim can be summarily closed by making a partial Award. The part of the claim is resolved by the parties in the earlier stage of the Arbitration proceedings and by virtue of the same, the Tribunal passes order on such consented claim/s.

 Example:

We will take the earlier Example 2, itself.

A works contract, where C is the Contractor and O is the Owner; contract pertains to construction of multi storied complex. Work commences with vigour; during the progress of contract work, O demands correction, rectification from in the construction plan ;  C does not do it  to the satisfaction of O; O is not happy with the quality of work of C; O decides to terminate the services of C and issues notice terminating the works contract; C is constrained to stop the work; a dispute has  emerged now. C files a claim before the Arbitral Tribunal against O for grant of compensation. The claim of C is as below;

(a) declaration that the termination of the contract by O is bad in law.

(b)   For recovery of actual sum of Rs. 45,00,000.00 expended by the contractor towards the work done before the termination.

(c) for damages of Rs.50,00,000.00.

It is the specific case of C that, after giving deduction to the various payments made by O from time to time, a sum of Rs 45,00,000.00 was still payable by O to him towards the actual value of construction, as on the date of termination; O disputes the claim of C on various heads of claim, but concedes  that  O has not paid Rs 45,000.00 to C.

In such disputes, usually the decision to terminate was bad, right or wrong, requires an adjudication by the Tribunal to be rendered upon the contentions and materials to be produced by the Parties; it requires a detailed adjudication which necessarily forms part of the final Award.

Whereas, the issue as to the quantum of payment towards actual  work done, but not paid for various reasons by the Owner may be admitted and quantified. Since claim (b) is admitted, i.e., the liability of Rs 45,000,00.00, the Tribunal may  proceed to pass partial Award on claim (b) while deferring  adjudication on claim (a) & (c), for final adjudication, by a detailed final award.

To conclude, Interim Award is an award  passed subject to adjustment at the time of passing of the final award, whereas, partial award is a final award at the initial stage of the arbitral proceedings, itself.

The benefit of passing such awards are  that  it  gives major  relief  in the conflict, in the initial stage itself and the scope of the  dispute narrows down; some immediate respite is given to a party; such of those issues/claims which do not require serious adjudication by the Tribunal, gets summarily resolved and only the remaining or contentious claims shall only go for final adjudication by the Arbitral Tribunal.

III. ADDITIONAL AWARD

        under Sec 33 of The  Arbitration & Conciliation Act, 1996.

After the Award is delivered and received,  if the Tribunal finds any computation, clerical, typographical or any other error of similar nature occurring in the award, the Tribunal on its own initiative may  correct the error within 30 days from the date of the arbitral award.

If the error noted above is sought at the request  application by a party, within 30 days from the receipt of the arbitral award,  duly served on the other parties in the proceedings, the  Tribunal if  it considers the request to be justified, it shall make the corrections or give the interpretations, within 30 days or such extended time from the receipt of the request.

Similarly, if the parties request, the Tribunal may give interpretation of a specific point or  part  of the award within 30 days or such extended time from the receipt of the request.

If a party  to Arbitral award, with notice to other party, within the 30 days from the receipt of the Arbitral award makes an application for an additional award which was omitted in the  Arbitral award and if  the Tribunal considers  the request  to be justified,  make an additional award within 60 days or extended  time duration.

Needless to say that such additional award made, shall have interpretation  and  satisfy the requirement of  Section 31 of The Arbitration and Conciliation Act, 1996 i.e. the additional award should be well reasoned with quantum of award, rate of interest etc, clearly specified.

For the purpose of  computation  of time for  preferring application under Section 34 of the  Act, it  is  three months from the date of  disposal of request by the Tribunal.

To conclude,  for  providing quick remedy and  to avoid challenge of the award on certain grounds, the Arbitral Tribunals are empowered to pass variety of awards in the interest of the parties; further, for this purpose, the  Arbitral Tribunal has more powers under the Act, as compared to the Court under Civil Procedure Code, 1908. (Act 5 of 1908).