In an arbitration dispute, the intention of the parties as reflected in the agreement should be followed, a division bench of the Delhi high court stated last week while setting aside the order of the single judge bench in a dispute between Prime Industries and Seil Ltd. In this case, the agreement stated that in case of disputes, they shall be referred to a sole arbitrator according to the rules of the Indian Council of Arbitration.
The dispute in this case was referred to a former Chief Justice of India and he gave an award in favor of Prime Industries. Seil challenged it before the single judge arguing that according to the ICA rules, disputes involving Rs. 50 lakh and above should be decided by a three-member panel. The argument was accepted. But on appeal, the division bench stated that the agreement was for appointing a sole arbitrator, though the ICA rules were different.
In such cases, the terms of the contract should be the guide as the agreements are drawn up by expert corporate lawyers. Moreover, arbitration of a sole arbitrator has been observed to be faster, and “in a domestic arbitration a sole arbitrator is the norm because a tribunal of three or more arbitrators adds substantially to the costs of litigation and is apt to delay the proceedings.”