New Arbitral Tribunal directed to be formed due to fee dispute under Article 142 of Constitution of India: SC

Oil and Natural Gas Corporation Ltd. Vs Afcons Gunanusa JV (Supreme Court of India)

Conclusion: In present facts of the case, the Hon’ble Supreme Court of India invoked Article 142 of the Constitution of India and have directed to form new arbitral Tribunal due to disputes in the fee structure provided in IV Schedule of the Arbitration and Conciliation Act, 1996.

Facts:

On 29 May 2009, an agreement was executed between the parties for a Lump Sum Turnkey Contract for the construction of an ICP-R Platform. The ICP-R Platform was alleged to have been completed on 31 October 2012. But due to ongoing disputes and differences, the Respondent in this case invoked arbitration on 20 July 2015, in accordance with Clause 1.3 of the LSTK Contract. On the same date the Petitioner also appointed their arbitrator and an arbitral tribunal was constituted.

The arbitral tribunal held a preliminary meeting on 25 November 2015 at which the members of the tribunal indicated their view that the fee schedule prescribed in the contract seemed unrealistic, the arbitral tribunal noted that the Fourth Schedule to the Arbitration and Conciliation Act 1996 recommends the fee for each arbitrator as Rs 30 lakhs, when the amount in dispute exceeds Rs 20 crore (in the present case, it was Rs 900 crores). On 16 April 2016, the arbitral tribunal informed the Petitioner, that it would no longer bargain on the amount.

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