India - An Arbitral Tribunal Cannot Go Beyond The Terms Of The Contract Between The Parties And Cannot Apply Public Law Principles On Fairness And Reasonableness.
Legal News & Analysis - Asia Pacific - India - Regulatory & Compliance - Dispute Resolution
26 July 2021
Matter: Board of Control for Cricket in India v. Deccan Chronicle Holdings Limited
Order dated: 16 June 2021.
Board of Control for Cricket in India (“BCCI”) terminated an agreement with Deccan Chronicle Holdings Limited (“DCHL”) on grounds of breach of contractual obligations by DCHL. Aggrieved by such an action, DCHL referred the matter to arbitration and a sole arbitrator was appointed, who directed BCCI to pay DCHL a sum of over INR 4.8 billion for wrongful termination of the agreement. The sole arbitrator’s award (“Award”) was challenged by BCCI before the Bombay HC.
The Bombay HC noted that the Award goes beyond the terms of the agreement between the parties. The Bombay HC held that role of the arbitrator is to arbitrate within the terms of the contract and the arbitrator has no power apart from what the parties have given him under the contract. Further the arbitrator cannot go beyond the pleadings and the evidence of the parties and cannot pass order on the basis of the conduct of one of the parties with other third parties which were not signatory to or part of the agreement.
The HC further clarified that an arbitral tribunal is not a court of law and its orders are not judicial orders and its functions are not judicial functions. Therefore, it cannot exercise powers of the writ courts and pass orders on the basis of principles of public policy like fairness and reasonableness which is the domain of the writ courts in India. The jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of reference, unless the parties, by mutual consent agree to entitle the arbitrator to settle a dispute by applying what they conceive is 'fair and reasonable’. The Bombay HC further found DCHL to be in unquestionably breach of the agreement on multiple grounds and set aside the Award.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law