The Supreme Court, in Hindustan Construction Company Limited v National Highways Authority of India, held that the dissenting opinion of an arbitrator cannot be treated as an award if the majority award is set aside. The court observed that, when a majority award is challenged, the focus is to point out illegalities in the majority award; the minority decision merely embodies the views of the arbitrator disagreeing with the majority.
In this case, a dispute arose between the appellant contractors and the National Highways Authority of India (NHAI) over a contract for a bypass construction project. The appellant’s case was that an interpretation by the supervising engineer was contrary to the technical specification clause of the contract.
The NHAI supported the interpretation, a view later upheld by its dispute resolution board. The matter was subsequently referred to arbitration. Three technical people were appointed as arbitrators, and gave a mostly harmonious award, except on a small number of issues where one delivered a dissenting opinion.
Under section 34 of the Arbitration and Conciliation Act, 1996, the appellants applied for a single judge of the high court to set aside both the unanimous and majority parts of the award.
On the dispute’s technical aspects, the judge held that the tribunal’s majority opinion reflected a plausible and reasonable view that did not call for interference. However, an appellant bench of the high court set aside the single judge’s decision, holding that the tribunal’s majority view, and award, were based on an implausible interpretation of the contract. The bench substituted its own view for that reached by the tribunal.
The main question before the Supreme Court was the role of a court under section 34 of the act. This was where the predominant view of the technical experts sitting as arbitrators, who were familiar with the contractual interpretation of the type of work involved, came to a single conclusion.
The court observed that in appeals, judges tend to adopt a corrective lens through training, inclination and experience. However, when exercising the jurisdiction under section 34, that approach is impermissible.
Courts cannot, through a process of primary contract interpretation, create pathways to the kind of review prohibited under section 34. The Supreme Court held that the appellate bench could not carry out a review that displaced the majority view of the tribunal and substituted it with another.
The majority view of the arbitrators was plausible and the court found no reason to hold otherwise. The court reiterated that it is settled law that awards setting out reasons, especially when they interpret contractual terms, and are not to be interfered with lightly.
The Supreme Court further held that a dissenting opinion could not be treated as an award if the majority award was set aside. The court allowed the appeals, setting aside the judgments of the appellate bench. The original tribunal awards were upheld and restored.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.
