Court Appoints New Arbitrator to Resolve Unsettled Claims After Initial Award Set Aside
In a significant ruling, the Jammu and Kashmir High Court, led by Justice Sanjay Dhar, has permitted a second reference to arbitration in a long-standing dispute between M/s Sohrab Iqbal Goni (JV) and the Director of Transport, J&K Economic Reconstruction Agency. The court's decision follows the setting aside of an earlier arbitral award, allowing unresolved disputes to be arbitrated afresh.
The case arises from a 2008 contract for the construction of a 54-meter span bridge over the Ferozpora Nalla at Chanapora Kunzar. The project was marred by delays and allegations of faulty design, leading to the foreclosure of the contract and subsequent arbitration. The initial arbitration, concluded in January 2022, awarded Rs. 63,13,511 to the petitioner for losses due to liquidated damages deductions but dismissed other claims. This award was later set aside by the Designated Commercial Court in April 2025, prompting the petitioner to seek a fresh arbitration.
The High Court's decision emphasizes the necessity of appointing a judicially trained arbitrator for disputes requiring detailed factual assessments. Justice M.K. Hanjura, a former judge of the court, has been appointed as the sole arbitrator. The court ruled that the earlier disputes were not conclusively resolved, justifying a second arbitration.
This ruling underscores the court's role in ensuring that unresolved disputes can be appropriately arbitrated, maintaining the integrity and purpose of the arbitration process. The order mandates both parties to bear the arbitral costs equally, subject to the final award.
Bottom Line:
Arbitration - Second reference to arbitration after setting aside of arbitral award is maintainable if underlying disputes between the parties remain unresolved, and claims are not reduced to deadwood.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11(6), 34, 37
