NHAI VS M/s AE Tollway Ltd.[1]
Brief Facts
NHAI filed a S.14 Petition before the Delhi High Court under of the Arbitration and Conciliation Act, 1996 (Act) seeking termination of the mandate of an Arbitral Tribunal on the sole ground that the Tribunal has fixed its fees contrary to the Schedule of Fee provided in the Agreement between the parties.
The Agreement had made reference to an NHAI circular outlining the arbitrators' fees and costs. The Tribunal declined to follow the Circular and fixed its fee as per Schedule IV of the Act. NHAI sought recall of the above direction of the Tribunal on the ground that the Tribunal was bound to follow the fee schedule set out in the Agreement, and also bound to charge consolidated fees for claims and counter-claims.
The Tribunal rejected NHAI”s Application relying upon the judgment of the Supreme Court in Oil and Natural Gas vs, Afcons Gunanusa JV4 [“ONGC”] and held the arbitral fees were liable to be charged separately for claims and counter-claims in terms of ONGC. Against this direction NHAI moved the High Court for termination of the mandate of the Tribunal.
Conclusion of the Court
---S.14 Petition is maintainable in view of the Supreme Court’s judgment in ONGC and the order in NTPC Ltd. vs. M/s Era Infra Engineering Ltd. (EIEL)[2] The Supreme Court in Era Infra had while holding that the arbitrator could not have determined his fees unilaterally, terminated the arbitral proceedings and appointed a substitute arbitrator.
---In view of ONGC which requires party autonomy to be given paramount importance, the order of the Tribunal to the extent that the fee structure projected by NHAI is not acceptable to the Tribunal, is wrong.
---Paragraph 125 of ONGC characterises Schedule IV as a model fee schedule, to which the parties cannot object. However, it was conceded by the Respondent that this would not apply in the face of a contrary contractual arrangement.
--- As the NHAI Circular reveals a clear intention to define the sum in dispute as inclusive of the claim and the counter-claim, the interpretation does not present any ambiguity, calling for application of the doctrine of contra proferentem. In ONGC, the Supreme Court has given an interpretation of Schedule IV on this point, which resolves an ambiguity in the Schedule, but cannot be applied to a contractual arrangement which does not present similar ambiguity.
--ONGC makes it clear that the determination of arbitral fees is contractual in nature and requires a tripartite consensus between both parties and the arbitrator and to the extent that parties have made provision in this regard in their agreement, that governs the proceedings, although it may be modified, if parties agree. In the absence of such a consensus, it is open to the arbitrators to decline the assignment, but they cannot take a position contrary to the agreement of the parties.
---The direction of the Tribunal is not the correct position in law and for the purposes of the present arbitration, the fee of the Tribunal must be computed on the basis of total sum in dispute, inclusive of the claims and counter-claims, as provided in NHAI Circular.
--- The parties are directed to place this judgment before the Tribunal, within the next two weeks. In case any of the Arbitrator is not inclined to proceed with the arbitration on the basis determined in the judgment, the mandate of the said Arbitrator will stand terminated.
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