Case Note & Summary
The dispute arose from a contract dated 6 November 1989 between Oil and Natural Gas Corporation Limited (ONGC) as employer and a consortium of foreign companies as contractor for the construction of submarine oil pipelines between Uran Shore Refinery and the HRA Platform. The contract contained an arbitration clause, and after various delays and disputes, the parties appointed arbitrators who, unable to agree, referred the matter to an umpire. The umpire rendered an award on 10 December 2007, allowing certain claims of the claimant consortium and partially allowing ONGC's counter-claim for liquidated damages. ONGC filed Arbitration Petition No. 584 of 2008 under sections 30 and 33 of the Arbitration Act, 1940, seeking to set aside the award insofar as it allowed some claims of the claimant. The present judgment deals with the challenge to the award on Claim 9(I)(b). This claim related to a 24-inch submarine pipeline allegedly damaged by a drilling rig belonging to another contractor of ONGC. The claimant had sought USD 150,000 as cost of repair and an extension of time of 12.670 days. The umpire rejected the monetary claim for want of evidence, finding no reliable evidence on how the damage occurred, but granted a six-day extension of time on the ground that the delay was caused by factors beyond the claimant's control, noting that vessels in the vicinity belonged to or were under the control of ONGC. ONGC argued before the High Court that this extension was contrary to clauses 5.9 and 41.8 of the contract, which placed responsibility for damage on the contractor and required rectification without cost or time effect. ONGC further argued that the claimant's own witness admitted having no personal knowledge of the cause of damage, and that the claimant had already received insurance compensation, resulting in double recovery. The claimant consortium, on the other hand, supported the umpire's decision, arguing that the extension of time was an independent claim, that the umpire had followed the Hudson treatise and applied a rough and ready measure, and that under section 30 of the Arbitration Act, 1940, the court could not reappreciate evidence. The court examined these submissions, but the extract of the judgment provided does not contain the final ruling. The matter was heard on 7 July 2014 and judgment pronounced on 12 August 2014.
Headnote
A) Arbitration - Umpire's Award - Sections 30, 33, Arbitration Act, 1940 - Extension of Time - Contract Clauses 5.9 and 41.8 - The umpire granted six days' extension of time for completion of the contract, holding that the delay was caused by factors beyond the claimant's control. The petitioner challenged the grant, arguing it was contrary to contract clauses 5.9 and 41.8 which placed responsibility for damage on the claimant, and that the related cost of repair claim was rejected for want of evidence. The respondent contended that the extension was justified and not linked to the repair claim. The court's full reasoning and ruling are not stated in the available text, but the court heard arguments and reserved judgment. (Paras 10-16)
Issue of Consideration
Whether the umpire's grant of six days' extension of time in respect of Claim 9(I)(b) can be sustained when the claim for cost of repairs was rejected for want of evidence and when contract clauses 5.9 and 41.8 placed responsibility on the claimant for any damage.
Law Points
- arbitral award may be set aside if based on no evidence or contrary to contract
- extension of time not permissible when contract places responsibility for damage on contractor
