Case Note & Summary
The dispute arose between Chennai Metro Rail Limited and Afcons regarding the arbitration proceedings related to a contract valued at Rs. 1566 crores, signed on 31.01.2011. Following the initiation of arbitration by Afcons on 15.04.2021, the tribunal was constituted to address several claims. A significant issue emerged when the tribunal sought to unilaterally increase its hearing fees from ₹1,00,000 to ₹2,00,000 per session, which Chennai Metro contested. The tribunal's insistence on the revised fee, despite Chennai Metro's objections, led to a petition filed by Chennai Metro under Section 14 of the Arbitration and Conciliation Act, 1996, seeking to terminate the tribunal's mandate. The Madras High Court initially granted an interim stay but later dismissed Chennai Metro's application. The court's analysis focused on the principles of impartiality and the contractual nature of fee arrangements in arbitration. It was held that any change in fee structure must be mutually agreed upon, and the tribunal's unilateral decision raised reasonable apprehensions of bias. The Supreme Court ultimately upheld Chennai Metro's challenge, reinforcing the necessity for impartiality and adherence to agreed terms in arbitration proceedings.
Headnote
A) Arbitration - Impartiality of Tribunal - Unilateral Fee Increase - Arbitration and Conciliation Act, 1996, Sections 12, 14 - The tribunal's unilateral increase of fees without mutual consent raised justifiable doubts about its impartiality, leading to a challenge of its mandate. The court emphasized that any fee revision must be agreed upon by all parties involved, and the tribunal's insistence on the increased fee was impermissible under the law. Held that the tribunal's actions warranted a review of its mandate (Paras 1-34).
Issue of Consideration
Whether the unilateral increase of fees by the arbitration tribunal, despite objections from one party, constitutes grounds for challenging the tribunal's mandate under the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court upheld Chennai Metro's challenge to the arbitration tribunal's fee increase, ruling that the tribunal's unilateral decision was impermissible and raised justifiable doubts about its impartiality. The court emphasized that any fee revision must be mutually agreed upon by both parties.
Law Points
- arbitration
- impartiality
- bias
- fee fixation
- party autonomy
