SC suggests change in arbitration law

The Supreme Court last week suggested an amendment to the Arbitration and Conciliation Act to avoid unnecessary delay and additional expenses in this alternative dispute resolution mechanism. As the law stands, it allows piecemeal appeals against interim awards. The court prefers a consolidated appeal. The recommendation was made in its judgment, IFFCO vs Bhadra Products. In the dispute between IFFCO and Bhadra over a tender for defoamers, a retired Supreme Court judge was appointed arbitrator. He passed an interim order on the question of limitation. This was challenged before the Orissa High Court by IFFCO. The question was whether the interim order on limitation could be challenged as an interim award. The Attorney General said yes, but Bhadra argued it was only a question of jurisdiction and could not be called an interim award. The high court dismissed the IFFCO appeal. The Supreme Court, however, set aside the high court view and stated that the interim award could be challenged. The law says that an award includes an interim award. But, in a given case, more than one award may be necessary. In such cases, the arbitrator should consider “whether there is a real advantage in delivering an interim award or in proceeding with the matter as a whole and delivering one final award. Ultimately a fair means for resolution of all disputes should be uppermost in the mind of the arbitration tribunal,” the judgment said.