Excepted Matters and Arbitration

June 30, 2018

A very interesting issue came up in an Arbitration matter of engineering contract with our firm. It was an engineering contract and terms were laid down under Tender. Various powers and terms were laid down which were given to the Engineer. However, as far as Arbitration is concerned there was a clause in Tender document by which certain issues only can be referred to arbitration and those which is bestowed upon Engineer cannot be referred to arbitration. The said clause was, in general, we see in most of the engineering contracts. It was as under: Where there was a clause in the Tender Document that, “ Except where otherwise provided in the Contract all questions and disputes, relating to the meaning of specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as arising, out of or relating to the Contract, designs, drawings, specifications, estimates, instructions, orders or those conditions concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to arbitration subject to the provisions of the Arbitration Act, 1996 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force.”   The Claimant referred the dispute relating to unpaid running Bill , which was within jurisdiction of the Engineer. The Respondents objected the claims on the grounds that it is Excepted Matters and Tribunal has no jurisdiction. Now let us see the provisions of Arbitration Act,1996 Section 28 of the Arbitration Act,1996 reads as under: Section 28 – Rules applicable to substance of dispute (1) Where the place of arbitration is situated in India,— (a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; (b) in international commercial arbitration— (i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute; (ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute. (2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so. (3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. While studying on this terms “Excepted Matters”  we came across a judgment of Queens Bench Decision in Minster Trust Ltd Vs Traps Tractors LD & Ors [1951]  1 […]

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