Recently, the Delhi High Court in Eco Green Buildtech Pvt. Ltd. Vs. Vikartan Infrastructure Pvt. Ltd. set aside an arbitral award on two grounds.
- One, the arbitrator used his personal knowledge in deciding on a particular claim. This use of personal knowledge denied full opportunity to the petitioner to deal with the same.
- The second ground was the use of the Hudson formula to decide on a claim for loss of profit without any evidence having been adduced by the Respondent Claimant.
In a recent paper published by the India International Arbitration Centre, I came up with a checklist of about 70 items that arbitrators should take care of while writing arbitral awards. Item 32 of the Checklist states: "Whether analysis proceeds in the following manner: facts, law/ contract, application of law to facts, and conclusion?" Item 33 of the checklist states: "Whether the award deals with any argument or judgment which has not been raised or cited by the parties?"
If the arbitrator who wrote the award in the matter had taken care of these two items in the checklist, perhaps the defects which led the award to be set aside could have been avoided.
Given the number of awards set aside on the ground of lack of evidence in support of an awarded claim, a separate entry in the checklist is perhaps warranted. This separate entry will also act as a caution to arbitrators not to decide individual claims without evidence even if they rely on a formula.
I have updated the checklist by adding an Item after Item 32 and renumbering the checklist. The renumbered Item 33 reads: "Whether the arbitral awards decides on each claim/ counter-claim based on evidence and whether the evidence is clearly identified and evaluated?"
Now there are now 71 Items in the Checklist for Arbitral Awards, which can be downloaded from here. It would do well for arbitrators and arbitral institutions to use such a checklist for ensuring that arbitral awards are of the highest quality.
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